Q4 2021 CME Group Inc Earnings Call

Speaker 1: Good day and welcome to the CME report quarter and year end 2021 earnings call. At this time, I would like to turn the conference over to John Peter. Please go ahead, sir.

Good day and walked into the CME.

What class of restaurants, a year and 2021 earnings call at this time I would like to turn the conference over to John P. Sir. Please go ahead Sir.

Speaker 2: Thank you. Good morning, everyone, and I hope you are all doing well today. I'm going to start with a safe harbor language.

Thank you good morning, everyone and I hope, you're all doing well today I'm going to start with the Safe Harbor language statements made on this call and in other reference documents on our website that are not historical facts are forward looking statements. These statements are not guarantees of future performance.

Speaker 2: Statements made on this call and in 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.

The 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 statements detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website lastly on the final page of the earnings release, you will see a reconciliation between GAAP and non-GAAP measure.

Speaker 2: Detailed information about factors that may affect our performance can be found in the filings with the FCC, which are on our website. Lastly, on the final page of the earnings release, you'll see a reconciliation between GAAP and non-GAAP measures. With that, I would like to turn the call over.

With that I would like to turn the call over to Terry.

Speaker 3: Thanks, John . Let me echo John's comments and hoping that you and your families are all safe and healthy. So again, thank you for joining us this morning. We released our executive commentary earlier today, which provided extensive details on the fourth quarter of 2021.

John Let me Echo John's comments on hoping that Youre, all you and your families are all safe and healthy. So again. Thank you for joining US. This morning, we released our executive commentary earlier today, which provided extensive details on the fourth quarter of 2021.

Speaker 3: I have John , Sean, Derek, Sunil and Julie Winkler on the call this morning and we look forward to addressing any questions you have.

John Shawn Derik, Sunil and Julie Winkler on the call. This morning, and we look forward to addressing any questions you have.

Speaker 3: Before I begin, in addition to John , who will discuss the financial results, I'm going to have Sean and Derek make some comments as we did last quarter.

Before I begin in addition to John who will discuss the financial results I'm going to have Sean and Derek make some comments as we did last quarter.

Speaker 3: Trading activity was strong during the fourth quarter with average daily volume.

Activity was strong during the fourth quarter with average daily volume of $20 5 million contracts per day up 26% versus fourth quarter last year and up 15% sequentially. We also added 26% Adv growth during the month of December versus the prior year, we saw tremendous year over year strength in our.

Speaker 3: of 20.5 million contracts per day, up 26% versus fourth quarter last year, and up 15% sequential.

Speaker 3: We also added 26% ADV growth during the month of December versus the prior year. We saw tremendous year-over-year strength in our interest rate business.

Interest rate business, which was up 56%, including record quarterly sulfur futures Adv.

Speaker 3: which was up 56%, including record quarterly SOFR futures ADB.

Speaker 3: as we continue to assist clients with the transition from LIBOR.

As we continue to assist clients with the transition from LIBOR.

Speaker 3: Equity Index ADV increased 15% and Energy ADV rose 16% compared to fourth quarter last year. In addition, Options ADV grew 58% to 3.7 million contracts.

Equity index, Adv increased 15% in energy Adv rose, 16% compared to fourth quarter last year. In addition options Adv grew 58% to $3 7 million contracts.

Speaker 3: The strong finish to the year supported record annual ADB in total of 19.6 million contracts, up 3% from last year.

The strong finish to the year.

Supported record annual Adv, and total of $19 6 million contracts up 3% from last year.

Speaker 3: as well as record annual non-USADB of 5.5 million contracts or up 4% compared with 2020. In the fourth quarter, non-US average daily volume was up 24% to 5.7 million contracts per day. We saw 26% growth in Europe , 15% growth in Asia, and 45% growth in Latin America.

As well as record annual non U S. Adv of $5 5 million contracts or up 4% compared with 2020 in the fourth quarter non U S. Average daily of average daily volume was up 24% to $5 7 million contracts per day, we saw 26% growth in Europe .

15% growth in Asia, and 45% growth in Latin America as always we continued to launch new innovative products tools and services to support customer needs.

Speaker 3: As always, we continue to launch new innovative products, tools and services to support customer needs.

Speaker 3: We executed untargeted sales campaigns for recent launches during Q4.

We executed on targeted sales campaigns for recent launches during Q4.

Speaker 3: Micro-either futures were launched in early December and surpassed 100,000 contracts within the first two weeks.

Micro ether futures were launched in early December and surpassed 100000 contracts within the first two weeks.

Speaker 3: We also began trading e-mini Russell 2000 Monday and Wednesday weekly options contracts, as demand for the more short-dated options continues to grow. Additionally, we recently announced our plans to launch a new 20-year U.S. Treasury Bond Future in early March 2022, which is pending regulatory review.

We also began trading E mini Russell 2000, Monday, and Wednesday weekly options contracts as demand for the more short dated options continues to grow. Additionally, we recently announced our plans to launch a new 20 year U S. Treasury bond future in early March 2022, which is pending regulatory.

<unk> review.

Speaker 3: Over the full year 2021, new products launched since 2010, generated approximately $500 million in revenue, or up 30% from 2020.

Over the full year 2021, new products launched since 2010 generated approximately $500 million in revenue are up 30% from 2020.

Speaker 3: And finally, in line with our longstanding history of innovation, we are extremely excited about having signed our 10-year strategic partnership deal with Google Cloud. This will allow us to transform derivative markets, true cloud adoption and co-innovation to deliver expanded access, new products, and more efficiencies for all market participants. As far as activity to...

And finally in line with our long standing history of innovation. We are extremely excited about having signed our 10 year strategic partnership deal with Google Cloud.

This will allow us to transform derivative markets to cloud adoption and co innovation to deliver expanded access new products and more efficiencies for all market participants.

As far as activity to date in 2022, we averaged $24 6 million contracts per day in January up 28% compared with January of 2021 equity index and interest rates continue to lead the way with year over year growth of 56% and 33% respectively options Adv growth.

Speaker 3: We averaged 24.6 million contracts per day in January , up 28% compared with January of 2021.

Speaker 3: Equity index and interest rates continue to lead the way, with your over-year growth of 56% and 33% respectively.

Speaker 3: Options ADV growth was also strong, which was up 39%. With that, let me turn the call over to Sean and then Derek to give you a little more color on each of these areas, Sean. Thank you, Terry, and thanks again, everyone for joining. While volatility across financial asset classes remained well below normal historical levels in 2021.

It was also strong which was up 39% with that let me turn the call over to Sean and then Derek to give you a little more color on each of these areas Sean Thank.

Thank you Terry and thanks again, everyone for joining while volatility across financial asset classes remained well below normal historical levels in 2021 inch.

Speaker 4: Interest rate and actually index volatility around the historical mean in the fourth quarter and FX market volatility generally remained below the 20th percentile in that somewhat more normal environment in the fourth quarter. As Terry mentioned, we saw strong rates and equity volumes. We saw rates options of 94% year of year, equity index options of 68% year of year and FX options of 18%.

Interest rate and equity index volatilities around the historical mean in the fourth quarter.

And FX market volatility generally remained below the <unk> percentile in that somewhat more normal environment in the fourth quarter as Terry mentioned, we saw strong rates and equity volumes, we saw rates options up 94% year over year equity index options up 68% year over year and FX options.

18%.

Speaker 4: In terms of our customer penetration, every financial asset class saw an all-time record average annual number of large open-interest holders in 2021 as more customers used more of our financial products than ever before. In addition, we are pleased with our continued progress in the financial product launches.

In terms of our customer penetration every financials asset class saw an all time record average annual number of large open interest holders in 2021 as more customers used more of our financial products than ever before in.

In addition, we are pleased with our continued progress in the initial product launches.

Speaker 4: new product adoption, and strong commercial results from these new products.

New product adoption and strong commercial results from these new product.

Speaker 4: January 24th, New Financial Products achieved a volume of more than 10.5 million contracts, making up over 30% of the entire exchange volume that day.

January 24th New financial products achieved a volume of more than 10 5 million contract, making up over 30% of the entire exchange volume that day.

Speaker 4: Among our new products, we achieved an ADV record in our micro equity eminies in January of 3.7 million contract, up 64 percent, compared with January of last year.

Among our new products, we achieved an adv record and our micro equity E. Minis in January of $3 7 million contracts up 64% compared with January of last year.

Speaker 4: Our newly launched micro ether futures achieved in 80V of 21,500 contrasts in January .

Our newly launched micro easier futures achieved an adv of 21500 contracts in January and our crypto futures in total reached a record 57900 contracts in January of 229% year over year equating to $2 87 billion average daily notional.

Speaker 4: and our crypto futures in total reached a record 57,900 contracts in January of 229% per year, equating to 2.87 billion average daily no social trade.

Trade it with.

Speaker 4: strong growth in our equity index and crypto futures, we initiated a fee adjustment beginning on February 1st.

The strong growth in our equity index and crypto futures, we initiated a fee adjustment beginning on February one.

We increased our.

Speaker 4: We increased our E-mini and micro-emini member fees by one penny per contract, and we increased our non-member E-mini and micro-emini fees by a nickel per contract. Likewise, we increased our Bitcoin and our Ether futures member fees by 50 cents per contract, and our non-member fees by $1 per contract. We are also pleased with new projects.

The mini and micro E mini member fees by one penny per contract and we increased our non member E mini and micro E mini fees by a nickel per contract.

While we increased our bitcoin and our <unk> futures member fees by 50 per contract and our non member fees by one dollar contract.

We are also pleased with new product growth in our rates business.

Speaker 4: Putting our new 20-year U.S. Treasury Note features announcement into perspective, our ultra-10-year futures achieved a new all-time high-annual 80-

Putting our new 20 year U S. Treasury note futures announcement with respect to our ultra 10 year futures achieved a new all time high annual Adv of 372000 contracts in 2021.

Speaker 4: 372,000 contracts in 2021.

As we progressed through the LIBOR transition our silver futures now represent 95% of the average daily volume of all exchange traded so for futures and 98% of the open interest.

Speaker 4: As we progressed through the LIBOR transition, our SOFR Futures now represent 95% of the average daily volume of all exchange-traded SOFR Futures, and 98% of the open.

Speaker 4: In January our sofa futures products are sofa products overall grew exponentially.

In January our silver futures products are sofa products overall grew exponentially.

Speaker 4: So, our futures achieved 731,000 contracts ADD up 645%.

Silver futures achieved 731000 contracts Adv up 645% year over year on February 3rd our silver futures and options achieved an open interest of $3 4 million contracts up 406% versus a year ago.

Speaker 4: On February 3rd, our Silver Futures and Options achieved an open interest of 3.4 million contracts, up 406 percent versus a year ago.

Speaker 4: adding the open interest from our SOFR linked contract, which is how do we refer to our EURDOL our futures and options that reference a LIBOR, which will be finally set after June 30th, 2023, two hours, SOFR futures and options open.

Adding the open interest from our sulfur linked contract, which is how do we referred to our eurodollar futures and options that referenced a LIBOR, which will be finally set after June 32023.

Two our silver futures and options open interest the combined open interest is currently running at 17, four 5 million contract.

Speaker 4: The combined open interest is currently running at 17.45 million contracts.

Regarding our terms so for index, we have already license 600 firms across the globe and across the financial banking manufacturing and other industry and with that I'll hand, it over to Derek.

Speaker 4: Regarding our term so-for-index, we have already lights.

Speaker 4: 600 firms across the globe and across the financial banking manufacturing and other industry and with that all handed over to Derek

Thanks, Sean looking at our commodities portfolio, we drove strong 2021 results across our global benchmarks with particular strength in the fourth quarter and energy, which grew 16% year on year.

Speaker 2: Thanks, Sean. Looking at our commodities portfolio, we drove strong 2021 results across our global benchmarks with particular strength in the fourth quarter in energy, which grew 16% year on year.

Speaker 2: In addition to hitting record agricultural products volumes in Europe and Asia in 2021, we also hit a new record monthly average daily volume in our micro WTI contract in November and set multiple records in our industrial models portfolio made up of copper, aluminum and steel. On the client side, we continue to focus on expanding commercial customer participation. In 2021, these end user open interest holders were a best performing client segment overall.

In addition to hitting record agricultural products volumes in Europe and Asia. In 2021, we also hit a new record monthly average daily volume in our micro Wty contract in November and set multiple records in our industrial metals portfolio made up of copper aluminum and steel.

On the client side, we continue to focus on expanding commercial customer participation and in 2021. These end user open interest holders were our best performing client segment overall.

Speaker 2: Additionally, the better serve our clients accelerating focus on environmental and sustainability concerns and the emerging risk management needs of these customers. I'm pleased to announce that we have created a new environmental product portfolio.

Additionally to better serve our clients accelerating focus on environmental and sustainability concerns and the emerging risk management needs of these customers I am pleased to announce that we have created a new environmental products portfolio.

Speaker 2: This portfolio aggregates the full range of our existing and planned environmental and sustainability link products. So, this is our market leading global emissions offset contracts, biofuels such as ethanol and other renewables, and battery metals like co-bought and lithium. And we'll serve as a catalyst for our continued expansion across asset classes in this rapidly evolving space.

This portfolio aggregates, the full range of our existing and planned environmental and sustainability linked products, such as our market, leading global emissions offset contracts.

<unk> fuel such as ethanol and other renewables and battery metals, I cobalt and lithium and will serve as a catalyst for our continued expansion across asset classes in this rapidly evolving space.

Speaker 2: Customer demand is increasing for carbon and environmental products that facilitate broad participation and risk management needs across theverse industry industries and geographic limits. Our focus is on building tools to effectively manage their environmental risks and achieve their goals through the energy transition.

Customer demand is increasing for carbon in environmental products that facilitate broad participation and risk management needs across diverse interest with industries and geographic limits. Our focus is on building tools to effectively manage their environmental risks and achieve their goals through the energy transition.

