CME Group a Stock

Welcome to the CME Group Second Quarter 2026 Earnings Call. [Operator Instructions]

I will now turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. Earlier this morning, we released our earnings commentary, which provides extensive details on the second quarter 2026, which we will be discussing on this call. I'll start with the safe harbor language, and 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.

With that, I'll turn the call over to our Chairman and CEO, Terry Duffy.

Thank you, Adam, and thank you all for joining us this morning. I'll make a few comments about our strong quarter and then -- before I turn it over to Lynne to provide an overview of our financial results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks.

The second quarter average daily volume of 29.8 million contracts represented the second highest Q2 in our history and was within 1% of our record second quarter a year ago with May and June, particularly strong following the tough April comparison. Open interest ended the quarter up 8% over the past year and up 16% since the beginning of this year. Additionally, we delivered a record level of capital efficiencies, saving our customers an average of over $95 billion in margin per day.

Recently, this strong business performance has been overshadowed by discussions surrounding perpetual futures. While this product may be do the futures, they function much more like leverage spot products. They may appeal to certain retail traders seeking high leverage, but they are not appropriate for the institutional risk managers who comprise the vast majority of our business.

Perpetual futures are highly engineered instruments that rely on frequent funding rate adjustments that revert the decision back to the spot price. They are known for high leverage and automated liquidations. They offer limited investor protections and introduce heightened market risk, particularly for retail participants. These products do not appeal to our core customers.

Through the first half of 2026, 94% of our volume originated from institutional customers. Perpetual futures are in no way substitutes for the institutional hedging tools that these customers rely on. Perpetuals do not provide price or time certainty to necessary components for hedging exposures.

Furthermore, when taking into an account both of the transaction fee and the daily funding costs, the total cost to trade perpetual futures is typically orders of magnitude more expensive than our highly efficient futures contracts. We have the full technical and operational capabilities to launch perpetual futures. In fact, we have contract specifications and are prepared to bring these products to market should evolving demand or structural shifts make it appropriate to do so. However, we have not heard demand from our customers for these products.

Crypto perpetuals are not new and existed before we even launched our crypto futures complex in 2017. We have built that business over the past -- last 9 years because our futures fill a market need that was not met by traditional crypto products, including perpetuals. Our crypto futures volume is up over sevenfold in the past 3 years despite the existence of crypto perpetuals. We remain deeply committed to ensuring market integrity, and we'll never sacrifice core protections in the name of innovation. Instead, we continue to launch innovative products while preserving the safety and soundness of our marketplace.

In the second quarter, we successfully introduced 24/7 trading of crypto futures. And this weekend, we are launching 24/7 trading of our 1-ounce gold contract. Next week, we will be launching single stock futures, which will simplify directional trading with exceptional capital efficiency.

In the fourth quarter, we plan to launch Treasury Link to link our U.S. treasury futures and cash treasury liquidity pools. We're also partnering with silicon data to launch a pioneering compute futures market later this year. We expect our innovation -- we expect our innovative new offerings to further accelerate our growth as we build on our record-breaking performance in the first half of 2026. Our robust product pipeline and ongoing investments in our technology evolution position us well to drive continued value for both clients and shareholders.

With that, I will turn the call over to Lynne to review our financials, and I look forward to your questions.

Thanks, Jerry, and thank you all for joining us this morning. As Terry mentioned, CME Group delivered strong financial results in the second quarter. Our revenue of over $1.7 billion was up 1% from the second quarter in 2025. This marks a record for second quarter revenue and the second highest all-time quarterly revenue behind Q1 of this year. The average rate per contract for the quarter was $0.678, a $0.026 increase from Q1. Market Data revenue achieved another record quarter, up 20% to $238 million, continuing our trend of 33 consecutive quarters of year-over-year market data revenue growth and our eighth consecutive quarter of record revenue.

Adjusted expenses were $521 million for the quarter and $412 million, excluding license fees. Our adjusted operating income was $1.2 billion or 69.5% adjusted operating margin. Adjusted net income and adjusted diluted earnings per share were $1.1 billion and $2.99 per share, 1% higher than Q2 2025. This represents an adjusted net income margin for the quarter of 63.4%. We returned $1.2 billion to shareholders during the quarter with $468 million in regular quarterly dividends and $695 million in shares repurchased.

