CME Group Q4 2025 CME Group Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 CME Group Inc Earnings Call
Lines have been placed on a listen-only mode until the question and answer session of today's call.
I would now like to turn the call over to add a minute. Please, go ahead.
Good morning. And I hope you're all doing well today. We released our earnings commentary earlier this morning which provides extensive details on the fourth quarter and full year results for 2025.
I will start with the Safe Harbor language, then I'll turn it over to Terry.
Statements made on this call and in the other reference documents on our website that are not historical facts, our forward-looking statements, these statements are not guarantees of future performance. They involve risks uncertainties and assumptions that are difficult to predict therefore actual outcomes and results May differ materially from what is expressed or implied in any statement detailed information about factors. That may affect our performance can be found in the filings with the SEC, which are on our website.
Lastly, in the earnings release, you will see a Reconciliation between gaap and non-gaap measures following the financial statements with that, I'll turn the call over to Terry.
Thanks Adam, and thank you all for joining us this morning. I'll keep my opening remarks brief to highlight, what was quite simply, the most successful year in CME group's history. Following that Lynn will provide an overview of our financial results and our 2026 guidance. In addition to Lynn, we have other members of our management team present to answer questions after the prepared remarks.
Speaker #1: Welcome to the CME Group fourth quarter, 2025 earnings call. At this time, I would like to inform all participants that your lines have been placed on a listen-only mode until the question and answer session of today's call.
2025 marked our fifth consecutive year of record, volume with average value, average, daily volume increasing 6%,
To 2128.1 million contracts. This growth was broad-based, including all-time record.
Speaker #1: I would now like
Adam Minick: Good morning, and I hope you're all doing well today. We released our earnings commentary earlier this morning, which provides extensive details on our Q4 and full year results for 2025. I will start with the Safe Harbor language, then I'll turn it over to Terry. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements.
Adam Minick: Good morning, and I hope you're all doing well today. We released our earnings commentary earlier this morning, which provides extensive details on our Q4 and full year results for 2025. I will start with the Safe Harbor language, then I'll turn it over to Terry. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements.
In our interest rate energy, medals Agricultural, and crypto complexes. It was also a record year for our international business, which averaged 8.4 million contracts for a day up. 8% from the previous record set in 2024.
Global participants, continue to choose the deep and liquid markets at CME Group to manage their risk.
In addition to our record volume results, we continue to deliver unmatched, Capital, efficiencies, for our customers. In the most recent quarter, our customers, average. Daily margin savings reached 80 billion across. All 6, asset classes representing an increase of approximately 20 billion. Over the past year, the ability to offset margin across asset classes isn't just a nice benefit. It's a necessity for our clients.
Adam Minick: With that, I'll turn the call over to Terry.
Adam Minick: With that, I'll turn the call over to Terry.
Due to the diversity of our asset classes. This offering is a unique benefit for our Market, participants
Terry Duffy: Thanks, Adam, and thank you all for joining us this morning. I'll keep my opening remarks brief to highlight what was quite simply the most successful year in CME Group's history. Following that, Lynne will provide an overview of our financial results and our 2026 guidance. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks. 2025 marked our fifth consecutive year of record volume, with average daily volume increasing 6% to 28.1 million contracts. This growth was broad-based, including all-time record in our interest rate, energy, metals, agricultural, and crypto complexes. It was also a record year for our international business, which averaged 8.4 million contracts per day, up 8% from the previous record set in 2024.
Terry Duffy: Thanks, Adam, and thank you all for joining us this morning. I'll keep my opening remarks brief to highlight what was quite simply the most successful year in CME Group's history. Following that, Lynne will provide an overview of our financial results and our 2026 guidance. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks. 2025 marked our fifth consecutive year of record volume, with average daily volume increasing 6% to 28.1 million contracts. This growth was broad-based, including all-time record in our interest rate, energy, metals, agricultural, and crypto complexes. It was also a record year for our international business, which averaged 8.4 million contracts per day, up 8% from the previous record set in 2024.
Speaker #3: us this morning. I'll keep my the call over to Terry. quite simply the most successful year in CME Group's history. Following that, Lynne will provide an overview of our financial results and our 2026 guidance.
Speaker #3: In addition to Lynne, we have other metals agricultural and crypto complexes. It was also a record year for our international business, which averaged 8.4 million contracts per day up 8% from the previous record set in 2024.
Speaker #3: members of our management team present to answer questions after the prepared remarks. 2025 marked our fifth consecutive year opening remarks brief to highlight what was of record volume, with average daily volume increasing 6% to 21, 28.1 million contracts, this growth was broad-based, including all-time record in our interest rate energy
In December, we received approval from the US Securities and Exchange Commission for CME. Securities clearing, we are on track to launch this new Clearing House later this year. In advance of the sec's US Treasury clearing mandate this. Combined with our work to extend CME, F cross margining to end user clients in early. 2026 will unlock even more Capital efficiencies for the industry.
Innovation continues to accelerate our growth. And in Q4, we expanded, our retail footprint, throughout the launch of event contracts on financial and commodity products, economic indicators and sports
Speaker #3: Global participants continue to markets at CME Group to manage their choose the deep and liquid risk. In addition to our record volume results, we continue to deliver unmatched capital efficiencies for our customers' average daily margin savings reached $80 billion across all six asset classes.
Terry Duffy: Global participants continue to choose the deep and liquid markets at CME Group to manage their risk. In addition to our record volume results, we continue to deliver unmatched capital efficiencies for our customers. In the most recent quarter, our customers' average daily margin savings reached $80 billion across all six asset classes, representing an increase of approximately $20 billion over the past year. The ability to offset margin across asset classes isn't just a nice benefit, it's a necessity for our clients. Due to the diversity of our asset classes, this offering is a unique benefit for our market participants. In December, we received approval from the US Securities and Exchange Commission for CME Securities Clearing. We are on track to launch this new clearinghouse later this year in advance of the SEC's US Treasury clearing mandate.
Terry Duffy: Global participants continue to choose the deep and liquid markets at CME Group to manage their risk. In addition to our record volume results, we continue to deliver unmatched capital efficiencies for our customers. In the most recent quarter, our customers' average daily margin savings reached $80 billion across all six asset classes, representing an increase of approximately $20 billion over the past year. The ability to offset margin across asset classes isn't just a nice benefit, it's a necessity for our clients. Due to the diversity of our asset classes, this offering is a unique benefit for our market participants. In December, we received approval from the US Securities and Exchange Commission for CME Securities Clearing. We are on track to launch this new clearinghouse later this year in advance of the SEC's US Treasury clearing mandate.
This initiative represents the next step in our multi-year strategy, to expand our customer base by providing greater access to markets for the next generation of Traders. While still early days. These products are delivering promising, initial results, and generated traction, with previously, untapped customer segments.
Over 68 million of these event contracts have traded in the 6 weeks since launch including over 7 million markets, related contracts.
Speaker #3: Representing an increase of offset margin across asset classes isn't just a nice benefit; approximately $20 billion over the past diversity of our asset classes, this offering is a unique benefit for our market participants.
Our retail focused products also drove strong performance in 2025 with micro products. Up 59%, in Q4 to a record, 4.4 million contracts per day
The 1 oz gold contract that we launched last year has been successful with Q4 volume of 66,000 per day.
Speaker #3: In December, we received approval from the U.S. Securities and Exchange customers. Commission for CME Securities clearing. We are on track to launch In the most recent quarter, our year. year.
Next week, we will be launching a 100 oz, silver contract, which will help the retail Community manage exposure, or invest in that. Commodity at a time when the pressure's Metals markets are very active,
Speaker #3: In advance of the SEC's this new clearinghouse later this U.S. Treasury clearing mandate, this combined with our work to extend CME FIC cross-margining to end-user clients in early 2026 will efficiencies for the industry.
Terry Duffy: This, combined with our work to extend CME/FICC cross margining to end user clients in early 2026, will unlock even more capital efficiencies for the industry. Innovation continues to accelerate our growth, and in Q4, we expanded our retail footprint through the launch of event contracts on financial and commodity products, economic indicators, and sports. This initiative represents the next step in our multi-year strategy to expand our customer base by providing greater access to markets for the next generation of traders. While still early days, these products are delivering promising initial results and generated traction with previously untapped customer segments. Over 68 million of these event contracts have traded in the 6 weeks since launch, including over 7 million markets-related contracts.
Terry Duffy: This, combined with our work to extend CME/FICC cross margining to end user clients in early 2026, will unlock even more capital efficiencies for the industry. Innovation continues to accelerate our growth, and in Q4, we expanded our retail footprint through the launch of event contracts on financial and commodity products, economic indicators, and sports. This initiative represents the next step in our multi-year strategy to expand our customer base by providing greater access to markets for the next generation of traders. While still early days, these products are delivering promising initial results and generated traction with previously untapped customer segments. Over 68 million of these event contracts have traded in the 6 weeks since launch, including over 7 million markets-related contracts.
Finally, in 2025 was a record-breaking year for CME cryptocurrency trading at CME Group, in the fourth quarter, average, daily volume of cross. The complex of 379,000 was up 92% and represented over 13 billion in notional, value traded per day.
Speaker #3: Q4, we expanded our retail accelerate our growth and, in footprint throughout the launch of event contracts on financial and commodity products, economic indicators, and sports.
Speaker #3: This initiative represents the next step in our multi-year strategy to expand our customer base by providing greater access to markets for the next generation of traders.
Speaker #3: While still early days, these products are delivering promising initial results and generated traction with previously untapped customer of these event contracts have traded segments.
24/7 trading for our entire crypto Suite. Next quarter to enable our customers to hedge exposure, to the underlying cash markets, for these products, which currently trade throughout the weekend as markets. Continue to evolve, we will strategically evaluate whether other asset classes would also benefit from 24/7. We've carried the momentum from a record setting year in 2026 with new volume records in January.
Speaker #3: in the six weeks since launch, including over 7 million Over 68 million markets-related contracts. Our retail focused products also drove strong performance in 2025 with micro products up 59%.
Terry Duffy: Our retail-focused products also drove strong performance in 2025, with Micro Products up 59% in Q4 to a record 4.4 million contracts per day. The 1-ounce gold contract that we launched last year has been successful, with Q4 volume of 66,000 per day. Next week, we will be launching a 100-ounce silver contract, which will help the retail community manage exposure or invest in that commodity at a time when the precious metals markets are very active. Finally, 2025 was a record-breaking year for CME cryptocurrency trading at CME Group. In Q4, average daily volume across the complex of 379,000 was up 92% and represented over $13 billion in notional value traded per day.
Terry Duffy: Our retail-focused products also drove strong performance in 2025, with Micro Products up 59% in Q4 to a record 4.4 million contracts per day. The 1-ounce gold contract that we launched last year has been successful, with Q4 volume of 66,000 per day. Next week, we will be launching a 100-ounce silver contract, which will help the retail community manage exposure or invest in that commodity at a time when the precious metals markets are very active. Finally, 2025 was a record-breaking year for CME cryptocurrency trading at CME Group. In Q4, average daily volume across the complex of 379,000 was up 92% and represented over $13 billion in notional value traded per day.
While the macro landscape grows increasingly complex, we remain focused on providing. The premier risk management tools are clients need to navigate Market shifts, but that I'll turn the call over to Lynn to review the financial results in more detail.
Speaker #3: In Q4, to a record 4.4 million contracts per day. The one-ounce gold contract that we successful, with Q4 volume launched last year has been of 66,000 per day.
Thanks Terry. And thank you all for joining us this morning. In addition to the volume records Terry. Discussed we delivered our fourth consecutive year of record revenues and adjusted net income in 2025.
Speaker #3: Next week, we will be launching a 100-ounce silver contract, which will help the retail community manage exposure or invest in that commodity at a time when the pressures metals markets are very active.
Our revenue of 6.5 billion grew 6% compared to 2024 and included annual revenue records in 5 out of our 6 asset classes.
Our Market data Revenue surpassed 800 million for the first time up. 13% from 2024.
Speaker #3: year for CME cryptocurrency trading at CME Group. In the fourth quarter, average daily volume across the complex of and represented over $13 billion in notional value traded per $379,000 was up 92% day.
Adjusted annual expenses. Excluding license fees were approximately 1.625 billion and are adjusted operating margin for the year. Was 69.4% of 110 basis points from 2024
Terry Duffy: This strength has continued into 2026, and next week we will be expanding our cryptocurrency offering with the launch of Cardano, Chainlink, and Stellar Futures on 9 February. We'll begin offering 24/7 trading for our entire crypto suite next quarter to enable our customers to hedge exposure to the underlying cash markets for these products, which currently trade throughout the weekend. As markets continue to evolve, we will strategically evaluate whether other asset classes would also benefit from 24/7. We've carried the momentum from a record-setting year in 2026, with new volume records in January. While the macro landscape grows increasingly complex, we remain focused on providing the premier risk management tools our clients need to navigate market shifts. With that, I'll turn the call over to Lynne to review the financial results in more detail.
Terry Duffy: This strength has continued into 2026, and next week we will be expanding our cryptocurrency offering with the launch of Cardano, Chainlink, and Stellar Futures on 9 February. We'll begin offering 24/7 trading for our entire crypto suite next quarter to enable our customers to hedge exposure to the underlying cash markets for these products, which currently trade throughout the weekend. As markets continue to evolve, we will strategically evaluate whether other asset classes would also benefit from 24/7. We've carried the momentum from a record-setting year in 2026, with new volume records in January. While the macro landscape grows increasingly complex, we remain focused on providing the premier risk management tools our clients need to navigate market shifts. With that, I'll turn the call over to Lynne to review the financial results in more detail.
Speaker #3: into 2026, and next This strength has continued week we will be expanding our cryptocurrency offering with the launch of Cardano, Chainlink, and Stellar Futures on February 9th.
We delivered 4.1 billion in adjusted net income. Resulting in 9% adjusted. Earnings per share growth for the year.
During the fourth quarter CME Group generated revenue of 1.65 billion and 8% increase from Q4 24.
Speaker #3: We'll begin offering 24/7 trading for our entire crypto suite next quarter to enable our customers to hedge exposure to the underlying cash markets for these products, which currently trade throughout the weekend.
The average rate for contract for the quarter was 70.7 cents, driving clearing and transaction fees of 1.3 billion up 8% from last year.
Speaker #3: evolve, we will strategically evaluate whether other asset As markets continue to classes would also benefit from 24/7. We've carried the momentum from a record-setting year in 2026 with new volume records in January.
Market data reached a new record level up. 15% to 208 million.
Adjusted expenses were 543 million for the quarter and 447 million, excluding license fees.
Are adjusted operating income was 1.1 billion or a 67% operating margin for the quarter.
Speaker #3: As the landscape grows increasingly complex, we remain focused on providing the premier risk management tools our clients need to navigate market shifts. With that, I'll turn the call over to Lynne to review the financial results in more detail.
CME Group, had an adjusted effective tax rate of 23.7%.
Adjusted net income and adjusted diluted earnings per share came in at 1 billion and 2.77 cents per share, 10% higher than Q4 2024.
Speaker #3: detail.
Speaker #2: Thanks, Terry, and thank you all.
Lynne Fitzpatrick: Thanks, Terry, and thank you all for joining us this morning. In addition to the volume records Terry discussed, we delivered our fourth consecutive year of record revenues and adjusted net income in 2025. Our revenue of $6.5 billion grew 6% compared to 2024, and included annual revenue records in five out of our six asset classes. Our market data revenue surpassed $800 million for the first time, up 13% from 2024. Adjusted annual expenses, excluding license fees, were approximately $1.625 billion, and our adjusted operating margin for the year was 69.4%, up 110 basis points from 2024. We delivered $4.1 billion in adjusted net income, resulting in 9% adjusted earnings per share growth for the year.