Speaker 2: Turning to our global options business, we delivered strong results again in 2021, up 6% versus 2020, finishing the year with a robust first quarter, fourth quarter, up 58% this Terry mentioned. Our outstanding fourth quarter results were led by strength in our interest rates, equity index, and FX business lines, as macroeconomic uncertainties and rate rise expectations filtered across global financial markets.

Turning to our global options business, we delivered strong results again in 2021 up 6% versus 2020, finishing the year with a robust FERC first quarter fourth quarter up 58% as Terry mentioned, our outstanding fourth quarter results were led by strength in our interest rates equity index and FX business lines as macro.

Economic uncertainties and rate rise expectations filtered across global financial markets.

Speaker 2: Our options growth was again driven by outside growth outside the U.S. led by APAC up 23% and EMEA up 4%. Most importantly, our fastest growing options client segment.

Our options growth was again driven by outsized growth outside the U S led by APAC up 23% and EMEA up 4%. Most importantly, our fastest growing options client segments for commercials and buy side customers, which reflects our consistent focus on attracting end user customers to our markets.

Speaker 2: for commercials and buy side customers which reflects our consistent focus on attracting end user customers to our markets.

Speaker 2: Our overall options growth was accelerated by the continued global adoption of our electronic front-end CME Direct, which had a new record number of active users in 2021 and drove a record for Glovex revenues on this platform.

Overall options growth was accelerated by the continued global adoption of our electronic front end CME direct which hit a new record number of active users in 2021 and drove a record for <unk> revenues on this platform <unk>.

Speaker 2: Femidrat continues to be a key driver of our non-US growth. He adversely, monthly users, trading or booking via the platform in the fourth quarter increasing 50% in Latin America, 18% in Europe and 10% in Asia versus fourth quarter 2020.

<unk> continues to be a key driver of our non U S growth the average daily monthly users Trey.

Trading or booking via the platform in the fourth quarter, increasing 50% and Latin America, 18% in Europe , and 10% in Asia versus fourth quarter 2020.

Speaker 2: Finally, turning to our international business, having just taken over responsibility for this business in November . I'm excited to optimize this team's structure and mandate to ensure that we can continue to deliver outside growth outside the US to unlock the next flag of our global growth story. As Terry shared, we reached record annual non-USADV in 2021, which was bolstered by our strongest fourth quarter ever, a 5.7 million con.

Finally, turning to our international business, having just taken over responsibility for this business in November I am excited to optimize this team structure and mandate to ensure that we can continue to deliver outsized growth outside the U S. So unlock the next leg of our global growth story.

As Terry shared we reached record annual non U S. Adv in 2021, which was bolstered by our strongest fourth quarter ever a $5 7 million contracts.

Speaker 2: Given our success in finding and onboarding new global clients, we've specifically invested a new client facing headcount in Asia, this further strengthen the on-the-ground commercial resources, which will further accelerate this growth.

Given our success in finding and Onboarding, new global clients, we have specifically invested a new client facing head counts in Asia to further strengthen the on the ground commercial resources, which will further accelerate this growth.

Speaker 2: Overall, we are very pleased with the continued success of our non-US business and with 2021 revenues and excess of $1.1 billion. I look forward to generating continued outsized growth in both futures and options as we continue to add resources to this critical part of our global growth story. With that, I'll talk to John to discuss the financial results.

Overall, we are very pleased with the continued success of our non U S business and with 2021 revenues in excess of $1 1 billion.

I look forward to generating continued outsized growth in both futures and options as we continue to add resources to this critical part of our global growth story with that I'll turn over to John to discuss the financial results.

Speaker 2: Thanks, Derek. During the fourth quarter, CME generated more than $1.1 billion in revenue, with average daily volume of 26% compared to the same period last year. If you adjust for the impact of the creation of Ostra, our joint venture with IHS market, our revenue would have been up approximately 11% for the quarter. Market data revenue was up 2% from last year to $142 million, and up 6% for the full year of 2021.

Thanks, Derek during the fourth quarter CME generated more than $1 $1 billion in revenue with average daily volume up 26% compared to the same period last year. If you adjust for the impact of the creation of <unk>, our joint venture with IHS market. Our revenue would have been up approximately 11% for the quarter market data revenue was up 2%.

From last year to $142 million and up 6% for the full year of 2021.

Speaker 2: Expenses were very carefully managed in an adjusted basis where $429 million for the quarter and $369 million excluding license.

Expenses were very carefully managed and an adjusted basis were $429 million for the quarter and $369 million excluding license fees for the year CME had adjusted operating expenses, excluding license fees of $1.468 billion, which is $32 million below our revised guidance of $1.

Speaker 2: For the year, CME had adjusted operating expenses, excluding license fees of $1 billion, $468 million, which is $32 million below our revised guidance of $1.5 billion.

<unk> 5 billion.

CME had an adjusted effective tax rate of 22, 1%, which resulted in an adjusted net income attributable to CME group of $607 5 million up 22% from the fourth quarter last year and an adjusted EPS attributable to common shareholders of $1 66 <unk>.

Speaker 2: CME had an adjusted effective tax rate of 22.1%, which resulted in an adjusted net income attributable to CME group of $607.5 million, of 22% from the fourth quarter last year, and an adjusted EPS attributable to common shareholders of $1.66.

Speaker 2: The issuance of the Class G, Nod Voting Shares in November in conjunction with our partnership with Google impacted the calculation of EPS attributable to common shares.

The issuance of the class G Nonvoting shares in November in conjunction with our partnership with Google impacted the calculation of EPS attributable to common shares.

Speaker 2: The Class G non-voting shares have similar rights to common stock with the exception of voting rights and are convertible to common shares on a one-to-one basis. Add the Class G shares been converted to common shares at the date of the issue.

Class G Nonvoting shares have similar rights to common stock with the exception of voting rights and are convertible to common shares on a one to one basis add to class G share has been converted to common shares at the date of the issuance. The adjusted EPS attributable to common shareholders would have been $1 68, we expect the EPS for the class.

Speaker 2: The adjusted EPS attributable to common shareholders would have been $1.68. We expect the EPS for the Class G and common shareholders to be the same going forward. Please refer to the Financial Results page of the Executive Commentary for further information.

And common shareholders to be the same going forward. Please refer to the financial results page of the executive commentary for further information.

Speaker 2: Capital expenditures for the fourth quarter were approximately $29 million. Seamage declared $2.5 billion of dividends during 2021, including the annual variable dividend of $1.2 billion. And cash at the end of the quarter was approximately $2.9 billion.

Capital expenditures for the fourth quarter were approximately $29 million Simi declared $2 5 billion of dividends during 2021, including the annual variable dividend of $1 2 billion and cash at the end of the quarter was approximately $2 9 billion.

Speaker 2: Turning to guidance for 2022, we expect total adjusted operating expenses, excluding license fees, to be approximately $1,450,000. We are expecting an improving business environment in our guidance reflex set expectation. In addition to our expense guidance, we expect the investment related to the Google partnership and the move to their cloud platform to be in the range of $25 to $30 million.

Turning to guidance for 2022, we expect total adjusted operating expenses, excluding license fees to be approximately $1 $450 million, we are expecting an improving business environment and our guidance reflects that expectation. In addition to our expense guidance, we expect the investment related to the Google partnership and the.

Move to their cloud platform.

To be in the range of $25 million to $30 million a portion of these costs may be capitalized and we will update the guidance as the engineering and migration plans finalized.

Speaker 4: A portion of these costs may be capitalized and we will update the guidance as the engineering and migration plans finalized.

Speaker 2: Gap of expenditures net of leasehold improvement allowances are expected to be approximately $150 million and the adjusted effective tax rate should come in between 22.5% and 23.5%.

Capital expenditures net of leasehold improvement allowances are expected to be approximately $150 million and the adjusted effect effective tax rate should come in between 22, 5% and 23, 5%.

Speaker 2: With that summary, we'd like to open up the call for your questions. Based on the number of analysts covering us, please let me yourself to one question and then feel free to jump back into the queue. Thank you.

With that summary, we'd like to open up the call for your questions based on the number of analysts covering US. Please limit yourself to one question and then feel free to jump back into the queue. Thank you.

Speaker 1: Thank you sir. If you would like to ask a question, please signal the pressing star one on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Thank you Sir if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

You're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Speaker 1: We will now take our first question from Dana Kannon, from Jess Lee's. Please go ahead.

We will now take our first question from Dan Fannon from Jefferies. Please go ahead.

Thanks, and good morning.

Speaker 5: Thanks and good morning. John , I guess first with you on expenses, if you could maybe...

John I guess first with you on expenses, if you could maybe.

Speaker 5: talk about what drove the Delta versus your guidance and the order to conservative kind of start from, I guess, where you ended the year in the fourth quarter and versus where you said you'd end up. And then as we think about 2022 and the Google partnership, maybe beyond that, maybe the size of the scope of the investment on a multi-year basis and how we should think about that scaling or escalating from the numbers you gave in 2022.

Talk about what drove the delta versus your guidance in the or just a conservative.

Start from I guess, where you ended the year in the fourth quarter versus what you had said you'd end up and then as we think about 2022 with the Google partnership.

Maybe beyond that maybe the size of it.

Cope of the investment on a multiyear basis and how we should think about that scaling or escalating trumps. The numbers you gave in 2022.

Speaker 2: Thanks Dan, appreciate the question. Yeah, in terms of the delta from the guidance.

Thanks, Dan I appreciate the question.

Yes in terms of the in terms of the Delta from the guidance.

Speaker 2: You know, as you know, we were, as I said in my preferred remarks, down about $32 million from our revised guidance, at 1.5 billion, and that's $60 million below the guidance that we gave at the start of the year. It's the difference is driven by three things. One is that we achieved our run rate synergies earlier than expected.

As you know we were as I said in my prepared remarks down about $32 million from our revised guidance of $1 5 billion and that $60 million below our guidance that we gave at the start of the year.

The difference is driven by three things.

One is that we achieved a run rate synergies earlier than expected.

Speaker 2: So our realized synergies were higher and that's about a third of the delta. And if you call last quarter, we announced that we had our $200 million and run rate synergy target that we had set at the start of the next acquisition.

So our realized synergies were higher and Thats about a third of the Delta.

If you recall last quarter, we announced that we had hit our $200 million and run rate synergy target that we had set at the start of the next acquisition.

Speaker 2: We still had limited travel and in-person events and our marketing spend was lower. That's another third of the difference.

We still had limited travel and in person events and our marketing spend was lower that's another third of the difference and the balance is really good expense management across the entire organization, including careful use of contingent labor also we did experience some delays in delivery of technology equipment that led to lower technology.

Speaker 2: And the balance is really good expense management across the entire organization, including careful use of contingent labor.

Speaker 2: Also, we did experience some delays in delivery of technology equipment that led to lower technology expenses. That's the balance. So that's the difference between the one point

Expenses, so that's the balanced so thats the difference between the one 5%.

Speaker 2: Billion revised guys and the $1,468,000,000 that we came in at.

1 billion revised guidance.

$1.468 billion that we came in at.

Speaker 6: In regards to your question around...

In regards to your question around.

Speaker 6: the Google Multi-Year Investment.

The Google multi year investment.

Speaker 6: You know, based on current training activity, I would expect to invest on average a net of $30 million per year for the next four years as we looked to move to the Google Cloud platform after which we would expect.

Based on current trading activity I would expect to invest on average a net of $30 million per year for the next four years as we look to move to the Google Cloud platform after which we would expect.

Speaker 6: to be in a net positive cash spending position.

To be in a net positive cash spending position.

Speaker 6: We're going to update annually as the costs could fluctuate based on the order that applications are moved to the cloud and the speed of the migration.

We're going to update annually as the costs could fluctuate based on the order that applications are moved to the cloud and the speed of the migration. So if we are moving to the cloud faster you would see our expenses tick up to in order to move quicker to the cloud, which would be a good outcome as we want to move there as quickly as <unk>.

Speaker 6: So if we are moving to the cloud faster, you would see our expenses take up to, in order to move quicker to the cloud, which would be a good outcome as we want to move there as quickly as possible, really to enjoy the benefits that we see of getting on to the cloud platform. So we look forward to bringing in new products to market faster, innovating quicker, and be more flexible and nimble than we are today. So...

<unk> will really to enjoy the benefits that we see of getting onto the cloud platform.

We look forward to bringing in new products to market faster innovating quicker and be more flexible and nimble than we are today. So.

Speaker 6: Like I said, that's an annual, that's on average, the 30 million.

Like I said, that's that's an annual.

On average the $30 million.

Speaker 6: And like I said, it'll fluctuate also. It's important to note that that's a cash outflow, a portion of that.

And like I said it'll fluctuate also it is important to note that.

That's a cash outflow a portion of that.

Speaker 6: is it could potentially be capitalized and I would expect some of it to be capitalized I will update that as we get closer each year

It could potentially be capitalized I would expect some of the to be capitalized.

We'll update that as we as we get closer each year.

Great. Thank you.

Thank you Dave.

Speaker 1: We will now take our next question from Alex Crumb from UBS. Please go ahead.

We will now take our next question from Alex Kramm from UBS. Please go ahead.

Speaker 7: Yeah, hey, good morning, everyone. Since you were just talking about the Google Cloud Partnership on the cos side.

Yeah, Hey, good morning, everyone.

You're just talking about the Google cloud partnership on the cost side, maybe you can also talk about it.

Speaker 7: Maybe you can also talk about it around the revenue side and the opportunity set there and maybe the excitement there. What new sources of revenue could you theoretically generate or how might may your clients be able to engage with you or easier and then specifically any change for co-location revenues? I mean, that's a nice income stream. So just wondering if anything could change there over time given that you're moving to the cloud.

Around the revenue side and the opportunity set there and maybe the excitement they are like what what new.

Sources of revenue could you theoretically generate or home appliance be able to engage with your easier and then specifically any change for co location revenues I mean, thats a nice income stream. So just wondering if anything's changed there over time, given that you're moving to the cloud.

