CME (CME) 26 Jul 232023 Q2 Earnings call transcript

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

During this presentation, participants are in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]

It's my pleasure to turn the conference over to Adam Minick. ahead. go Please

hope I doing today. well Good you're morning. all

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

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

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

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

for this Thank you us morning. you, joining all thank and Adam;

which our few As on brief Adam a our current released the quarter we comments make the outlook, said, earlier on executive will quarter provides XXXX. will financial summarize Lynne second and details of I and today, results. commentary

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

businesses, classes of us setting have quarter. the CME just As continued that for for spanning financial an risk cost a benefit mentioned geopolitical increasing things up management. couple our product the display. on helped uncertainty, quarter, we are Group's six XXXX portfolio, extremely results last capital The asset is of The be of to favorable backdrop deliver was and diverse for the

rates, compared QX. X.X market daily first contracts XX% growth class during products, X% a Energy. million in Metals XX% decline Despite our substantial our up the of of quarter commodities volatility, across million asset average ADV volume volume in with daily and with up of increased equity for XX%, X% half in XXXX. is equity average was XX.X growth Agricultural in XX% and classes the delivered Interest

quarter, in Energy. contracts in million Agricultural ADV a to XX% from Our non-U.S. growth growth critical the on was including Metals highest X.X and for contracts ADV with quarterly million the double-digit last XX% including options year-over-year of QX, QX ADV X.X year. Options, record, again, role up played Ags,

Our product innovation choice has product strong these match participants to risk, protect more in portfolios driven in as to more precisely this to continue with growth uncertain area clients for times. and ways their look new

changes or it divergent our up As to relates expectations a drive management. risk down economic data and rates continue short-term rate to of market,

As we issuance saw that with for of to the will dramatically. contribute Over ongoing time, expect debt coupon the treasury come. debt hedging the increased issuance and years financing we recent to greater resolution ceiling, needs bill more

our are increasing we side, using backdrop, announcement management commodities to On for demand exports agriculture the for continue to will treasury margining opportunities opportunities and With growth, increase recent the the including benchmark, energy accelerate products. cross our markets. to DTCC with on risk favorable this focus

to enhance growth continues opportunities environment positions We in growth ongoing us underlying the product believe trading strategic initiatives strong across accelerated our services coming innovation with and our our on years. for Additionally, execution data for focus clients. combined

Lynne call for quarter turn that, With I'll the to results. over the financial second

Terry. Thanks,

fees. million, strong $XXX basis revenue, for increased at first on transaction revenue data the were X%, excluding while $X.X fees compared an quarter second and up last over about billion versus in versus QX grew During CME Clearing quarter Group quarter, and million flat a adjusted the year. XX% XXXX. the quarter generated X% license with $XXX Expenses market

million. migration was investment our This in cloud quarter, approximately our $XX

adjusted $X.XX, effective last share earnings $XXX year. up adjusted XXX up million, basis of in the period compared of had points diluted of which rate over year. same XX.X%, expanded to per tax to last an XX.X%, driving both operating income for quarter margin from Our adjusted XX% second CME the resulted quarter net Group the

the this increase of of of strength quarter and adjusted our Capital paid model expanding addition delivered In $XX quarter revenue million approximately an $XXX evident during net compared we was to operating as our approximately million. both Group were in dividends income expenditures CME last to the year. margins, and $XXX million

ending approximately $X was billion. balance Our cash

is the can with the the business. at focused see you Group results, growing As team entire current CME on

delivered quarters. earnings double-digit last in growth of adjusted have eight each the We

the XX-year year Although, it despite by at term, the of growth is market we zero when compound to multiple or last rate a to the grown challenging predict you seven XX% per global short earnings of annual have and periods pandemic rate impacts policy volumes the period economy. interest conditions look XX% the five, of over or our on

growth in environment enhancing risk a As to our service favorable we’re Terry mentioned, for and efficiencies. number going new product customer a through innovation designed forward are we expansion, accelerate management of actions and capital and taking

Given goal management coming as is above historical in growth these decade deliver the team this, averages. our a to

hand back the you. call I’ll to Terry,

Lynne. you, Thank

We of are company. very the pleased with the continued strong financial performance

seeing the for ask I’d briefly in short-dated questions, Before like comment call to Tim on the trends to Sammann recent Derek that options open McCourt I and we’re products.

to Tim, first. go I’ll And Tim?

Terry. Thanks,

know, contracts with on important from days X.X to and volume curve. volume. entire zero day options XXXX million to including is equity the growing our year maturity pleased up per growth. and XX% a also in futures, since and same XX% interest across or XXX% Short-dated the seeing open very DTE our of up performance options up driver options, of which are multi-year strong now equity remain options Volume make expiring our we options our year-to-date day. expiry drove are last It’s of We zero

talk record Russell to strong trading equity derive in strength and up options equity options demonstrates indices most Derek on up Group. while date, year Year-to-date to options products the further story now. compared the value been continue will an customers largely a we’re in of equities short-dated growth to you both other with are to double-digits. from XXXX expansion to And to see the options portfolio, Nasdaq important beginning CME have X% at XXXX particular This story which parts

