Summary

• CME Group Inc. is a leading global derivatives marketplace.
• CME Group, is the holding company for CME, CBOT, NYMEX, COMEX, NEX
• The company runs an electronic trading platform, CME Globex, which allows customers in approximately 150 countries to trade futures and options contracts.
• The company also operates two cash market businesses: BrokerTec, which facilitates dealer-to-dealer trading for fixed-income markets, and EBS, which provides foreign exchange spot trading.

CME Group Inc. (Nasdaq: CME, LSE: 0HR2) is a leading global derivatives marketplace. It operates a global marketplace where institutions and individuals can trade futures and options based on interest rates, equity indexes, foreign exchange, energy, metals, and agricultural commodities. The company runs an electronic trading platform, CME Globex, which allows customers in approximately 150 countries to trade futures and options contracts. The company also operates two cash market businesses: BrokerTec, which facilitates dealer-to-dealer trading for fixed-income markets, and EBS, which provides foreign exchange spot trading.

CME Group was founded in 1898 as the Chicago Mercantile Exchange. It has since grown to become the world's largest and most diverse derivatives marketplace. The company's products and services are used by a wide range of market participants, including commercial banks, investment banks, hedge funds, and asset managers.

Recent Developments

CME Group Realigns Foreign Exchange Businesses¹

15 Aug 2023; CME Group, the world's leading derivatives marketplace, today announced a realignment of its FX futures, options, cash and over-the-counter (OTC) FX businesses into a single unit led by Paul Houston, who has overseen CME Group's futures and options business for seven years.

Under the new structure, Houston will serve as Global Head of FX Products and will be responsible for the company's FX derivatives markets as well as its EBS cash markets business, leveraging a combined team to further improve client service, increase efficiencies and enhance product development across the entire FX marketplace. Jeff Ward, Global Head of EBS, will be leaving CME Group in September.

Financial Highlights

Second-Quarter 2023 Results²

25 Jul 2023; CME Group Inc. reported financial results for the second quarter of 2023.

The company reported revenue of $1.4 billion and operating income of $839 million for the second quarter of 2023. Net income was $778 million and diluted earnings per common share were $2.14. On an adjusted basis, net income was $836 million and diluted earnings per common share were $2.30. Financial results presented on an adjusted basis for the second quarter of 2023 and 2022 exclude certain items, which are detailed in the reconciliation of non-GAAP results.

As of June 30, 2023, the company had approximately $2 billion in cash (including approximately $120 million deposited with Fixed Income Clearing Corporation, which is included in other current assets) and $3.4 billion of debt. The company paid dividends of approximately $400 million during the second quarter of 2023. The company has returned over $21.5 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.

Company Overview

CME Group, is the holding company for CME, CBOT, NYMEX, COMEX, NEX. CME Group Inc. is a leading global derivatives marketplace. CME was founded in 1898 as a not-for-profit corporation. It established its clearing house in 1919, which is operated as part of CME. CME demutualized in 2000, and in 2002 its parent company, CME Group, completed an initial public offering of its Class A common stock (Nasdaq: CME). CME Group subsequently acquired CBOT Holdings, Inc. in 2007, NYMEX Holdings, Inc. (NYMEX and COMEX) in 2008, the Kansas City Board of Trade in 2012 and NEX Group plc (NEX) in 2018. The combination with NEX expanded its global customer base and product offerings through the complementary combination of CME Group’s exchange-traded derivative products and NEX’s cash and OTC products.

CME Group exchanges offer the widest range of global benchmark products across interest rates, equity indexes, foreign exchange (FX), agricultural commodities, energy and metals. The company also offer cash and repo fixed income trading via BrokerTec, and cash and OTC FX trading via EBS. In addition, the company operate one of the world’s leading central counterparty clearing providers, CME Clearing, operated by CME.³

Derivatives Exchange Business

Through its derivatives exchanges and clearing house, the company believe its customers prefer CME Group's diversity of products, liquidity, price transparency and technological capabilities.

CME

CME's product slate includes agricultural, equities, FX, cryptocurrencies/alternative investments and interest rate products, including Eurodollar futures and options, Secured Overnight Financing Rate (SOFR) futures and options, Bloomberg Short-Term Bank Yield (BSBY), livestock and cash-settled contracts based on the S&P 500, including the E-mini S&P 500 ESG (Environmental, Social and Governance) contract, Micro E-mini Equity Index contracts, Nasdaq-100, FTSE Russell and Bitcoin and Ether Reference Rate.