So Alex I think you asked.

Speaker 3: So Alex, I think you asked a couple of different questions around the revenue opportunities associated with Google. So I'm going to ask Sunil and Julia to comment on the co-location, which was your final question. I believe John and I can tackle that. And what's on you starts.

A couple of different questions around the revenue opportunities associated with Google, So I'm going to ask Sunil.

Yeah Julian to comment on the co location, which was your final question I believe John I can tackle that.

He starts in them.

Speaker 8: Thank you, thank you Terry. So I think for the first phase, we are aggressively focused on migrating, clearing, and

Thank you. Thank you Terry so I think for the <unk>.

Phase we are aggressively focused on.

Grating clearing and.

Speaker 8: Enterprise business applications to the cloud. And as far as clearing applications are concerned, we are focused on actually moving foundational services to the cloud. One key service that is client facing that we intend on delivering this here is CME's margin calculator.

Enterprise business applications to the cloud and as far as clearing applications are concerned we are focused on actually moving foundational services to the cloud.

One key service that is client facing that we intend on delivering this year is CMS margin calculator.

Speaker 8: It complements an online risk engine that we already offer, but this one would be a calculator that would run on the cloud as an app.

It complements and online risk engine that we already offer but this one would be a calculator that would run.

On the cloud as an app and.

Speaker 8: and it would allow our clients, our service providers, our clearing firms.

And it will allow our clients.

Our service providers, our clearing firms, who actually spin up.

Speaker 8: to actually spin up these calculation engines on demand as necessary throughout the day, at a calculated risk in real time.

<unk> calculation engines on demand.

As as necessary throughout the day at the calculated risk in real time.

Speaker 8: So in terms of services, that's what we plan to offer. I will pass on to

In terms of services, that's what we plan to offer I will pass on to.

Speaker 8: Julie to talk about the data side on the market data side.

Julie to talk about the data side on the market data side.

Speaker 9: So as Sunil points out, you know, we've have been engaging with customers since the announcement in November . And, you know, one of the things that they definitely have highlighted is the need to manage risk more in real time. And so we are really allowing our customers to help us prioritize this work. The second area is really in market data. And we see significant opportunities to, you know, deliver value to our customers in new ways. And, you know, we have an existing service that is live with...

Yes, so SNL points out we have been engaging with customers since the announcement in November and.

One of the things that they definitely highlighted is the need to manage risk more in real time, and so we are really allowing our customers to help us prioritize. This work. The second area is really end market data and we see significant opportunities to deliver value to our customers in new ways and we have.

An existing service that is live with TCP today with our smart screen product, we have 25 global customers that are in production.

Speaker 9: with our Smart Stream product. We have 25 global customers that are in production. We have about 70 more in the pipeline. And so what's really planned next is really an acceleration of the data and products that we put within that offering. So we'll be looking to add real-time options data onto that platform, which we know there are a number of customers in the pipeline that have an interest in that.

70, more in the pipeline and so what's really planned knacks theres really an acceleration of the data and products that we put within that offering so well.

We will be looking to add real time options data onto that platform, which we know there are a number of customers in the pipeline that have an interest in that.

Speaker 9: And then also looking at other ways that we can use Google tools such as BigQuery to make some of our large and certainly interesting data sets available to our customers through that offering.

And then also looking at other ways that we can use Google tools, such as big query to make some of our large and certainly interesting datasets available to our customers through that offering.

Speaker 9: So, you know, it's really a blend of both, you know, our data and our intellectual property being used with Google Tools and making us really kind of build that solid data foundation.

It's really a blend of both.

Our data and our intellectual property being used with Google tools, and making us really kind of build that valid data foundation to make it easier and adding analytics to that as well. So a lot of that planning is underway now and we're quite excited of working with them. So Alex on your last question around the Colocation revenue, which is a very nice revenue source for CME.

Speaker 3: to make it easier and adding analytics to that as well. So a lot of that planning is underway now and we're quite excited of working with them. So Alex, on your last question around the co-location revenue, which is a very nice revenue source for CME. I think it's a bit premature to judge what that revenue is gonna look like one way or another. We have a lot of work ahead of us over the next couple years as we've already outlined on moving markets to the cloud. So there's a lot to be done between now and then with that revenue potentially impacted. But...

I think it's a bit premature to judge what that revenue is going to look like one way or another we have a lot of work ahead of us over the next couple of years as we've already outlined on moving markets to the cloud. So there's a lot to be done between now and then with that revenue potentially impacted but I will say as we did this transaction and I worked closely with John as we understand.

Speaker 3: I will say, as we did this transaction, and I work closely with John on this, we understand that the co-location revenue could be impacted down the road.

That the co location revenue could be impacted down the road, saying that I also believe the savings and efficiencies are moving us into the cloud will well offset any.

Speaker 3: Saying that, I also believe the savings and efficiencies of moving us into the cloud will well offset.

Speaker 3: any expected revenue coming out of co-location. So I do believe the future is much brighter on this efficiencies and costs associated with the co-lo business. So John , do you wanna add to that? Yeah, to your question, Alex, also, what differentiates this?

Expected revenue coming out of co location. So I do believe the future is much brighter on efficiencies and costs associated with the Colo business. So John you want to add to that yes.

To your question Alex also what differentiates this relationship with Google versus the client vendor relationship is the innovation framework that we have set up.

Speaker 6: relationship with Google versus a client vendor relationship is the innovation framework that we have set up You know with Google so Yes, we're moving to the cloud, but also we have a Framework set up so that we co-innovate with Google new products and services to deliver to our clients It's too early to say What that is going to be but we have

With Google So yeah.

Yes, we are moving to the cloud, but also we have.

A framework set up so that we co innovate with Google new products and services to deliver to our clients.

It's too early to say what that is going to be but we have.

Speaker 6: a framework so that we will develop business plans together, we'll develop products and services together. And you're starting to see a little bit of it. Julie talked about utilizing some of their technology, like BigQuery. Google has invested significantly in, obviously, in their technology footprint. And we get the benefit to leverage that in a way that others can't because it's a partnership versus a client-bender relationship. All right, very helpful.

A framework so that we will develop business plans together will develop.

Products and services together and you're starting to see a little bit of it Julie talked about utilizing some of their technology like big query.

Google has invested significantly in obviously in their technology footprint, and we get the benefit to leverage that in a way that others can't because.

It is a partnership versus a client vendor relationship.

Alright, very helpful jumping back into the queue. Thanks.

Alright. Thanks.

We will now take our next question from Rich Repetto from Piper Sandler. Please go ahead.

Speaker 1: We've now taken our next question from Rich Repetial from Piper Settler. Please go ahead.

Yeah. Good morning, Terry Good morning, John and congrats to the strong start in January .

Speaker 6: Yeah, good morning, Terry. Good morning, John . And congrats to the strong start in January with your volume.

Your volumes.

Speaker 10: So I guess my question is more about here and now or not the Google Cloud but more 2022.

I guess my question is more about hearing now or not the Google cloud, but more 2022.

Speaker 10: And your stock is the only US exchange stock up, you know, year to day. And I think everybody's looking at anticipating, you know, a bigger tailwind than you've had in regards to the volume.

Your stock is the only U S exchange stock up year to date and I think everybody is looking at anticipating.

A bigger tailwind.

Then you have had in regards to volumes so.

Speaker 10: So I guess can you add, we all can do our studies on the global financial crisis and interest rates cycle. But I guess Terry, is there anything incremental that you can give us or your investors about this year and the macro environment that gives us more comfort that say the 24, 25 million contract in January is more sustainable.

I guess can you add we all can do our studies on the global financial crisis.

Interest rate cycles, but I guess Terry.

Is there anything incremental you can give us or your investors about.

This year and the macro environment.

Gives us more comfort that say the 'twenty four 'twenty 5 million contracts.

In January as more sustainable this year.

Yes, rich thank you and I hope you and your family are well, it's really hard to predict future volumes as we've said since day, one of taking the company public rich and I know Youre aware of that I will say the following I don't think any of us have ever seen.

Speaker 3: Yeah Rich, thank you and I hope you and your family are well. It's really hard to predict future volumes as we've said since day one of taking the company public rich and I know you're aware of that. I will say the following, I don't think any of us have ever seen.

Speaker 3: The way the markets are setting up right now is it relates to pandemic supply chain controls, inflation, nobody has seen this in the last 20 plus years, especially on the inflationary front. So I think the way our markets are situated, we've been able to continue to invest in different products, as I mentioned in my earlier comments, to generate revenues outside of our product lines, which have grown this company. But when you look at what's in front of us,

The way the markets are setting up right now as it relates to pandemic supply chain controls inflation with nobody that I've seen this in the last 20 plus years, especially on the inflationary front. So I think the way our markets are situated we've been able to continue to invest in different products as I've mentioned in my earlier comments to generate revenues outside of our.

For product lines, which have grown this company, but when you look at what's in front of US I would suspect that our core products should be continue to be very active like you saw in January why is that because of all the fundamental factors that are not here just in the U S. But across the globe. So this is something a setup that I have not seen in my career in a very.

Speaker 3: I would suspect that our core product should be continued to be very active like you saw in January . Why is that? Because of all the fundamental factors that are not here just in the US but across the globe. So this is something I set up that I have not seen in my career in a very, very long time. I think the last time I saw something like this.

Very long time, I think the last time I saw something like this I didn't know what it was because I was a young trader in the early eighties, but this is the last time I remember seeing a setup like this where the potential for our risk management is going to be extremely critical because I don't and John can I'm going to let John comment in a moment because he traded these markets from an interest rate perspective from the bank side.

Speaker 3: I didn't know what it was because I was a young trader in the early 80s, but that's the last time I could remember seeing a setup like this were the potential for risk management is going to be extremely critical because I don't and Sean can I'm gonna let Sean comment in a moment because he traded these markets from an interest rate perspective from the bank side, but I don't think we've ever seen a setup like this in modern times, Rich. So I'm

I don't think we've ever seen a setup like this in modern times rich so I'm.

Speaker 3: Again, I'm not sure if I'm happy about this or sad because there's a lot going on in the world right now But we need to make sure that we're focused on managing the risk

Again, I am not sure if I'm happy about this or said because there's a lot going on in the world right now, but we need to make sure that we're focused on managing the risks to our clearing division putting out our data to Julie's division, making sure people have access to markets through our technology and offering efficiencies through our product sets, but I don't think ive ever seen a setup like this going forward so I can't.

Speaker 3: to our clearing division, putting out our data through Julia's division, making sure people have access to markets, to our technology, and offering efficiencies to our product sets. But I don't think I've ever seen a setup like this going forward. So I can't predict the future. I will say one thing, this is a very dynamic setup for us, so Sean, you may want to add to that. Yeah, so thanks, Terry. Yeah, this is something we've been talking about I think throughout the entire pandemic, which is that we saw that this cycle was completely different from the previous cycle, from the amount of stimulus coming from both fiscal authorities as well as the monetary authorities with completely unprecedented.

Predict the future I will say one thing. This is a very dynamic setup for us. So Sean you may want to add to that yeah. So thanks Terry.

It's something we've been talking about I think throughout the entire pandemic, which is that we saw that this cycle is completely different from the previous cycle.

The amount of stimulus coming from both fiscal authorities as well as the monetary authorities was completely unprecedented relative to the size of the problem and we've seen it now in the outcome <unk> got an unemployment rate at 4%.

Speaker 4: relative to the size of the problem. And we've seen it now in the outcome. We've got an unemployment rate at 4.

Speaker 4: You've got a record number of open positions in the United States that need to be filled. You've got an inflation rate running at 7%. You've got your wage growth at 5.7.

You've got a record number of open positions in the United States that need to be filled you have got an inflation rate running at 7% you've got year over year wage growth at five 7%.

Speaker 4: And you've got the Federal Reserve still buying securities and at 0% or near 0% overnight rate. It's really unprecedented, I think, in our history. We've got now five tightnings priced into the curve for the coming year. That's the first time I've seen that in a very long time. This reminds me during my trading career of late 1993.

And you've got the federal reserve still buying securities and at zero percent or near zero percent overnight rate.

It is really unprecedented I think in our history. We've got now five tightening priced into the curve for the coming year. That's the first time I've seen that in a very long time on this reminds me during my trading career of late.

<unk> <unk> thousand 93.

Speaker 4: And what happened then in 1994 with 300 basis points of the Fed Titan in 94?

And what happened then in 1994 with a 300 basis points at the fed tightened in 94.

Speaker 4: and all have it sorry broke loose in 1994 with some of the largest bankruptcies in US history. So let's...

And all havoc, sorry broke loose and 994 almost had a large bankruptcies in U S history.

So, let's see what happens.

Speaker 4: I think the setup is very strong. I think with five tightnings priced in for this year, I think every single fed meeting could be in play. That means that not only do you need the risk management on inflation around the long-end treasury futures, not only do you need or long-term options, but you're also going to need to manage that FOMC meeting at every FOMC.

I think the set up is very strong I think with.

Five tightenings priced in for this year I think every single fed meeting could be in play that means that not only do you need the risk management on inflation around the long and treasury futures not only need do you need or long term options, but youre also going to need to manage that epilepsy meeting at every epilepsy meeting.

Speaker 4: So across the entire curve, whether it is each of the F1C meeting results or its CPI releases or its long-term inflation expectation.

So across the entire curve, whether it is each of the <unk> C meeting results or CPI.

Releases or a long term inflation expectations, you are going to be needing our products, especially as the fed now reduces its balance sheet and actually starts tightening so rich I don't want to belabor the point, but theres a lot in front of US here, but I wanted to give you. One example, which I think is real time, it's not just interest rates. This is the reason why I see them as multiple asset classes are critically important to risk manage.

Speaker 4: You're going to be needing our products, especially as the Fed now reduces its balance sheet and actually starts tightening.