Lynne Fitzpatrick: Thanks, Terry, and thank you all for joining us this morning. In addition to the volume records Terry discussed, we delivered our fourth consecutive year of record revenues and adjusted net income in 2025. Our revenue of $6.5 billion grew 6% compared to 2024, and included annual revenue records in five out of our six asset classes. Our market data revenue surpassed $800 million for the first time, up 13% from 2024. Adjusted annual expenses, excluding license fees, were approximately $1.625 billion, and our adjusted operating margin for the year was 69.4%, up 110 basis points from 2024. We delivered $4.1 billion in adjusted net income, resulting in 9% adjusted earnings per share growth for the year.
Speaker #2: for joining us this morning. to the volume records Terry discussed, In addition we delivered our fourth consecutive year of record revenues and adjusted net income in 2025.
Cash at the end of the quarter was approximately 4.6 billion including 1.3 billion in remaining ostra proceeds.
Our board has approved, the use of these proceeds towards share repurchases over time.
Speaker #2: Our revenue of $6.5 billion grew 6% compared to 2024 and included annual revenue records in five out of our six asset classes. Our market data revenue surpassed $800 million for the first time, up 13% from 2024.
We repurchase 256 million in shares during the fourth quarter and additional 276 million in shares, thus far in 2026.
CM group, pay dividends of 455 million in the fourth quarter, and approximately 3.9 billion in 2025.
Speaker #2: Excluding license fees, expenses were approximately $1.625 billion. Adjusted annual expenses and our adjusted operating margin for the year was 69.4%, up 110 basis points from 2024.
As announced last year, the annual variable dividend declaration and payment dates have been aligned with our q1 regular dividends and will be declared next week.
Speaker #2: We delivered $4.1 billion in adjusted net earnings per share growth for the year. During the fourth quarter, income, resulting in 9% adjusted CME Group generated revenue of $1.65 billion and 8% increase from Q4 '24.
Earlier this week, we published a transaction fee changes which will be effective April 1st.
Lynne Fitzpatrick: During the fourth quarter, CME Group generated revenue of $1.65 billion, an 8% increase from Q4 2024. The average rate per contract for the quarter was $0.707, driving clearing and transaction fees of $1.3 billion, up 8% from last year. Market data reached a new record level, up 15% to $208 million. Adjusted expenses were $543 million for the quarter, and $447 million, excluding license fees. Our adjusted operating income was $1.1 billion, or a 67% operating margin for the quarter. CME Group had an adjusted effective tax rate of 23.7%. Adjusted net income and adjusted diluted earnings per share came in at $1 billion and $2.77 per share, 10% higher than Q4 2024.
Lynne Fitzpatrick: During the fourth quarter, CME Group generated revenue of $1.65 billion, an 8% increase from Q4 2024. The average rate per contract for the quarter was $0.707, driving clearing and transaction fees of $1.3 billion, up 8% from last year. Market data reached a new record level, up 15% to $208 million. Adjusted expenses were $543 million for the quarter, and $447 million, excluding license fees. Our adjusted operating income was $1.1 billion, or a 67% operating margin for the quarter. CME Group had an adjusted effective tax rate of 23.7%. Adjusted net income and adjusted diluted earnings per share came in at $1 billion and $2.77 per share, 10% higher than Q4 2024.
Take it in aggregate. With the market data fee change, which took effect January 1st and incentive program revisions the fee adjustments would increase total revenue by approximately 1 to 1 and a half percent on similar activity to 2025.
Speaker #2: The average rate per contract for the quarter was 70.7 cents, driving clearing and transaction fees of $1.3 billion, up 8% from last year. Market data reached a new record level, up 15% to $208 million.
We will be evaluating transaction fees on a regular basis going forward. And may make changes as conditions warrant versus aggregating in December, as in past years.
Speaker #2: Adjusted expenses were $543 million for the quarter and $447 million excluding license fees. Our adjusted operating income was $1.1 billion the quarter. CME Group had an adjusted effective tax rate of 23.7%.
For 2026 guidance. We expect total adjusted operating expenses. Excluding licenses to be approximately 1.695 billion.
This includes our typical core expense growth as well as reinvestment related to the new initiatives. Ramping up this year, including 24/7 crypto trading, Securities, clearing, and event, contracts,
We are dedicated to continuously evolving our products that an offering a commitment that requires Strategic investment for growth.
Speaker #2: Adjusted net income and adjusted diluted earnings per share came in at $1 billion and $2.77 per share, 10% higher than Q4 2024. Cash at the end of the quarter was approximately $1.3 billion, with remaining cash of $4.6 billion including OSTRA proceeds.
Lynne Fitzpatrick: Cash at the end of the quarter was approximately $4.6 billion, including $1.3 billion in remaining Austra proceeds. Our board has approved the use of these proceeds towards share repurchases over time. We repurchased $256 million in shares during the fourth quarter, an additional $276 million in shares thus far in 2026. CME Group paid dividends of $455 million in the fourth quarter and approximately $3.9 billion in 2025. As announced last year, the annual variable dividend declaration and payment dates have been aligned with our Q1 regular dividend and will be declared next week. Earlier this week, we published transaction fee changes, which will be effective 1 April.
Lynne Fitzpatrick: Cash at the end of the quarter was approximately $4.6 billion, including $1.3 billion in remaining Austra proceeds. Our board has approved the use of these proceeds towards share repurchases over time. We repurchased $256 million in shares during the fourth quarter, an additional $276 million in shares thus far in 2026. CME Group paid dividends of $455 million in the fourth quarter and approximately $3.9 billion in 2025. As announced last year, the annual variable dividend declaration and payment dates have been aligned with our Q1 regular dividend and will be declared next week. Earlier this week, we published transaction fee changes, which will be effective 1 April.
Total cap, capital expenditures are expected to be 85 million and the adjusted effective tax rate should become in between 23.5 and 24.5%.
Speaker #2: Our board has approved the use of these proceeds towards share repurchases over time. We repurchased 256 million in shares during the fourth quarter. An additional $276 million in shares thus far in 2026.
We are proud of the record-breaking results. The Firm has delivered this year, driving 6%, Revenue growth and 9% adjusted earnings growth. On top of the record set in 2024, we encouraged by the strong activity to date in 2026 and remain focused on helping our clients navigate this complex environment.
Speaker #2: CME Group paid dividends of $455 million in the fourth quarter and approximately $3.9 billion in 2025. As announced last year, the annual variable dividend declaration and payment dates have been aligned with our Q1 regular dividends, and we'll be declared next week.
We now like to open up the call for your questions. Thank you.
At this time, we will now begin the question and answer session. If you would like to ask a question, please first, unmute your phone and then press star 1.
Speaker #2: Earlier this week, we published transaction fee changes, which will be effective April 1st. Taken in aggregate with the market data fee change, which took effect January 1st, and incentive program revisions, the fee adjustments would increase total revenue by approximately 1 to 1.5% on similar activity to 2025.
At any time, if you wish to remove your question, you can press start to to remove yourself from the question to you 1. Moment, please for our first question.
Lynne Fitzpatrick: Taken in aggregate with the market data fee change, which took effect 1 January, and incentive program revisions, the fee adjustments would increase total revenue by approximately 1 to 1.5% on similar activity to 2025. We will be evaluating transaction fees on a regular basis going forward and may make changes as conditions warrant versus aggregating in December, as in past years. For 2026 guidance, we expect total adjusted operating expenses, excluding license fees, to be approximately $1.695 billion. This includes our typical core expense growth, as well as reinvestment related to the new initiatives ramping up this year, including 24/7 crypto trading, securities clearing, and event contracts. We are dedicated to continuously evolving our product set and offerings, a commitment that requires strategic investment for growth.
Lynne Fitzpatrick: Taken in aggregate with the market data fee change, which took effect 1 January, and incentive program revisions, the fee adjustments would increase total revenue by approximately 1 to 1.5% on similar activity to 2025. We will be evaluating transaction fees on a regular basis going forward and may make changes as conditions warrant versus aggregating in December, as in past years. For 2026 guidance, we expect total adjusted operating expenses, excluding license fees, to be approximately $1.695 billion. This includes our typical core expense growth, as well as reinvestment related to the new initiatives ramping up this year, including 24/7 crypto trading, securities clearing, and event contracts. We are dedicated to continuously evolving our product set and offerings, a commitment that requires strategic investment for growth.
The first question will come from Dan Fannon of Jeffrey's. Your line is open.
Speaker #2: We will be evaluating transaction fees on a regular basis going forward and may make changes as conditions warrant versus aggregating in December as in past years.
Speaker #2: For 2026 guidance, we expect total adjusted operating expenses excluding license fees to be approximately $1.695 billion. This includes our typical core expense growth as well as reinvestment related to the new initiatives ramping up this year, including 24/7 crypto trading, securities clearing, and event contracts.
Good morning. Um, wanted to talk about just the current environment and activity you know the health of your customer base in aggregate as well. Just given some of the volatility you guys have raised margin requirements. I think in the medals complex a few times, we've seen really large swings in in the underlying. So was hoping just to get a little bit more context around how, you know you think the customer base is performing through these kind of elevated periods of volatility.
Speaker #2: We are dedicated to continuously evolving our product set and offerings, a commitment that requires strategic investment for growth. Total capital expenditures are expected to be approximately $85 million.
Lynne Fitzpatrick: Total capital expenditures are expected to be approximately $85 million, and the adjusted effective tax rate should come in between 23.5% and 24.5%. We are proud of the record-breaking results the firm has delivered this year, driving 6% revenue growth and 9% adjusted earnings growth on top of the record set in 2024. We're encouraged by the strong activity to date in 2026 and remain focused on helping our clients navigate this complex environment. We'd now like to open up the call for your questions. Thank you.
Lynne Fitzpatrick: Total capital expenditures are expected to be approximately $85 million, and the adjusted effective tax rate should come in between 23.5% and 24.5%. We are proud of the record-breaking results the firm has delivered this year, driving 6% revenue growth and 9% adjusted earnings growth on top of the record set in 2024. We're encouraged by the strong activity to date in 2026 and remain focused on helping our clients navigate this complex environment. We'd now like to open up the call for your questions. Thank you.
Speaker #2: And the adjusted effective tax rate should become in between 23.5 and 24.5%. We are proud of the record-breaking results the firm has delivered this year, driving 6% revenue growth and 9% adjusted earnings growth on top of the record set in 2024.
Yeah. And I'm sorry, Duffy thank you for your question. And I think there's a couple of interesting examples to how the customer is looking at 1 that can be a reflection of open positions as we talked about possibly, uh, with with the analyst investors and others. I think we're sitting around 125 million open positions today, but let's specifically talk about 1 product, which you mentioned, which is silver and I'll ask Derek to chime in but
Speaker #2: date in 2026 and remain We are encouraged by the strong activity to focused on helping our clients navigate this complex environment. We'd now like to open up the call for your questions.
Speaker #2: Thank
Speaker #2: you. At this time, we will now begin the
Operator: At this time, we will now begin the question and answer session. If you would like to ask a question, please first unmute your phone and then press star one. At any time, if you wish to remove your question, you can press star two to remove yourself from the question queue. One moment, please, for our first question. The first question will come from Dan Fannon of Jefferies. Your line is open.
Operator: At this time, we will now begin the question and answer session. If you would like to ask a question, please first unmute your phone and then press star one. At any time, if you wish to remove your question, you can press star two to remove yourself from the question queue. One moment, please, for our first question. The first question will come from Dan Fannon of Jefferies. Your line is open.
Speaker #3: question and answer session. If you would like to ask a question, please first unmute your phone and then press Star 1. At any time, if you wish to remove your question, you can press Star 2 to remove yourself from the question queue.
Speaker #3: One moment, please. For our first question. The first question will come from Dan Fannon of Jefferies. Your line is open.
When we change the margins on Silver, some thought that the market would sell off. We went to a notional margin regime because of the activity related to Silver and just on that particular product, that didn't affect the customer base or the product at all, because it went and made a new historic High, not went down the other way. So I would say the customer is healthy because of the market direction of which it went, which would tell you that some of the retail participants, which are traditionally long people, and others set, new highs in lie of the way, the margins were going forward. So I would say, overall, the customers very healthy throughout these all the different asset classes, but I wanted to call out your example of
Speaker #4: Thanks. Good morning. I wanted to talk about just the current environment and activity. The health of your customer base in aggregate as well. Just given some of the volatility you guys have raised margin requirements, I think in the metals complex a few times, we've seen really large swings in the underlying.
[Analyst] (Jefferies): Thanks. Good morning. Wanted to talk about just the current environment and activity, you know, the health of your customer base in aggregate as well. Just given some of the volatility, you guys have raised margin requirements, I think, in the metals complex a few times. We've seen really large swings in the underlying. So was hoping just to get a little bit more context around how, you know, you think the customer base is performing through these kind of elevated periods of volatility.
Dan Fannon: Thanks. Good morning. Wanted to talk about just the current environment and activity, you know, the health of your customer base in aggregate as well. Just given some of the volatility, you guys have raised margin requirements, I think, in the metals complex a few times. We've seen really large swings in the underlying. So was hoping just to get a little bit more context around how, you know, you think the customer base is performing through these kind of elevated periods of volatility.
Speaker #4: So I was hoping to just get a little bit more context around how you think the customer base is performing through these kind of elevated periods of volatility.
Speaker #4: So I was hoping to just get a little bit more context around how you think the customer base is performing through these kind of elevated periods of
Silver. Do you want to add to that Derek? Yeah, I think Terry made some good points there. I mean, the, the important part about that health of that market right now is, we're seeing all our clients segments grow. Yes, retail is growing, but our institutional base is growing double digits right now. Um, I think Daniel also, look at the quality of the market. In terms of open interest open interest is steady to increasing. We're seeing volume increases across all regions as well as Futures and options. So those are kind of indicators of a of a risk on environment, I think price up and price down, but we're seeing a health ecosystem. And I think risk management uh, is 1 of the reasons why customers choose and institutional customers specifically to do their business at C group,
Speaker #5: Dan, I'm Terry Duffy. Thank you for your question. And I think there's a couple of interesting examples to how the customer is looking at.
Terry Duffy: Dan, it's Terry Duffy. Thank you for your question, and I think there's a couple of interesting examples to how the customer is looking at. One, it can be a reflection of open positions as we talk about constantly, with, with, analysts, investors, and others. I think we're sitting around 125 million open positions today, but let's specifically talk about one product, which you mentioned, which is silver, and I'll ask Derek to chime in. But when we changed the margins on silver, some thought that the market would sell off. We went to a notional margin regime because of the activity related to silver and just on that particular product. That didn't affect the customer base or the product at all because it went and made a new historic high, not went down the other way.
Terry Duffy: Dan, it's Terry Duffy. Thank you for your question, and I think there's a couple of interesting examples to how the customer is looking at. One, it can be a reflection of open positions as we talk about constantly, with, with, analysts, investors, and others. I think we're sitting around 125 million open positions today, but let's specifically talk about one product, which you mentioned, which is silver, and I'll ask Derek to chime in. But when we changed the margins on silver, some thought that the market would sell off. We went to a notional margin regime because of the activity related to silver and just on that particular product. That didn't affect the customer base or the product at all because it went and made a new historic high, not went down the other way.
Great, appreciate the comments.
Thanks, Dan.
