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Analogies for CME (CME):

1. Like the NYSE or Nasdaq, but for commodities, currencies, and interest rates.
2. Imagine the NYSE or Nasdaq, but instead of trading shares of companies, you're trading contracts for things like oil, gold, or future interest rates.

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• Futures and Options Exchanges: Provides electronic trading platforms for a wide range of derivative contracts across interest rates, equity indices, foreign exchange, energy, metals, and agricultural commodities.
• Clearing Services: Acts as a central counterparty, guaranteeing the performance of trades and mitigating counterparty risk for transactions executed on its exchanges and certain over-the-counter markets.
• Market Data and Information Services: Sells real-time and historical pricing, trading, and reference data derived from its global marketplaces to market participants.
• Co-location and Connectivity Services: Offers direct physical placement of trading servers within its data centers and high-speed network access for ultra-low latency trading.

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CME Group (symbol: CME) primarily serves institutional clients rather than individual consumers. As an operator of financial exchanges and a clearinghouse, its "customers" are the various market participants who utilize its platforms for trading, clearing, and data services.

While CME's customer base is broad and comprises thousands of trading firms, hedge funds, asset managers, and corporations, the most direct and significant "customer companies" in terms of interaction with CME's clearing and trading systems are the major Futures Commission Merchants (FCMs). These firms facilitate trades for themselves and their clients, and clear those trades through CME's clearing house. The largest FCMs are typically divisions of major global investment banks and financial institutions. Below are some prominent examples of public companies that operate major FCMs and are therefore significant users/customers of CME's services:

• JPMorgan Chase & Co. (Symbol: JPM) - Through its FCM entity, J.P. Morgan Securities LLC.
• The Goldman Sachs Group, Inc. (Symbol: GS) - Through its FCM entity, Goldman Sachs & Co. LLC.
• Morgan Stanley (Symbol: MS) - Through its FCM entity, Morgan Stanley & Co. LLC.
• Bank of America Corporation (Symbol: BAC) - Through its FCM entity, Merrill Lynch Professional Clearing Corp.
• Citigroup Inc. (Symbol: C) - Through its FCM entity, Citigroup Global Markets Inc.

These financial institutions, among others, act as critical intermediaries in the futures and options markets, bringing substantial order flow and clearing activity to CME Group's exchanges.

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Terrence A. Duffy, Chairman and Chief Executive Officer

Terrence A. Duffy serves as Chairman and Chief Executive Officer of CME Group, overseeing the world's leading derivatives marketplace. He previously held roles as Executive Chairman and President, and Executive Chairman. Duffy was President of TDA Trading, Inc. from 1981 to 2002, a firm he founded. He has been a CME member since 1981 and a Board member since 1995. Under his leadership, CME Group completed significant mergers and acquisitions, including combining with the Chicago Board of Trade in 2007, acquiring the New York Mercantile Exchange in 2008, and NEX in 2018. He also led a landmark partnership with Google Cloud in 2021. Duffy was appointed by President Bush and confirmed by the U.S. Senate in 2003 as a member of the Federal Retirement Thrift Investment Board, serving until 2013.

Lynne Fitzpatrick, President and Chief Financial Officer

Lynne Fitzpatrick has served as CME Group's President and Chief Financial Officer since November 2024, having previously held the Chief Financial Officer position since April 2023. She joined CME Group in 2006 and has held positions of increasing responsibility within the finance organization, including Senior Managing Director and Deputy Chief Financial Officer, and Managing Director of Corporate Development and Treasurer. Prior to joining CME Group, Fitzpatrick worked as an investment banker at Credit Suisse and UBS.

Julie Winkler, Chief Commercial Officer

Julie Winkler has served as Chief Commercial Officer of CME Group since 2016. In this role, she leads the company's sales, product marketing, research and product development, data analytics, and innovation lab functions, as well as the data services business line. She joined the Chicago Board of Trade (CBOT) in 1996 and held various leadership positions in business development and product development before its acquisition by CME Group in 2007. Winkler played a key role in the company's mergers and the development of new products, including the Bitcoin futures contract in 2017.

Tim McCourt, Senior Managing Director, Global Head of Equities, FX and Alternative Products

Tim McCourt has served as Senior Managing Director, Global Head of Equities, FX and Alternative Products since August 2024. He is responsible for leading the development and execution of the company's global equity index, foreign exchange, cryptocurrency, and alternative investment product strategies. Prior to this, he served as Senior Managing Director, Global Head of Financial and OTC Products since June 2023, and Global Head of Equity and Foreign Exchange Products since February 2022. Before joining CME Group in 2013, McCourt worked for the Royal Bank of Scotland, where he managed the Americas Index and Delta One trading book, and held a senior trading role with JPMorgan in New York for 10 years in the Equity Derivatives Group.