Speaker 3: So Rich, I don't want to belabor the point, because there's a lot in front of us here, but I want to give you one example, which I think is real time. It's not just interest rates. This is the reason why CME's multiple asset classes are critically important to risk management. When you look literally 20 months ago, April 20th of 2020, the price of West Texas Intermediate was minus 3750. They were paying you to take the product. Today, I rest today, whatever it was, the market traded upwards of $92.93 a barrel.

And when you look literally 20 months ago April 20th of 2020, the price of West, Texas Intermediate was minus $37 50, they were paying you to take the product today or yesterday, whatever it was a market traded upwards of $92 $93 a barrel.

Speaker 3: This is how fast it can turn in a cycle that no one's ever seen before. So just put a pen and paper not only to one aspect classes, but across the world and multiple aspect classes. So that's why I said that what I did at the outset of my comments about I've never seen this set up before. And I think that's just a reflection of how volatile things can become from one day to the next.

This is how fast it can turn in a cycle that no one's ever seen before so just put a pen and paper not only to one asset classes, but across the world in multiple asset classes. So that's why I said, what I did at the outset of my comments about I've never seen a set up before and I think thats just a reflection of how volatile things can become from one day to the next.

Got it thanks, that's very helpful. Thanks for that.

Speaker 10: Got it. Thanks. It's very helpful.

Speaker 1: We will now take our next question from Brian Badole from Deutsche Bank. Please go ahead.

We will now take our next question from Brian Bedell from Deutsche Bank. Please go ahead.

Speaker 11: Thank you, my folks. I have a few questions, but I'll just ask one right now and then get back on the queue. Maybe start with switching gears to the environmental products portfolio.

Good morning folks.

Have a few questions, but I'll get I'll just ask one right now and then get back in the queue, maybe start with switching gears to the environmental products portfolio.

You talked about.

Speaker 11: You just talk about, maybe just if we can carve out that portfolio and think of the ADV that you're currently generating. And then talk about the potential for product innovation in this range of products. There's a lot of obviously new adoption and the profile of US users versus the international user.

Can you just talk about.

Maybe just.

We can carve out that portfolio and think of the Adv that Youre currently generating and then and then talk about the potential.

For product innovation in this range of products given that there's a lot of obviously do adoption and the profile of U S users versus the international users.

Speaker 11: And what touches other categories of financials, I know you have S&P, ESG, Futures for you.

Touches other categories.

Financials, I know you have S&P ESG futures for example.

Thanks, Brian Let me turn it to.

Speaker 3: And finally, let me turn it to Derek, Sam and who will address those? Derek. Thanks, Frank. A good question. A couple of questions that I'll focus on the environmental properties of that that are specifically addressing sustainability environmental risk management. And Sean can talk about the reference. Right. And Ryan, you may want to hit your mute button. I think everybody might be in a little feedback off you, but yeah. And I'll talk to you in the show.

Derek Salmon, who will address those.

Thanks, Brian Good question, a couple a couple of questions that I'll focus on the environment.

Of that that are specifically addressing sustainability environmental risk management and Sean can talk about the referenced and Brian Brian you may want to hit your mute button, I think everybody who might be in the low feedback of you but go ahead.

I'll turn it over to Sean.

Speaker 2: The adults are no longer a shong to cover the indexes that track the sustainable companies themselves.

I'll turn it over to Sean to cover the.

Indexes that.

The sustainable companies themselves. So you may have seen our press release from us yesterday announcing a new product launch in our global emissions offsets futures product suite called C. G. L contract that complements our Geo contract launched last year. So our global emissions offsets contracts, we followed that with a N.

Speaker 2: So you may have seen a press release from this yesterday announcing a new product launch in our global mission's offset futures products we call the CGO contract. That compliments our GEO contract launch last year. So global mission.

Speaker 2: Offset contracts we followed that with it and geo is there's our nature-based global missions offset contracts And we announced yesterday our C geo contract and this is our core global missions offset contract This is a contract that actually tracks

<unk>, which is our nature based global missions offset contracts and we announced yesterday our seat GL contract and this is our core global emissions offset contract. This is a contract that actually tracks.

Speaker 2: and aligns with the core carbon principles with the emerging set of transparent and consistent standards around the supply chain.

And aligns with our core carbon principles, which are emerging set of transparent and consistent standards around the supply chain of carbon credits overseen by the integrity Council of the voluntary carbon markets. This is a rapidly evolving space, Brian what you typically see US do is look at underlying physical or cash markets and as they get to a point of liquidity.

Speaker 2: of carbon credits overseen that integrity council of the voluntary carbon market. This is a rapidly evolving space.

Speaker 2: Brian , what you typically see us do is look at underlying physical or cash markets and as they get to a point of liquidity, we then assess that and determine now with the point in time to accelerate the growth of that market by overlaying derivatives on top of that.

We then assess that and determined now at the point in time to accelerate the growth of that market by overlaying derivatives on top of that this market is moving so rapidly based on the commitments that global companies have made to sustainability and managing carbon footprint that we have partnered exclusively with the largest voluntary carbon offset spot trading market expansive CBL.

Speaker 2: This market is moving so rapidly based on the commitment that the global companies have made to sustainability and managing carbon footprints that we have partnered exclusively with the largest voluntary carbon offset spot trading market, expansive CDL, to be the exclusive provider of derivatives contracts on the back of these in the carbon market. Overall, these products that we've launched last year are going to tremendous success in a market that literally the spot market didn't exist two and a half years ago. This is a different market from the cap and trade programs that you see in Europe and in different states in the US. This is a voluntary or free market carbon offset that allows customers to have validated carbon credits or validated by UN entities.

<unk> to be the exclusive provider of derivatives contracts on the back of these in the carbon market. Overall. These products that we've launched last year has been a tremendous success in a market that literally the spot market didn't exist two and a half years ago. This is a different market from a cap and trade programs that you see in Europe and in different states in the U S. This is a voluntary or free.

<unk> market carbon offset that allows customers to have validated carbon credits. They are validated by U S entities, and then use those credits to offset risk globally. So think about this as a free market fungible product that can cover risks, whether you're in Europe Asia U S or otherwise there was also a vintage associated with these so these track the variability of the.

Speaker 2: to then use those credits to offset risk globally. So think about this as a

Offsets overtime. This is an early stage in the development of this market as I said the cash market didn't exist two years ago. So we identified the leader in the space. We wanted to move forward aggressively and make sure that we were the go to platform to embed environmental products carbon specifically into our markets and our success there has been very strong.

When you look at what we've done since launch in 2021, we had over 57 million tonnes of Cotwo equivalent traded between our two contracts that were alive at our Geo and NGL contract and over $6 5 million offsets were delivered through seven successful cycle. So this is a physically delivered products. These are emerging needs we are going to.

Speaker 2: trade between our two contracts that were live, our geo and NGO contract. And over six and a half million offsets were delivered through seven successful cycles. So this is a physically delivered product. These are emerging needs. We are gonna see this become more and more a portion of every global company's risk management toolkit. Right now it's early days. We're developing these markets. We have a long history of

Speaker 2: So this is a physically delivered product. These are emerging needs. We are gonna see this become more and more a portion of every global companies risk management toolkit. Right now it's early days. We're developing these markets. We have a long history of seeing opportunities, seeing around corners and markets, investing in them and making sure that we're the winner. So with that, we'll turn over and turn over to Julie. Yeah, Julie, you want to talk about the STS and Pierre, Sean, I'm going to tell you all about coming on to that. Thanks, jerk. Yeah, so this is Sean jumping in on the financial side. See me now host the world's largest CSG conference.

This become more and more a portion of every global companies risk management tool kit right now. It's early days, we're developing these markets. We have a long history of seeing opportunities seen around corners and markets investing in them and making sure that would've winter so with that we will turnover and turn it over to Julie <unk>.

Speaker 2: seeing opportunities, seeing around corners and markets, investing in them and making sure that we're the winner. So with that, we'll turn over and turn over to Julie. Yeah, Julie, you want to talk about the STS and Pierre Shawn on the interview when I comment on that, thanks, Derek.

You want to talk about ESG, S&P or Sean on the JV you want to comment on that thanks Derek.

Speaker 4: So this is Sean jumping in on the financial side. Seeming now hosts the world's largest ESG contract by nominal value, the S&P 500 ESG index futures, which haven't reached an open interest of more than 4 billion in noional value. In January , we had a record volume day on Glowbacks of 7,900.

So this is Sean jumping in on the financial side seeming now hosts the world's largest ESG contract by nominal value of the S&P 500, ESG Index futures, which haven't reached in open interest of more than $4 billion in notional value January we had a record volume day on globex.

7943 contracts.

Speaker 4: More than 1.5 billion no-tional traded that day, which was very encouraged. Thank you. Thanks, Brian .

More than $1 5 billion notional traded that day, which was very encouraging.

Thanks, Sean.

Thanks, Brian .

Appreciate your question.

Yeah.

Speaker 1: We will now take our next question from Ken Wartenton from JP Marken. Please go ahead.

We will now take our next question from Ken Worthington from Jpmorgan. Please go ahead.

Hi, good morning.

Speaker 4: Hi, good morning. Over the last four years, we've been in various market environments, various volatility levels, rate environments. Futures volumes have been constant in 18, 19, 20, and 21 after rising a lot in 17.

Over the last four years, we've been in various market environments various volatility levels rate environments futures volumes have been constant in 18 19 2021 after rising a lot in 17.

What should we think of as the natural growth rate of futures volume when holding all of the sort of the macro factors constant.

Speaker 4: What should we think of as the natural growth rate of futures volume when holding all the sort of the macro factors constant? And as we think about CME initiatives from like new products, new customers, what should that add to annual growth to futures volumes over time?

As we think about CME initiatives from like new products, new customers, what should that add to annual growth to futures volumes over time.

Well I'll start and I think Sean and John and others can jump in but when you say the volumes have been constant youre correct in your analysis.

Speaker 3: I'll start, and I think Sean and John and others can jump in, but when you say

Speaker 3: The volumes have been constant. You're correct in your analysis. But the comment I made earlier is what I truly believe this is we're setting up for something that a lot of us have never seen before. So what does that mean for the out years going forward as you just pointed out from 17 going on through 18, 19 and 20? So I think it's going to be interesting to see if that pattern continues or do we see a whole new pattern of trade between the multiple asset classes for people to manage risk because of the...

The comment that I made earlier is what I truly believe this is we're setting up for something that a lot of us have never seen before so what does that mean for the out years going forward as you just pointed out from 17.

Going out through 2019, and 20, so I think it's going to be interesting to see if that pattern continues or do we see a whole new pattern of trade between the multiple asset classes for people to manage risk because of the fundamental of macro factors that are going on throughout the world. So it's going to be quite interesting I will say the following though Ken when you look at the efficiencies.

Speaker 3: fundamental macro factors that are going on throughout the world. So it's going to be quite interesting. I will say the following, though, Ken, when you look at the efficiencies that CMEs been able to effectuate for clients over the years, it's been quite a benefit for the clients to be able to make their capital more efficient for them to manage their risk here. so I anticipate…

That CME has been able to effectuate for clients over the years has been quite a benefit for the clients to be able to make their capital more efficient for them to manage their risk here. So.

I anticipate.

Ours to continue down that path and we'll look for greater efficiencies as you know we're still.

Speaker 3: us to continue down that path and look for greater efficiencies. As you know, we're still finalizing some opportunities with our friends over it.

Finalizing some opportunities with our friends over at the Depository Trust Corporation to get margin offsets with our broker tech platform against our futures that's out of our hands. We've done all we can from our side, we are waiting for the DTC to finalize the approvals from the SEC, but that will be another efficiency, that's going to be very effective.

Speaker 3: a depository trust corporation to get margin offsets with our broker tech platform against our futures. That's out of our hands. We've done all we can from our side. We're waiting for the DTCC to finalize the approvals from the SVC. But that will be another efficiency. That's going to be very effective for clients to manage risk going forward. So again, liquidity, begast liquidity, we think this is another way that we will look at the markets going forward. But I think when you look at just a setup right now,

<unk>.

For clients to manage risk going forward. So again liquidity begets liquidity. We think this is another way that we will look at the markets going forward, but I think when you look at just the setup right now it's.

Speaker 3: It's very interesting for the out years and I'll ask some of my colleagues to comment as well.

It's very interesting for the out years and I'll ask some of my colleagues to comment as well, yes. So this is Shawn I'll jump in as I started in my prepared remarks.

Speaker 4: Yes, so this is Sean, I'll jump in as I started in my prepared remark.

Speaker 4: 2021 volatility across financial asset classes were significantly

'twenty, one volatilities across financial asset classes, we're significantly below normal.

Speaker 4: If you look at Euro dollar, for example, the Euro versus dollar foreign change rate, it's a 12%ile going back to at least 2007, Yannis 14%, sterling as a 21st.

You look at Euro dollar for example, the euro versus dollar foreign exchange rate, which is the 12 percentile going back.

Until at least 2007 yen at 14th percentile Sterling is a 21% if.

If you look at the S&P 500, he was at 39% if.

Speaker 4: If you look at the SMP 500, it was at the 39th.

Speaker 4: If you look across our race complex, it would generally around the 30th percentile going back to 2007. So, volatilities were extremely suppressed and depressed relative to a zero Federal Reserve Interstrate Policy, overnight rate policy, as well as their purchase of security.

If you look across our rates complex.

He would generally around the 30 percentile going back to 2007, so volatilities were extremely suppressed and depressed relative to zero.

That a reserve interest rate policy overnight rate policy as well as their purchase of securities. So and as I said in my prepared remarks in the fourth quarter, we saw more normalized or volatility in particular are closer to normal in both equities and rates, but foreign exchange remained well below.

Speaker 4: So, and as I said in my prior remarks in the fourth quarter, we saw more normalized volatility, in particular closer to normal in both equities and rates.

Speaker 4: but foreign exchange remained well below historical norms. So I think you have to take the volatility environment into account.

Historical norms.