Speaker #5: One of them can be a reflection of open positions, as we talk about constantly with the analysts, investors, and others. I think we're sitting around 125 million open positions today, but let's specifically talk about one product which you mentioned, which is Silver.
The next question will come from Patrick moly of Piper Sandler. Your line is open sir.
Speaker #5: Now, as Derek to chime in, but when we changed the margins on Silver, some thought that the market would sell off. We went to a notional margin regime because of the activity related to Silver and just on that particular product.
Speaker #5: That didn't affect the customer base or the product at all, because it went and made a new historic high, not went down the other way.
Speaker #5: So I would say the customer is healthy because of the market direction of which it went, which would tell you that some of the retail participants which were traditionally long people and others set new highs in lieu of the way the margins were going forward.
Good morning. Thanks for taking the question. Um, and congrats on the launch of the prediction Market offering. And the JV with FanDuel I was hoping you could talk about what you've seen today in terms of Engagement and inbounds from market makers and institutions who are looking at the prediction Market space both in sports and non-sport contracts. And then as the second part of that, Terry would love to get your updated thoughts, just on the legal and Regulatory landscape around prediction markets. And some of the comments that have come out of the cftc, recently, kind of pledging to create clear, rules of the road and defend their jurisdiction there. Thanks.
Terry Duffy: So I would say the customer is healthy because of the market direction of which it went, which would tell you that some of the retail participants, which are traditionally long people and others, set new highs in lieu of the way the margins were going forward. So I would say overall, the customer is very healthy throughout all the different asset classes, but I wanted to call out your example of silver. Do you want to add to that, Derek?
Terry Duffy: So I would say the customer is healthy because of the market direction of which it went, which would tell you that some of the retail participants, which are traditionally long people and others, set new highs in lieu of the way the margins were going forward. So I would say overall, the customer is very healthy throughout all the different asset classes, but I wanted to call out your example of silver. Do you want to add to that, Derek?
Speaker #5: So I would say overall the customer is very healthy. Throughout all the different asset classes, but I wanted to call out your example of Silver.
Speaker #5: Do you want to add to that, Derek?
Speaker #6: Yeah, I think Terry made some good points there. I mean, the important part about that health of that market right now is we're seeing all our client segments grow.
Lynne Fitzpatrick: Yeah, I think Terry made some good points there. I mean, the important part about the health of that market right now is we're seeing all our client segments grow. Yes, retail is growing, but our institutional base is growing double digits right now. I think, Dan, you also look at the quality of the market in terms of open interest. Open interest is steady to increasing. We're seeing volume increases across all regions, as well as futures and options. So those are again indicators of a risk-on environment. I think price up and price down, but we're seeing a healthy ecosystem. I think risk management.
Derek Sammann: Yeah, I think Terry made some good points there. I mean, the important part about the health of that market right now is we're seeing all our client segments grow. Yes, retail is growing, but our institutional base is growing double digits right now. I think, Dan, you also look at the quality of the market in terms of open interest. Open interest is steady to increasing. We're seeing volume increases across all regions, as well as futures and options. So those are again indicators of a risk-on environment. I think price up and price down, but we're seeing a healthy ecosystem. I think risk management.
Uh, Patrick, thank you. I'm gonna ask Tim to touch a little bit on the market makers, uh, as it relates to the prediction markets and in sports, and the other things you referenced, I'll touch on the Regal, uh, the legal and the regulatory. Uh, I just met with the, the new chairman of the cftc, which I'll update you on, but I'll let him go first. Thanks Terry. And thanks. Patrick for the question.
Speaker #6: Yes, retail is growing, but our institutional base is growing double-digits right now. I think Danny also looked at the quality of the market in terms of open interest.
Speaker #6: Open interest is steady to increasing. We're seeing volume increases across all regions as well as futures and options. So those are going to indicators of a risk-on environment.
Speaker #6: I think price up and price down, but we're seeing a healthy ecosystem. I think risk management is one of the reasons why customers choose and institutional customers specifically to do their business at CME Group.
Julie Winkler: ... is one of the reasons why customers choose, and institutional customers specifically, to do their business at CME Group.
Derek Sammann: ... is one of the reasons why customers choose, and institutional customers specifically, to do their business at CME Group.
Speaker #4: Great. Appreciate the
[Analyst] (Barclays): Great. Appreciate the comments.
Dan Fannon: Great. Appreciate the comments.
Speaker #4: comments. Thanks,
Terry Duffy: Thanks, Dan.
Terry Duffy: Thanks, Dan.
Speaker #5: Dan. The next question will come from
Operator: The next question will come from Patrick Moley of Piper Sandler. Your line is open, sir.
Operator: The next question will come from Patrick Moley of Piper Sandler. Your line is open, sir.
Speaker #3: Patrick Moley of Piper Sandler. Your line is open,
Speaker #3: sir.
[Analyst] (Piper Sandler): Yes, good morning. Thanks for taking the question. And congrats on the launch of the prediction market offering and the JV with FanDuel. I was hoping you could talk about what you've seen to date in terms of engagement and inbounds from market makers and institutions who are looking at the prediction market space, both in sports and non-sport contracts. And then as a second part to that, Terry, would love to get your updated thoughts just on the legal and regulatory landscape around prediction markets and some of the comments that have come out of the CFTC recently, kind of pledging to create clear rules of the road and defend their jurisdiction there. Thanks.
Patrick Moley: Yes, good morning. Thanks for taking the question. And congrats on the launch of the prediction market offering and the JV with FanDuel. I was hoping you could talk about what you've seen to date in terms of engagement and inbounds from market makers and institutions who are looking at the prediction market space, both in sports and non-sport contracts. And then as a second part to that, Terry, would love to get your updated thoughts just on the legal and regulatory landscape around prediction markets and some of the comments that have come out of the CFTC recently, kind of pledging to create clear rules of the road and defend their jurisdiction there. Thanks.
Speaker #4: Thank you for taking the question. And congrats on the launch of the prediction market offering, and the JV with FanDuel. I was hoping you could talk about what you've seen to date in terms of engagement and inbounds from market makers and institutions.
Speaker #4: We're looking at the prediction market space, both in sports and non-sport contracts. And then, as a second part to that, Terry, we'd love to get your updated thoughts just on the legal and regulatory landscape around prediction markets, and some of the comments that have come out of the CFTC recently—kind of pledging to create clear rules of the road and defend their jurisdiction there.
I think, what's been interesting as we've launched the prediction markets at CME Group, we've not only seen new individual participants, come to our Market as we look to attract that next generation of Trader and get more people to trade all products at CME Group across, the traditional markets, Futures based event contracts or sports or seeing new institutional and market makers, reach out to CMI group that are new to CME Group. So I think, when we look at the innovation of the product design, we are pulling Market participants from other parts of the ecosystem where they may be more traditionally Sports based. And they're also coming to our Market to reach out how they can Market make the event contracts at CME Group, how they can take advantage of the liquidity that it is existing at CME Group early days here since we launched in December. So we've been pleased with not only the market maker performance that we've seen on screen in providing liquidity to the marketplace but the number of clients and new clients reaching out asking how they can get involved, that's a great thing to see for a new market, but also great to see new participants being attracted to our
Long-standing Benchmark products and markets at CME Group as well.
Speaker #4: Thanks.
Terry Duffy: Patrick, thank you. I'm gonna ask Tim to touch a little bit on the market makers, as it relates to the prediction markets in sports and the other things you referenced. I'll touch on the regulatory, the legal and the regulatory. I just met with the new chairman of the CFTC, which I'll update you on, but I'll let Tim go first.
Speaker #5: Patrick, thank you. I'm going to ask Tim to touch a little bit on the market makers, as it relates to the prediction markets in sports and the other things you referenced.
Terry Duffy: Patrick, thank you. I'm gonna ask Tim to touch a little bit on the market makers, as it relates to the prediction markets in sports and the other things you referenced. I'll touch on the regulatory, the legal and the regulatory. I just met with the new chairman of the CFTC, which I'll update you on, but I'll let Tim go first.
Speaker #5: I'll touch on the legal and the regulatory. I just met with the new chairman of the CFTC, which I'll update you on, but I'll let Tim go first.
Speaker #4: Thanks, Terry. And thanks, Patrick, for the question. been interesting as we've launched the prediction I think what's markets at CME Group, we've not only seen new individual participants come to our market as we look to attract that next generation of trader and get more people to trade all products at CME Group across the traditional markets, the futures-based event contracts, or sports.
Julie Winkler: Great. Thanks, Terry, and thanks, Patrick, for the question. I think what's been interesting as we've launched the prediction markets at CME Group, we've not only seen new individual participants come to our market as we look to attract that next generation of trader and get more people to trade all products at CME Group across the traditional markets, the futures-based event contracts or sports. We're also seeing new institutional and market makers reach out to CME Group that are new to CME Group.
Tim McCourt: Great. Thanks, Terry, and thanks, Patrick, for the question. I think what's been interesting as we've launched the prediction markets at CME Group, we've not only seen new individual participants come to our market as we look to attract that next generation of trader and get more people to trade all products at CME Group across the traditional markets, the futures-based event contracts or sports. We're also seeing new institutional and market makers reach out to CME Group that are new to CME Group.
Speaker #4: We're also seeing new institutional and market makers reach out to CME Group that are new to CME Group. So I think when we look at the innovation of the product design, we are pulling market participants from other parts of the ecosystem where they may be more traditionally sports-based, and they're also coming to our market to reach out how they can market make the event contracts at CME Group, how they can take advantage of the liquidity that is existing at CME Group, early days here since we launched in December.
Julie Winkler: So I think when we look at the innovation of the product design, we are pulling market participants from other parts of the ecosystem where they may be more traditionally sports-based, and they're also coming to our market to reach out how they can market make the event contracts at CME Group, how they can take advantage of the liquidity that is existing at CME Group. Early days here since we launched in December. So we've been pleased with not only the market maker performance that we've seen on screen in providing liquidity to the marketplace, but the number of clients and new clients reaching out, asking how they can get involved. That's a great thing to see for a new market, but also great to see new participants being attracted to our long-standing benchmark products and markets at CME Group as well.
Tim McCourt: So I think when we look at the innovation of the product design, we are pulling market participants from other parts of the ecosystem where they may be more traditionally sports-based, and they're also coming to our market to reach out how they can market make the event contracts at CME Group, how they can take advantage of the liquidity that is existing at CME Group. Early days here since we launched in December. So we've been pleased with not only the market maker performance that we've seen on screen in providing liquidity to the marketplace, but the number of clients and new clients reaching out, asking how they can get involved. That's a great thing to see for a new market, but also great to see new participants being attracted to our long-standing benchmark products and markets at CME Group as well.
Speaker #4: So we've been pleased with not only the market maker performance that we've seen on screen in providing liquidity to the marketplace, but the number of clients and new clients reaching out, asking how they can get involved.
Speaker #4: That's a great thing to see for a new market, but also great to see new participants being attracted to our long-standing benchmark products and markets at CME Group as well.
So I think that's a very healthy sign for that particular Marketplace, so I really don't want to get involved in the legal battles. In court between the states to tribes the casinos and others about, what if the gaming or not? I think that's not our fight. So on the regulatory side, I will tell you that I believe that the cftc looks as these contracts as swaps as you know, and they are very much wanting to regulate that I did meet with chairman celi, he felt very passionate about that. I want passion, it's my word not his, I would say that he is committed to overseeing this product, um, and I do believe he thinks that they are legal swaps under the cftc's regulation. So that's what I can tell you today. But again, let me emphasize. This we are not going to get bogged down in a bunch of litigation over. Whether this is sports gambling or swaps markets today. They are called swaps markets which we participated in and we will do so. But if in fact there's some litigation that
Speaker #4: So Patrick, on the regulatory and legal side of this, first I'll touch on the legal side. The last thing I'm going to have CME Group do is get tied up in a bunch of legal battles and court over sports.
Terry Duffy: So, Patrick, on the regulatory and legal side of this, first, I'll touch on the legal side. The last thing I'm gonna have CME Group do is get tied up in a bunch of legal battles in court over sports. That's not traditionally our business. We are very focused on the market side of this. We have a great relationship with FanDuel. They are in the sports business. They're an online gaming company, as you know. So we thought it was a good marriage. We still believe it's a massively good marriage to distribute our product through FanDuel, to touch a whole new customer base to trade our products, which I outlined in my opening remarks about the amount of contracts that are being traded on markets, not sports. So I think that's a very healthy sign for that particular marketplace.
Terry Duffy: So, Patrick, on the regulatory and legal side of this, first, I'll touch on the legal side. The last thing I'm gonna have CME Group do is get tied up in a bunch of legal battles in court over sports. That's not traditionally our business. We are very focused on the market side of this. We have a great relationship with FanDuel. They are in the sports business. They're an online gaming company, as you know. So we thought it was a good marriage. We still believe it's a massively good marriage to distribute our product through FanDuel, to touch a whole new customer base to trade our products, which I outlined in my opening remarks about the amount of contracts that are being traded on markets, not sports. So I think that's a very healthy sign for that particular marketplace.
Speaker #4: That's not traditionally our business. We are very focused on the market side of this. We have a great relationship with FanDuel. They are in the sports business.
we don't like we will not pursue that particular asset class and tie up our shareholders and others in court cases over this because I think there's enough people in that fight but we will remain in the business as long as it's overseen by the commodity Futures Trading commission and they deem it to be a legal swap.
Great, thank you both.
Thank you.
Speaker #4: They're an online gaming company, as you know. So we thought it was a good marriage. We still believe it's a massively good marriage to distribute our product through FanDuel to touch a whole new customer base, to trade our products—which I outlined in my opening remarks—about the amount of contracts that are being traded on markets, not sports.
The next question will come from Benjamin Buddhist of Barclays. Your line is open sir.
Speaker #4: So I think that's a very healthy sign for that particular marketplace. So I really don't want to get involved in the legal battles in court between the states, the tribes, the casinos, and others, about if the gaming or not.
Terry Duffy: So I really don't want to get involved in the legal battles in court between the states, the tribes, the casinos, and others about what if it's gaming or not. I think that's not our fight. So on the regulatory side, I will tell you that I believe that the CFTC looks as these contracts as swaps, as you know, and they are very much wanting to regulate that. I did meet with Chairman Selig. He felt very passionate about that. I want... Passionate is my word, not his. I would say that he is committed to overseeing this product, and I do believe he thinks that they are legal swaps under the CFTC's regulation. So that's what I can tell you to date.
Terry Duffy: So I really don't want to get involved in the legal battles in court between the states, the tribes, the casinos, and others about what if it's gaming or not. I think that's not our fight. So on the regulatory side, I will tell you that I believe that the CFTC looks as these contracts as swaps, as you know, and they are very much wanting to regulate that. I did meet with Chairman Selig. He felt very passionate about that. I want... Passionate is my word, not his. I would say that he is committed to overseeing this product, and I do believe he thinks that they are legal swaps under the CFTC's regulation. So that's what I can tell you to date.
Speaker #4: I think that's not our fight. So on the regulatory side, I will tell you that I believe that the CFTC looks as these contracts as swaps, as you know.
Speaker #4: And they are very much wanting to regulate that. I did meet with Chairman Selig; he felt very passionate about that. I want passionate is my word, not his.
Speaker #4: I would say that he is committed to overseeing this product. And I do believe he thinks that they are legal swaps under the CFTC's regulation.