Tim. Thanks,

through discussed average quarters, strategies. Rates, our recent in management and volume options up trading in Interest is our and options classes bigger daily XX% XX% business Year-to-date, risk of become franchise have Equities all customers’ part a is non-U.S. driven up we’ve global by As asset Metals June. and Options across

options larger for growth XX% to options this growing XX% year-to-date seen story, asset options up trading. total across volume growing all have weekly Within weekly expirations classes, and with we demand of

expirations customers to commodities equities, our have risks, reports global specific such event meetings. embraced crop shorter-dated which to OPEC allow similarly traders and addition hedge In as

a up XX% our uniquely The contributed are across our short-dated year-over-year. which need manage In options Agricultural franchise and to weekly help gold up XXX% options options allows for overall. their to options effectively our the quarter record grew second efficiencies most last agricultural options strength and for our weekly quarter year, them second CME in were versus of WTI meets weekly Energy, while quarter, portfolio. Group capital to customers’ deliver XXX% operational options significant entire risk

we can questions. open the now that, with for call And

Barclays. first sir. Our with Instructions] you. Please the Budish go of Thank comes question line ahead, Benjamin [Operator from

comment Hi, just positioning to your made grow the about prepared to taking historical wanted that business so Lynne the you faster much kind the remarks, for next Thanks the I sort of question. than average to there. decade. in a over of go back

customers, a next over unpack of you maybe sort increase you do volatility? global as could see, like decade sort need manage it what the is of increasing you just How bit, key elements that If of of little is think what that risk, to RPC, you it it kind that sort a more about are like is the looks more in indicated?

and in of want a start colleagues my like, I'll to will Sure. here. number jump

while, that big the about OTC efficiencies. growth that capital certainly expansion, been we number has the think we've looking that is a new levers a one focus, as at look growth, as story at looking at customer products, a of well been is I product alternative innovation that new talking international is the for

want if of initiatives on Julie, know, a comment don't I are that to So, you underway. those few

initiative efficiencies in order we to Yeah. that that thing I of going and for number to is a very cross-margin about be important are do certainly excited the quite to capital the continues that about -- be at is talked one thing. Capital mean, more delivering top one clients have important deploy CME years and the and a Group. an more at list of their trading our

that's that is going positive are as as growing our environment -- to and hedging of And a well feedback issuance quite across the our more I dealers that the Treasury they the clients our risk, number from need broker on horizon those seen hedge is markets well. macroeconomic from increased asset to a using mean as think classes.

giving expectations well-positioned continue able globally. the across marketplace very we're being the roll feel out from a them about express, the another we segments, a Tim think bit talked sensing as different instruments of I team is and our products, we're able positivity. highlight that to we therefore also quite to again, Derek the that lot to be earlier Buy-side, clients options about more to And we're of and our support

commented part us And have for the it growth quite the still believe that of well international and suits certainly we is that on future.

analytics and not the data our data. team the had new out number real cases, is that hard deliver, X% our on customer We services, services also rolled based of to the good in previously products, we about that and things feel some to delivering our growth working business

things give future. of all those a So, positive for outlook the us

gave Lynne. (ph). that thanks, Ben, you here and what Julie; Thanks, to some on thinking hopefully, exchange color we're

Very helpful. Thanks, guys. Yeah.

you. Thank

Thank you.

comes your Dan from question. with of with Fannon proceed Jefferies. question next Our line Please the

of I a on little morning. Thanks. guess Good bit that. a follow-up

you've the comments sustainability first that the about and around be half I'm you. behind concerns being but Just investor continues and of worst or volumes the best year, -- the potentially continues had of sorry, the to good in

all -- two the a what terms expand the and as partnership the that about you how the and highlighted So of DTCC maybe of and then already, timing potential maybe kind gets of agreement. and that or we in think could that And would growth one you in that out the should think you implications pick highlight you bit opportunities you maybe rolled about the see short-term. upon here

your for you thank Dan, So, question.

questions got there. a in of couple You

a we put we're did confident we release out that hopefully, fairly DTCC first that are about waiting we of on XXXX. and feel weeks now. implemented We regulatory DTCC, approval, the expecting hoping the -- just with of we're the will the into have couple So and going back quarter which

have otherwise, So, release. the put we wouldn't out

looking we at that. So, are

could agreement quarters, going far NEX, acquired And of which a and be and you once what some we gave Tully again, around be mean this thought we'd Sean today about as we couple going you when expected gets once recall I fully the case thought implemented back efficiencies, feel back think that as we and that put figures confident he that many we years could that very we XX%-plus, XX% to be somewhere still what forward. is the

So, question. that's the DTCC

for couple I what on Tim years. make well. the it as was a you question of other The and to is relates drivers business on I'll ask asked a the as couple to out his Derek business, And think comments of

Thanks, Sure. Terry.

as periods As our to front mentioned for management there remarks, risk for offer clients. opening provide CME tailwind the continue of a certainly will us, continued of Terry which uncertainty continued are solutions in in we

we the beginning a where journey, it's from successfully the end down if rates SOFR, drilling the us. little of various transition think front think some in of of LIBOR if the asset at but really complex, classes, not that's we I we about completed what's the to look bit, of the

think T-Bills those into coupling Treasury June factor days be what on year Julie's I of that from of were To and to issuance we're to present, the some mean most look you that management their resolution issued issuance, of going of debt seeing of $X.X backdrop and we tightening in about by only of the needs the if Most is And of end. risk if coupons. is, a the expecting our at client. comments, macroeconomic at trillion the ceiling, that with early instead now analysts recent the drivers

that T-Bills accessing is that We respect look at we or market. present, something the currently offer the management CME product at to not the risk with offering

moves to issuance T-Bills both well our futures and coupons, will as BrokerTec. buttressing complex, treasury that as as our options within be that So from

at year, expected another out, look meeting they're look also the I think in today, FOMC when market, March the [indiscernible] XXXX. then, if over the rates you XXXX. of the the a be bound Fed to there's XX point XX% you're a as possibly further reduction before point the increase. for chance then, predict of uncertainty basis But CME with you range somewhat of in a basis with increase one rest XX% chance more seeing XX of But

view clients' across uncertainty cash need So the and going be sort the to so of options, for to our the same this or go go that down to stay swaps various backdrop across consensus up, a futures, to CME all is have and rates classes at the manage products that asset tremendous market. do