So I think you'll have to take the volatility environment into account if you look at.

Speaker 4: If you look at, you know, industry policy itself.

Interest rate policy itself.

Speaker 4: 2016-2017-2018, the Federal Reserve was tight.

16, 2017 2018, the federal reserve is tight.

Speaker 4: So that's why we saw much higher volatilities in those years than we did last year. Hence the reason why our volumes and our revenues remained relatively flat.

So thats why we saw much higher volatilities in those years than we did last year, hence the reason why our volumes and our revenues remained relatively flat.

Speaker 4: It was in a much, much lower volatility environment.

It was in a much much lower volatility environment. We did have on the back of that as Terry mentioned in his prepared remarks $500 million last year in that lower volatility environment that came from new products launched since 2010.

Speaker 4: We did have on the back of that, as Terry mentioned in his prepare remarks, $500 million last year in that lower volatility environment that came from new product launches in 2010.

Speaker 4: So, with the growth of large open interthalters, the growth of customers.

So.

With the growth of large open interest holders the growth of customers and with a much with new product growth as well as a more normalized volatility environment I would expect the results and year to grow.

Speaker 4: and with a much with new product growth as well as a more normalized volatility environment, I respect the results.

Speaker 9: Really? Yeah, and I think adding to that, right, you've heard us talk a lot about the evolution of our commercial model and also our focus on new client acquisition. So when we look specifically at those new institutional clients that we were able to...

Julie.

Think adding to that rate you've heard us talk a lot about the evolution of our commercial model and also our focus on new client acquisition and so when we look specifically at those new institutional clients that we were able to add to CME group volume and revenue last year, 10%.

Speaker 9: add to CME Group volume and revenue last year, you know, 10% of those net new institutional clients.

Of those net new institutional client came to us and we're trading crypto another 16% were trading the micro suite and so I think it speaks to that product innovation is helping to attract new customers and when we look over both our institutional and our retail new client base, we've generated over 1 billion.

Speaker 9: came to us and we're trading crypto. Another 16% we're trading the micro-sweep. And so I think it speaks to that product innovation is helping to attract new customers. And when we look over both our institutional and our retail new client base.

Speaker 9: We've generated over a billion dollars over the last five years that is completely net new revenue and new customers that are trading here. And so we believe with our commercial model, we can continue to expand that. We're advancing our digital capabilities and personalizing things in ways that other companies are doing as well, but doing it in an accelerated fashion. So I think I'm optimistic about what we...

Over the last five years that is completely net new revenue and new.

New customers that are trading here and so we believe with our commercial model. We can continue to expand that we're advancing our digital capabilities and personalizing things in ways.

That other companies are doing as well, but doing it in an accelerated fashion. So I think I'm optimistic about what we can and need to do in the future and Don do you have anything yes, I think two other points one we didn't really touch on here and that's innovation right. So part of the Hallmark and one of the things that Terry has.

Speaker 6: You need to do in the future and don't you have anything? Yeah, I think two other points. One we didn't really touch on here and that's innovation, right? So, you know, part of the hallmark and one of the things that Terry has really instilled into the business is innovating. And when you take a look at

Really instilled into the <unk> business is innovating and when you take a look at our products.

Speaker 6: Products launched in 2010, regenerating about a half a billion dollars per year in products that had been launched in 2010. So meaningful innovation that's driving meaningful revenue.

Products launched since 2010, while we're generating about a half a billion dollars per year in products that.

That had been launched in 2010, so meaningful innovation, that's driving meaningful revenue.

Speaker 6: Second point and very touched on it and that was the globalization of our business.

Second point and Derek touched on it and that was the globalization of our business.

Speaker 6: You know, we've invested in sales forces as Julie talked about, but that sales forces is around the world. And, you know, right now we're approaching, we're right around 29% of our volume is...

We've invested in with <unk>.

<unk> and Salesforce as Julie talked about but that sales forces are as around the world and.

Right now we're approaching we're right around 29% of our volume is.

Coming outside of the United States generating close to about.

Speaker 6: Coming outside of the United States, generating close to about 38% of our revenue from most clearly.

38% of our revenue.

<unk>.

Speaker 6: 28% of our revenue from electronic trading from outside the United States. Also, did want to point out and Sean touched on it, and that's price.

28% of our revenue from electronic trading from outside the United States also did want to point out and Sean touched on and Thats and Thats up pricing.

Speaker 6: You know, he mentioned in his prepare remarks a couple of points around price increases that we've done in our equity complex. When I take a look at

He mentioned in his prepared remarks, a couple of points around.

Price increases that we've done in our equity complex when I take a look at.

Speaker 6: You know, price adjustments we made. And obviously we take a very targeted approach all with the eye of not impacting volumes. But we did make pricing adjustments across almost all of our as that class is and assuming similar trading patterns as

Price adjustments, we've made and obviously, we take a very targeted approach.

All with the eye of not impacting volumes, but we did make pricing adjustments across almost all of our asset classes and assuming similar trading patterns as last year.

Speaker 6: last year, we would expect, you know, one and a half to 2% price.

We would expect one 5% to 2% price adjustment.

Speaker 6: adjustment, you know, against our revenues. So the fee is going to affect in February . As Sean mentioned, the

Against our revenue so.

The fee fees go into effect in February .

As Sean mentioned the.

Speaker 6: you know the the the the largest portion of the the adjustments is in our equity complex and our equity Complex is growing at 55% year to you know so far this quarter It's up in our micros where we also made some adjustments is up over 65% so far this quarter

Yes.

The.

The largest portion of the fee adjustments is in our equity complex and our equity complex is growing at 55% so far this quarter.

Up in our Micros, where we also made some adjustments is up over 65% so far this quarter.

Speaker 3: Congrat ?????? Thank you so much.

Okay.

Okay. Thanks, Thank you so much.

Thanks, Ken.

Speaker 1: Moving on to our next question from Simon Clinton, from Atlantic Equities. Please go ahead.

We will now take our next question from Simon Clench from Atlantic Equities. Please go ahead.

Speaker 5: Hi everyone, thanks for taking my question. I'm really interested in your thoughts around, I guess, inflation. Obviously, inflation really, the expectation backflow is fantastic from a volume perspective you guys. And I'm curious as to how you're feeding that into, I guess, into your operations and your expense expectations through fiscal year 22 based on your guidance.

Hi, everyone. Thanks for taking my question.

I'm really interested in your thoughts around that.

I guess inflation.

Obviously inflation.

It takes me back to Wix is fantastic from a volume perspective, you guys and I am curious as to how you're feeding that into.

I guess into your operations and your expense expectations through fiscal year 'twenty two based on your guidance.

Speaker 10: certainly noting that your compensation and salaries, for example, I think were held flat last year. So I was wondering what, I guess how sustainable that guidance for expense in fiscal year 22 is and how we should think.

Certainly, noting that compensation and salaries for example, I think were held flat last year. So I was wondering.

I guess, how sustainable that guidance for expense in fiscal year 'twenty, two ways and how we should think about that.

Speaker 3: Thanks, Simon. We appreciate the question. John , why don't you touch a little bit on our expenses as it relates to inflationary times that we're all dealing with? Sure, yes. Thanks, Simon, for the question. When you take a look at our guidance, and you adjust for Ostra, and you adjust for the...

Thanks, Sam and we appreciate the question John wanted to touch a little bit on our expenses as it relates to the inflationary times that we're all dealing with sure yes.

Yes, Thanks, David for the question when you take a look at our guidance and you adjust for <unk> and you adjust for the.

Speaker 6: and you adjust for our synergy capture. When I take a look at our core expense growth rate, our core expenses are growing at approximately a little over 3.5%. That's been at a higher expense growth rate than we've seen historically. We generally have been around the 3% growth rate. So you certainly are seeing some upward pressure Now, I do have bigger revenues.

And when you adjust for our synergy capture.

When I take a look at our core expense growth rate.

Our core expenses are growing at approximately a little over three 5%.

It had been at a higher.

<unk> expense growth rate than we've seen historically.

We generally have been around the 3% growth rate. So certainly are seeing some some upward pressure on our on our costs.

Speaker 6: Secondly, when you take a look at our guidance for next year, we also included approximately $30 million in cost.

Secondly, when you take a look at our guidance for next year. We also included approximately $30 million in costs related to an improving business environment.

Speaker 6: related to an improving business environment.

Speaker 6: So that would be about half of that, 30 million is really related to increased travel and in-person events. And we've seen that starting to come through in the first quarter with more conferences, for example, being in person.

That would be about half of that $30 million is really related to increased travel and in person events and we've seen we've seen that starting to come through in the first quarter with more conferences for example, being in person.

Speaker 6: Also, we're expecting a higher marketing spend in next year. The second half of that or the other 15 million is related around growth.

Also we are expecting a higher marketing spend.

And next year, the second half of that or the other other $15 million is related around.

Growth.

Speaker 6: growth initiatives that we have, specifically customer facing employees globally.

Growth initiatives that we have specifically customer facing employees globally and also.

Speaker 6: and also focused on a new customer acquisition program.

Focused on new customer acquisition programs.

Speaker 6: So those those the two kind of pieces it's something we certainly are working you know diligently on in terms of manage our costs our team has done a wonderful job you know across the entire organization in terms of managing our costs over the long run. In fact if you take a look at our cost base in 2018

So those those are the two kind of pieces.

Something we certainly are working.

Diligently on in terms of manage our costs or our team has done a wonderful job.

Across the entire organization in terms of managing our costs over the long run in fact, if you take a look at our cost base in 2018, and you adjust for ultra you adjust for our.

Speaker 6: and you adjust for Ostra, you adjust for our...

Speaker 6: You just for the synergies, the 200 million and run rate synergies that we achieved last quarter, and you assume that we had next for the full year in 2018, our costs have grown on a compound annual growth rate, assuming we hit the 1450 in terms of our guidance at less than 3% per year. So, we've got a long history of being able to manage our costs across the entire organization. The entire team does a great job ensuring that we manage our costs as efficiently as possible. Thanks, Herman.

You adjust for the synergies the 200 million in run rate synergies that we achieved last quarter.

And you assume that we had next for the full full year in 2018, our cost have grown on a compound annual growth rate, assuming we hit the $14 50 in terms of our guidance at less than 3% per year. So we've got a long history of being able to manage our costs across the entire organization and the entire team does a great job ensuring.

Know that we manage our costs as efficiently as possible.

Thanks, Simon for the question I appreciate it.

Speaker 12: Thank you.

Thank you okay.

Speaker 1: We will now take our next question from Alex Boenstein from Common Sachs. Please go ahead.

We will now take our next question from Alex Goldstein from Goldman Sachs. Please go ahead.

Hey, good morning, guys. Thank you for taking the question I was hoping to dig into market data a little bit more.

Speaker 6: Hey, good morning guys. Thank you for taking the question. I was hoping to dig into market data a little bit more. The revenue trends have been flat. It's really over the course of most of this year. I know it's a big growth initiative for business, so maybe give us an update on how you think it about the growth prospects into 2022. And then as a sort of related follow-off to that, I guess the discussion around Google with respect to market data and new analytics and tools you're planning to roll out, what's the timeline when you actually think these initiatives could help the revenues?

Revenue trends have been flattish really over the course of most of this year I know, it's a big growth initiative for the business and maybe give us an update on how you're thinking about the growth prospects into 2022, and then as a.

Sort of related follow up to that I guess, the discussion around Google with respect to market data and your analytics and tools, you're planning to rollout what's the timeline. When you actually think these initiatives could help the revenues.

Sure no. Thanks for the question I think.

Speaker 9: Sure, no thanks for the question. You know, I think just a little bit in terms of the performance in Q4 of the market data business, you know, as John pointed out, certainly up over Q4 of 2020, but not an annualized basis, you know, up almost 6%. And so in Q4, what you're seeing a little bit is some of the true ups that we had from a drive data licensing perspective that hit in Q3. We had a number of...

Just a little bit in terms of the performance in Q4 of the market data business as.

As John pointed out certainly up over Q4 of 2021 on an annualized basis up almost 6% and so in Q4, what you are seeing a little bit is some of the true ups that we had from a drive data licensing perspective, hitting in Q3, we had a number of.

Agreements that we reached with them with some banks and so.

Speaker 9: you know, agreements that we reach with some banks. And so, you know, that's something that then is built into the baseline, but is not something that we were able, you know, replicated in Q4. So those types of things are just a little bit lumpy as we've talked about in the past with audit.

That's something that that is built into the baseline, but it is not something that we were able replicated in Q4. So those types of things are just a little bit lumpy as we've talked about in the past with with audit. Our data business is strong as we look across both the professional data subscribers, which is the 70 <unk>.

Speaker 9: You know, our data business is strong, you know, as we look across both the professional data subscribers, which is the 70% of that revenue continues to be very solid. And a lot of the policy and pricing changes that we have made have driven that uplift in revenue that I talked about.

Of that revenue continues to be very solid and a lot of the policy and pricing changes that we have made have driven that that uplift in revenue that I talked about so we feel.

Speaker 9: So we feel very good about the direction of the business as well as the innovation we've been able to drive and putting our historical data on the cloud.

Very good about the direction of the business as well as the innovation, we've been able to drive and putting our historical data on the cloud. Your your second question on where we will see some of that I mean, as I mentioned earlier, we hope to be able to get that real time options data on an adjacent.

Speaker 9: Your second question on, you know, what where we will see some of that. I mean, as I mentioned earlier, we hope to be able to get that real time options data on in the JSON format onto that feed in, you know, within the next six months.

Format onto that feed in within the next six months.

Speaker 9: and you know are getting close there and believe that will help drive additional clients into that production environment.

And are getting close there and believe that will help drive additional clients into that production environment.

Speaker 9: And utilizing a lot of these other tools with Google, as we mentioned, these are off the shelf tools that Google has today. And it will be relatively easy to put that into use as it relates back to smart stream.

And utilizing a lot of these other tools with Google as we mentioned these are.