Hi, good morning, and thank you for taking the question. Um, I was wondering if you could address the pricing changes made, I think there was an announcement quite recently. I know, Market data pricing went into effect earlier the year earlier in the year. Um, just curious if there's any other puts and takes by asset class, obviously from your release, we saw that the rates, um, asset class is not seeing any other changes, but just curious if there's any other, um, contacts, anything else, you could share around the thought process for this year. Thank you. Yeah, Ben. Thank you. Um, I'm going to ask Julie Winkler, my chief commercial officer to comment on the market data, not only the pricing, but the business itself which gives her an opportunity to talk about that because I think it's really important component to see me then Lynn can address the other part of your question. Sure. Yeah, thanks for your question. Uh, Benjamin. We we did in January 1st, uh, Institute, a 3.5% rack rate increase across most of our Market data products.
Speaker #4: So that's what I can tell you to date. But again, let me emphasize this. We are not going to get bogged down in a bunch of litigation over whether this is sports, gambling, or swaps markets.
Terry Duffy: But again, let me emphasize this: We are not going to get bogged down in a bunch of litigation over whether this is sports gambling or swaps markets. Today, they are called swaps markets, which we participate in, and we will do so. But if, in fact, there's some litigation that we don't like, we will not pursue that particular asset class and tie up our shareholders and others in court cases over this, because I think there's enough people in that fight. But we will remain in the business as long as it's overseen by the Commodity Futures Trading Commission, and they deem it to be a legal swap.
Terry Duffy: But again, let me emphasize this: We are not going to get bogged down in a bunch of litigation over whether this is sports gambling or swaps markets. Today, they are called swaps markets, which we participate in, and we will do so. But if, in fact, there's some litigation that we don't like, we will not pursue that particular asset class and tie up our shareholders and others in court cases over this, because I think there's enough people in that fight. But we will remain in the business as long as it's overseen by the Commodity Futures Trading Commission, and they deem it to be a legal swap.
Speaker #4: Today, they are called swaps markets, which we participate in, and we will do so. But if, in fact, there's some litigation that we don't like, we will not pursue that particular asset class and tie up our shareholders and others in court cases over this.
And you know, this was really a continuation of our, our price to Value adjustments. You know, in ensuring that our Data Business, certainly remains uh resilient and we have proven given the record uh 800 million in annual revenue, that was referenced earlier. In our call this marks, the 31st consecutive quarter of growth for our data business. So Q4 we saw, you know, up Revenue up, 15% to 28,
Speaker #4: Because I think there's enough people in that fight. But we will remain in the business as long as it's overseen by the commodity futures trading commission, and they deem it to be a legal swap.
Speaker #4: Great. Thank you both.
[Analyst] (Piper Sandler): Great. Thank you both.
Patrick Moley: Great. Thank you both.
Speaker #5: Thank
Terry Duffy: Thank you.
Terry Duffy: Thank you.
Speaker #3: The next question will come from Benjamin Buddish of Barclays. Your line is open, sir.
Operator: The next question will come from Benjamin Budish of Barclays. Your line is open, sir.
Operator: The next question will come from Benjamin Budish of Barclays. Your line is open, sir.
Speaker #7: Hi, good morning, and thank you for taking the question. I was wondering if you could address the pricing changes made. I think there was an announcement quite recently.
[Analyst] (Barclays): Hi, good morning, and thank you for taking the question. I was wondering if you could address the pricing changes made. I think there was an announcement quite recently. I know, market data pricing went into effect earlier in the year. Just curious if there's any other puts and takes, by asset class. Obviously, from your release, we saw that the rates asset class is not seeing any other changes, but just curious if there's any other context, anything else you could share around the thought process for this year. Thank you.
Benjamin Budish: Hi, good morning, and thank you for taking the question. I was wondering if you could address the pricing changes made. I think there was an announcement quite recently. I know, market data pricing went into effect earlier in the year. Just curious if there's any other puts and takes, by asset class. Obviously, from your release, we saw that the rates asset class is not seeing any other changes, but just curious if there's any other context, anything else you could share around the thought process for this year. Thank you.
Speaker #7: I know market data, pricing went into effect earlier the year, earlier in the year. I'm just curious if there's any other puts and takes by asset class, obviously from your release.
Speaker #7: We saw that the rates asset class is not seeing any other changes. But just curious if there's any other context, anything else you could share around the thought process for this year.
8 million and just to dig into that a little bit more of of talking about the quality of that growth. So our non-recurring Revenue items like the audit and the catch payments were actually lower than the previous quarters. Which really just demonstrates that our core subscription revenue is accelerating. And our growth drivers are really kind of balanced across 3 main pillars. We saw 50% of this Revenue growth coming from new user expansion and we have been successful and really monetizing both the retail growth that you've heard us reference as well as institutional participation in our data products.
Speaker #7: Thank you.
Speaker #5: Yeah, Ben, thank you. I'm going to ask Julie Winkler, my chief commercial officer, to comment on the market data, not only the pricing but the business itself, which gives her an opportunity to talk about that because I think it's really important component to CME.
Terry Duffy: Yeah, Ben, thank you. I'm gonna ask Julie Winkler, my chief commercial officer, to comment on the market data, not only the pricing, but the business itself, which gives her an opportunity to talk about the exciting, it's a really important component to CME, and then Lynn can address the other part of your question. Julie?
Terry Duffy: Yeah, Ben, thank you. I'm gonna ask Julie Winkler, my chief commercial officer, to comment on the market data, not only the pricing, but the business itself, which gives her an opportunity to talk about the exciting, it's a really important component to CME, and then Lynn can address the other part of your question. Julie?
Speaker #5: And then Lynne can address the other part of your question.
Speaker #5: question.
Speaker #8: Yeah, thanks for your question.
Julie Winkler: Yeah, thanks for your question, Benjamin. We did, in 1 January, institute a 3.5% rack rate increase across most of our market data products. You know, this was really a continuation of our price to value adjustments, you know, in ensuring that our data business certainly remains resilient. We have proven, given the record $800 million in annual revenue that was referenced earlier in our call, this marks the 31st consecutive quarter of growth for our data business. So Q4, we saw, you know, revenue up 15% to $208 million.
Julie Winkler: Yeah, thanks for your question, Benjamin. We did, in 1 January, institute a 3.5% rack rate increase across most of our market data products. You know, this was really a continuation of our price to value adjustments, you know, in ensuring that our data business certainly remains resilient. We have proven, given the record $800 million in annual revenue that was referenced earlier in our call, this marks the 31st consecutive quarter of growth for our data business. So Q4, we saw, you know, revenue up 15% to $208 million.
Speaker #8: Benjamin, we did in January 1st institute a 3.5% rack rate increase across most of our market data products. And this was really a continuation of our price-to-value adjustments.
Speaker #8: Ensuring that our data business certainly remains resilient, and we have proven this given the record $800 million in annual revenue that was referenced earlier in our call.
The second pillar of really around 25% of our growth being driven by product Innovation. So our ability to deliver new data. Sets, our new cloud-based delivery models are really helping us to create more sticky, recurring revenue and lastly is is that pricing Integrity that I referenced earlier of. That's the, the remaining 25% of our, our growth and revenue where we're able to really capture the value of CME data. Particularly given our strong bench uh Mark products and liquid. Um products, these really have become the golden source for futures and options and is a huge contributor to that record Revenue that we saw this year, Glen? Yeah. So been when it comes to the transaction fee changes, that we announced the, the most impacted for those fee changes would be in the metals complex, particularly around precious metals and the micro comp.
Speaker #8: This marks the 31st consecutive quarter of growth for our data business. So Q4, we saw up revenue, up 15% to 208 million. And just to dig into that a little bit more of talking about the quality of that growth.
Complex as well. We also had some changes on the crude oil side and finally in the grains complex I would say those are the 3 areas. You will see the most meaningful impacts
Julie Winkler: And just to dig into that a little bit more on talking about the quality of that growth, so our non-recurring revenue items, like the audit and the CEDS payments, were actually lower than the previous quarters, which really just demonstrates that our core subscription revenue is accelerating.
Julie Winkler: And just to dig into that a little bit more on talking about the quality of that growth, so our non-recurring revenue items, like the audit and the CEDS payments, were actually lower than the previous quarters, which really just demonstrates that our core subscription revenue is accelerating.
Speaker #8: So, our non-recurring revenue items, like the audit and the cash payments, were actually lower than the previous quarters, which really just demonstrates that our core subscription revenue is accelerating.
Speaker #8: And our growth drivers are really kind of balanced across three main pillars. We saw 50% of this revenue growth coming from new user expansion.
Terry Duffy: ... and our growth drivers are really kind of balanced across three main pillars. We saw 50% of this revenue growth coming from new user expansion, and we have been successful in really monetizing both the retail growth that you've heard us reference, as well as institutional participation in our data products. The second pillar of really around 25% of our growth being driven by product innovation. So our ability to deliver new data sets, our new cloud-based delivery models, are really helping us to create more sticky recurring revenue. And lastly is that pricing integrity that I referenced earlier, of, that's the remaining 25% of our growth in revenue, where we're able to really capture the value of CME Data, particularly given our strong benchmark products and liquid products.
Julie Winkler: ... and our growth drivers are really kind of balanced across three main pillars. We saw 50% of this revenue growth coming from new user expansion, and we have been successful in really monetizing both the retail growth that you've heard us reference, as well as institutional participation in our data products. The second pillar of really around 25% of our growth being driven by product innovation. So our ability to deliver new data sets, our new cloud-based delivery models, are really helping us to create more sticky recurring revenue. And lastly is that pricing integrity that I referenced earlier, of, that's the remaining 25% of our growth in revenue, where we're able to really capture the value of CME Data, particularly given our strong benchmark products and liquid products.
Speaker #8: And we have been successful in really monetizing both the retail growth that you heard us reference as well as institutional participation in our data products.
Speaker #8: The second pillar of really around 25% of our growth being driven by product innovation. So our ability to deliver new data sets, our new cloud-based delivery models, are really helping us to create more sticky recurring revenue.
Speaker #8: And lastly, is that pricing integrity that I referenced earlier of that's the remaining 25% of our growth and revenue where we're able to really capture the value of CME data, particularly given our strong benchmark products and liquid products.
Last note, I did mention this in the opening remarks, but we are going to move away from consolidating, these type of transaction fee changes in the December time frame. Um with the number of new initiatives we have launching and the like we want to make sure that we are being uh thoughtful in when we are making these changes. So we may do them at different times during the year. Versus that Consolidated change in the December time frame going forward.
Okay. Uh, very helpful. Thank you both.
Thank you.
The next question will come from Craig seigenthaler of Bank of America. Your line is open.
Speaker #8: These really have become the golden source for futures and options, and is a huge contributor to that record revenue that we saw this year.
Terry Duffy: These really have become the golden source for futures and options and is a huge contributor to that record revenue that we saw this year.
Julie Winkler: These really have become the golden source for futures and options and is a huge contributor to that record revenue that we saw this year.
Speaker #5: Lynne?
Operator: Lynn?
Terry Duffy: Lynn?
Speaker #8: Yeah, so Ben, when it comes
Lynne Fitzpatrick: Yes. So Ben, when it comes to the transaction fee changes that we announced, the most impacted for those fee changes would be in the metals complex, particularly around precious metals and the micro complex as well. We also had some changes on the crude oil side, and finally, in the grains complex. I would say those are the three areas you will see the most meaningful impact. You did mention rates, though. One thing to keep in mind, those changes that you saw in that announcement was related to the rack rate fee schedule changes. We also are always looking at our incentive programs. We did make some changes in various programs, including some incentive programs related to the rates complex. We felt those were more appropriate than needing to change the fee schedule rates at this point.
Lynne Fitzpatrick: Yes. So Ben, when it comes to the transaction fee changes that we announced, the most impacted for those fee changes would be in the metals complex, particularly around precious metals and the micro complex as well. We also had some changes on the crude oil side, and finally, in the grains complex. I would say those are the three areas you will see the most meaningful impact. You did mention rates, though. One thing to keep in mind, those changes that you saw in that announcement was related to the rack rate fee schedule changes. We also are always looking at our incentive programs. We did make some changes in various programs, including some incentive programs related to the rates complex. We felt those were more appropriate than needing to change the fee schedule rates at this point.
Speaker #8: to the transaction fee changes that we announced, the most impacted for those fee changes would be in the metals complex, particularly around precious metals and the micro complex as well.
Speaker #8: We also had some changes on the crude oil side. And finally, in the grains complex, I would say those are the three areas you will see the most meaningful impact.
Thanks. Good morning everyone. So we have a, a followed question to Ben's last question on your pricing strategy, you know, we're all programmed to look for an announcement in 4 q. Um see the changes in 1 q. But going forward, it looks like we're not going to get that same transparency from the CMA so curious what drove the change. And does this mean that increases will be smaller in the future? Because I thought the old method worked pretty well and it provided transparency and to see in these long-term Revenue growth rate.
Speaker #8: You did mention rates, though. One thing to keep in mind, those changes that you saw in that announcement was related to the rack rate fee schedule changes.
Speaker #8: We also are always looking at our incentive programs. We did make some changes in various programs including some incentive programs related to the rates complex.
Speaker #8: We felt those were more appropriate than needing to change the fee schedule rates at this point. So overall, this increase is similar to what we've seen in the past years.
Yeah Craig it's Terry Duffy um listen we we think that we need to do pricing changes as we continue to deliver value and we don't necessarily need to do that in December every year and so we make changes based on how we're running the business and how we think we can continue to grow that business and where the value is added. So that kind of
Lynne Fitzpatrick: So overall, this increase is similar to what we've seen in the past years. One other last note, I did mention this in the opening remarks, but we are gonna move away from consolidating these type of transaction fee changes in the December time frame. With the number of new initiatives we have launching and the like, we want to make sure that we are being thoughtful in when we are making these changes. So we may do them at different times during the year versus that consolidated change in the December time frame going forward.
Lynne Fitzpatrick: So overall, this increase is similar to what we've seen in the past years. One other last note, I did mention this in the opening remarks, but we are gonna move away from consolidating these type of transaction fee changes in the December time frame. With the number of new initiatives we have launching and the like, we want to make sure that we are being thoughtful in when we are making these changes. So we may do them at different times during the year versus that consolidated change in the December time frame going forward.
Speaker #8: One other last note, I did mention this in the opening remarks, but we are going to move away from consolidating these type of transaction fee changes in the December timeframe.
Speaker #8: With the number of new initiatives we have launching and the like, we want to make sure that we are being thoughtful in when we are making these changes.
Comes in different parts of the Year. Some increases may be smaller, some increases may be larger. Some may not be there at all. Um, I think what you're hearing us say, is, we're running this business on a real-time basis and we are going to continue to do what's in the best interest of our clients and our shareholders going forward to grow the business. So I don't think there's a pattern that we need to follow in order to facilitate pricing moves 1 way or another
Speaker #8: So we may do them at different times during the year versus that consolidated change in the December timeframe going forward.
Thank you.
You're welcome.
Speaker #7: Okay, very helpful. Thank you
Operator: Okay, very helpful. Thank you both.
Benjamin Budish: Okay, very helpful. Thank you both.
Speaker #7: both. Thank
Speaker #7: both. Thank
The next question will come from Brian Bedell of Deutsche Bank? Your line is open sir.
Speaker #5: you. The next question will come
Terry Duffy: Thank you.
Terry Duffy: Thank you.
Operator: The next question will come from Craig Siegenthaler of Bank of America. Your line is open.
Operator: The next question will come from Craig Siegenthaler of Bank of America. Your line is open.
Speaker #3: From Craig Siegenthaler of Bank of America, your line is open.
Speaker #9: Thanks. Good morning, everyone. So we have a follow-up question to Ben's last question on your pricing strategy. We're all programmed to look for an announcement in 4Q, see the changes in 1Q.