So of let exactly you to in going favor the for about is tough risk me asked. Dan, I a the that very predict But for several too, a important the an come. to because it question beginning think more in several couple comments that for We recall, talking we to at I been exciting make this see us as because things a that going years was really environment future. And said you of it's up be XXXX, lot we've setting out think of management. of are year it's

So really that's why of excited about just that referenced. out years, of the some these some things Tim we're

one for neglected for businesses. be any moment cannot management Risk

that, others in of We to have There's have but multiple to in factors investors make I failures manage to failure, they're tailwind few to. is and his whether that the Group. risk manage only an going asking, on you're classes that a that stay not risk going all fruition that that of that analysts continue a to potentially CME small let listen this not if coming host we to and think, are whole to examples asset are bank for business. Derek question, I'm are think, we think comments for going important Derek? be, it's a to

Yeah.

from commodities the that options I we've and already Terry think heard on growth.

asset U.S. the scale and also growth. first a year-to-date. up. growing half banks, But than I the breadths faster points look think year the of This up business with is client than franchise is exception our growing faster class of options, couple the of single that data are the overall. every only Just our at underscore if you options options segment, Not options with is the XX% non-U.S. volumes, our

And what's is, most XX% client is year-to-date. important volume and up buy-side options our

I option the across the it speaks So to and customer our the the attractiveness think, and entire breadth scale solutions range. of

by client led led one segment. not one is not this So asset cost, by

across a lot it's client of So in really scale segments. grown

And of lot on talk side, you the then commodity Terry heard products. our a about the status benchmark

portfolio have into We our products. hard built long expanding and of

our interest interest we've you If but record at to open market XXX,XXX contracts crude defend validity both our in success of contract. expand out and look energy grades the that all-time set those franchise, building products. We contracts, of grades what also WTI an in with the over open crude done the in

globalizes. world In fragments. has this world the our of serving as a our cases, the So some story world evolves, as benchmarks been expansion clients of multiyear the

for products those scenarios. have each of We

we need become management portfolio their provider. in solve ports need risk their that and what they that's client we we do. fill solution and So We of

traded said at predict now And a in as we prepared But zero-vol X.X the largest class, around earlier, and contracts you're markets and still day. said, the my volumes. as U.S. Dan, looking in a we world right equity can't the when equity we markets environment asset basically remarks million I at

you show even are of you where we can people low-vol situation. an future what vol. see kind I are? there's there think When we're that at just I volumes in to goes think example, when say, even the happen no where giving

you much. very Great. That’s Thank helpful.

Thanks, Dan.

Kyle next, KBW. with Voight proceed Coming with you. from the up a question line question. Please your we of have Thank

Maybe more question driven? given morning. I M&A the in pr any for the to domestically seeing internationally, more your or itself. I the some right early Terry. right that since are from terms if year, the last M&A environment? not can Good on you M&A update sounded just mean, a on that you an Hi. boxes guess open And not we're peers executed been checking seeing announcements executing provide price presented of you've has of deals, and given right you opportunities announced opportunity

for should saw And as XX do terms the that think Lynne Terry, over last next XX larger or M&A about the the mentioned, then accelerating also you years, you maybe we a being accelerating XX a kind versus of we think you, years? of of what question the in growth, growth over years as driver next

great a it's Kyle, question.

happening with things accomplish when see of years that the one we can competitors can't, going that the will think looking CME of you're out I things those allow in that transaction in we order of lot in forward. goals there's that And to I future shape future, need the but maybe is growth several the don't to certain Google happen. things that do technology M&A our us have growth to do a our

So in standpoint. I from strong position a think we're very that

to M&A not far don't what did, analysis they're talking in my about they transactions. -- them comment on those of As to I'm thinking what doing, and competitors like type rooms are strategic they're what why as doing. I doing the

different will that investors growth things strategically are of said, are As now, avenues. the think company we our I've and this benefit clients. again, focused into And on we right to only we our through do many

you. And I'm very if, to but just it, still going my doing focused That's they're field. transaction, that are, things. been different there something not in left not fact, from out assure a And on. I it's was be we've to competitors am saying open I

of innings early in strong Tim have products. continue risk reference build to management to We're we So going franchise. some in to made these a it. on

that we're that on, is doing really the forward. going we think, data in of technology is distribution We with truly working the the in what market Google, our that products, Julie exciting believe

don't a we to we to investment. need shy it's M&A, our to And from want further? to fact, necessarily away we're benefit it but going in comment So do you not see if if Lynne,

Yeah.

I certainly disciplined opportunities as something we the at growth. were think Terry there look M&A, years. but looking We're And our covered seen the over you've to we've organic it's if it out approach in there, very at, well. been

the I reference. I more one on said And Kyle, this And will I think prior call. make

peers. some We strong to in way position. where capital transaction an come there are so-called If, very was in our a our fact, of M&A

we're or that they're acquire in As to you they assets that them, to referenced, going at of afford what at they that them look we're are get based does shopped, a on no when shopped may the pay people may our lot matter get can business. getting that. things but right mean a going And levered not benefit now. heavily position to are. decisions for make strong We'll to strategically It

Understood. Thank you.

Thank you.