Suzanne Sprague, Chief Operating Officer and Global Head of Clearing

Suzanne Sprague has served as CME Group's Chief Operating Officer and Global Head of Clearing since November 2024. Prior to this, she served as Senior Managing Director and Global Head of Clearing and Post-Trade Services since 2022. Since joining CME Group in 2002, she has held various leadership positions in financial and risk management, including Managing Director, Credit & Liquidity Risk, Risk Policy & Banking.

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Key Business Risks for CME Group (CME)

1. Cybersecurity Risks and System Failures: As a critical financial market infrastructure provider, CME Group is at an elevated risk of cybersecurity threats. A successful cyberattack or significant system failure could lead to the misuse of data (both company and customer), interruptions in operations, a reduction in customer base and trading volume, substantial financial liabilities, and considerable expenses to bolster or investigate security incidents. Such events could also severely damage the company's reputation and brand, and result in regulatory fines.
2. Declines in Trading Volume and Average Rate Per Contract: CME Group's profitability is highly susceptible to fluctuations in trading volume and the average rate per contract. Given its largely fixed cost structure, any significant decrease in demand for its diverse range of products and services could adversely affect its financial performance. Furthermore, the average rate per contract is subject to various influencing factors, making it an unreliable indicator for future performance and adding to revenue uncertainty.
3. Dependence on Trading and Clearing Activities of Exchange Members and Member Influence: A substantial portion of CME Group's derivatives contract volume, approximately 84% in 2021 and 2023, and 85% in 2024, is derived from its members' trading and clearing activities. This reliance, coupled with special rights granted to members—including the ability to elect directors—grants them considerable influence over the company's operations. This could potentially lead to situations where member interests diverge from or conflict with those of public shareholders, impacting decision-making and strategic direction.

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Decentralized Finance (DeFi) derivatives platforms represent a clear emerging threat to CME's traditional business model.

These platforms, such as dYdX, GMX, Synthetix, and Aevo, enable peer-to-peer trading of derivatives (e.g., perpetual futures, options) directly on blockchain networks using smart contracts. This technology allows for the disintermediation of traditional central exchanges and clearinghouses, which are core components of CME's revenue streams and market position. DeFi platforms aim to offer lower transaction costs, 24/7 global accessibility, enhanced transparency, and censorship resistance by removing intermediaries and automating functions that CME currently provides.

While currently dominant in cryptocurrency derivatives, the underlying technology and business model of DeFi pose a long-term threat by demonstrating an alternative, potentially more efficient, and disintermediated way to execute and clear derivatives. Should this model mature, gain broader adoption, and potentially expand into tokenized traditional asset classes, it could directly erode CME's market share, transaction fees, and clearing revenues by diverting trading volume to these decentralized venues.

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CME Group (symbol: CME) operates a leading global derivatives marketplace, offering a wide range of futures and options contracts across major asset classes. The addressable markets for CME's main products and services, primarily derivatives, are substantial and global in scope.

Overall Derivatives Market

The global derivatives market is immense. On the high end, its notional value is estimated to be over $1 quadrillion, though some analysts suggest this figure is overstated. More recently, the notional outstanding of global over-the-counter (OTC) derivatives rose to $729.8 trillion at the end of June 2024.

Interest Rates

CME Group offers futures and options based on interest rates, including U.S. Treasuries and SOFR. The global market for exchange-traded interest rate futures was notionally valued at $34,771 billion in 2019. The notional outstanding of global OTC interest rate derivatives (IRD) increased by 0.9% to $578.8 trillion at mid-year 2024. Total trading volume in interest rate futures and options globally reached 6.1 billion contracts in 2023.

Equity Indexes

CME Group provides products for major U.S. equity indexes such as the S&P 500, Nasdaq-100, Dow Jones, and Russell 2000. The turnover for the global market in exchange-traded equity index futures was notionally valued at US$130 trillion in 2008. More recently, the number of stock index options and futures contracts traded globally in the first half of 2023 amounted to 34.50 billion. CME's Micro E-mini Equity Index futures alone surpassed 3 billion contracts traded across all four indices as of November 29, demonstrating significant activity within this segment.