CME Group continued to build on its record 2025 performance through the first half of 2016. Volume through the first half was 10% ahead of last year with open interest growing 8%. Revenue increased 8% and adjusted diluted earnings per share come 10% in the first half of the year.

Further, we set new records for our large open interest holders in interest rates, equity index and FX since the start of this year. Third quarter volume has started out strong with July to date, tracking 18% ahead of last year. Our strong financial performance this year reflects CME Group's established role as the world's severe risk management destination in times of uncertainty, our robust market infrastructure and deep liquidity pools allow participants to manage exposure with confidence.

As the market landscape continues to evolve, we remain committed to driving innovation and delivering the capital efficiencies that our clients rely on. With continued strong demand for our risk management products, we look forward to continuing this momentum in the second half.

We'd now like to open up the call for your questions.

[Operator Instructions] Your first question in the queue is from Dan Fannon with Jefferies.

Terry, I was hoping you could expand upon your comments on perpetuals. Clearly, the market is focused on this topic. Can you expand upon what you're hearing from customers, if anything, around the potential innovation that might be coming fromperpetuals?

Yes, Dan, it's a great question. I've spent a lot of time over the last several weeks going through each and every one of our asset classes talking to the highest levels of those institutions who participate in our business under the great benefits of being in my role for the last 30 years as I've booked a lot of good relationships, and they put me in the right direction with the participants. So I'll give you an example, the largest -- second largest energy participant in the world of commercial participation. So there's been a lot of talk about oil as it relates to perks and other -- and of course, it's in the headlines today as it relates to the Iranian war.

I have had conversations with the CEO of this firm and his derivative participants from different parts of the world, and they reassured me 19 times I ask them that they want to meet with this product. They do not want this product. They do not know how they would possibly risk manage the exposures that they have on their books with a perpetual contract. It does not work for them. They made it quite clear to me that this product that we have today and other energy products that are available to them, whether it's at ICE or somewhere else are critically important to what they do to manage their business. So that is one example.

And I've also know the same thing as it relates to our other products such as rates and equities and have had very similar conversations. So when these products have end dates associated with them on the cash market side and you have a product as I said in my opening comments, that trade around a leverage spot price that does absolutely nothing for them in order to risk manage their product. Now it might do something for the retail participant who wants to just trade back and forth. And -- but it does nothing for the 94% of the business that I outlined earlier in my comments.

And I think anybody on this call knows me. I'm pretty forward straight shooter, and I even mentioned that in my opening comments, if I thought we needed to list these, we would do so. And I said that we were prepared to do it if we needed to do it. But that's not what we are hearing. We are hearing quite the contrary to how business and commerce gets done by the institutional participants. And I want to be careful about the names that I use, but I will tell you that these are significant players. These are not third or fourth tier players. These are top-tier players who are the open interest in CME.

The next question is from Alex Kramm with UBS.

I guess I'll stay on the same topic, even though you brought it up twice already, Terry, that if there's demand, you would meet it. So maybe just talk a little bit more philosophical why on the retail side, you don't think there's demand yet because clearly, you've been expanding into retail aggressively. And I know that's not your core market, but it's been a nice growth area. And clearly, it seems like there is interest from retail. So just maybe can you give us some more detail what the retail participation is saying and why you're not ready -- or why you're not willing to do this right now? Or -- and what really has to change for you to expand there on the retail side?

I'm going to ask -- so the comparison, Alex, and thank you for the question. Comparison for the retail right now in the United States would be the crypto franchise because that's the only other perps that are out there competing with our products today. So Tim is going to walk through some of the statistics around what the retail is doing in that particular asset class.

But I want to make a point, and I think this is really important as it relates to perpetuals. I want to ask anybody or it's a rhetorical question. How many people have been talking about the funding rate and the cost of the funding rate as it relates to a perpetual? And how many people have been talking about the auto liquidation, risk management model on the back end of the market? The answer to that because it was rhetorical is zero. The only thing we're talking about, about a perpetual is there is no exploration data associated with it. I will tell you that we are not seeing anybody nor do we hardly ever see anybody in the retail division hold on to these products long enough to ever go to an expiration. So that is not the issue.