[Analyst] (Bank of America): Thanks. Good morning, everyone. So we have a follow-up question to Ben's last question on your pricing strategy. You know, we're all programmed to look for an announcement in Q4, see the changes in Q1, but going forward, it looks like we're not gonna get that same transparency from the CME. So curious what drove the change, and does this mean that increases will be smaller in the future? Because I thought the old method worked pretty well, and it provided transparency into CME's long-term revenue growth rate.
Craig Siegenthaler: Thanks. Good morning, everyone. So we have a follow-up question to Ben's last question on your pricing strategy. You know, we're all programmed to look for an announcement in Q4, see the changes in Q1, but going forward, it looks like we're not gonna get that same transparency from the CME. So curious what drove the change, and does this mean that increases will be smaller in the future? Because I thought the old method worked pretty well, and it provided transparency into CME's long-term revenue growth rate.
Speaker #9: But going forward, it looks like we're not going to get that same transparency from the CME. So, curious what drove the change. And does this mean that increases will be smaller in the future?
Speaker #9: Because I thought the old method worked pretty well and it provided transparency and to CME's long-term revenue growth rate.
Speaker #5: Yeah, Craig, it's Terry Duffy. Listen, we think that we need to do pricing changes as we continue to deliver value. And we don't necessarily need to do that in December every year.
Terry Duffy: Yeah, Craig, it's Terry Duffy. Listen, we think that we need to do pricing changes as we continue to deliver value, and we don't necessarily need to do that in December every year. And so we make changes based on how we're running the business and how we think we can continue to grow that business and where the value is added. So that comes in different parts of the year. Some increases may be smaller, some increases may be larger, some may not be there at all. I think what you're hearing us say is, we're running this business on a real-time basis, and we are gonna continue to do what's in the best interest of our clients and our shareholders going forward to grow the business.
Terry Duffy: Yeah, Craig, it's Terry Duffy. Listen, we think that we need to do pricing changes as we continue to deliver value, and we don't necessarily need to do that in December every year. And so we make changes based on how we're running the business and how we think we can continue to grow that business and where the value is added. So that comes in different parts of the year. Some increases may be smaller, some increases may be larger, some may not be there at all. I think what you're hearing us say is, we're running this business on a real-time basis, and we are gonna continue to do what's in the best interest of our clients and our shareholders going forward to grow the business.
Great. Thanks. Good morning, folks. Thanks for taking the question. Uh, maybe just back to your prediction markets. Um, can you talk about um uh conversations uh that you're having with other distribution Partners? I think you've got a, a total of like 130 Retail Partners all in. Um, maybe just just characterize the interest from other potential Partners, um, to engage with prediction markets, you know, other other Retail Partners, to get you with uh, prediction markets on the CME platform. And then also um, how you're thinking about, you know, future product roll out, um uh the potential to you. Um, really broaden the range of the types of contracts. I know, you don't want to get into obviously political or culture but um, more deeply into, um, say financial and Company specific kpis.
Speaker #5: And so we make changes based on how we're running the business and how we think we can continue to grow that business, and where the value is added.
Um, you know, something along the lines of fundamental investing whether you're seeing any demand for that or is there any interest in launching those types of contracts?
Speaker #5: So that comes in different parts of the year. Some increases may be smaller, some increases may be larger. Some may not be there at all.
Thanks Brian. Um, let me touch on a couple things. You did say something, but I'm going to turn it to Tim McCourt in a second, but you talked about political
Speaker #5: I think what you're hearing us say is we're running this business on a real-time basis, and we are going to continue to do what's in the best interest of our clients and our shareholders going forward to grow the business.
Speaker #5: So I don't think there's a pattern that we need to follow in order to facilitate pricing moves one way or another.
Terry Duffy: So I don't think there's a pattern that we need to follow in order to facilitate pricing moves one way or another.
Terry Duffy: So I don't think there's a pattern that we need to follow in order to facilitate pricing moves one way or another.
[Analyst] (Bank of America): Thank you.
Craig Siegenthaler: Thank you.
Speaker #5: You're Thank you.
Speaker #5: Thank you. You're welcome. The next question will come from Brian.
Terry Duffy: You're welcome.
Terry Duffy: You're welcome.
Operator: The next question will come from Brian Bedell of Deutsche Bank. Your line is open, sir.
Operator: The next question will come from Brian Bedell of Deutsche Bank. Your line is open, sir.
Speaker #3: Bedell of Deutsche Bank. Your line is open, sir.
Speaker #10: Great, thanks. Good morning, folks. Thanks for taking the question. Maybe just back to prediction markets—can you talk about the conversations that you're having with other distribution partners?
[Analyst] (Deutsche Bank): Great, thanks. Good morning, folks. Thanks for taking the question. Maybe just back to prediction markets, can you talk about the conversations that you're having with other distribution partners? I think you've got a total of, like, 130 retail partners all in. Maybe just characterize the interest from other potential partners to engage with prediction markets, you know, other retail partners to engage with prediction markets on the CME platform. And then also, how you're thinking about, you know, future product rollout, the potential to really broaden the range of the types of contracts.
Brian Bedell: Great, thanks. Good morning, folks. Thanks for taking the question. Maybe just back to prediction markets, can you talk about the conversations that you're having with other distribution partners? I think you've got a total of, like, 130 retail partners all in. Maybe just characterize the interest from other potential partners to engage with prediction markets, you know, other retail partners to engage with prediction markets on the CME platform. And then also, how you're thinking about, you know, future product rollout, the potential to really broaden the range of the types of contracts.
Speaker #10: I think you've got a total of like 130 retail partners all in. Maybe just characterize the interest from other potential partners. To engage with prediction markets, other retail partners to engage with prediction markets on the CME platform.
We're not suggesting that we would not list, political contracts. We are suggesting that we would not list certain political contracts. And I think there's a big difference there when you have a presidential election or who's going to potentially win the house or the Senate, those are large contracts that are very diverse in nature that multiple participants can take an opinion on versus maybe a small Congressional race in a district, or a state race, or something like that. Those are the ones we want to stay away from. But the larger ones we, we are not suggesting that we would not take a look at them, so I just want to make sure you understand that we do our in our looking, at some of the political contracts on the larger scale, not the smaller scale on the culture of ones. Those are a little bit different depending on how you define, what the culture of the, uh, prediction is. So I I would have to see what is being referred to as if it's around some of the uh award shows and things like that entertainment. You know, some of those are a little
Speaker #10: And then also how you're thinking about future product rollout to potential to really broaden the range of the types of contracts. I know you don't want to get into, obviously, political or culture.
[Analyst] (Deutsche Bank): I know you don't want to get into, obviously, political or culture, but, more deeply into, say, financial and company-specific KPIs, you know, something along the lines of fundamental investing, whether we're seeing any demand for that or is there any interest in launching those types of contracts?
Brian Bedell: I know you don't want to get into, obviously, political or culture, but, more deeply into, say, financial and company-specific KPIs, you know, something along the lines of fundamental investing, whether we're seeing any demand for that or is there any interest in launching those types of contracts?
Speaker #10: But more deeply into say financial and company-specific KPIs. Something along the lines of fundamental investing, whether you're seeing any demand for that or is there any interest in launching those types of
Speaker #10: contracts? Thanks, Brian.
Terry Duffy: Thanks, Brian. Let me touch on a couple of things. You did say something, but I'm going to turn to Tim McCourt in a second, but you touched on political. We're not suggesting that we would not list political contracts. We are suggesting that we would not list certain political contracts, and I think there's a big difference there. When you have a presidential election or who's going to potentially win the House or the Senate, those are large contracts that are very diverse in nature, that multiple participants can take an opinion on, versus maybe a small congressional race in a district or a state race or something like that. Those are the ones we want to stay away from, but the larger ones, we, we are not suggesting that we would not take a look at them.
Terry Duffy: Thanks, Brian. Let me touch on a couple of things. You did say something, but I'm going to turn to Tim McCourt in a second, but you touched on political. We're not suggesting that we would not list political contracts. We are suggesting that we would not list certain political contracts, and I think there's a big difference there. When you have a presidential election or who's going to potentially win the House or the Senate, those are large contracts that are very diverse in nature, that multiple participants can take an opinion on, versus maybe a small congressional race in a district or a state race or something like that. Those are the ones we want to stay away from, but the larger ones, we, we are not suggesting that we would not take a look at them.
Speaker #5: Let me touch on a couple of things. You did say something, but I'm going to turn it to Tim McCourt in a second. But you touched on political.
I don't know if I want to get too much involved in those but uh, the political contracts on the larger scale are fine. There are some unique uh business contracts that we talk about. PPI CPI, things like that. Where we're already doing Tim. Yeah. Thanks Terry. And Brian. Thanks for the question. You know, we do have a few current distribution Partners. Also, uh, live where Terry had mentioned, the FanDuel predicts app is up and running. We also have drafting predictions that are connected and we have a handful of other uh distribution platforms. Also offering our event contracts, across all the types of products that we have, the traditional futures-based markets, economic indicators cryptocurrency, as well as the sports based uh event contracts.
Speaker #5: We're not suggesting that we would not list political contracts. We are suggesting that we would not list certain political contracts. And I think there's a big difference there.
Speaker #5: When you have a presidential election or who's going to potentially win the House or the Senate, those are large contracts that are very diverse in nature that multiple participants can take an opinion on versus maybe a small congressional race in a district or a state race or something like that.
Speaker #5: Those are the ones we want to stay away from. But the larger ones we are not suggesting that we would not take a look at them.
Speaker #5: So I just want to make sure you understand that we do, in our looking at some of the political contracts on the larger scale, not the smaller scale.
Terry Duffy: But I just want to make sure you understand that we are looking at some of the political contracts on the larger scale, not the smaller scale. On the culture ones, those are a little bit different, depending on how you define what the culture of the prediction is. So I would have to see what it was being referred to as. If it's around some of the award shows and things like that, entertainment, you know, some of those are a little, I don't know if I want to get too much involved in those, but the political contracts on the larger scale are fine. There are some unique business contracts that we talk about, PPI, CPI, things like that, where we're already doing this. Tim?
Terry Duffy: But I just want to make sure you understand that we are looking at some of the political contracts on the larger scale, not the smaller scale. On the culture ones, those are a little bit different, depending on how you define what the culture of the prediction is. So I would have to see what it was being referred to as. If it's around some of the award shows and things like that, entertainment, you know, some of those are a little, I don't know if I want to get too much involved in those, but the political contracts on the larger scale are fine. There are some unique business contracts that we talk about, PPI, CPI, things like that, where we're already doing this. Tim?
Speaker #5: On the culture ones, those are a little bit different depending on how you define what the culture of the prediction is. So I would have to see what is being referred to as.
Speaker #5: If it's around some of the award shows and things like that, entertainment, some of those are a little I don't know if I want to get too much involved in those.
20 to 130 retail distribution Partners to understand what it will take for them to be ready to offer this contract. We did turn these contracts on back in December, so we still are early days in working with those partners and making sure they have the technological capabilities to connect offer. And the front end, they need to offer these type of swap based, and Futures based event contracts to their participants. I would characterize that pipeline pipeline as robust and we're actively engaged with continuing to onboard. Those participants, uh, just to further, Terry's comments about the future product pipeline at semigroup. This is something that we approach in a, a similar way, to all of our product development will continue to listen to the marketplace, our clients, our distribution partners, and our market makers, and liquidity, providers to figure out what does make sense in terms of rounding out. The event contract offering, but it is important to us that this is more than just the, the trade of the day or what might be happening in the marketplace. We're really focused on getting these new users to our markets and into
Speaker #5: But the political contracts on the larger scale are fine. There are some unique business contracts that we talk about—PPI, CPI, things like that.
The known risc-based contracts of events. As a way, they could enter markets, and we want to make sure they're also having access to things like
Speaker #5: That's where we're already doing, Tim. Yeah,
Speaker #10: thanks, Terry. And Brian, thanks for the question. We do have a few current distribution partners also live. We're, Terry had mentioned, the FanDuel Predicts app is up and running.
Julie Winkler: Yeah, thanks, Terry, and Brian, thanks for the question. You know, we do have a few current distribution partners also live, where Terry had mentioned. The FanDuel Predicts app is up and running. We also have DraftKings Predictions that are connected, and we have a handful of other distribution platforms also offering our event contracts across all the types of products that we have, the traditional futures-based markets, economic indicators, cryptocurrency, as well as the sports-based event contracts. We are working with our other 120 to 130 retail distribution partners to understand what it will take for them to be ready to offer this contract.
Tim McCourt: Yeah, thanks, Terry, and Brian, thanks for the question. You know, we do have a few current distribution partners also live, where Terry had mentioned. The FanDuel Predicts app is up and running. We also have DraftKings Predictions that are connected, and we have a handful of other distribution platforms also offering our event contracts across all the types of products that we have, the traditional futures-based markets, economic indicators, cryptocurrency, as well as the sports-based event contracts. We are working with our other 120 to 130 retail distribution partners to understand what it will take for them to be ready to offer this contract.
Speaker #10: We also have DraftKings Predictions that are connected. And we have a handful of other distribution platforms also offering our event contracts across all the types of products that we have, the traditional futures-based markets, economic indicators, cryptocurrency, as well as the sports-based event contracts.
Event contracts on gold event, contracts on NASDAQ S&P, economic indicators, as well as some of the stuff that we're seeing in the sports and cultural side of the offering. We'll continue to work with them to make sure it makes sense. I think, Brian about your question around some of the other, uh, you know, Financial aspects or kpis. I think those are things that we're hearing from.
Speaker #10: We are working with our other 100, 20 to 130 retail distribution partners to understand what it will take for them to be ready to offer this contract.
Speaker #10: We did turn these contracts on back in December, so we still are early days in working with those partners and making sure they have the technological capabilities to connect, offer, and the front end they need to offer these type of swap-based and futures-based event contracts to their participants.
Julie Winkler: We did turn these contracts on back in December, so we still are early days in working with those partners and making sure they have the technological capabilities to connect, offer, and the front end they need to offer these type of swap-based and futures-based event contracts to their participants. I would characterize that pipeline as robust, and we're actively engaged with continuing to onboard those participants. Just to further Terry's comments about the future product pipeline at CME Group, this is something that we approach in a similar way to all of our product development. We'll continue to listen to the marketplace, our clients, our distribution partners, and our market makers and liquidity providers to figure out what does make sense in terms of rounding out the event contract offering.
Tim McCourt: We did turn these contracts on back in December, so we still are early days in working with those partners and making sure they have the technological capabilities to connect, offer, and the front end they need to offer these type of swap-based and futures-based event contracts to their participants. I would characterize that pipeline as robust, and we're actively engaged with continuing to onboard those participants. Just to further Terry's comments about the future product pipeline at CME Group, this is something that we approach in a similar way to all of our product development. We'll continue to listen to the marketplace, our clients, our distribution partners, and our market makers and liquidity providers to figure out what does make sense in terms of rounding out the event contract offering.
Speaker #10: I would characterize that pipeline as robust, and we're actively engaged with continuing to onboard those participants. Just to further Terry's comments about the future product pipeline at CME Group, this is something that we approach in a similar way to all of our product development.
Speaker #10: We'll continue to listen to the marketplace, our clients, our distribution partners, and our market makers and liquidity providers to figure out what does make sense in terms of rounding out the event contract offering.
Speaker #10: But it is important to us that this is more than just the trade of the day or what might be happening in the marketplace.