Off the shelf tools that Google has today and it will be relatively easy to to put that into and to use as it relates back to smart stream a lot of the innovation that John spoke with earlier is definitely focused on our data and our information that we believe there are definitely better ways that we can.

Speaker 9: A lot of the innovation that John spoke with earlier is definitely focused on our data and our information. So we believe there are definitely better ways that we can be packaging the data and information. And we'll be working with some of our clients this year for them to preview some of that and we'll eventually be scaling it out to other customers. So definitely I would say a building a year but also something that we will have new products in market in 2022. Right.

B packaging this data and information and we'll be working with some of our clients. This year for them to preview some of that and will eventually be scaling it out to other customers. So definitely I would say a building year, but also something that we will have new products in market in 2022.

Alright. Thanks.

Thanks, Alex.

Speaker 1: We will now take our next question from Owen Mow, from Openheimer. Please go ahead.

We will now take our next question from Owen Lau from Oppenheimer. Please go ahead.

Hey, good morning, and thank you for taking my questions. So on digital assets could you. Please give us an update on our recent traction in conversation with investors for your peak on an Isa futures product in light of the recent trading environment.

Speaker 8: Hey, good morning, and thank you for taking my questions. So on digital assets, could you please give us an update on your recent traction and conservation with investors for your Bitcoin and Ether futures product in light of the recent trading environment?

Speaker 13: And then on the new product launch, could you please talk about whether you have any near term plan to launch more crypto derivatives products? And it would be great if you can explain a little bit more on the approval process and the typical timeline from say having a plan to actually launch on the product or on the new product on the crypto side. Thanks.

On the new product launch could you. Please talk about whether you have any near term plans to launch more quickly.

The types of products and Youll be Greg if you can explain a little bit more on the approval process and the typical timeline from say, having a plan to actually launch on the <unk>.

On the new product on the crypto side. Thank you.

Okay. Thanks, Owen on the digital assets one of these ash, both Sean and Julie to make some comments and as it relates to the new products also with Julian Sean So that's kind of in their domain.

Speaker 3: Thanks Owen. On the digital aspect, let me ask both Sean and Julie to make some comments and as it relates to new products also with Julian and Sean. That's kind of a nerf.

Speaker 4: Bill Maynes of Sean, you want to start? Yeah, as I said earlier, in January , we had an all-time record in our total crypto average daily volume.

Domains. So John you want to start as I said earlier in January we had an all time record in our total crypto average daily volumes.

Speaker 4: And we serve Bitcoin futures doing well at $8,900 contracts, either at 880V, or Ether futures at over $5,000 contracts, or micro Bitcoin at over $17,000, and our new micro Ether actually at over $23.

And we saw a bitcoin futures doing well at 8900 contracts year to date, Adv or ether futures at over 5000 contracts are microbitcoin at over 17000, and our new micro ether actually at over 23000.

Speaker 4: So all of these contracts are doing quite well and thriving. In addition to that, as I mentioned earlier in the prepare remarked, we also recently increased our fees on both members and non-members, on both our Bitcoin and our ether futures. That again starts on February 1st. In addition to that, we are of course planning new products.

All of these contracts are doing quite well and thriving in addition to that as I mentioned earlier in the prepared remarks. We also recently increased our fees on both members and non members on both our bitcoin and are either futures that again starts on February one in addition to that we are a corresponding new product.

Speaker 4: And we do have a very strong new product pipeline across the financial asset class.

And we do have a very strong new product pipeline across the financials asset class.

Speaker 4: And we do have a strong product type bond within our crypto area.

And we do have a strong product pipeline within our crypto area.

Speaker 4: We have not announced any new products recently, but I can assure you we do have a strong product pipeline, as we always do in this asset class, as in other asset classes. And we will be announcing those as appropriate in terms of the time that takes to get the approval.

We have not announced.

Any new products recently, but I can assure you we do have a strong pipeline as we always do in this asset class as in other asset classes, and we will be announcing those as appropriate in terms of the time it takes to get the approval.

Speaker 4: You know, and in particular, in some cases, you do need CFTC review.

And in particular in some cases <unk> FTC review and in some case in some cases, you want the <unk> to approve.

Speaker 4: and in some cases you want the CFTC to approve, but I'll hand it over to Julie to come.

But I'll hand, it over to Julie to comment on that let me just jump in for a second because I think your question Alan on the approval side is interesting because theres been a lot of noise and rhetoric around the cash side of Cryptos with the SEC our process of Sean light laid out what the futures is can be there'll be a self certification process or a full filing so.

Speaker 3: Let me just jump in for a second because I think your question, Owen, on the approval side is interesting because there's been a lot of noise and rhetoric around the cast side of cryptos with the SEC. Our process of Sean Light out laid out with the futures is can be there be a self-certification process or a full filing. So those full the self-certification process can be done in as little as 10 days to two weeks.

Those full at the self certification process can be done and lose a little of 10 days to two weeks.

Speaker 3: The full approval, which the commission would have to find it novel and complex to go down that path.

The full approval, which the commission would have defined at Navajo and complex to go down that path.

Speaker 3: of a full could be several months, but again, they would have there's the clock runs on this unless there's a An issue with the commission as you saw when we launched crypto currencies with Bitcoin

Our full could be several months, but again they would have the clock runs on this unless there is.

An issue with the commission as you saw when we launched crypto currencies with bitcoin. The first the second exchange to do so I believe in 2017 that was a self certification process. So you can kind of see the path that we go down as it relates to the derivative side of the crypto asset classes, So Julian I'll turn to <unk>.

Speaker 3: The first or the second exchange to do so, I believe in 2017, that was a self-certification process. So you can kind of see the path that we go down as it relates to the derivative side of the crypto asset classes. So Julie, what on the other hand?

Speaker 9: I'll just zoom out of it. I mean, I think in 2021, we launched over 75 new products, which is very consistent with what we have done in past years and...

Just zoom out of it I mean, I think in 2021, we launched over 75, new products, which is very consistent with what we have done in past years and the success rate for those products just continues to trend higher and higher and I attribute that a lot of that to the active engagement, we have with our clients before we.

Speaker 9: This success rate for those products just continues to trend higher and higher and

Speaker 9: I tribute that a lot of that to the active engagement we have with our clients before we roll those products out.

Roll those products out and I think Keith or in the entire micro suite of new things that we introduced last year with the micro <unk> in treasury yields.

Speaker 9: I think ETH are in the entire micro suite of new things that we introduced last year with the micro WTI and Treasury yield. These were some of the fastest growing products at SAME Group and they have brought new participants to the exchange from around the world that we pointed out. I mean, the one thing that I think is interesting specifically is we looked at the crypto activity.

These were some of the fastest growing products at CME group and they have brought new participants to the exchange from around the world that we pointed out I mean, the one thing that I.

<unk> is interesting specifically as we looked at the crypto activity.

Speaker 9: you know, from the first quarter of 2021 versus to what we saw in January , we're now seeing a double digit participation on a percentage basis from the buy side. And so we have, you know, this is a key value proposition of our crypto suite that we are highly regulated, you know, margined, cleared. Around Gay Park so far five, that millions of billion dollars.

From the first quarter of 2021 versus to what we saw in January we're now seeing double digit participation on a percentage basis from the buy side and so we have this is a key value proposition of our crypto suite that we are a highly regulated.

Margined cleared risks.

Speaker 9: Risk managed shop here and and this is attractive to those by-side clients that are looking for access for access to that asset class and You know the numbers here really points that out

Our risk managed shop here and this is attractive to those buy side clients that are looking for.

Our access to that asset class and the numbers here it really point that out.

Speaker 9: And I also think the whole experience right that we're bringing customers, we are just seeing over 2 million visitors just to our website just to look at what our crypto offerings are. It's driving thousands of new leads for us. We're supplementing that with crypto events and social posts and digital media. And that's all part of how we're going to continue to grow this business and be relevant to customers in the crypto space.

And I also think that the whole experience right that we're bringing customers.

<unk> just seen.

Over 2 million visitors to our website just to look at what our crypto offerings are it's driving thousands of new leads for us.

We're supplementing that with crypto events.

And social posts and digital media and that's all part of how we're going to continue to grow this business and be relevant to customers in the crypto space.

Speaker 3: I want to give you a little thank you appreciate it.

Hopefully that gives you a little.

Thank you appreciate it.

Speaker 1: We will now take our next question from Carly Voight from KBW. Please go ahead.

We will now take our next question from Carlos <unk> from <unk>. Please go ahead.

Hi, good morning.

Speaker 14: Hi, good morning. I have a two-part question on net investment income. So first part is just on the cash performance bonds. It looks like those increase to 158 billion in the fourth quarter. But if we go back to pre-COVID, so in 4th, you're 19, they're at 37 billion. I guess you're over four times higher today.

I have a two part question.

Net investment income. So first part is just on the cash performance bonds. It looks like those increased to 158 billion in the fourth quarter, but if we go back to pre COVID-19, there at 37 billion. So I guess youre over four times higher today.

Speaker 14: So, as the Fed begins to tighten more meaningfully, should be expect that level of cash collateral to decline meaningfully from the current levels and just trying to get any sense of some normalized level there. And the second part of the question is just around the net investment income capture rate and

I guess as the fed begins to tighten more meaningfully should we expect that level of cash collateral to decline meaningfully from the current levels and just trying to get any sense of sort of normalized level there.

The second part of the question is just around the net investment income capture rate and.

Speaker 14: You know, is is last the last rate cycle still good proxy to look at where I think you read troughly 30 basis points in that capture rate at the peak of the rate cycle? Or is there something different to know for this hiking cycle?

Yes.

The last rate cycle is still a good proxy to look at where I think you've reached roughly 30 basis points and net capture rate at the peak of the rate cycle.

Is there something different for this hiking cycle.

Speaker 3: Thanks Count, let me turn it over to Sunil and you'll be some color as it really is.

Thanks, Ken let me turn it over to Sunil and he can give you some color as it relates to that.

Thank you Terry so when it comes to cash margin posted at the clearing house. It is a function of both the risk exposure and clients choice right. Among all the assets that they can post at the clearinghouse.

Speaker 8: Thank you, Terry. So when it comes to cash margin posted at the clearing house, it is a function of both the risk exposure and client's choice, right, among all the assets that they can post at the clearing house. We have a very flexible program and clients today choose cash. You're right that

Have a very flexible program and clients today choose cash youre right that.

Speaker 8: The interest rate or the opportunity to earn a return does play a role, but it is very hard for us as the clearinghouse to actually forecast what it's going to be in the future as the Fed changes rate.

The interest rate or the opportunity to earn a return does play a play a role but it is very hard for us as the clearinghouse to actually forecast, what it's going to be in the future as the fed.

Changes right.

Speaker 8: When it comes to the capture rate, again, it's very hard for us to give you an indication of how to model that because the rate that we are paid for deposits at the Fed or at the discretion of the Fed and there is no guarantee that it will track any one of the publicly disclosed rates.

When it comes to the capture rate.

Again, it's very hard for us to give you.

Give you an indication of how to model that because the rate that we are paid for deposits at the fed are at the discretion of the fed.

And there is no guarantee that it will track any one of the publicly disclose rates.

Speaker 8: So this is one of the reasons we cannot give you a view into what these, what to expect going forward.

<unk>.

This is one of the reasons, we cannot give you.

Our view into what what these.

What to expect going forward, but.

Speaker 8: But at the moment, what we have is around, you know, it fluctuates.

At the moment, what we have is around it fluctuate.

Speaker 8: The cash margin is between 140 to 150 billion.

The cash margin is between 140 to 150 billion.

That is in U S dollar equivalent terms.

Speaker 8: that is in you as a dollar equivalent terms. And about 96% of it is that just to build on there.

And about 96% of it is that.

Yes, just to build on that for a moment.

Speaker 6: because you have to about to capture rate. Currently, IOERs at 15 basis points, we rebate back to our clients 10 basis points and we earn five basis points on those funds.

You asked about the capture rate.

Currently.

<unk> at 15 basis points, we rebate back to our clients 10 basis points, and we and we earned five basis points on that.

On those funds.

Speaker 6: To your point, we did see an increase in average balances.

To your point.

We did see an increase in average balances.

Speaker 6: of about six billion dollars. You went from about on average in the third quarter of 144 billion to 150 billion dollars on average. So we did see an increase. So the amount of funds we earned...

Of about $6 billion, you went from about an average in the third quarter of $144 billion to $150 billion on average so we did see an increase though.

The amount of funds we earned.

Speaker 6: From a CME perspective, was about a million dollars more this quarter than we did last quarter. Historically, if you look at over time as the Fed increases.

From a CMC perspective was about $1 million more this quarter than we did last quarter.

Historically, if you look at over time as.

As the fed increases rates.

Speaker 6: you know, we'll, we, you know, often make adjustments as well in terms of our capture rate. But to Cineo's point, we're always looking at what are the alternatives that our clients have to invest their funds.

We often make adjustments as well.

<unk> of our capture rate, but to <unk> point, we're always looking at what are the alternatives that our clients have to invest their funds. So we want to be competitive too.

Speaker 6: So we want to be competitive to keep the cash levels up at the clearing house because it's good for the, for a risk management perspective, but also we earn on that as well.

To keep the cash levels up at the clearinghouse because it's a it's good for risk management perspective, but also.

We earn we earn on that as well.

Thank you.

Yes.

Speaker 14: I'll hopefully that gave you a little flavor. Yeah, thanks. Say I was just, you know, if I just follow up real quickly, just on the, um,

Now hopefully that gave you a little flavor yeah. Thanks I was just.

If I could just follow up real quickly just on the.

Speaker 14: i think i asked about you know last last cycle is around thirty basis points with the net capture were reached to i mean

I think I had asked about.

Last cycle was around 30 basis points was the net capture where to reach too I mean.

Hi.