And then I clearly outlined, if they did, the cost associated with going to roll the product versus paying the funding rate and the cost to trade the product, which is sevenfold higher than CME's execution cost would way overshadow the cost that it would be to roll your position. So that demand is still not there. But just to reinforce that, I'm going to ask Tim to walk through an apples-to-apples comparison on the crypto side because that's what we've seen to date that's been approved. Tim?

Thanks, Terry, and thanks, Alex, for the question. As Terry said in his opening remarks, our cryptocurrency business at CME Group has continued to grow year-over-year in 9 years we've been in it along aside thesis perpetuals in the crypto-native ecosystem outside the U.S. And when we look at the growth we had, if we look at the suite of crypto products at CME Group, that grew 32% compared to Q2 2025. Our suite of cryptocurrency futures and options is up 44% for H1 '26 versus H1 '25, and is up 76% in June versus June of 2025, despite slightly more muted volatility environment we're seeing to and that is in place with perpetuals being introduced the last 2 weeks.

Now as Terry said, if we look at some of the numbers at CME Group, we're doing between $4.5 billion and $6.5 billion per day of trading in our Cryptocurrency complex versus about $270 million at the Bitcoin Perk introduced by [ Kalshi ] in the month of July. And then if you look at open interest, again, which as Terry is saying, is a proxy for risk management and access to these markets, we have between $9 billion and $10 billion of average daily open interest for June and July versus $10 million of open interest in the perpetual product that was introduced at the end of May beginning.

So I think these numbers speak for themselves and are long year -- almost 9-year growth trajectory of serving this community, along with the introduction of additional cryptocurrency futures, the introduction of 24/7 trading, where we've seen over $1.5 billion traded over the first 8 weekends with a significant participation of retail we think the retail community in cryptocurrency is adequately served alongside the institutional community of clients at CME.

Thanks, Tim. Lynne, do you want to add?

Yes, if I could just add one thing. Tim highlighted at the end, the launch of the 24/7 crypto. We have those metals products also going live this began, and we've talked about the single stock features so in line as well. So we continue to innovate our products and add what we are seeing as demand coming from that retail customer. So we're certainly hearing interest in our products and continuing to expand our suite both in terms of availability and product to meet that need.

So Alex, hopefully that gives you some more color about what we are really seeing versus what is being written upon or potentially propaganda coming out of other entities or what they are may or may not be doing.

The next question is from Chris Allen with KBW.

Maybe if you could switch gears a little bit and talk about compute futures. It seems like a really interesting product opportunity. I wonder if you could give us any color on customer demand here? And how do you think CME as part of the construction will be differentiated versus other competing launches?

That's a great question, Chris, and thank you for that. when this was originally introduced I found it fascinating that this market was really underserved as far as a risk management asset for the growth of not only data centers but just compute in general. And working with some of our -- and this is the beauty of CME Group having the business partners with our FCMs and our clients and working together to bring products together to go forward and serve the interest of many, many participants.

So compute futures, whether you're a believer in AI or not or whether you're a believer in the proliferation of data centers or not, some things have just become undeniable, and I think this might be one of those scenarios because the artificial intelligence serves so many different industries outside of finance and the benefits there it can derive. So -- but you need to have the risk because you've seen some of these compute stocks or AI stocks, the volatility that can be inherent in them, the multiples they trade at. So I think this will give them a massive risk management tool to use going forward. And I am really excited by the growth of this product, and we're going to do it and do it properly with our partners.

And for me, I think this is another innovative concept idea as the world continues to evolve. We're reintroducing single stock futures, as we said in our earlier comments. I'm probably the only one that's old enough to remember that when we first introduced in the first time they failed measurably. Sometimes, timing is really important when you list products. And I will say timing is massively critical right now when we get ready to list future. So just as I do with single stock futures, the time is right for that product as well.

So I'm going to ask Derek Sammann, who's kind of falls under his business line a little bit and can we make a comment as well. Derek?

Yes. I think as Terry and Lynne both mentioned, we continue to innovate products based on client demand and client need and those continue to evolve every single day despite the headlines of what the flavor of the month is in retail. When we look at the compute future specifically, there is certainly an unmet need in the world in which we operate where data centers are front and center of driving economic growth in AI is in the middle of every conversation right now.