Thank you.

with Our comes Atlantic Clinch Simon question. question your line next proceed Equities. of the from Please with

guess, give over by Google the pace come. just yet of that has several If perhaps the back years. Hi, that maybe to market everyone. could accelerated opportunities flavor the us what go the been taking about for -- for has that Julie data I expanding guess, But -- this. just Lynne the were in the this been talking next guess, innovation in you to partnership Thanks Lynne, or expand I on I we And of my if influenced or sort the, terms -- product what a pipeline you question. run how could of of, or talking what has about was

the Sunil partnership. touch then opportunity the Google to on data, on or Julie, you the want market

commercial speak and have off, then side. kick Terry, Julie I'll the to I'll

with it's data of XX (ph) terms it. platform, date. beta of have built finally And banks In we available about

let bit that are have working clients. speak in set our a I the releasing on of a will Julie services little about area. opportunity We to we commercial developed that

some Simon. with Yes, working don't minute for into been Google. data performance and start just of just the build-outs about product a on I Why just that then services quickly the we've talking go

as quarter, I is our user versus as that ago. we demand our well X% a earlier, from were And were base from up mentioned high this where As driven year we professional traders and exchange real-time seeing seeing content that segments we're growth are in of the across our clients, increase subscriber a steady those accessing of retail number all those positive. really professional

as in those In see QX, many not the of did saw true-ups as first one-time we quarter. we

back had of So QX, payments. to we if But remember, Lynne some growth. definitely still positive those mentioned had you one-time

everything, audits, from from and subscribers So fees, those true-ups some true-ups real-time even accruals. data can come derive audit from

that So out I well. just wanted call as to

quarter. We worth continue sporadic are to this calling say revenue items, but those it's that out

again, we're able products usage where about as the introduce. as been is, And quite to well new that the positive we've device feeling

As Google new to Cloud able for really well. being now, as we're business, development has products our at out, the to and new analytics get for Sunil us at the our of pointed allowed data magnitude us accelerate that into sitting data including products

APIs, So how data. our to the we've flexibility and be through enhance going And been distribute our more data, package going on how able how we're that price the can we our to then to data highly is making increasing through data, business. we focused our available how we're

is, All environment. enhanced enabled The easy as as of accessible do is believe, can from much just don't CME cloud, these an today it be use that more clients on-prem that to new much we in data are computation doing once through as able far making this just you is this what for well to services. access better the we

that allowing as well shortly. our us sharing that And able quarter. so analytics. And to execution clients this some We've with create compelling put we'll be new been that's trade production to into

leads And data being that manage leverage so take activity our this allowing action data their providing we clients how benchmarking on insights. of proprietary and just this helping our better clients are risk. able us them our to is and this with into And own really all giving really them to and

the the risk at also on looking we're side. clearing So some opportunities new and

data new the the that seen So efficiency, which just we helps. rollout. Hope business. product the is we'll had specifically puts behind of not allowing more and that with And otherwise within production it's that be seeing speed cloud us, that

that. hopefully, some Thanks, on Julie. that you color gave Simon,

That's thorough. very you Thank much. Yeah. really

Thanks.

Thank you.

Kramm UBS. Next the line from Alex of comes proceed with your question. question Please with

for Hi. lot. at Yes. I some zero that the morning, the stands guess franchise DTE. it's comparing that the some has comments everyone. some are look And thing franchise, see a investors that your a comment going your competitors other clearly, micro of saying on versus of elsewhere proactive off. want that the your don't on trends retail partners, is down there. Good when out retail you I percentage Thanks post-COVID? out those come the is equity of just you But that I simplify really if talk what's REIT could -- just to volumes just there? when maybe wondering drying you brokerage Do on is as going or up is this activity to

And other about that then bigger I acceleration you it's or a couple mean, to but really, still of was interesting or that, so, last retail the growth and that as just talk is over much years, the decade opportunity an next again? things of now over component about related the story

But to there's Tim Alex, let team. going thank Tim. to chopping you. bit the take him going and of your then Appreciate lot to question. rest question. Go of of join I'm that at kind a and -- let start ahead, to the I'm going I'm people

less the some well Great. things coming volatility only together, not individual When that the certainly, to more the available, upward products broadly. major the in not at attractive When we it complex CME, markets Micro given, the his surprising coupled look comments, we in as the micro over seen the but is those active Thanks, as trends all volume, more the other we've inbound which Alex. question. as Thanks to client equity Terry prefers mentioned ecosystem from in reversion CME, for E-mini in some that see mean in be price trade indices. tends a at

in XXXX off to it's the record quarter, Micro is actually is same Micro XXX what and as S&P note, volume the XXXX. on this than NASDAQ. we look saw an example, for at a phenomenal that. we But we've coming down, holds par golfing QX is seen If Micro the this higher still true that and of And a with XXXX volumes the while important

product tough a it's respect So strong needs to and management trading it's relative provides. it very a with comp, its certainly that risk but

is XXXX, it The is that is product. versus And launched is actually at as from that's to revenue perspective, to the the the I a a come slightly two of to have last starting or down, the of thing mature be which HX. And to mean volumes a note other Micro even taken flat One, year through Micro we've in continues a really to though some things. respect now what result years actions other E-minis, Micro interesting risk-adjusted up the old, pricing regular few with a by that's premium E-minis.