Julie Winkler: But it is important to us that this is more than just the trade of the day or what might be happening in the marketplace. We're really focused on getting these new users to our markets and into the known risk-based contracts of events as a way they could enter markets, and we want to make sure they're also having access to things like event contracts on gold, event contracts on Nasdaq, S&P, economic indicators, as well as some of the stuff that we're seeing in the sports and cultural side of the offering. We'll continue to work with them to make sure it makes sense. I think, Brian, about your question around some of the other, you know, financial aspects or KPIs, I think those are things that we're hearing from folks, but we have no commitment to look at those products at this time.
Tim McCourt: But it is important to us that this is more than just the trade of the day or what might be happening in the marketplace. We're really focused on getting these new users to our markets and into the known risk-based contracts of events as a way they could enter markets, and we want to make sure they're also having access to things like event contracts on gold, event contracts on Nasdaq, S&P, economic indicators, as well as some of the stuff that we're seeing in the sports and cultural side of the offering. We'll continue to work with them to make sure it makes sense. I think, Brian, about your question around some of the other, you know, financial aspects or KPIs, I think those are things that we're hearing from folks, but we have no commitment to look at those products at this time.
Post, but we have no commitment to to, to look at those products at this time, we'll continue to engage with them but I think, as Terry's comments, also suggested, we do need to make sure and make sure everyone's aware that these meet the standards at CME and are also part of the cftc regulatory framework. Those are the things that we look at to make sure that the contracts we do bring to Market, we have the comfort and confidence to make sure that the clients trade them, have the consistent experience of trading at CME Group that they've been accustomed over the years. So let Brian, let me just finish the prediction comment with 1. Other thing that I said earlier, we are committed to listing these contracts that are deemed swaps and if there's sports event related swaps, we will list them. When I said that, we don't want to get tied up in legal battles, it doesn't mean that we're going to run away as long as the federal government calls, these swaps we will participate in them. Um, that's our regulator and if the states and others have issues with it, they should take it up with the federal government, not that the entities that they approved for these contracts to be traded under dcms. So that's what I meant about the legal battles.
Yeah, yep. You know, that's that's fantastic color. Thank you.
Thank you.
Speaker #10: We're really focused on getting these new users to our markets and into the known risk-based contracts of events as a way they could enter markets.
The next question will come from Bill cats of TD Cowen. If your line is open,
Speaker #10: And we want to make sure they're also having access to things like event contracts on gold, event contracts on Nasdaq, S&P, economic indicators, as well as some of the stuff that we're seeing in the sports and cultural side of the offering.
Great. Uh, thank you for taking a question. Maybe if I could sneak a 2-part question in some disparate, so I apologize in advance, but first it was great to see you buy back some stock in the fourth quarter and earlier into the new year,
Speaker #10: We'll continue to work with them to make sure it makes sense. I think, Brian, about your question around some of the other financial aspects or KPIs—I think those are things that we're hearing from folks, but we have no commitment to look at those products at this time.
Speaker #10: We'll continue to engage with them. But I think, as Terry's comments also suggested, we do need to make sure—and make sure everyone is aware—that these meet the standards at CME and are also part of the CFTC regulatory framework.
Julie Winkler: We'll continue to engage with them. But I think as Terry's comments also suggested, we do need to make sure, and make sure everyone's aware, that these meet the standards at CME and are also part of the CFTC regulatory framework. Those are the things that we look at to make sure that the contracts we do bring to market, we have the comfort and confidence to make sure that the clients trading them have the consistent experience of trading at CME Group that they've been accustomed over the years.
Tim McCourt: We'll continue to engage with them. But I think as Terry's comments also suggested, we do need to make sure, and make sure everyone's aware, that these meet the standards at CME and are also part of the CFTC regulatory framework. Those are the things that we look at to make sure that the contracts we do bring to market, we have the comfort and confidence to make sure that the clients trading them have the consistent experience of trading at CME Group that they've been accustomed over the years.
Speaker #10: Those are the things that we look at to make sure that the contracts we do bring to market, we have the comfort and confidence to make sure that the clients trade them, have the consistent experience of trading at CME Group, that they've been accustomed over the years.
How do we think about maybe the prospect of approach to Capital um and how much of like sort of related to the astrop proceeds so forth as we should think about, maybe to go forward, um, pay out Dynamic and then within your Market data and information Services, it was nice to see the rise, uh, quarter on quarter. I positive, that's probably more of the activity levels, but could you speak to the durability of that given? What seems to be a very frenetic change. In the expectation around, uh, sort of subscription and data packages. Give an AI disintermediation risk. Thank you. Thanks Bill. Yeah, we'll talk about that in, um,
Speaker #2: So Brian, let me just finish the prediction comment with one other thing that I said earlier. We are committed to listing these contracts that are deemed swaps.
Terry Duffy: So, Brian, let me just finish the prediction comment with one other thing that I said earlier. We are committed to listing these contracts that are deemed swaps, and if they're sports event-related swaps, we will list them. When I said that we don't want to get tied up in legal battles, it doesn't mean that we're gonna run away. As long as the federal government calls these swaps, we will participate in them. That's our regulator, and if the states and others have issues with it, they should take it up with the federal government, not that the entities that they approve for these contracts to be traded under DCMs. So that's what I meant about the legal battles.
Terry Duffy: So, Brian, let me just finish the prediction comment with one other thing that I said earlier. We are committed to listing these contracts that are deemed swaps, and if they're sports event-related swaps, we will list them. When I said that we don't want to get tied up in legal battles, it doesn't mean that we're gonna run away. As long as the federal government calls these swaps, we will participate in them. That's our regulator, and if the states and others have issues with it, they should take it up with the federal government, not that the entities that they approve for these contracts to be traded under DCMs. So that's what I meant about the legal battles.
Speaker #2: And if they're sports event-related swaps, we will list them. When I said that we don't want to get tied up in legal battles, it doesn't mean that we're going to run away.
Speaker #2: As long as the federal government calls these swaps, we will participate in them. That's our regulator. And if the states and others have issues with it, they should take it up with the federal government, not that the entities that they approve for these contracts to be traded under DCMs.
Uh, I'll let Lynn discuss that and on the market data, was that tied to the AI part of your question? Is that a fair way to assess it? Yes, correct. Thank you. Okay. All right. So yeah, go ahead. Hi Bill. This is Lynn. So your question on the, the buyback, um, we have discussed with our board and we'll be using the osteoporosis towards repurchases, so you've seen us uh, start along that path. And we will continue to be deploying those uh that Capital towards repurchases over time.
Speaker #2: So that's what I meant about the legal battles.
Speaker #3: Yep, yep. No, that's fantastic, Carter. Thank
Brian Bedell: Yep. Yep, no, that's, that's fantastic, Carter. Thank you.
and then Julie, if you maybe want to address some of the market data questions,
Speaker #3: you. Thank
Speaker #2: you.
Terry Duffy: Thank you.
Terry Duffy: Thank you.
all right, I think the
Speaker #1: The next question will come from Bill Katz of TD Cowan. Your line is open.
Operator: The next question will come from Bill Katz of TD Cowen. Your line is open.
Operator: The next question will come from Bill Katz of TD Cowen. Your line is open.
Importance of.
Speaker #4: Great. Thank you for taking the question of me. If I could sneak a two-part question in somewhat disparate, so I apologize in advance. But first, it was great to see you buy back some stock in the fourth quarter and early here into the new year.
[Analyst] (TD Cowen): Great, thank you for taking the question. Maybe if I could sneak a 2-part question in, somewhat disparate, so I apologize in advance. But first, it's great to see you buy back some stock in the Q4 and early here into the new year. How do we think about maybe the prospective approach to capital, and how much, like, sort of related to the Astra proceeds, so forth, as we should think about maybe the go-forward payout dynamic? And then within your market data and information services, it was nice to see the rise quarter-over-quarter. I would posit that's probably more of the activity levels, but could you speak to the durability of that, given what seems to be a very frenetic change in the expectation around sort of subscription and data packages, given AI disintermediation risk? Thank you.
Bill Katz: Great, thank you for taking the question. Maybe if I could sneak a 2-part question in, somewhat disparate, so I apologize in advance. But first, it's great to see you buy back some stock in the Q4 and early here into the new year. How do we think about maybe the prospective approach to capital, and how much, like, sort of related to the Astra proceeds, so forth, as we should think about maybe the go-forward payout dynamic? And then within your market data and information services, it was nice to see the rise quarter-over-quarter. I would posit that's probably more of the activity levels, but could you speak to the durability of that, given what seems to be a very frenetic change in the expectation around sort of subscription and data packages, given AI disintermediation risk? Thank you.
Speaker #4: How do we think about maybe the prospective approach to capital and how much of sort of related to the OSTRA proceeds and so forth as we should think about maybe the go-forward payout dynamic?
Speaker #4: And then within your market data and information services - it was nice to see the rise - quarter on quarter, I posit that's probably more the activity levels.
Speaker #4: But could you speak to the durability of that given what seems to be a very frenetic change in expectation around sort of subscription and data packages given AI disintermediation risk?
Speaker #4: you. Thank
Speaker #2: Thanks, Bill. Yeah. We'll talk about that in the AI disintermediation risk is an interesting question. We'll get to that in a second because I think that was your last one.
Terry Duffy: Thanks, Bill. Yeah, we'll talk about that and the AI disintermediation risk is an interesting question. We'll get to that in a second because I think that was your last one. So let's talk about the capital. I'll let Lynne discuss that. And on the market data, was that tied to the AI part of your question? Is that a fair way to assess it?
Terry Duffy: Thanks, Bill. Yeah, we'll talk about that and the AI disintermediation risk is an interesting question. We'll get to that in a second because I think that was your last one. So let's talk about the capital. I'll let Lynne discuss that. And on the market data, was that tied to the AI part of your question? Is that a fair way to assess it?
Speaker #2: So let's talk about the capital I'll let Lynne discuss that. And on the market data, was that tied to the AI part of your question?
Speaker #2: Is that a fair way to assess it?
Speaker #4: Yes, correct. Thank you.
[Analyst] (TD Cowen): Yes, correct. Thank you.
Bill Katz: Yes, correct. Thank you.
Terry Duffy: Okay. All right, so go ahead, Lynne.
Terry Duffy: Okay. All right, so go ahead, Lynne.
Speaker #2: right. So. Okay. All
Speaker #1: Yes, hi, Bill. This is Lynne. So your question on the buyback, we have discussed with our board, and we'll be using the OSTRA proceeds towards repurchases.
Lynne Fitzpatrick: Yes. Hi, Bill, this is Lynne. So your question on the buyback, we have discussed with our board, and we'll be using the Astra proceeds towards repurchases. So you've seen us start along that path, and we will continue to be deploying that capital towards repurchases over time. And then, Julie, if you maybe want to address some of the market data questions?
Lynne Fitzpatrick: Yes. Hi, Bill, this is Lynne. So your question on the buyback, we have discussed with our board, and we'll be using the Astra proceeds towards repurchases. So you've seen us start along that path, and we will continue to be deploying that capital towards repurchases over time. And then, Julie, if you maybe want to address some of the market data questions?
Speaker #1: So you've seen us start along that path, and we will continue to be deploying those capital towards repurchases over time. And then Julie, if you maybe want to address some of the market data
Speaker #1: questions. Yeah.
Julie Winkler: Yeah, I think the importance of, you know, certainly all of 2025 performance was really speaking to the recurring subscription revenue that this business generates. So the uptick in both retail participation and institutional demand for our clients, you know, serves as good momentum going into 2026, and that is something that we've seen with the historic growth of the business, you know, up 31 consecutive quarters. In terms of AI, we have been, you know, on top of that from the beginning, and I think a key part of thinking about data versus how our clients use data is this is a critical input for them as they back-test their trading strategies and deploy those within our marketplace to both provide, you know, proper hedging as well as liquidity into our market space.
Julie Winkler: Yeah, I think the importance of, you know, certainly all of 2025 performance was really speaking to the recurring subscription revenue that this business generates. So the uptick in both retail participation and institutional demand for our clients, you know, serves as good momentum going into 2026, and that is something that we've seen with the historic growth of the business, you know, up 31 consecutive quarters. In terms of AI, we have been, you know, on top of that from the beginning, and I think a key part of thinking about data versus how our clients use data is this is a critical input for them as they back-test their trading strategies and deploy those within our marketplace to both provide, you know, proper hedging as well as liquidity into our market space.
Input for them, as they back test, their trading strategies and deploy those within our Marketplace to both provide, you know, proper hedging, as well as liquidity into our markets Market, um, space. And so, you know, while AI is and and the use of data is important there, you know, it is not change how that data is being used by our our training entities. We are very much talking with our customers about how they're using AI to enhance a lot of their training algorithms, but they still need that core source data. Um, and we do and have been adjusting our policies accordingly as the AI um, has continued to develop. So Bill, I assume your question was related to around some of our competitors as it relates to mortgage businesses and some of their surveillance surveillance businesses, that could be potentially disruptive by artificial intelligence. We are not in that situation today as Julie described, this is proprietary data that that people need for risk management, protocols and everything else that
Speaker #3: the importance I think of certainly all of 2025 performance was really speaking to the recurring subscription revenue that this business generates. So the uptick in both retail participation and institutional demand for our clients serves as good momentum going into 2026.
They do so, we're not in some of those other ancillary businesses that could be potentially disrupted by AI, we actually believe we're in a situation where AI could enhance our customer and enhance our business going forward. Not not this intermediate or destructive. Does that make sense? I think that's where your question was going, even though you didn't ask it that way.
Speaker #3: And that is something that we've seen with the historic growth of the business up 31 consecutive quarters. In terms of AI, we have been on top of that from the beginning.
While I was trying to be a little bit more uh uh neutral on it but thank you, yes. Appreciate it. Help very much. Thank you. Bill, you know me, I'm very I I kind of get to the point. Thank you so much.
Thank you.
Speaker #3: And I think a key part of thinking about data versus how our clients use data is this is a critical input for them as they backtest their trading strategies.
The next question will from Ashish sabadra of RBC Capital markets. Your line is open.
Speaker #3: And deploy those within our marketplace to both provide proper hedging as well as liquidity into our market space. And so while AI and the use of data is important there, it is not change how that data is being used by our trading entities.
Thanks for taking my question. I just wanted to uh uh ask a question on the progress on the Google Cloud migration and if you can quantify the expense in the fourth quarter and expected for 2026, thanks.
Julie Winkler: And so, you know, while AI is, and the use of data is important there, you know, it does not change how that data is being used by our trading entities. We are very much talking with our customers about how they're using AI to enhance a lot of their trading algorithms, but they still need that core source data, and we do and have been adjusting our policies accordingly as the AI has continued to develop.
Julie Winkler: And so, you know, while AI is, and the use of data is important there, you know, it does not change how that data is being used by our trading entities. We are very much talking with our customers about how they're using AI to enhance a lot of their trading algorithms, but they still need that core source data, and we do and have been adjusting our policies accordingly as the AI has continued to develop.
So why don't we talk for a second on the migration with Sunil and then we'll talk real quick on the expenses what? Lynn. So you'll give a quick update on the migration.
Speaker #3: We are very much talking with our customers about how they're using AI to enhance a lot of their trading algorithms. But they still need that core source data and we do and have been adjusting our policies accordingly as the AI has continued to develop.
Speaker #2: So, Bill, I assume your question was related to some of our competitors as it relates to mortgage businesses and some of their surveillance businesses that could be potentially disrupted by artificial intelligence.