We are going to be the first daily benchmark tracking to spot out the rental cost as in video, each one that are GPUs. And what that means is that we're going to be partnering with silicon data as the price reported agency, as Jerry referenced, for these rental indices. And what this means is it allows customers to be able to manage the risk and price certainty and price curves around the input cost in managing their data center business is going to provide a mechanism for financing for a lot of these companies. There's no real price discovery mechanism today, that's the business that we are in, whether it's ag, whether it's equities, whether it's energy, this falls right under our price discovery mechanism. It allows customers to manage the procurement planning process, which they can't do now with a forward curve and allows for clear budgeting as well.

When you think about how we think the users of these products are, it's not just the commercial end users, AI labs, cloud providers, asset managers looking to get exposure to growth drivers of the AI economy, banks, energy firms, hedge funds and professional trading houses -- and when you take a step back, this actually sits vessels well inside our commodities portfolio because when you think about what this allows us to do, it allows customers to effectively hedge a data center. Think about that for a minute. We've got our copper contract. We've got our aluminum contract. We've got our nat gas, which is typically the energy it in the most data centers. We've got a power business. We've got compute futures.

So we think about what that portfolio product means to our commercial end users as well as asset managers and bioscience firms and loan exposure. This is the next evolutionary step in product innovation that continues to expand our portfolio based on customer need and our ability to innovate in a rapidly change the environment.

Ken, hopefully, that gives you a little bit of -- Chris, a little bit of color on the compute futures.

The next question in the queue is from Ken Worthington with JPMorgan.

So Trump has launched a project fault in minerals and metals with copper, silver, aluminum, lithium and some others on the list. Are there positive implications for Comex from Project Vault or other Trump metals and neural initiatives?

Thanks, Ken. Appreciate the question. Derek, do you want to address that?

Yes. And I can appreciate the question. There's certainly a lot of discussion around what it means for reinforcing U.S. missile supply chains. I think -- let me take a step back, Project Vault is out in the market alongside a lot of other growth drivers that have led to our record first half revenues and volumes in our metals business and our second best second quarter ever in our metals business. When you look at what Project Vault is focused on, it's really about reinforcing U.S. supply chains. And that means is reinforcing the value of U.S. benchmark which exactly what CME Group is all about, whether it's our copper business, whether it's our battery metals business, where we are single largest venue for risk management and price discovery in battery metals.

This is contributing all to the focus on U.S. benchmarks, the products we run. And if you follow that value, what's happening, we see our copper volumes up 4% this year, we see record amounts of physical copper in COMEX warehouses just under 700,000 short tons of copper in U.S. warehouses directly responding to the focus on U.S. supply chains and onshoring the ability for customers and U.S. infrastructure to enable access to this critical minerals and battery metals. That is exactly the business that we are in the middle of. We are the #1 exchange for battery metals globally, and this is bringing new interest into this part of the industry from buy side and banks alongside commercials, which is the original driver for our entry into the battery metals business.

And the last data point I'd tell you is that we're seeing record open interest in our steel context right now. That is directly tied to focus on U.S. supply chain. So overall, I think we're well positioned for this. We continue to innovate in this space. And as I mentioned before, we continue to respond to customer need. And as those needs evolve, we'll continue to grow this business.

The next question in the queue is from Patrick Moley with Piper Sandler.

So Terry, earlier this month, the CFTC stayed your 24/7 crude oil contract the day before launch, while the 24/7 gold contract went forward and Chairman Selig was fairly pointed about the self-certification timing. So what do you make of the commission drawing the line between those 2 products? And do you see any read through there on how they're maybe approaching the perpetual futures question and allowing 24/7 trading in those products potentially?

Yes. Thanks, Patrick. I appreciate the question. I think that when you look at the stay on our 40.2 is what Patrick is referring to, there's 2 ways to certify contracts, 40.2 is cell certification, 40.3 as a full review. We actually filed both as everybody may know. But the contract we filed was not novel or complex. It was an existing contract, there's sort of smaller size to it. So we felt -- we announced the date the 40.2 was the right approach for us to do, which, by long, we have the ability to file either one. We're not compelled to file of 40.3 or 40.2, but we did file the multiple.