But the is other mix. the member

since Micro this mix, we're the RPC increased $X.XX year for even E-mini. time So in customer which a last that of lower volume environment, about seeing larger non-member has proportionality

remind important So different HX of Micro XXXX. is that is is performance people the is than something of that the revenue to performance volume of through E-minis

interest at more single-day of market. with Micro XX which positive more the a Micro the in are for is contracts. the clients top E-mini open where management E-mini development days This risk health maturation, all trading versus XXXX, is the CME, becoming them of statement respect for E-mini. a the other open a records holding overall that in the intraday trading, several to at tool with very And just and alongside open of Micro are at XX Micro is look complex If look the we interest point interest June of a E-mini is tool the

is when the choice. product year of very indices remains of we that QX analogous a Micro from E-minis up sibling, conflict in I what to CME look And last trade their we the by one older performance isolation. the can't of E-mini S&P the this That mean on point QX in the at hand-in-hand XX.X:X. factor resilience of S&P, is combined I'll make That, And They at we with equity the look by ETFs three The for ago its the you if futures most X.X and is, ETF. E-minis, XXXX. that factor of top XXXX. contracts. that, for go at at out And a the look strong

for the thing Same NASDAQ.

This quarter, similar in we XX.X the of that times quarter, to year. XX.X last XXXX. outtraded versus ETFs out X.X:X times X.X Dow, our traded the combined we in ETFs futures this the And

E-minis off So at very futures a despite slowing record still year, equity offering Micro strong the CME. a growth in here of

Thanks, Julie? Tim.

is portion there ball the be Tim we certainly, equity two-year in as some And volume. lows, would hitting our Yeah. our business with retail equity to of but of pointed softness out, majority the that, expect

However, strong. setting We record slightly remains at which last revenue retail year, looking business our year. very being performance. had down overall a year strong just very, is And we're extremely this

the We growth in for and barometers this China that both us, also second And the of mention saw we call LATAM quarter. the is Greater positive sign and QX a retail one of in also key of Europe, real often on new up which health the and the in traders. retail participation for QX X% just this is number over marketplace was XXXX of of total of number traders,

was QX new firm's to up also continue markets, ability people, in X% our of So to and attract the that XXXX. CME's ability CME

positioned a our participants activity certainly we for some the signs, very our diverse from impact increased of retail well asset growth class, have the fact that think ball had we're equity other things. feel see future we classes and on I So we But some asset quarters. still saw in by the

$X.XX. Metals options data rate as metals When Yeah. growth to business participation, what up couple add of said look are And from you year. Julie our you at complex, retail at points to contract volumes know, this retail our specifically. X% year-to-date in for And has is Also benefited highest XX%. up per retail example, just a

to any So partner major into walk able be the every to happens, being or means of when sector and liquidity rotation we're benefit them of distribution going the to that. that customer, a offer beneficiary customer product benchmark

the story volatility franchise. because of see the strength that. to to That's the we whether And cost got behind asset we from that. growth certain of benefit they when So benefit of see we're you've set going rotate, classes in and the over capital, normalization

Alex, of talk flow and comments. I for heard few of we in people. all and the always things situation you've find a And an hopefully, think, lot it's And about we salient. them one have, a that retail, So ebb you

Ms. Our as type is as described professional a was retail different pointing more participants, little out. Winkler bit

COVID about nature. maybe factors, talk classified Robinhood talk in as a that and person of you that you the than our was on there. something or other yes, trading about average But when So retail platform is different

but And against the our competitors the see volume against Tim about products. how performing not not can decreasing, say lookalike CME, competitive only to type or what that are is share increasing had clearly you

for So hopefully, properly questions are those you. been answered

Yeah. much. Lots color. great of Thank you very

Thanks, Alex.

Thank you.

next sir. Bank. question of ahead, the Our Deutsche Brian Please go comes line Bedell from with

couple taking Good of the over as to Maybe mid go story. The looking options back Thanks been of total to can Thanks. I'm percentage years for the was numbers the Hi. morning, think Great. just Obviously, options last in now. that's folks. high-teens I my a at, question. if nicely. ADV I improving

above XX%. You've vectored of sort

just of to over I trends your wanted improving try So sort that of confidence understand next year. the of type to

you the the the of talk to then that's just accretive And on of of in RPC. set just Page then in maybe about platform, is commentary dynamics direct business first into think future options. business? helping trading Is options electronic complex across potentially that or about you RPC the of also terms the energy the mentioned quarterly front-end And the stimulate whether earnings that X

to... I'm and then Derek start, do and Brian. Tim, Thanks, want to you going

I'll Yeah. start actually order, In reverse question, Brian. your last with

you've That including for and provide customer the now both futures and to and a started the markets base to that's services talk make we options. full front-end sure proprietary That our have of provide the that to all capabilities API all breadth analytics, access yeah, as Direct. extended really our to that about capabilities able us to customers all seamlessly, we to them offer, the heard functionality, that were itself. gives calls is we to previous everything our connecting global that all the connectivity, mechanism So CME on our

side. not rate the class, just our rates business asset across interest highest into evolved to to And ISV become growth options we've the It's has is or seen energy. provider single actually this the of substantial. with link largest been So on penetration the rapidly limited there that

suite So positions story. developed integral last whether that whole capabilities, customers of our the strategies it's new growth it's to or look pre-trade they space, an help to and we've options part years. five That's over analytics to a In at post-trade analytics four the tools implement. to want we capability developed

customers analytical tools classes expand of partnership We just delivery enable seamless there. functional suite blocks full we're that the that creates That's critical single experience, and willing we're it's just front asset brings the to think capabilities innings of very all And one are a of to there. as those are we're trade our and actually part a more the And into capabilities, our and all as end of in as with of reported we early with options it in tools. growth futures a -- with becoming seeing developing QuikStrike. through happy our well still continue

is on The there from and as there of the participants that we're growth the is last largest note well. front some buy-side end seeing piece in uptake our brokers I'd