Terry Duffy: ... So Bill, I assume your question was related to around some of our competitors as it relates to mortgage businesses and some of their surveillance, surveillance businesses that could be potentially disrupted by artificial intelligence. We are not in that situation today, as Julie described. This is proprietary data that, that people need for risk management protocols and everything else that they do. So we're not in some of those other ancillary businesses that could be potentially disrupted by AI. We actually believe we're in a situation where AI could enhance our customer, enhance our business going forward, not, not disintermediate or disrupt it. Does that make sense? I, I think that's where your question was going, even though you didn't ask it that way.
Terry Duffy: ... So Bill, I assume your question was related to around some of our competitors as it relates to mortgage businesses and some of their surveillance, surveillance businesses that could be potentially disrupted by artificial intelligence. We are not in that situation today, as Julie described. This is proprietary data that, that people need for risk management protocols and everything else that they do. So we're not in some of those other ancillary businesses that could be potentially disrupted by AI. We actually believe we're in a situation where AI could enhance our customer, enhance our business going forward, not, not disintermediate or disrupt it. Does that make sense? I, I think that's where your question was going, even though you didn't ask it that way.
Um, migration is going very well to plan. We'll complete our non-alpha ultra low latency markets are concerned um the purpose-built Chicago, uh region by Google is coming up to plan. Um, it is it is uh low latency uh technology in Google Cloud. It's very novel. So we'll be making that available to clients for testing in 2027.
I'll, I'll pass it on to uh, Lynn.
Speaker #2: We are not in that situation today, as Julie described. This is proprietary data that people need for risk management protocols and everything else that they do.
yes, so on the, in the fourth quarter,
29 million in spending related to the cloud environment.
Speaker #2: So we're not in some of those other ancillary businesses that could be potentially disrupted by AI. We actually believe we're in a situation where AI could enhance our customer, enhance our business going forward, not disintermediate or disrupt it.
Speaker #2: Does that make sense? I think that's where your question was going, even though you didn't ask
Speaker #2: it that way. Well, I was trying to be a
[Analyst] (JP Morgan): Well, I was trying to be a little bit more neutral on it, but thank you. Yes, appreciate it. Helpful very much. Thank you.
Bill Katz: Well, I was trying to be a little bit more neutral on it, but thank you. Yes, appreciate it. Helpful very much. Thank you.
Speaker #4: little bit more neutral on it, but thank you. Yes, appreciate it. Helped
The majority of that was in our tech line related to the consumption charges. So our total for the year was right around 100 million uh related to Google. It's getting harder and harder as we go forward though. To disaggregate the Google related charges and our our base charges because we've seen so many of the on premises expenses. Start to roll off.
Speaker #4: very much. Thank you. Bill, you know me. Thank you so
Terry Duffy: Bill, you know me, I'm very, I, I gotta get to the point.
Terry Duffy: Bill, you know me, I'm very, I, I gotta get to the point.
Speaker #2: I kind of get to the point.
[Analyst] (JP Morgan): Thank you so much.
Bill Katz: Thank you so much.
Speaker #2: Thank much.
Speaker #2: you.
Terry Duffy: Thank you.
Terry Duffy: Thank you.
Speaker #1: The next question will
Operator: The next question is from Ashish Sabadra of RBC Capital Markets. Your line is open.
Operator: The next question is from Ashish Sabadra of RBC Capital Markets. Your line is open.
Speaker #1: come from Ashish Subhadra of RBC Capital Markets. Your line is
Speaker #5: Thanks for taking my question. I just wanted to ask a question on the progress on the Google Cloud migration, and if you can quantify the expense in the fourth quarter, and what you expect it to be for 2026.
[Analyst] (RBC Capital Markets): Thanks for taking my question. I just wanted to ask a question on the progress on the Google Cloud migration, and if you can quantify the expense in Q4 and expected for 2026. Thanks.
Ashish Sabadra: Thanks for taking my question. I just wanted to ask a question on the progress on the Google Cloud migration, and if you can quantify the expense in Q4 and expected for 2026. Thanks.
So, I would say going forward, that that expense is built into our overall guidance, um, but it's becoming I think less meaningful to separate it out just because you've you've taken out a lot of those on premises expenses. So I would just, uh, start counting that in the overall expense growth Association that we that we got into the 1695. That is inclusive of all, the tech related, spend both Google and the remaining on premises.
Speaker #5: Thanks.
Very helpful color. Thank you.
Terry Duffy: So why don't we talk for a second on the migration with Sunil, and then we'll talk real quick on the expenses with Lynne. So Sunil, give a quick update on the migration.
Terry Duffy: So why don't we talk for a second on the migration with Sunil, and then we'll talk real quick on the expenses with Lynne. So Sunil, give a quick update on the migration.
Thank you.
Speaker #2: second on the migration, which Sunil and then So why don't we talk for a we'll talk real quick on the expenses with Lynne. So Sunil, give a quick update on the migration.
The next question will come from. Michael Cyprus of Morgan Stanley. Your line is open
Sunil Cutinho: Our migration is going very well to plan. We'll complete our non-ultra low latency migration in early this year. As far as our ultra low latency markets are concerned, the purpose-built Chicago region by Google is coming up to plan. It is low latency technology in Google Cloud. It's very novel. So we'll be making that available to clients for testing in 2027. I'll pass it on to Lynne.
Speaker #4: Our migration is going very well to plan. We'll complete our non-ultra-low-latency migration in early this year. As far as our ultra-low-latency markets are concerned, the purpose-built Chicago region by Google is coming up to plan.
Sunil Cutinho: Our migration is going very well to plan. We'll complete our non-ultra low latency migration in early this year. As far as our ultra low latency markets are concerned, the purpose-built Chicago region by Google is coming up to plan. It is low latency technology in Google Cloud. It's very novel. So we'll be making that available to clients for testing in 2027. I'll pass it on to Lynne.
Speaker #4: It is low-latency technology in Google Cloud. It's very novel. So we'll be making that available to clients for testing in 2027. I'll pass it on to Lynne.
Oh hey, good morning. Um, just curious how you see the role of tokenized collateral and potential benefits there and more specifically how do you think about some of the advantages or even disadvantages of stablecoin as collateral versus tokenized deposits versus say a tokenized money fund? I guess, would you accept all 3? Would you treat any of them differently? Curious. How you think about that? And if you could
Collaborate more broadly on the steps that you're taking this year, uh, to tokenize collateral.
Speaker #1: Yeah. So on the fourth quarter, we had about 29 million in spending related to the cloud environment. The majority of that was in our tech line, related to the consumption charges.
Lynne Fitzpatrick: Yeah, so in Q4, we had about $29 million in spending related to the cloud environment. The majority of that was in our tech line related to the consumption charges. So our total for the year was right around $100 million related to Google. It's getting harder and harder as we go forward, though, to disaggregate the Google-related charges and our base charges, because we've seen so many of the on-premises expenses start to roll off. So I would say going forward, that expense is built into our overall guidance, but it's becoming, I think, less meaningful to separate it out just because you've taken out a lot of those on-premises expenses. So I would just start counting that in the overall expense growth, Ashish, that we guided to, 1,695.
Lynne Fitzpatrick: Yeah, so in Q4, we had about $29 million in spending related to the cloud environment. The majority of that was in our tech line related to the consumption charges. So our total for the year was right around $100 million related to Google. It's getting harder and harder as we go forward, though, to disaggregate the Google-related charges and our base charges, because we've seen so many of the on-premises expenses start to roll off. So I would say going forward, that expense is built into our overall guidance, but it's becoming, I think, less meaningful to separate it out just because you've taken out a lot of those on-premises expenses. So I would just start counting that in the overall expense growth, Ashish, that we guided to, 1,695.
Speaker #1: So our total for the year was right around 100 million, related to Google. It's getting harder and harder as we go forward, though, to disaggregate the Google-related charges and our base charges because we've seen so many of the on-premises expenses start to roll off.
Speaker #1: So I would say, going forward, that expense is built into our overall guidance, but it's becoming, I think, less meaningful to separate it out, just because you've taken out a lot of those on-premises expenses.
Speaker #1: So I would just start counting that in the overall expense growth, Ashish, that we got into the 1695. That is inclusive of all the tech-related spend, both Google and the remaining
Lynne Fitzpatrick: That is inclusive of all the tech-related spend, both Google and the remaining on-premises.
Lynne Fitzpatrick: That is inclusive of all the tech-related spend, both Google and the remaining on-premises.
Speaker #1: on-premises. Very helpful, Caleb.
[Analyst] (RBC Capital Markets): Very helpful, caller. Thank you.
Ashish Sabadra: Very helpful, caller. Thank you.
Speaker #5: Thank
Speaker #5: you. Thank
Terry Duffy: Thank you.
Terry Duffy: Thank you.
Speaker #1: The next question will come from Michael Cypress of Morgan Stanley. Your line is open.
Operator: The next question will come from Michael Cyprys of Morgan Stanley. Your line is open.
Operator: The next question will come from Michael Cyprys of Morgan Stanley. Your line is open.
Speaker #1: open. Oh, hey, good
[Analyst] (Morgan Stanley): Oh, hey, good morning. Just curious how you see the role of tokenized collateral and potential benefits there. And more specifically, how do you think about some of the advantages or even disadvantages of stable coin as collateral versus tokenized deposits versus, say, a tokenized money fund? I guess, would you accept all three? Would you treat any of them differently? Curious how you think about that, and if you can elaborate more broadly on the steps that you're taking this year to tokenize collateral.
Michael Cyprys: Oh, hey, good morning. Just curious how you see the role of tokenized collateral and potential benefits there. And more specifically, how do you think about some of the advantages or even disadvantages of stable coin as collateral versus tokenized deposits versus, say, a tokenized money fund? I guess, would you accept all three? Would you treat any of them differently? Curious how you think about that, and if you can elaborate more broadly on the steps that you're taking this year to tokenize collateral.
Speaker #6: morning. Just curious how you see the role of tokenized collateral and potential benefits there, and more specifically, how do you think about some of the advantages or even disadvantages of stablecoin as collateral versus tokenized deposits versus, say, a tokenized money fund?
On a token. So if you were to give me a token from a systemically important financial institution, I would probably be more comfortable than, uh, maybe a third or fourth, tier bank, trying to issue a token for margin. That's probably something I would not accept. So that's kind of how we're looking at, what we'd accept and how we distribute. So, not only are, we looking at tokenized Cash, obviously, we're looking at different initiatives with our own coin that we could potentially put on a decentralized network for other of our industry, participants to use. So there's multiple different ways that we're approaching this to create a clients going forward without introducing any additional risks to the system.
Great. Thank you.
Speaker #6: I guess, would you accept all three? Would you treat any of them differently? Curious how you think about that and if you can taking this year to tokenize elaborate more broadly on the steps that you're collateral.
Thanks Michael.
And we'll take the last question from Ken, Worthington of JP Morgan. Your line is open, sir.
Speaker #2: Michael, thank you. And it's a great question. I don't know if we have enough time to answer all of it because it's pretty deep, but I will try to summarize it for you.
Terry Duffy: Michael, thank you, and it's a great question. I don't know if we have enough time to answer all of it because it's pretty deep, but I will try to summarize it for you. As it relates to the tokenized cash, you know, we have an initiative that we're rolling out with Google that'll be coming out this year on tokenized cash, and that will be with another depository bank that will help facilitate those transactions. On the tokens and what would we accept in going forward, that all depends on who is issuing the token and giving it to us, and it would depend also based on the risk associated with that token. Would we haircut it to a point where it's even worth taking or not? And what's the entity that's issuing the token to give us for margin?
Terry Duffy: Michael, thank you, and it's a great question. I don't know if we have enough time to answer all of it because it's pretty deep, but I will try to summarize it for you. As it relates to the tokenized cash, you know, we have an initiative that we're rolling out with Google that'll be coming out this year on tokenized cash, and that will be with another depository bank that will help facilitate those transactions. On the tokens and what would we accept in going forward, that all depends on who is issuing the token and giving it to us, and it would depend also based on the risk associated with that token. Would we haircut it to a point where it's even worth taking or not? And what's the entity that's issuing the token to give us for margin?
Speaker #2: As it relates to the tokenized cash, we have an initiative that we're rolling out with Google that'll be coming out this year, on tokenized cash.
Speaker #2: And that will be with another depository bank that will help facilitate those transactions. On the tokens and what would we accept in going forward, that all depends on who is issuing the token and giving it to us.
Hi, thank you so much for uh, squeezing me in. Um, you mentioned that the cftc approved cross margining for client accounts and you'd be launching shortly. What sort of cross margining programs you launching and what sort of adoptions do you anticipate and along the same lines? You also got approval of the launch uh Treasury and repo clearing. How would you expect these 2 initiatives to impact collateral bounces over time?
A great question Ken. So I asked Sunil the comment on the first part of it. Maybe Mike you can touch on the second.
Speaker #2: And it would depend also based on the risk associated with that token. Would we haircut it to a point where it's even worth taking or not?
Speaker #2: the entity that's issuing the token to give us for And what's margin? So right now, we are looking at different forms of margin, but we are not going to put the enterprise at risk by taking something that we can't get our arms around on a token.
Um, so the uh, you know, the CME Fick cross margining program for clients. Uh is operationally ready?
Terry Duffy: So right now, we are looking at different forms of margin, but we are not gonna put the enterprise at risk by taking something that we can't get our arms around on a token. So if you were to give me a token from a systemically important financial institution, I would probably be more comfortable than maybe a third or fourth-tier bank trying to issue a token for margin. That's probably something I would not accept. So that's kind of how we're looking at what we'd accept and how we distribute. So not only are we looking at tokenized cash, obviously, we're looking at different initiatives with our own coin that we could potentially put on a decentralized network for other of our industry participants to use.
Terry Duffy: So right now, we are looking at different forms of margin, but we are not gonna put the enterprise at risk by taking something that we can't get our arms around on a token. So if you were to give me a token from a systemically important financial institution, I would probably be more comfortable than maybe a third or fourth-tier bank trying to issue a token for margin. That's probably something I would not accept. So that's kind of how we're looking at what we'd accept and how we distribute. So not only are we looking at tokenized cash, obviously, we're looking at different initiatives with our own coin that we could potentially put on a decentralized network for other of our industry participants to use.
Speaker #2: So if you were to give me a token from a systemically important financial institution, I would probably be more comfortable than maybe a third or fourth-tier bank trying to issue a token for margin.
Uh we that program has been running since 2024. Um we have 18 uh firms participating. We generated record savings for uh for those firms of about 1, 1 and a half billion.
Speaker #2: That's probably something I would not accept. So that's kind of how we're looking at what we'd accept and how we distribute. So not only are we looking at tokenized cash, obviously, we're looking at different initiatives with our own coin that we could potentially put on a decentralized network for other of our industry participants to use.
Um, in terms of expanding to clients, um, while we are operationally, ready, we are dependent on the approval from the FCC, which is expected sometime this year.
Speaker #2: So there's multiple different ways that we're approaching this to create efficiencies for our clients going forward without introducing any additional risk to the
Terry Duffy: So there's multiple different ways that we're approaching this to create efficiencies for our clients going forward without introducing any additional risk to the system.
Terry Duffy: So there's multiple different ways that we're approaching this to create efficiencies for our clients going forward without introducing any additional risk to the system.
Speaker #2: system. Great.
Um in terms of um uh, you know, generally the our our portfolio margin savings, we are generating about 25 billion in the interest rate complex. That includes the 1 and a half billion which includes future swaps and cash products. So again, just to be clear, you were referring to
Speaker #6: Thank you.
[Analyst] (Morgan Stanley): Great. Thank you.
Michael Cyprys: Great. Thank you.
Speaker #2: Thanks, Michael.
Terry Duffy: Thanks, Michael.
Terry Duffy: Thanks, Michael.