So my read on that is that they stayed the contract. I guess that's their priority to do so. I guess I don't want to give in too much of the idiosyncrasies of some of the products they have not stayed, but it is kind of interesting how some of the 40.2 filings that have gone through the agency. And I guess I can go through an example of the ridiculous and others, but let's just talk about the fourth of July contract that they did not stay in a 40.2, which was [Kalshi] Nathan's Hotdog Eating Contest that was actually a contract that went through. And I guess that had an economic interest to somebody, I'm not sure who, but 24/7 needs to be stayed on his existing contract.

So that, to me, is a little concerning about readily benefit, susceptible to manipulation under core principle 3, which we have been very adamant about of these contracts. So we didn't see anything novel or complex as it relates to our small oil contract. We have talked to, as I said earlier in my comments, some of the largest producers in the commercial side of the energy they understood what we were trying to effectuate. We have 24/7 oil being traded today by entities that are supposedly not allowed to have U.S. participants into it, but yet we've yet to see how the federal government is policing U.S. participants from not participating in these 24/7 markets or how they're not having an influence on the weekends certain markets, I'm not suggesting they are, but how they're not.

So -- then we also have prediction markets that have prices of oil that trade 24/7. So I was a little surprised by that, but I guess I shouldn't be because there's certain other contracts that take priority when you're in the hot dog business. So there's a lot of things going on right now, Patrick, and surprised by it. And I'm not trying to be too flippant about it, but I am trying to point out that we are trying to run contracts here that are meaningful for commerce that we think are critical for commerce. And there are other participants that are listing this, and we are being held up by the agency, but they are not telling us or the world how they are policing U.S. participants from not participating in 24/7 oil today or how they can square up that predictions on oil prices were down the road that trade 24/7 are any different from our small contracts. So a little surprised by it, but not really.

The next question in the queue is from Brian Bedell with Deutsche Bank.

Maybe just to switch back to perpetuals and really focusing on the retail side and maybe a futuristic scenario. And that would be, Terry, what would your view be on any potential, down the road, CFTC approval of equity perps, particularly S&P? What kind of process do you think that ought to go through given that market is multiples? Many multiple sites of the crypto market and could have systemic issues. So if you could talk about that.

And then if you were to launch those, I would assume they would not be risk margin with your existing clearinghouse. They would be separate. So I mean, could you theoretically launch those for retail at lower leverage? And would you view yourself as having the exclusive right to the S&P license in a perp future -- or I shouldn't say future, but a perp contract, which I guess is a CFTC-regulated swap as opposed to the future?

Ryan, great question. A lot in here to unpack. Let me unpack it. First of all, your last comment was the right comment. We still believe and our litigation will show that these are swaps not futures. Anytime 2 parties exchange payments as they do in the funding rate, under the Dodd-Frank Tech, which I had the distinct pleasure of testifying 20 to 30 times on in 2010, long before anybody at the CFTC was up there, I know what Dodd-Frank says. That is a swap contract. So we feel very confident that, that is a swap contractor start.

Let's fast forward though, you asked another question. would we lift those contracts on equities, I believe, as you said, in a separate entity. No, we would never -- we would not need to list them in a separate entity of clearing. We can list them in our existing clearing because it doesn't mean if you list a perp that you have to have in other liquidation margin methodology in order to have a perpetual. So we would not need to do that if, in fact, you went down that path. But that's a long way from even having a discussion.

Your third question was as it relates to our relationship with S&P Global. Anything that is considered a future and cleared by our agreement is the exclusive right under the index of CME Group. So no one else could be able to list that contract. That is the intellectual property that is owned in partnership with S&P Global. So we would be the only ones that could list a perpetual. If we went down that path, on equities on the indices of the S&P of the Dow Jones, and we have the agreements with NASDAQ and with Russell that they have the understanding that those are intellectual property products if they're deemed futures, they are -- they fall under the scope of our agreement. So we're the only ones that could participate in that particular asset class on the indices. I don't know if I touched on 3 of the 4 or all 4?

Is it just the systemic risk of potentially approving in equity perp given that market equities are obviously massively larger than crypto about...