CME Group products are traded primarily through CME Globex, as well as by open outcry in Chicago for Eurodollar options and SOFR options and through privately negotiated transactions.

CBOT

CBOT's product slate consists of agricultural, equities and interest rate products, including contracts for United States (U.S.) Treasury futures, soybean, corn, and wheat and contracts based on the Dow Jones Industrial Index.

NYMEX

NYMEX's product slate consists of energy and metals products, including contracts for crude oil, natural gas, heating oil, gasoline and emissions (GEO and NGO).

COMEX

COMEX's product slate consists of metals products, including contracts for gold, silver, copper and other base metals.

CME Clearing Business

Through its clearing house, CME Clearing, which is operated by CME, the company provide clearing and settlement services for a broad range of exchange-traded futures and options on futures contracts and OTC derivatives. The company's integrated clearing function is designed to ensure the safety and the soundness of its markets by serving as the counterparty to every trade, becoming the buyer to each seller and the seller to each buyer, and limiting counterparty credit risk. CME Clearing marks open positions to market at least twice a trading day, requiring payments from clearing firms whose positions have lost value and making payments to clearing firms whose positions have gained value. For select cleared-only markets, positions are marked-to-market daily, with the capacity to mark-to-market more frequently as market conditions warrant. The CME ClearPort front-end system provides access to its flexible clearing services for block transactions, bi-lateral trades and swaps.

Cash Markets Business

The company's cash markets business is comprised of BrokerTec and EBS. Certain BrokerTec and EBS products are cleared at third-party clearing houses. BrokerTec and EBS offer anonymous and disclosed trading venues, offering clients multiple execution and distribution options and the benefit of an established and far-reaching distribution network of liquidity providers and consumers. The company's BrokerTec Central Limit Order Books were migrated from a third-party platform to its CME Globex electronic platform in the first quarter of 2021 and its EBS Central Limit Order Books were migrated to the CME Globex platform in the second quarter of 2022.

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BrokerTec operates global electronic trading for fixed income products on the CME Globex platform, with a leading position in cash U.S. Treasuries, E.U. and U.S. repo fixed income instruments and European Government Bonds. It facilitates trading for banks and non-bank professional trading firms. BrokerTec Quote is a third party Request For Quote platform that offers a dealer-to-client trading solution for the European and U.S. government repo markets. BrokerTec Stream is a relationship-based trading platform offering U.S. Treasury instruments.

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EBS provides for the trading of FX products across major and emerging market currencies. EBS also offers execution of non-deliverable forwards through a Commodity Futures Trading Commission (CFTC) registered swap execution facility (SEF), operated by one of its subsidiaries. EBS operates both as a Central Limit Order Book platform for spot and non-deliverable forwards currency pairs, as well as a relationship-based thirdparty trading platform offering spot FX, FX forwards and FX swaps.

Market Data Business

The company offer a variety of market data services through industry-leading market data platforms and third-party distribution partners, which are designed to meet the risk-management, trading, investment and business needs of its global client base. As such, the company provide proprietary real-time and historical market data related to CME Group’s vibrant and deeply liquid exchanges and cash markets businesses. The company further offer derived cash markets pricing, third-party and alternative data sets, as well as a wide range of analytic tools. As customers continue to leverage cloud technology to improve and evolve their businesses, CME Group has taken a leading role by becoming the first derivatives marketplace to provide live market data natively in the cloud with the launch of its cloud connect capabilities on the Google Cloud Platform. CME Group is also the distributor of leading benchmark equity and commodity indices on behalf of third parties as well as its own proprietary benchmarks and indices, including CME Term SOFR Reference Rates (CME Term SOFR), which is a benchmark designed to adhere to the IOSCO Principles for Financial Benchmarks.

References

1. ^ https://www.cmegroup.com/media-room/press-releases/2023/8/16/cme_group_realignsforeignexchangebusinessesexpandingtradingoppor.html
2. ^ https://www.cmegroup.com/media-room/press-releases/2023/7/26/cme_group_inc_reportssecond-quarter2023financialresults.html
3. ^ https://fintel.io/doc/sec-cme-group-inc-1156375-10k-2023-february-27-19415-3265