Speaker #1: And we'll take the last question from Ken Worthington of JP Morgan. Your line is open,
Operator: We'll take the last question from Ken Worthington of JP Morgan. Your line is open, sir.
Operator: We'll take the last question from Ken Worthington of JP Morgan. Your line is open, sir.
Speaker #1: sir.
[Analyst] (JP Morgan): Hi, thank you so much for squeezing me in. You mentioned that the CFTC approved cross margining for client accounts, you'd be launching shortly. What sort of cross margining programs are you launching, and what sort of adoptions do you anticipate? And along the same lines, you also got approval to launch Treasury and Repo clearing. How would you expect these two initiatives to impact collateral balances over time?
Ken Worthington: Hi, thank you so much for squeezing me in. You mentioned that the CFTC approved cross margining for client accounts, you'd be launching shortly. What sort of cross margining programs are you launching, and what sort of adoptions do you anticipate? And along the same lines, you also got approval to launch Treasury and Repo clearing. How would you expect these two initiatives to impact collateral balances over time?
Speaker #7: squeezing me in. You mentioned that Hi. Thank you so much for the CFTC approved cross-margining for client accounts to be launching shortly. What sort of cross-margining programs are you launching, and what sort of adoptions do you anticipate?
Our treasury clearing offering and what it could do to deliver value versus what we have today with others, is that this is why I'm clear so we can answer it directly. Yeah, there, there was there was 2 parts to it. 1 1 is I thought you just got approval for client accounts from the cftc. I know you were waiting for that for a while. I thought that was just approved and that you will be sort of launching the the those those pro programs sort of imminently. And then the second part was just on the treasure
Speaker #7: And along the same lines, you also got approval to launch treasury and repo clearing. How would you expect these two initiatives to impact collateral balances
Speaker #7: over time? Great
Speaker #2: question, Ken. So I'll ask Sunil to comment on the first part of it, and maybe, Mike, you can touch on the second.
Terry Duffy: Great question, Ken. So I'll ask Sunil to comment on the first part of it, and maybe, Mike, you can touch on the second.
Terry Duffy: Great question, Ken. So I'll ask Sunil to comment on the first part of it, and maybe, Mike, you can touch on the second.
That's the 1. Yeah, that's the 1. That's the Neil just reference. We are still waiting from the SDS to approve. The cfpc has the cfdc SDC has not yet. We're hoping that comes uh shortly.
Got it. Okay. Okay, awesome. Thank you.
Sunil Cutinho: So the, you know, the CME FICC cross margining program for clients is operationally ready. That program has been running since 2024. We have 18 firms participating. We generated record savings for those firms of about $1.5 billion. In terms of expanding to clients, while we are operationally ready, we are dependent on the approval from the SEC, which is expected sometime this year. In terms of, you know, generally our portfolio margin savings, we are generating about $25 billion in the interest rate complex. That includes the $1.5 billion, which includes futures, swaps, and cash products.
Speaker #4: So the CME FICC cross-margining program for clients is operationally ready. That program has been running since 2024. We have 18 firms participating. We generated record savings for those firms of about one and a half billion.
Sunil Cutinho: So the, you know, the CME FICC cross margining program for clients is operationally ready. That program has been running since 2024. We have 18 firms participating. We generated record savings for those firms of about $1.5 billion. In terms of expanding to clients, while we are operationally ready, we are dependent on the approval from the SEC, which is expected sometime this year. In terms of, you know, generally our portfolio margin savings, we are generating about $25 billion in the interest rate complex. That includes the $1.5 billion, which includes futures, swaps, and cash products.
And then the other part of your question was around the benefits of CME treasury clearing. Is that right? Yeah. Like just on your collateral balances. You know what, what do you kind of anticipating their
Then it's a big deal.
Yeah, yeah. So I
The little hard to.
Forecast at this.
Point can, but
Speaker #4: In terms of expanding to clients, while we are operationally ready, we are dependent on the approval from the FCC, which is expected sometime this year.
Speaker #4: In terms of, generally, the portfolio margin savings, we are generating about $25 billion in the interest rate complex. That includes the one and a half billion, which includes futures, swaps, and cash products.
for broader, um, inclusion in Need for clearing of some of these Securities going forward. So some of the new types of of clients that might need to clear going forward. That could be additive to the to that, uh, amount of collateral. But I think what's unique and what is important to remember, is the Neil talked about these offsets we had within our complex, so the 25 billion a day.
Speaker #2: So Ken, just to be clear, you were referring to our treasury clearing offering and what it could do to deliver value versus what we have today with others.
Terry Duffy: So Ken, just to be clear, you were referring to our treasury clearing offering and what it could do to deliver value versus what we have today with others. Is that, just so I'm clear, so we can answer it correctly?
Terry Duffy: So Ken, just to be clear, you were referring to our treasury clearing offering and what it could do to deliver value versus what we have today with others. Is that, just so I'm clear, so we can answer it correctly?
That's inclusive of all, all of our futures and options, the swaps that we're clearing here at CME as well as the offset with Fick, when we have our treasury clearing offering.
Speaker #2: Is that—just so I’m clear—so we can answer it?
Speaker #2: correctly? Yes.
[Analyst] (JP Morgan): Yeah. There was two parts to it. One is I thought you just got approval for client accounts from the CFTC. I know you were waiting for that for a while. I thought that was just approved and that you will be sort of launching those programs sort of imminently. And then the second part was just on the treasury-
Ken Worthington: Yeah. There was two parts to it. One is I thought you just got approval for client accounts from the CFTC. I know you were waiting for that for a while. I thought that was just approved and that you will be sort of launching those programs sort of imminently. And then the second part was just on the treasury-
Speaker #4: There was two parts to it. One is I thought you just got approval for client accounts from the CFTC. I know you were waiting for that for a while.
Speaker #4: I thought that was just approved and that you will be sort of launching the those programs sort of imminently. And then the second part was
Speaker #4: just on the treasury. That's the
Sunil Cutinho: That's the one-
Sunil Cutinho: That's the one-
Speaker #2: one yeah, that's the one that Sunil just referenced. We are still waiting from the FCC to approve the CFTC has the CFTC has not yet.
Terry Duffy: Yeah, that's the one that Sunil just referenced. We are still waiting from the SEC-
Terry Duffy: Yeah, that's the one that Sunil just referenced. We are still waiting from the SEC-
[Analyst] (JP Morgan): SEC
Terry Duffy: to approve. The CFTC has. The SEC has not yet.
Ken Worthington: SEC
Terry Duffy: to approve. The CFTC has. The SEC has not yet.
Speaker #2: We're hoping that
[Analyst] (JP Morgan): Got it.
Ken Worthington: Got it.
Terry Duffy: We're hoping that comes shortly.
Terry Duffy: We're hoping that comes shortly.
Speaker #2: comes shortly. Got it.
[Analyst] (JP Morgan): Got it. Okay. Okay, awesome. Thank you.
Ken Worthington: Got it. Okay. Okay, awesome. Thank you.
Speaker #4: Okay. Okay. Awesome. Thank
Speaker #4: You—and then the other part of your question was—
Terry Duffy: Then the other part of your question was around the benefits of CME Treasury Clearing. Is that right?
Terry Duffy: Then the other part of your question was around the benefits of CME Treasury Clearing. Is that right?
Speaker #2: Around the benefits of CME Treasury clearing. Is that right?
Speaker #4: Yeah. Just on your collateral balances, what are you kind of anticipating there?
[Analyst] (JP Morgan): Yeah. Like, just on your collateral balances, you know, what are you kind of anticipating there?
Ken Worthington: Yeah. Like, just on your collateral balances, you know, what are you kind of anticipating there?
Speaker #2: Lynn, it's a big deal.
Terry Duffy: Linda, it's a big deal.
Terry Duffy: Linda, it's a big deal.
Speaker #1: Yeah. So it's a little hard to forecast at this point, Ken, but certainly with things like the mandates potentially coming for broader inclusion in need for clearing of some of these securities going forward.
Lynne Fitzpatrick: Yeah, so-
Lynne Fitzpatrick: Yeah, so-
Terry Duffy: Yeah.
Terry Duffy: Yeah.
Lynne Fitzpatrick: Yeah. So I, it's a little hard to forecast at this point, Ken, but certainly with things like the mandates potentially coming for broader inclusion in need for clearing of some of these securities going forward, so some of the new types of clients that might need to clear going forward, that could be additive to that amount of collateral. But I think what's unique and what is important to remember is Sunil talked about these offsets we had within our complex, so the $25 billion a day, that's inclusive of our futures and options, the swaps that we're clearing here at CME, as well as the offsets with FICC.
Lynne Fitzpatrick: Yeah. So I, it's a little hard to forecast at this point, Ken, but certainly with things like the mandates potentially coming for broader inclusion in need for clearing of some of these securities going forward, so some of the new types of clients that might need to clear going forward, that could be additive to that amount of collateral. But I think what's unique and what is important to remember is Sunil talked about these offsets we had within our complex, so the $25 billion a day, that's inclusive of our futures and options, the swaps that we're clearing here at CME, as well as the offsets with FICC.
Speaker #1: So some of the new types of clients that might need to clear going forward, that could be additive to the amount of collateral. But I think what's unique and what is important to remember is Sunil talked about these offsets we had within our complex, so the 25 billion a day.
So the agreement we have with Fick is growing by the day. That is really the important part of this. Our treasury clearing offering is a nice to have. We will continue to roll it out in a methodical way but the True Value that we see right now in today is with dtcc and the fit clearing organization, that's where the value is at. And that's where we're keeping our minds focused on.
Okay, great. Thank you.
Thank you.
Speaker #1: That's inclusive of all of our futures and options, the swaps that we're clearing here at CME, as well as the offset with FICC. When we have our treasury clearing offering added to that and potentially the ability to offer additional cross-margining, we are bringing more into that pool of capital.
And at this time, I will turn the call over to Terry Duffy for closing remarks.
Lynne Fitzpatrick: When we have our Treasury clearing offering added to that and potentially the ability to offer additional cross margining, we are bringing more into that pool of capital and the efficiencies that can be created for clients by using these different pieces of the stool. So it is just further reinforcing the value proposition for clients and freeing up their capital for potentially other uses. So we think it's important that we're addressing all these different pieces.
Lynne Fitzpatrick: When we have our Treasury clearing offering added to that and potentially the ability to offer additional cross margining, we are bringing more into that pool of capital and the efficiencies that can be created for clients by using these different pieces of the stool. So it is just further reinforcing the value proposition for clients and freeing up their capital for potentially other uses. So we think it's important that we're addressing all these different pieces.
Thank you. And well, 2025 was a landmark year for CME Group. Our record performance in January provides a solid foundation as we move into 2026.
Speaker #1: And the efficiencies that can be created for clients by using these different pieces of the stool. So it is just further reinforcing the value proposition for clients and freeing up their capital for potentially other uses.
Speaker #1: So, we think it's important that we're addressing
Speaker #1: So we think it's important that we're addressing all these different pieces. The interesting part
Terry Duffy: The interesting part about all this, Ken, is our arrangement with FICC, which is critically important to the growth of this company, especially when it comes to clearing and giving offsets going forward in the rates business, to make sure that we are the dominant participant to bring your business to. That has upticked at FICC in recent months with new participants coming into it. So we were around $1 billion a day, I believe, with just the FICC offsets. That's upticked $ several hundred million over the last, more, $500 million or so in the last couple of months, and we see that continuing to grow. So the agreement we have with FICC is growing by the day. That is really the important part of this. Our treasury clearing offering is a nice to have.
Terry Duffy: The interesting part about all this, Ken, is our arrangement with FICC, which is critically important to the growth of this company, especially when it comes to clearing and giving offsets going forward in the rates business, to make sure that we are the dominant participant to bring your business to. That has upticked at FICC in recent months with new participants coming into it. So we were around $1 billion a day, I believe, with just the FICC offsets. That's upticked $ several hundred million over the last, more, $500 million or so in the last couple of months, and we see that continuing to grow. So the agreement we have with FICC is growing by the day. That is really the important part of this. Our treasury clearing offering is a nice to have.
Speaker #2: about all this, Ken, is our arrangement would fit, which is critically important to the growth of this company. Especially when it comes to clearing and giving offsets going forward and the rates business to make sure that we are the dominant participant to bring your business to.
We are delivering on our strategic roadmap launching CME Securities clearing, expanding our event contracts and introducing 24/7 trading to meet the evolving needs of our clients. These Investments, reinforce our leadership as the world's Premier risk management destination and will drive substantial growth for years to come. Once again, thank you for joining us on our call today. Thank you.
This concludes today's conference call.
You may all disconnect at this time.
Speaker #2: That has upticked at FIC in recent months with new participants coming into it. So we were around $1 billion, I believe, a day with just the FIC offsets.
Speaker #2: That's upticked several hundred million over the last $500 million or so in the last couple of months. And we see that continuing to grow.
Speaker #2: So the agreement we have with FIC is growing by the day. That is really the important part of this. Our treasury clearing offering is a nice-to-have.
Speaker #2: We will continue to roll it out in a methodical way. But the true value that we see right now and today is with DTCC and the FIC clearing organization.
Terry Duffy: We will continue to roll it out in a methodical way, but the true value that we see right now and today is with DTCC and the FICC clearing organization. That's where the value is at, and that's where we're keeping our minds focused on.
Terry Duffy: We will continue to roll it out in a methodical way, but the true value that we see right now and today is with DTCC and the FICC clearing organization. That's where the value is at, and that's where we're keeping our minds focused on.
Speaker #2: That's where the value is at. And that's where we're keeping our minds focused
Speaker #2: on. Okay.
[Analyst] (JP Morgan): Okay, great. Thank you.
Ken Worthington: Okay, great. Thank you.
Speaker #4: Great. Thank
Speaker #4: you. Thank
Terry Duffy: Thank you.
Terry Duffy: Thank you.
Speaker #1: And you. at this time, I will turn the call over to Terry Duffy for closing
Operator: At this time, I will turn the call over to Terry Duffy for closing remarks.
Operator: At this time, I will turn the call over to Terry Duffy for closing remarks.
Speaker #1: remarks. Thank you.
Terry Duffy: Thank you. And while 2025 was a landmark year for CME Group, our record performance in January provides a solid foundation as we move into 2026. We are delivering on our strategic roadmap, launching CME Securities Clearing, expanding our event contracts, and introducing 24/7 trading to meet the evolving needs of our clients. These investments reinforce our leadership as the world's premier risk management destination and will drive substantial growth for years to come. Once again, thank you for joining us on our call today. Thank you.
Terry Duffy: Thank you. And while 2025 was a landmark year for CME Group, our record performance in January provides a solid foundation as we move into 2026. We are delivering on our strategic roadmap, launching CME Securities Clearing, expanding our event contracts, and introducing 24/7 trading to meet the evolving needs of our clients. These investments reinforce our leadership as the world's premier risk management destination and will drive substantial growth for years to come. Once again, thank you for joining us on our call today. Thank you.
Speaker #2: And while 2025 was a landmark year for CME Group, our record performance in January provides a solid foundation as we move into 2026. We are delivering on our strategic roadmap, launching CME securities clearing, expanding our event contracts, and introducing 24/7 trading to meet the evolving needs of our clients.
Speaker #2: These investments reinforce our leadership as the world's premier risk management destination and will drive substantial growth for years to come. Once again, thank you for joining us on our call today.
Speaker #2: Thank
Speaker #2: you.
Operator: This concludes today's conference call. You may all disconnect at this time.
Operator: This concludes today's conference call. You may all disconnect at this time.