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our call, growing mentioned top the our the half as year. business of at about business is up the even But non-U.S. with faster, year-to-date, options first up XX%, XX% for full options I

got think So we the that that how use, at seeing, our access when footprint CME way us clients we're levers you a look at the to yet Asia tools opportunities, still Europe about deal and out the and options when penetration we've of growth specifically the good ahead those of think versus we Group have educating and there, growth in U.S. we sales is in on options force

lot to story. like the So a in

a of Brian, in important. here, largest futures We're couple the think world. just it's exchange because points the So really let I accentuate me

futures Our franchise massive. is

the growth is of the out in options. One it is the reasons the for what growth of years. real future is, But it the because is of

in So our our going options business continues only Group. me, to to futures be CME it better future hedging real franchise That's, story forward. of business for the a bolsters here

firms represent. an about talking They're just are they people not story like different it. some it's option that So

options are or well. and with as point exchange the that growing you don't We want grow not. futures I options on options to cannot the only future in futures And we're missed. be think

forward. that's a very that go to important we have point So

That's options I And of futures? RPC super dynamics, helpful. just the the guess, the versus

it Say again?

RRC the future. dynamic (ph) options versus The

Yeah.

Yeah.

the this So our was RPC complex $X.XXX. total quarter across options

saw from So what terms asset we It slightly options. how is class, of what will does that compare on those down and overall. trading in depend

Thank That’s great color. you so much.

Thanks, Brian.

next, up And from of Please we Bank with ahead, you. question go Thank Siegenthaler have America. a sir. Craig

Hey. Good morning, everyone.

pricing. on questions Our

hikes 'XX? we earlier larger then the price start could larger year 'XX hikes to with XQ and success usual XQ again this than year, in see again your price Given in next

Duffy. Terry It's Craig. Sure,

of a it's we're grow the that. the we Price make business. not but business, strategy are part me hikes comment on the -- how in Let

the we the they company. incurring no and have But has that So different. costs not strategy are of that's look we're our -- everybody revenue got to grow

what grow charge. business, Our we grow the strategy to is not

look see years. now the on month-by-month years be make Lynne? what at decisions basis say prepared right will fit. will or couple So next and to our we're on again, the we in we pricing will that But a continue of not as out to not

strategy. an is are bottoms-up to hit. very we product, we adjustment, add if a is know, that not we build target just by Craig, really think a to by the do have we approach where you market, market any, product that. looking type. market. And have for will to what that pricing as right It's we customer And This on that determine

the that velocity that what something it's ultimately It So period. at really that to through depends trying want health that the pricing the we level margins moving we environment, multiyear are systems of we don't do of time market impact we incremental in volumes because market. on see strategy. trade And never that And the of a look evaluate to on given we is our trading. earn high

you. Thank

Thanks, Criag.

line comes question. with And proceed next you. Lau Owen Thank your from of with question the our Please Oppenheimer.

Hey. Thank you taking Good questions. for my morning.

two-part I So have quick a question.

one market up data much but was payment the assets. The in about first one-time digital It the And is sequentially. one was is quarter? first question. the a down second year-over-year, How the then follow-up to

case future from ratio CME? institutional I and digital assets an Ether/Bitcoin And Thanks. impact soon. launched participation summary CME? Torres on repo give think please trading Judge us the you could judgment CME in the how on the Could potentially update

to So thanks, Lynne give the the Owen. I'm digital market on touch data will on going first Tim assets. one to you the ask Then question.

Yeah.

in saw we audit fee see didn't quarter, catch-up $X and QX. first the about payments in Owen, one-time we in that million So

saw $X.X quarter, audit we in million This fees. about

QX. to QX differential that explains really that So

in Great announced, spread Bitcoin/Ether think innovative recently by thanks. And that Bitcoin of is that the divided of July product. we you're where interesting interesting of complex one That's is which weekend for cryptocurrency the offsets will ratio alongside and products, it's and live XX. the we CME. trade That CME, will When the look other including contract Ether price I price at the the an clearing effectively correct, cryptocurrency contract. at at go

strong. composite, look we CME When the crypto at remains

space, institutional Our well as value proposition traders well continued of seen as in our futures base. client our traders as products OTC ETFs and remains the our contracts which salient grow, of growing open there as both in We've underlying out the volume creating with of in to both adoption most terms space, interest. are the this some popular of importance continuing the of as

is about our this the But position here to do we're in we up size Bitcoin pace Ripple HX doing case, CME. And in look X% at Ether on tradable through stay period, the another at When multitude products. strong comment for lane to look at crypto larger versus development, When the of product that and not do in that it's regards in really our the that year We a we on for volume case. we with your contracts, currently about question and Bitcoin reference have Ether XXXX. rates.

regulated regulated the as before only SEC to and continue is, and philosophy products. product CFTC we venue we regulatory we that the we'll this mantra offering from And additional Our the further clarity the product. will for introduce use deploy wait

Dan. you, Owen. Thanks, Thank

Dan. Thanks,

And next our Thank go Please of Morgan. line JP you. Ken with question from comes ahead. Worthington the