Foreign Exchange (FX)

CME Group offers foreign exchange futures and options. The global foreign exchange market is the largest and most liquid financial market, with daily exchange volumes surpassing $6 trillion per day. The global foreign exchange market size was valued at $861 billion in 2024 and is projected to reach $1.53 trillion by 2033. North America held a significant share of 25.8% in 2024. The notional outstanding of global foreign exchange derivatives grew by 9.6% to $129.9 trillion at mid-year 2024.

Energy, Agricultural Commodities, and Metals

CME Group's offerings also span energy, agricultural products, and metals futures and options. The global commodity services market size was estimated at $3.56 billion in 2024 and is predicted to grow to approximately $8.16 billion by 2034. Another estimate places the global commodity services market size at approximately $12 billion in 2023, projected to reach $18 billion by 2032. North America holds the largest share of the commodity services market. Globally, commodity derivatives notional outstanding rose to $2.7 trillion at mid-year 2024.

Cryptocurrency Derivatives

CME Group also provides cryptocurrency futures. The crypto derivatives market has experienced substantial growth, with its monthly trading volume reaching $1.33 trillion in September 2023, nearly four times the size of the crypto spot market. In 2025, the crypto derivatives market reached a record $8.94 trillion in monthly trading volume. CME is a predominant player in the U.S. centralized crypto derivatives market, holding over 60% market share of the monthly trading volume in the U.S. as of September 2023.

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CME Group (CME) is expected to drive future revenue growth over the next 2-3 years through several key initiatives and market trends:

1. Increased Trading Volumes Across Diverse Asset Classes: CME Group has consistently reported strong average daily volume (ADV) growth across various asset classes. This includes significant increases in interest rate products, such as U.S. Treasury, SOFR, Ultra 10-Year, and Ultra T-Bond futures, driven by ongoing economic and geopolitical uncertainty that enhances the need for risk management. Agricultural, energy (including WTI Crude Oil options), foreign exchange, and metals markets have also experienced substantial volume growth.
2. Expansion of Product Offerings and Innovation: The company is focused on introducing new and expanding existing products to meet evolving client needs. Recent examples include the launch of new analytics tools for volatility traders and the achievement of milestones in investment grade and high yield credit futures. The success of "micro products" across various asset classes has also been a significant driver, attracting a growing retail trader base.
3. Global and Retail Client Expansion: CME Group is actively expanding its client base, particularly in international markets. Non-U.S. average daily volume has seen substantial growth, especially in regions like EMEA and Asia. The company has also significantly increased its number of retail traders and expanded its global network of retail broker distribution partners, with nearly 50% of its retail business now originating from outside the U.S.
4. Leveraging Technology and Data Services: CME Group aims to enhance value for clients by leveraging technology, including its partnership with Google Cloud. The company has also demonstrated consistent growth in market data revenue, indicating increasing demand for its information services. New analytics tools further contribute to this segment.
5. Growth in Crypto Derivatives: Management has highlighted record trading volumes in crypto contracts as a key area of focus and a promising driver for future growth, underscoring the company's pursuit of emerging asset classes.

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Share Repurchases

• On December 5, 2024, CME Group's Board of Directors authorized a new share repurchase program of up to $3 billion of its Class A common stock. This program has no specified end date and its execution is subject to market conditions and other factors.
• CME Group's capital return strategy now includes opportunistic share repurchases, as highlighted in a September 2025 investor presentation.

Share Issuance

• No significant general public share issuances for capital raising purposes were identified within the last 3-5 years.

Inbound Investments

• In November 2021, Google made a $1 billion equity investment in a new series of non-voting convertible preferred stock of CME Group as part of a long-term strategic partnership to accelerate cloud migration and transform derivatives markets.

Outbound Investments

• CME Ventures, the corporate venture capital arm of CME Group, focuses on making strategic minority equity investments in external companies.
• CME Group historically engages in strategic acquisitions and partnerships to broaden its capabilities and enter new markets.
• Notable investments by CME Ventures include participation in a $21 million funding round for OpenGamma in February 2022 and supporting Kemiex in February 2023.

Capital Expenditures

• CME Group reported capital expenditures of $197.5 million in 2020, $127.2 million in 2021, $89.7 million in 2022, $76.4 million in 2023, and $94 million in 2024.
• Expected capital expenditures are approximately $91.4 million for 2025 and $96.45 million for 2026.
• The primary focus of capital expenditures includes consistently upgrading technology infrastructure to enhance trading speed, reliability, and security, with a strategic emphasis on accelerating cloud migration through its partnership with Google, which is anticipated to decrease capital expenditures over time.