Yes, Brian, I'm sorry, I don't mean to cut it off, but the systemic risk of an equity perp, if you were to try to list an equity per the way they are designed today and listed today in crypto, I think it could be a systemic issue for the marketplace because of no one understands full well how that funding rate would work and how it would be calculated because as we said earlier, it's technically not a future. It's a spot leverage product. So that right away has a problem for that particular asset class.

And secondly, on the auto liquidation of a market the size of the U.S. equity, other equity markets and the participants thereof could be very systemically risky as they auto liquidate on a whole host of mathematical equations and how they liquidate those products, how much percent does each entity want to preserve, to liquidate and what would happen in a cascading market up or down on liquidation on both sides of the market. And would they have to introduce tariffs as their first line of defense, not their last line of defense? And that, to me, would be a systemic risk, not just to the participants, that would be a systemic risk to the U.S. equity market. And if we have a systemic risk to the U.S. equity market, there's a systemic risk to the world. Yes.

Next question is from Alex Blostein with Goldman Sachs.

Terry, I was hoping to go back to the point you were making around single stock features and the fact, obviously, that's been tried before. You think the time is sort of right now for us to be more successful. Why now, I guess, what makes it different? And maybe talk through how you're planning to partner with various retail distribution platforms to perhaps make this a more successful product now? And again, ultimately, competition from some of those platforms directly to launch other of sort of leverage bets on underlying equities?

Yes. Thanks, Alex. Interesting question. So why timing now? I've been around, like I said earlier, a long time, and I've seen a lot of products come and go. And I like to tell people that when you've seen a lot of things, you're seeing a lot of people make money being wrong and you're seeing a lot of people losing money being right, and it's all about timing.

Right now, the world has evolved since 2000 when the single stock futures on Chicago joint venture was put forward with 3 separate entities with 3 separate agendas under 2 separate regulators being in the SEC and CFTC. It was destined kind of for failure because of the timing and where we're at the evolution of finance. That doesn't mean that the product is not a good concept or an idea for risk management protocols as we continue to evolve. And it's not too dissimilar to where T-bills were dead forever, and all of a sudden when the rates started to do what they did, T-bills actually became in favor again throughout a process, and we relisted T-bills for and we did quite well with them. And that can happen in different times in the world of economic finance.

I think that single stock futures with proliferation the markets itself. And I'm not suggesting markets are going higher or lower, but when you see that the appreciation in the equity markets today, I think people are now looking for other tools on how to hedge out that product, where they may not be looking at that with the valuation of the S&P then 50 much lower as it was in 2000 or the Dow it was at and the Russell and NASDAQ. So now of these different levels, I think people are looking at different tools in order to efficiently hedge certain stocks, and you don't need to read the daily paper to know that people like to talk about the MAG 7, the MAG 9, whatever the MAG is of the day, what is invoked.

So there's people that are looking to hedge out those risks in a liquid marketplace where they feel comfortable doing so. We think CME is the right place for that. We think with the products that we're going to offer them will be the right products for them to mitigate and manage that risk. And the reason why I feel so compelled about it is because of the participation levels, not only the institutions, but all the different cohorts and the valuation of the indexes in of themselves need to have tools to manage risk, and this is just another tool for them to do so, and we think it's efficient.

You asked another question, which I'm going to ask Tim and then Julie Winkler on the retail partner side or the partner side in general, how we're going to move that forward? So Tim, do you want to make a comment or touch on that?

Yes. Thanks, Terry, and thanks, Alex, for the question. I think also when we look at the timing of introducing single stock futures at CME Group next Monday is if we look at the momentum we're seeing in the equity complex at CME, where for Q2, an $8.6 million ADV, which is up 13% year-over-year, June delivering 10.1 million contracts, up 54% year-over-year. And if we look through where we are in July, about 7.8 million contracts per day, which is up about 40% -- between 40% and 50% versus July of 2025. And it's clear that the market needs and wants more risk management and access to equities. So offering single stocks alongside the natural home of risk transfer and price discovery that we offer our equity index contracts makes a ton of sense.

It's also worth noting that these single stock futures will be financially settled against the closing print of the name, which is a different innovation and different structure versus the prior product making them not only more accessible to institutional and retail traders in the U.S. but makes it much more approachable and accessible to the global customer base of CME Group and easier to plug and play to all of our distribution partners across the globe. And when you couple that with the near 24 access, Sunday night through Friday of our traditional equity complex at CME Group, alongside the nearly $45 billion per capital savings per day that our equity complex delivers to the market, that is what we think is different about it right now. And that's why I think Terry is absolutely right where timing matters, and we're optimistic about the timing of the market and the gravity of the compliant CME and look forward to the launch on Monday.