And rates the Hi. question. for a Good proposals in for centralized for markets the and the taking SEC treasuries number morning clearing thanks repo. of has and

and couple most you make a of the their into major way which do these the Terry, even And to rate and of liquidity the or impact could is directly of So a guess, repo rules? think Maybe a clearing how ultimately second, final are platform to treasuries first, volatility in rate activity? clearing likely lastly, participating CME? for flow CME parts through and for rules proposals important questions I what here. then priority extent

done these to a the before point finalized there's see we a that have yet to to there to because how a they're I the the and think unpack treasury lot lot you're Okay. I to lot they're Ken, for, going and I where referring a don't be know, there's implemented. market, that SEC proposals answers at be

starters. for proposals, Ken, the on SEC I for the far trading to And if net in it in CME As proposed. that. on go repo, Tim, through want anything positive I the don't that's fact, say I if a want only as sure as was for to on you negative I there to CME. see as comment it make that, see But a

a I that was to it, to clearing reminds put on It made want of could that of everybody want or said what not but up lot was -- was billion could that to don't the because be to clearing make don't us. same be. going government what analysis house, $X is, Dodd-Frank, a So a swaps had some bit misdirect a on when predictions worth XXXX not they by and I me during officials, it that it

there, on be I we them. But any predictions for don't you want any that, do So to will say see in Ken, going. on? Tim, do of through it's careful make comment proposals I I've I how as make gone to where a the about want But CME any negatives

Sure.

the regulatory various is, what sense be and clearing discussed, would we that we're customers. with regulators our the from reforms one a those see to suggestions and proposals evaluate may and for add in conversations looking clients to participate think makes while a certainly continue thing perspective our I I management the the to with risk and

what predict Terry hard As the to final said, very may rules like. look

of But bearing, strength complex I at CME and market and think broadly totality in a OTC interest to our we clients. already for at unlock we across gravity the speaking, ability the rate BrokerTec efficiencies look when cash or certainly of futures position the are and options, capital the to

complex portfolio savings about averaging margin billion across today. are $X.X rates the in the of We

certainly clearing would So the be increase or to velocity we're is of central benefits the looking engage. that something will that anything

not where to SOFR, margin, the the the across of with be earlier, wait these clients, savings Terry notes, expanded already horizon, But additive, a we're products XX providing and shake but we'll only how on to XX Ultra rules available important the to is lot with said clients portfolio gross suite with the bonds, big as our Ultra of capital to have may that margin note, final out. see the it's

Ken. Thanks, Tim. Thanks,

Thank Great. you.

of question a have question. Please Thank you. And proceed line Stanley. your Cyprus we with next, with Morgan Michael up from the

returned to about dividend through the that Hey. lot but dividend. capital past tremendous wanted and capital guys the amount question. A rates primarily special meaningfully today decade, higher have look zero for rate X%. of backdrop, ask the of I with a If Good the was Thanks management. taking back over you we morning. during a over

policy management? thought and think Just buybacks? And you impacting you. and curious calculus Thank backdrop the shifting capital rate considering is extent your how evolving, process about to around might what to

let Thanks, comment, Lynne well. I as Mike. will and I'll

Yeah.

since shareholders a transparency track We XXXX. during ability place through dividends with over to we've of as towards dividend and think So as billion approach we progress you that We've move of the the policy form returned the Michael, year. do in our in that of $XX.X variable lot appreciate shareholders know, the to our had that time. it

are So found flexibility is that the sure we we way our to and do that base. make we capital attractive been said, have preferred. dividend returning the we transparency. has both at like policy alternatives that, for look do investor most that And That always form the date, being to

repurchases, far know, we've share talked as just that. I mean, And so about you Michael, as

will at is just the talk to it. believe about shareholders time. do that we the Lynne we in continue referenced, of And best We what as

has off So right now, the out to table, be not now. proven dividend but we're our anything taking for policy right the one

Great. Thank you.

Thank you.

you. Thank

from comes with Patrick line Please question next go ahead, Sandler. of Piper [indiscernible] Our the sir.

Good Yeah. Thanks taking for question. morning. my

the Terry, to this opportunities works the So something a DTCC. the expanded I I wanted for know back margining that's been cross to is with in little while go now.

this now. ramp to expect maybe in would terms So launch quickly the in caused just come wondering quarter, how maybe And client to regulatory fruition of what to then you do and you utilization? first assuming that receive approval Thanks.

there Thanks, the has will say works at The of been role with Yeah. DTCC your agreement things. for a in Congratulations time. couple on Patrick. the firm. a long new I

as only And be on this part. takes part Why longer the well. anticipate. -- to frustrating the They in listen, right, equation. think that finish we're you projects DTCC bit other one exactly to everything needed at little do We a some to They you're had now? than that you of a I So look up. prepared when little works. had where

to this So side needed what control for do their of agreement. couldn't they we

finalization others products. marketplace like in going We QX excited because approved, about And hopefully, extremely them. on this as said for implemented have what with have it's as it's and necessary all said I And year. being of as do the next now come we and to far by this as this looking again, how have could to to see of a what goes for we're risk management what earlier, years Tim the out be soon

these businesses efficient more and order capital key for efficiencies every is if So that products and it each in grow going client. you're make to to amongst have

Patrick beneficial raised. I'll immensely. So this to you be Tim, margining CME extremely their cross comment that has more benefit agreement efficient, will and we the make should what the under agreement in believe capital let clients which on more do return,

Yeah. Thanks, Terry.