Speaker 14: I guess anything changed in terms of what you want to pass through, I guess. That's essentially the question just because it is such a big line item now. So I just want to make sure that 80 90% is that still a rough guide frame for kind of what you want to pass through to the end client.

Yes, It does anything change in terms of what your what you want to pass through I guess.

That's essentially the question just because it is such a big line item now so just want to make sure that 80% to 90% is that still a rough guide frame what kind of what you are what you want to pass through to the end clients.

Yeah.

Speaker 6: Yeah, I would say that's the case. We haven't changed our point of view in terms of how we're managing that. Again, we are mindful in terms of what our clients can invest elsewhere, and that also governs how much we rebate back to our clients. But we haven't changed our point of view in terms of how we manage that.

Yes, I would say that.

If that's the case, we haven't changed our point of view in terms of how we're managing that.

Again.

We are mindful in terms of what our clients can invest elsewhere in that that also.

Governs how much we rebate back to our clients, but we haven't changed our point of view in terms of how we manage that.

Speaker 3: I think just that to this night, a lot about it. But John's point earlier about clients have alternatives. We want to make sure from a risk manner perspective, we are balancing this in an appropriate way, not just to try to earn an extra 500,000,000,000,000,000,000. There's a lot more to it than just that. Thank you.

I think just to add to this.

But John's point earlier about clients have alternatives, we want to make sure from a risk management perspective, we are doing we are balancing this in an appropriate way not just to try to earn an extra 500000, a $1 billion, there's a lot more to it than just that.

Got it thank you very much.

Thanks Kyle.

Speaker 1: We've now taken our next question from Chris Ellens from Compass Point. Please go ahead.

We will now take our next question from Chris Allen from Compass point. Please go ahead.

Speaker 15: Good morning everyone, thanks for taking my question. I was wondering if you've provided some color just on plans for deployment around the $1 billion from the Google Investment. CapEx this year is 150 million, obviously, of a healthy amount of cash generation. Just wondering how you plan on deploying that, whether it's made shifted capital priorities and giving the cash balances, when this table.

Good morning, everyone and thanks for taking my question I was wondering if you provide some color just on plans for deployment around the $1 billion.

On the Google investment Capex. This year was $150 million, obviously, you have a healthy amount of cash generation.

Just wondering.

How do you plan on deploying that was shifted capital priorities given the cash balances where they stand right now.

Speaker 6: John ? Yeah, thanks, thanks, Chris. You know, as we indicated, you know, at the time we did the

Jonathan Yes, thanks, Chris.

As we indicated at the time, we did the.

Speaker 6: the transaction with Google, that the billion dollars was really gonna be used to invest in the business.

The the transaction with Google.

The $1 billion was really going to be used to invest in the in the business.

Speaker 6: So part of that investment includes, part of that investment includes obviously the migration onto the cloud platform, which we were very excited about. I kind of gave some highlights around what that would entail. Also, we are going to be looking at ways to accelerate the growth of the business through investing in the business. We don't really have anything to share with you at this point.

So part of that investment includes part of that investment includes obviously, the migration onto the cloud platform, which which we.

We're very excited about my kind of gave some some highlights around what that would would that would entail.

So.

We we are going to be looking at ways to accelerate the growth of the business.

Through investing in the business and we don't really have anything to share with you at this point.

Speaker 6: But, you know, we think that, you know, the focus is on growth here. And that's what we're, that's what we're intending to do with the cash.

But.

We think that.

The focus is on.

Is on growth here and that's what we're that's what we're intending to do with the cash.

Speaker 15: Just a quick follow up on ways to accelerate whether would you consider inorganic or just organic opportunity.

Just a quick follow up on ways to accelerate with it.

Would you consider inorganic or just organic.

Yes.

Speaker 6: You know, we're not limited in terms of how we are viewing the opportunity to invest in the business. You know,

We're not limited in terms of how we are viewing the opportunity to invest in the business.

No.

Speaker 6: I've been working with Terry for almost 20 years here now and in terms of M&A and I don't think our view around inorganic opportunities has changed at all. We are always looking for ways to deploy capital, whether it's in the business internally, organic growth opportunities or inorganic opportunities. We think about it from the point of the view of how can we help our clients.

I've been working with Terry for almost 20 years here now and in terms of in terms of M&A and I don't think our our view around inorganic opportunities has changed at all we are always looking for ways to deploy capital whether it's in the business.

Internally.

Organic growth opportunities or inorganic opportunities, we think about it from the point of view of how can we help our clients.

Speaker 6: And so we always look at things from our clients, you know, in our client's shoes.

And so we always look at things from our clients.

In our clients' shoes.

Speaker 6: Also, when we look at the M&A landscape and our opportunities to plake capital, we're in a very strong position. We kind of highlighted today why we are pretty optimistic about the future here and we want to, so we're in a strong position as we look at opportunities. We are in a very strong position as we look at opportunities.

Also when we look at we look at the M&A landscape and are our opportunities to deploy capital. We're in a very strong position, we kind of highlighted today why we are.

Pretty optimistic about about the future here and we want to and so we are in a strong position as we look at opportunities.

Thank you.

Alright, Thanks, Chris.

We will now take our next question from Craig <unk> from Bank of America. Please go ahead.

Speaker 1: We will now take our next question from Craig Second Haller from Bank of America. Please go ahead.

Speaker 13: Hey, good morning. Hope everyone is doing well. This is the live filling in for Craig. So I was wondering, given that Fed funds haven't moved yet, even though they will, and energy prices are already up a ton, I just wanted your perspective on the potential lead time between energy volumes and the rates volume curve. I guess said differently. Do you think energy volumes are going to be peaking well before rates volumes? Just on timing. Thanks. Thank you.

Hey, good morning, I hope everyone is doing well this is ely filling in for Craig.

So I was wondering given the fed funds haven't moved yet.

Though they will and energy prices are already up a ton I just wanted your perspective on the potential lead time between energy volumes and the rates volume curve or I guess said differently do you think energy volumes are going to be peaking well before rates volumes just on timing. Thanks.

Thanks, Doug.

If you want to.

Speaker 2: Talk a lot to energy. Yeah, great question. I think this cycle is a little bit different from previous cycles for a couple of different reasons. Structurally, the global energy market is in a very different place than it was last time we had changes in rate cycles. If you look at what is the combination of, what we talked about earlier, greenifying the...

Talk about the energy, yes, great question, I think the cycles, a little bit different from previous cycles for a couple of different reasons structurally that the global energy market is in a very different place than it was last time, we had changes in rate cycles.

You look at whether it's a combination of what we talked about earlier green are fine.

The.

Speaker 2: the balance sheets of a lot of companies, companies moving away from or trying to be part of this pain-to-bility initiative. It has promoted a lot of decisions to decrease cat-backs in the development of oil infrastructure. So coming out of the pandemic, we have just reached

Balance sheets of a lot of companies companies moving away from or trying to be part of our sustainability initiatives.

It is it has promoted a lot of decisions to decrease capex in.

The development of oil infrastructure, so coming out of the pandemic, we have just reached.

Speaker 2: the pre-pandemic levels of demand in crude oil, but yet we have not reached the level of production. So as one of the major reasons we're seeing elevated prices here is we're seeing...

Pre pandemic levels of demand in crude oil, but yet we have not reached the level of production. So that's one of the major reasons, we're seeing elevated prices here as we're seeing demand outstripping supply and I think structurally you're going to see less supply going forward than you had previously so I think theres a couple of items going on number.

Speaker 2: Man outstripping supply and I think structural you're gonna see less supply going forward than you had previously

Speaker 2: So I think there's a couple of items going on. Number one, you're seeing crude pushups through 90, 92. You're seeing demand outstrips supply. I think you're also seeing a divided world within energy. I was seeing what the future of crude oil looks like versus what the future of natural gas looks like. Certainly the Russian Ukraine tensions has created a whole new view of what a global benchmark looks like for natural gas. An unquestionable the US of the swing producer in global crude oil market and absolutely in the Nat gas market as well. The cap on demand or it should say access to natural gas right now is a function of the LMG facilities coming online in the Gulf.

One youre seeing crude push out through 1992.

Youre seeing.

<unk> outstrip supply I think Youre also seen a divided world within energy I've seen what the future of crude oil looks like versus what the future of natural gas looks like certainly the Russia and Ukraine tensions has created a whole new view of what a global benchmark looks like for natural gas and unquestionably the use of the <unk>.

<unk> producer in global crude oil market and absolutely in the Nat gas market as well the cap on demand or I should say access to.

Natural gas right now is a function of the LNG facilities coming online in the Gulf.

Speaker 2: There's three facilities online right now. There should be two more coming online in the next two years. The US is pumping at max capacity, liquefying natural gas, based on Henry Hub pricing. That's a market we own 80% of. And certainly in a world in which you're seeing global energy concerns at the forefront of domestic policy in Europe .

Three facilities online right now there should be two more coming online in the next two years. The U S is pumping at Max capacity liquefied natural gas based on Henry hub pricing Thats, a market, we own 80% of it.

And certainly in a world in which Youre seeing global energy concerns at the forefront of domestic policy in Europe , Youll see a greater push to see imports of U S. Sourced LNG priced on Henry hub that market that are 80% market share as it continued demand the last piece of this and this is why it's different from previous years.

Speaker 2: You'll see a greater push to see imports of US source LNG priced on Henry Hub. That market, the 80% market share of as a continued demand. The last piece of this, and this is why it's different from previous years, Europe has actually just deemed both natural gas and nuclear as green fuels.

Europe is actually just deemed both natural gas and nuclear as green fuels. So this will be not only the natural gas story isn't just the story of transition to sustainability that is a long term part of the overall energy story for a long time to come. So we will continue to grow and expand our footprint, there and youll see us <unk>.

Speaker 2: So this will be not only the natural gas story isn't just the story of

Speaker 2: transition to sustainability. That is a long-term part of the overall energy story for a long time to come. So we'll continue to grow and extend our footprint there, and you'll see us continue to accelerate global adoption in our markets. And your last point, we've seen an acceleration of volumes and participation in Q4 and coming into Q1 and energy. So we're excited about that. We think we're well positioned. Thanks, Derek. Thanks, Eli. Appreciate the question.

We need to accelerate global adoption of our markets and your last point, we have seen an acceleration of volumes in participation in Q4 and coming into Q1 and energy. So we're excited about that we think we're well positioned.

Derek Thanks, Sheila I appreciate the question.

Thanks, guys.

Speaker 1: Leave a now take our next question from Michael's praise from Morgan Stanley . Please go ahead.

We will now take our next question from Michael <unk> from Morgan Stanley . Please go ahead.

Hey, good morning, Thanks for taking the question I wanted to ask about crypto you guys have bitcoin and either futures and had been successful there I guess just broadly how do you think about potentially extending into the underlying physical token market and to what extent can it make sense for CME.

Speaker 6: Hey, good morning. Thanks for taking the question. What's the ask about crypto? You guys have Bitcoin and Ether futures and have been successful there. I guess just broadly, how do you think about potentially extending into the underlying physical token market? And to what extent can it make sense for CME?

Speaker 6: on that front but even potentially opening up your platform to bring retail investors in more directly with your exchange for app even with with crypto wallets on the physical side which gets to a broader question around how do you see the market structure developing in crypt overs as other asset classes and what do you think it's going to take to be successful to be a dominant um player within the trading of digital assets

On that front, but even potentially opening up your platform to bring retail investors in more directly with your exchange, perhaps even with crypto wallets on the physical side, which gets to a broader question around how do you see the market structure developing in crypto versus other asset classes and what do you think it's going to take to be successful to be a dominant player within the trading of digital ad.

<unk>.

Well, Michael there was a lot of.

Speaker 3: questions and comments are in one question, but I will say that listen to crypto.

Questions and comments and one question, but I will say that listen the crypto space and I've said this over the last several years appears to be here to stay and we are here to facilitate the risk management of these products as Sean referenced a moment ago, we're looking to roll out new products, we have not announced what those crypto prop.

Speaker 3: And I've said this over the last several years, appears to be here to stay. And we are here to facilitate the risk management of these products. As Sean referenced a moment ago, we're looking to roll out new products. We have not announced what those crypto products are yet. But we have been successful as Julie pointed out in the ones we have to date. As far as.

Next our yet, but we have been successful as Julie pointed out and the ones we have to date.

As far as.

Going into the cash side of the business as a very crowded field right now to say, the least and the cash crypto trading we are a dominant listed.

Speaker 3: going into the cash side of the business as a very crowded field right now to say the least in the cash crypto trading. We are a dominant listed on the crypto side in the futures.

On the crypto side in the futures.

Speaker 3: Point of view so we want to maintain our

Point of view, so we want to maintain our.

Speaker 3: presence in the listed market and the regulated market.

Presence in the listed market in a regulated market.

Speaker 3: So we'll wait and see as it relates to how it shakes out on the cash side. One of the things that we've been very successful at is to create

So, we'll wait and see as it relates to.

How it shakes out on the cash side one of the things that we've been very successful at is to create with our next transaction in marrying.

Speaker 3: with our next transaction in marrying...

Speaker 3: Cash markets for futures markets and creating efficiencies. This is something that I will have the team continually look at. It's not saying that we're going there, but we will look at the efficiencies in the growth of this market. But it's a very crowded market right now on the cash side. Again, on the listed side, I think we're doing quite well. And again, we were a walk before your run in this asset class. That's been the way I wanted to approach it. This is a contentious.

Cash markets, what futures market and creating efficiencies. This is something that I will have the team continually look at it's not saying that we're going there, but we will look at the efficiencies and the growth of this market, but it's a very crowded market right now on the cash side.

Again on the <unk>.

<unk> side, I think we're doing quite well and again, we were I'll walk before you run in this asset class has been the way I wanted to approach. It this is a contentious.

Product line and so we're a highly regulated entity.

Speaker 3: product line and so you know we're a highly regulated entity.