Alex, such a good question, and I don't want to work too long on it, but Julie, I do think it's important because it's such a good question and we talk about the distribution in our partners.

Yes. So our retail brokers globally are extremely excited about this new product innovation. They are seeing it as the single biggest retail growth catalyst of the year. This is been working on for some time. And also, we've been working with them and see them very actively in testing this within their systems. This product is a very straight forward wave for both single stock and single stock options traders to add futures to their training portfolios. And we believe this is going to continue to introduce a broader retail audience and attract them to CME Group markets.

So with the 22 biggest names, those are certainly going to be very appealing to retail traders. And we have over 35 retail partners that are targeting the readiness for day 1 kind of on activity. So we do believe this is going to build over time, but we feel very good about the retail brokers as well as the liquidity providers that we have ready to go for Monday.

Next question is from Ben Budish with Barclays.

So wondering if you could unpack the strength in market data growth this quarter, even better than last quarter, it looks like a pretty big sequential step up again. You called out pricing, which I think went into effect in January. You called out new products. I assume there's some new broker partners and things like that. But just curious if you can unpack that a little bit and how should we think about the next couple of quarters, given we have the pricing, but what else to think through in the near term?

Great question. Julie?

Certainly, this has been our -- Q2 was again a strong -- very strong quarter on record, $230 million in revenue, we saw an increase of 20%, as Lynne pointed out earlier, and this was a 6.2% sequential growth over last quarter. it's really coming down to a few main factors. The price increase that you mentioned. But a lot of other things as well.

We saw strong growth of 3.5% quarter-on-quarter growth for our professional subscribers. And this is just reinforcing the points that we've made throughout this call of having access to such a wide array of benchmarks. This real-time data is extremely important, and that is happening across all of our asset classes.

We've seen continued revenue expansion in our derived data business. That team is working through the sales pipeline. And there's also a variable component of many of these agreements, which is going to drive additional revenue as other performance-based measures kick in. And as we've discussed a bit with you last quarter, these performance-based simulation trading device accounts are really starting to grow rather significantly. Those were up year-over-year.

And really what these simulated trading environments are doing is they're acting as an incubator for both our market data business as well as our transaction-based retail business. So what we see is a robust pipeline of traders that graduate from the simulation environments after they get education, after they get exposure of how to trade and they then become professional data subscribers in their own right. So it's really a great catalyst for that type of revenue growth.

And additionally, it's just worth noting this quarter included approximately $7 million in audit and catch-up payments for prior periods. That was compared to $3.8 million in Q1. These are nonrecurring. So we expect those payments are going to fluctuate quarter-on-quarter I'd say this performance is a single tailwind, but a deliberate part of our multipronged strategy really across the data offerings, building demand and expanding that use also of our benchmark pricing with things like term so far.

Next question is from Michael Cyprys with Morgan Stanley.

Just a question on prediction markets. I was hoping you could update us on the traction that you're seeing, particularly outside of sports? And if you could talk to some of the steps that you're taking to drive greater engagement and connectivity, what's on the product road map? And more broadly, can you speak to the market data opportunity ahead with prediction markets?

Yes. Thanks, Mike. Prediction markets, interesting, there seems to be a lot of activity. But I want to ask Lynne to talk a little bit about how the revenue kicks out on top of those and the way they are structured. And we'll try to keep the sports out of it because I've been pretty public about this. A lot of these prediction markets on sports are gambling. And I think that, that is going to find its way to the Supreme Court, and that is not something that we want to be a part of participating in right now.

As I said earlier, I think a lot of these contracts are susceptible to manipulation when they list some of these small parleys and things of that nature. And those are not markets. Those are gambling. So we'll talk more about the predictions on economic outcomes and things of that nature and give you some stats on that. We've broken some of those out, and we can give you those.