look able the market immediate excited, when to next we're we benefits the we But to the this we at benefit one, bring benefit. finally when products early of that also expansions look now agreement. the includes clients it's bonds treasury announcement, bond again, that our at near-term sort So that are transactions of greater and to or certainly, looked futures, be was I to this we're And the notes the and Treasury have at year. also repo Ultra The SOFR available will Again, time maturity futures. eligible. earlier, than Ultra treasury U.S. year XX-year futures, one margin for fit note of cross like, the and clear saying the a

trying So of this terms benefits. to unlock in exciting is those

part initial program our clients present accounts. into the before, the we certainly offset advantage and earnings as about to is taking even efficiencies this step, we're we've calls to after in entering XX% is or XX% we rollout. proprietary or and that with of think order We to addition XX%. to the are typically with this of more is to And work try engaging the and important right? expect of those previously these something allow to but higher, expand clients but This we'd the further avail the The of part these to clients to closer said agreements continue that on slightly to avail look first do more will -- get clients them, capital efficiencies, common percentages the the [indiscernible]

years the continue explore So year. things road on rollout that the of to the just beyond down lots initial we next horizon early of

Thanks, Patrick. Tim. Thanks,

Thank you. Really helpful. Yeah.

line Chris Thank Citi. question Please of have sir. you. Allen And a ahead, go we the now from with

the Yeah. Good could update they both July? stand quarter cash revenues to generate during collateral the where for quarter balances, non-cash, everyone. if on I morning, we to related currently during and an get wondering was the

Thanks, Chris. Lynne?

was look we at average $XXX.X cash was last $XXX.X the from balance the for that If billion, billion quarter. quarter, Sure. up

on $XX.X non-cash $XXX.X average, For the in billion up the saw first we balances, quarter. from billion

line. So other $XX the non-cash balances this amount we million under cash revenue quarter. on Again, the million on the rolls quarter that balances just earned this and $XXX non-cash through

far cash so in at and you seeing If far July, average have month at -- look July the are far We're balances in in so balances so month-to-date this come year-to-date $XXX.X running $XXX.X about down. non-cash billion billion. on the in cash

Great. Thanks.

Thanks, Chris.

go question you. Thank the from Please now Bond Rosenblat Andrew a ahead. we of And line with Securities. have

Hi. Thanks. Good morning.

open energy in business, trend longer-term from interest is the a if upward you the overall to of still current natural little and energy decline. structurally? oil? Thanks. the So beginning drivers talk is bit the environment health Can the here about geopolitical gas trends And impacting

Thanks, question Derek? Good Andrew. and

I think the players out Yeah. significantly. up, trade normalized shift of levels step business particularly and a energy we've to It's and normalized really year we're seeing of last of of this. margin business required seen -- say, We that volatility I to, return therefore, that saw financial levels business return nice some would

just You pointed volumes open trend, as not the well. to in but interest, the

beneficiaries exported gas five some capacity put globalizing facilities cyclical, of more Hub, years. strength at to a the is particularly, on the some are There are facilities. position right amounts continues globally over record primary U.S. out franchise the max cyclicals look certainly that natural around are And biggest When you there be The we Henry really the board look That's the the natural centered the now. of of through coming at LNG be to those. structural. drivers, gas at at you in ourselves next

significant given perspective, That term posed is supplies in in gas. challenges natural War we're central client natural disruption CME in natural the segments customer and growth of of crude fuel some our new for look base. European the gas the happening Ukraine pricing franchise When Henry global is has shouldn't from of terms at So seeing point Hub actually the growth both across client gas. with there, fastest you that a acquisition surprise to Group's

gas there we're seeing growth we look that's crude a that So similar out story global growth, particularly that's in as in natural significant options place And oil. structural when taking well. It's of at in Europe. strong

marker the the price WTI terms has the of pricing in primary And that basket. into know, oil further you as outsized global of As footprint Midland WTI a June, benchmark actually has just in oil. Brent implemented Platts the setting in of WTI reinforced the

WTI on be have that about that strengthened. position call overtime, would global that significant benchmark of out. to physical we as I Seeing the shift, build talked taken has last and reference, a only And work

Coast As well. export over I crude U.S. the grades clip Gulf X connects contract specifically contracts, the WTI our barrels market before, as a that out as a the day, delivered to exporting is record million mentioned physically now

open XXX,XXX themselves growth in contracts interest. over WTI. open interest under That the of have just complements those contracts X So million

client franchise to the just energy market So of, across shifts that be the both share own we share transition, and structural overall the not segments. growth will we continue in of, but Hub, central for XX% market Henry market to a XX% WTI own market,

Andrew, talk referenced geopolitical. it, a let you me because is thing just I say too, lot more this one about and

single I are mean, -- critical China is the so world the around risk these in every going amazing has think geopolitical are one over of world. look rest all a when to world of and and Ukraine at and management geopolitical I factor between and the markets on every in the not high the just going forward. being every The potential between single Taiwan, the I has what's involved class on with of it. and trade going got asset mean, only factor a at the tensions you what's Russia the tensions

associated the geopolitical the across raising it's LNG. on you're but think I spot So for not board. It's with risk, only

and Terry Derek. Thanks,

Thanks, Andrew.

of Bank. from line Thank you. And proceed with Deutsche question Brian Please comes Bedell with final question. our the your

Great. have My questions been answered.

one quarter cash Just the clients? or paid earned collateral I'm balances the clarification. paying rate The the and the second -- on to the rate sorry, out that you're rate in

Yeah.

remains level eight It's for at rate the the been XX Fed accounts at hikes. basis last the points. on that rate So the

we we quarter XX about in second what had basis points, up -- slightly QX. earning from seen the just are earned in We

Okay. Great. Thank you.

Thanks, Brian.

call their turn Please you. go will now for the Thank I the to management back ahead. closing remarks.

call questions a the soon. speaking you thank to in me day appreciate the to we today. them. your look and participating for Have We answer of Let forward all Thank nice you opportunity to you. and

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