Speaker 3: and reputationally I want to make sure that we're always doing the right thing. So we are doing everything I believe that we can do it this particular moment with our eyes set at new opportunities going forward. And as it relates to the retail, our micro contracts are already attracting that retail crowd that you're referencing today.

<unk> reputation they want to make sure that we're always doing the right thing. So we are doing everything I believe that we can do at this particular moment.

Or is that new opportunities going forward and as it relates to the retail our micro contracts are already attracting that retail crowd that you're referencing today that are trading some of the cash platforms are trading in the futures on the on the smaller crypto products that we have listed so I think the long the short answer is Michael more to come as it relates to some of our newer.

Speaker 3: that are trading some of the cash platforms, they're trading the futures under smaller crypto products that we have listed. So...

Speaker 3: I think the short answer is Michael Moore to come as it relates to some of our newer products.

Products, but again, the only way that I would look at the the cash side is if we can create efficiencies against our futures portfolio. So not saying, we can or we cant but that is one thing I'm looking at.

Speaker 3: But again, the only way that I would look at the cash side is if we can create efficiencies against our futures portfolio. So not saying we can or we can't, but that is one thing I'm looking at.

Great. Thanks, so much I appreciate it.

Okay.

Speaker 1: We're going to take a follow up question from Alex Kram from UBS. Please go ahead.

We will now take a follow up question from Alex Kramm from UBS. Please go ahead.

Hey, Hello, again, sorry realized wanes over time here, but a couple of follow ups to squeeze in here and those will be quick.

Speaker 7: Hey, hello again. Sorry, I realized we're waiting to overtime here, but a couple of pull-off to squeeze in here and those should be quick.

Speaker 7: You mentioned the sofer term license and how many people you've license without you.

You mentioned the sulfur.

Term license and.

How many people you've license without you.

Speaker 7: I would assume this is kind of like a utility, kind of a benchmark like LIBOR was, but maybe elaborate if you actually generating revenues of that and if there's opportunity for maybe some analytics products, et cetera, and if you're looking at this as a revenue opportunity. And then another very quick follow up to the question early on, cash deployment.

I would assume this is kind of like a utility kind of a benchmark like LIBOR was but maybe elaborate if you're actually generating revenues all of that and if there is opportunity for maybe some analytics products et cetera, and if you're looking at this as a revenue opportunity and then another very quick follow up to <unk> question early on cash deployment.

Speaker 7: with the S&P global IHS market deal closing here imminently. Just wondering if you could estimate how big the check will be that you'll have to write them to keep your stake in the index franchise. JV unchanged.

With the with the S&P Global IHS Markit deal closing imminently, just wondering if you could estimate how big.

Check will be that you'll have to write them to keep your stake in the index franchise JV unchanged. Thanks.

Speaker 3: First of all, let me answer the last one first. I don't think anybody announced that we're writing a check for the increase in with the S&P global yet. That is something obviously we'll talk with them as they close their transaction. It's a little premature to make that assumption just yet. Alex, so I'll be careful with assuming that until that deal is closed. I agree it should be closing shortly, but we've been hearing that for quite some time now. So we'll wait till that is done.

First of all let me ask or answer the last one first I don't think anybody announced that we're writing a check for the increase and with S&P global yet that is something obviously, we will.

Talk with them as they close their transaction, it's a little premature to make that assumption just yet Alex so I'll be careful with assuming that until that deal is closed I agree it should be closing shortly but we've been hearing that for quite some time now so we will wait until that is done.

Speaker 3: We do like the industry businesses. We've been very successful with it. We think that the credit indices that are coming in for my HS and the S&P Global could be very attractive for CME. And we do like those businesses. So there's no question about it, but again, I want to be.

We do like the <unk> business as we've been very successful with it we think that the credit indices that are coming in from IHS into S&P global could be very attractive for CME and.

We do like those businesses. So there's no question about it but again I want to be I don't want to get over in front of us until that deal is closed to talk about what kind of check we may or may not be writing there is a lot more to it than just that.

Speaker 3: I don't want to get over in front of us until that deal is closed to talk about what kind of check we may or may not be writing. There's a lot more to it than just that. Let me also revert back to Julie on the first part of the question. Yeah, thanks for the question Alex. Yeah, as Sean pointed out in his remarks, you know, we have licensed up distance July over 600 entities.

Let me also revert back to Julian.

As part of your question, yes. Thanks for the question Alex as Sean pointed out in his remarks, we have license.

This since July over 600 entities or the term sulfur and so thats kind of a five two licenses across both real time and historical data and it is generating seven digit annualized revenue for us and another almost 400 firms in the pipeline so what the <unk>.

Speaker 9: for the term sofa. And so that's going to buy two licenses across both real time and historical data. And it is generating seven digit annualized revenue for us and another almost 400 firms in the pipeline. So.

Speaker 9: What the opportunity is here is, is both for direct data revenue, as well as we believe, process opportunities. So we're seeing really strong traction with...

Opportunity is here is both for direct data revenue is as well as we believe cross sell opportunity. So we're seeing really strong traction with global investment banks regional banks around the world both in the U S and APAC and also just getting into some new areas with people that CME.

Speaker 9: Global investment banks, regional banks around the world, both in the US and Asia.

Speaker 9: And also just getting into some new areas with people that CME has not traditionally worked with. So global trade finance, commercial real estate firms, export import and development banks, structured finance. And so...

He has not traditionally worked with global.

Global trade finance commercial real estate firms export import and development banks structured finance and so as we are engaging with those customers specifically.

Speaker 9: As we are engaging with those customers specifically to license them, you know, those become the new client opportunities that, you know, our sales team will be very actively talking to them about the whole suite of products and services that we offer here. So, you know, we see this as a great opportunity and and continues to be a key part of really supporting the growth and transition from LiveWord to so far that Sean and his team are working on with us as well. Spread this to...

Specifically to license them those become the new client opportunities that our sales team will be very actively talking to them about the whole suite of products and services that we offer here so.

We see this as a great opportunity and continues to be a key part of really supporting the growth and transition from LIBOR to sulfur that Sean and his team are working on with us as well.

Okay, Alex that address both of your questions.

Speaker 8: Fantastic. Thanks for the answers. Thanks, Bob. Appreciate it.

Antacid, Nick Thanks for the answers.

Thanks, Bob I appreciate it.

Speaker 1: We will now take our next follow-up questions from Brian Bidell from Dr. Bank. Please slow ahead.

We will now take our next follow up follow up question from Brian Bedell from Deutsche Bank. Please go ahead.

Speaker 11: Great. Thanks, the morning folks, for taking my follow up. Just a quick two part, hopefully. I'm just one. I went to just circle back Derek on your comments on the environmental. I don't know if you have the ADV from just that environmental products portfolio that you decided maybe just for January just so we could base.

Great. Thanks, Good morning folks for taking my follow up just a quick two parter hopefully I'm just one I wanted to just circle back Derek on your.

Comments on the environmental I don't know if you had the Adv.

From just that environmental products portfolio.

That you cited maybe just for January just so we could base growth off of that.

Speaker 11: growth off of that and I know I realize it's very early still and then the second part of part is just um... shanets is um... we talked a lot about the short end of the curve but maybe um... your view on the potential for increase in supply of hedgeable treasuries uh... into the market after you know quantitative tightening over the long

Realize it's very early still and then the second.

Part is just Sean.

We've talked a lot about the short end of the curve, but maybe.

Your view on the potential for increase in supply of Hedgeable treasuries.

The market after quantitative tightening over the long term.

Speaker 2: Thanks Brian , go ahead and start, Derek, and we'll go to Sean on the deliverables and play issues or supply other countries. Yeah, thanks Brian . So when you look at specifically the carbon product, well right now this is a brand new market. I mean the leading cash market out there, CDL expansive is trading a couple hundred million dollars a day equivalent in the spot market and that's the largest market we have. So right now those volumes just in the carbon market are in that kind of low single hundred digits right now, open interest records around 10,000 right before we close that at EARN. And so this is a low, it's going to be a low build, which is why we're saying this is an investment in making sure that we're walking up the best partners right now. Plus the energy transition could be decades long. So we're making sure that as we always do scene around corners.

Thanks, Brian go ahead, I'm, sorry, Derek and I will go to Sean on the deliverables for the supply of treasuries, yes. Thanks, Brian . So when you look at specifically just the carbon products alone. For example, right. Now this is a brand new market, leading cash market out there of CBL expansive is trading in a couple of hundred million dollars a day equivalent in the spot market.

That's the largest market we have so right now those volumes just in the carbon markets are in the kind of low single 100 digits right now open interest records around 10000 right before we closed at year end. So this is a low it's going to be a low build which is why we're saying this is an investment in making sure that we're walking up the best partners right now plus the synergy transition could.

Decades long, so we're making sure that as we always do is seeing around corners seen how the market's evolving working with our customers understanding what their needs are so that we can position ourselves as the risk management tool and price discovery center of choice.

Speaker 2: seeing how the market's evolving, working with our customers, understand what their needs are, so that we can position ourselves as the risk management tool and price discovery center of choice.

Speaker 2: We'll start to be presenting that environmental product portfolio view out to differently in the coming months because we're going to be wrapping in there Products that have rather substantial volumes right now in the biofuels ethanol products alongside battery metals etc So it's a if we developed it to be able to manage it as a portfolio So we'd be able to present that to you a little bit differently as we as we manage it and grow that globally But right now this is a you know low single hundreds low single thousands ADVs and the open interest in the tens of thousands right now So growing but it's going to be a slow build

I'll start to be presenting that environmental products portfolio view out too differently in the coming months, because we are going to be wrapping in there products that have rather substantial volumes right now in the biofuels ethanol products alongside battery metals et cetera. So it's as.

As we've developed it to be able to manage it as a portfolio. So we'd be able to present that to you a little bit differently as we as we manage it and grow that globally right. Now. This is a low single hundreds low single thousands Adv and open interest in the tens of thousands right now so growing but it's going to be a slow build.

Speaker 3: Thanks, Eric Shaw, on the supply after the Fed decides to, like, nub a little bit. Yes, thanks, Brian , and thanks, Terry. We are very pleased last year with all-time record volumes in our Treasury futures, or I'll try 10-year Treasury futures in our office of law. We're all good and slowly. In this

Thanks, Derek Sean on the supply after the fed decides to lighten up a little bit yeah, Thanks, Brian and thanks Terry.

We are very pleased last year with all time record volumes in our Treasury futures, our ultra 10 year Treasury futures and our future.

In terms of the upcoming potential for quantitative tightening as well as supply.

Speaker 4: In terms of the upcoming potential for quantitative tightening as well as supply, the Treasury did announce a slight reduction in the long-term issuance in the most recent release. However, that will be offset with the expectations of the Federal Reserve in reducing their quantitative easing. And then in the coming year, probably moving towards a quantitative tightening.

The Treasury did announce a slight reduction in the long term issuance in the most recent release, however that will be offset with the expectations of the federal reserve and reducing their quantitative easing.

And then in the coming year, probably moving towards a quantitative tightening.

Speaker 4: So, you know, in the very short term, you know, probably it looks like the amount of quantitative easing that the Federal Reserve is doing may offset the reduction in quantitative easing will offset the reduction in issuance longer term.

So.

In the very short term.

Probably it looks like.

The amount of quantitative easing the federal reserve is doing may offset the.

The reduction in quantitative easing will offset the reduction in issuance longer term.

Speaker 4: you know, remember what happened with our volumes in 2018, 2017, 2018 that period of time when the Federal Reserve actually started to sell US treasuries, you know, and we do expect in this cycle that will happen at some point and that with the combined record debt, record issuance and potential for quantitative fighting.

Remember what happened with our volumes in 2018 to 2017 2018 that period of time when the federal reserve actually started to sell you.

U S treasuries and we do expect in the cycles that that will happen at some point.

And that.

With the combined record debt record issuance and potential for quantitative tightening.

Speaker 3: that our products will be needed much more than ever before. You know, as Sean has always said, Brian .

Our products will be needed much more than ever before.

<unk> has always said Bryan.

Speaker 3: that the Fed doesn't hedge their balance sheet. When they sell them, the people that buy them, they have no choice but to hedge that balance sheet. So, to Sean's point, when you saw the increase of volumes in the time period, he referenced, that's a portion where the Fed is not increasing their balance sheet, their selling treasuries, and the folks that are buying them need to hedge those. That's why we do quite well in that scenario. So, again, there's no guarantees, but we believe it's setting up in a very similar pattern.

Doesn't hedge their balance sheet when they sell them the people that buy them. They have no choice, but to hedge that balance sheet. So to sean's point. When you saw the increase in volumes in the time period. He referenced a portion where the fed is not increasing their balance sheet theyre selling treasuries and the folks that are buying them need to hedge those that's why we do quite well.

That scenario. So again, there's no guarantees, but we believe it is setting up in a very similar pattern.

Speaker 11: Yep, yep, no, that's agreed. Thanks very much for the answers. Great color, thank you.

Yes.

Agreed thanks very much for the.

The answers great color. Thank you.

Thank you.

That concludes today's question and answer session I would like to turn the call back to management for any additional or closing remarks.

Speaker 1: Second goes to today's question and session. I will action the call back to management for any additional or closing on there.

Speaker 3: Let me thank all of you for joining us on today's call. We appreciate it very much. Obviously we're excited by the quarter. We're excited by the beginning of 2022. As I said, the landscape that the way it's setting up, we are in a position to continue to help people manage their risk to these most difficult times that we all live in. So please all stay safe and healthy. And we look forward to seeing you also. And thank you.

Let me. Thank all of you for joining us on today's call. We appreciate it very much obviously, we're excited by the quarter. We're excited by the beginning of 2022 as I said the landscape the way it's setting up.

We are in a position to continue to help people manage their risks through these most difficult times that we all live in so please all stay safe and healthy and we look forward to seeing you. All soon thank you.

This concludes today's call. Thank you for your participation you may now disconnect.

Speaker 1: Disconcudate is called. Thank you for your participation. You may know. Disconnect.

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