Yes. Thanks for the question. So a couple of points there. So if we look in launched, we've done about $525 million of that contract. That includes about $48 million contracts related to markets of that. So about 9% of the total. That does tend to fluctuate depending on what is going on in the markets themselves. So things like large events like World Cup, you tend to see a bit of a shift.

As Terry mentioned, our product set is much more narrow than some of what you might see on some of these other platforms, and that is intentional because we want to be very careful with what we are putting out for trade to make sure that it meets all the requirements that we see from our regulator.

A couple of other points I would note, we had over 140,000 accounts that were trading at contracts this quarter. That was up about 13% from last quarter. And we also saw some good growth in the average daily volume traded. So we are up over 4 million a day. That was up about 40% versus what we saw in Q1. So I can let Tim add a little bit more there. I guess one thing before I do, the market data question. I think that's still a bit of a ways off in terms of monetizing anything related to these markets given the level of volume, we'd want to see that really have a lot more seasoning before we would start talking about that.

Tim?

Yes. Thanks, Lynne. I think just maybe one thing to add is as we continue to see sort of consecutive months of growth in our ADV in the totality of the complex, we are also pleased to see when we are seeing some of these major events happening like the World Cup that Lynne mentioned, that on some of those days, we are seeing our market volume participate alongside upwards of 20% of the volume that we're seeing. So it just reinforces this hypothesis of getting these traders into our market, continuing to work to attract the next generation of traders.

So we're pleased to see that we're seeing balanced growth both in terms of the markets as well as the sports, but very pleased with the progress today. I appreciate the question.

Next question in the queue is from Bill Katz with TD Cowen.

Just a 2-part for me. Lynne, congratulations on the promotion. I'm wondering, I know it's a little bit ways off yet. I'm wondering if you can maybe talk about early views of strategically what are the top 2 or 3 priorities as you're ready for the new role. And then, Terry, just sort of curious, where do you stand in terms of time line you think on the case with the CFTC, which district do you think might have an opportunity to take a look at this? And any timing on milestones or pacing would be very helpful.

Yes. Thanks, Bill. And I appreciate you reaching out and congratulating Lynne because that's the right thing to do. So in tell us all about your strategic bent. So we can all have it going forward. So we've been working on that.

Yes. Well, thank you, Bill. I appreciate it. So I guess what I would say in terms of the strategy, as you know, I've been with the firm for about 20 years now, so a long time. And during my time here, I have been involved in kind of all of the strategic side of the business. So the M&A transactions, the partnerships we've done over time, working very closely with Terry and the team those. So my vision for the firm is not a strong departure from what we've delivered over the last 20 years. So I think we have done well in terms of staying with what we are good at, really running kind of the world-class exchange that we do and looking for ways to bring on more product, bring on more customers and create more capital efficiencies for those clients.

So my focus is going to be to continue that, build on what we have and continue that momentum to make sure we're delivering for those clients. So I wouldn't expect a large scale departure in that way going forward.

Yes. Thanks, Phil, and thanks, Lynne, for giving us some update.

Bill, on the CFTC and the litigation, it is just the process. What we filed -- the agency has 60 days in order to respond to that filing. So that will come out in August. And then I believe they have the ability to push it a little further before anything else can happen. So that's just when you are in litigation with the government agency, there's a time line associated with. It's not strictly a traditional sued against another party for [Carex] and are something that you have to go through a process with the government. And again, at 60 days and again, that could be continued. There has been a judge sign to the case. So that will move forward.

But I think we'll know more at the end of August as it relates to what the CFTC's response is to the court to our case. And then we'll have more report out. But right now, that's the process that we are aware of to date, Bill, and we don't have much more information than that. Wish we did, but that's just a process that happens when you go with the government.

And the next question in the queue is from Simon Clinch with Rothschild & Redburn.

Apologies. I'm going to bring it back to perpetual futures again, Terry. But I was just curious to tell the market is really focused on sort of the competitive threat to derivatives franchises from perpetual futures. But I'm interested in your perspective of whether you see any actual sort of adjacent opportunities of symbiotic opportunities between the futures and perpetual futures in the long run should they become a more substantial market for speculatory retail?

Interesting, interesting question, my friend, Simon, because I do. I do see opportunities as people continue to introduce these products that I believe are swaps. And when they're classified as swaps, as you know, Simon, swaps would need to be margins for 5 days, you need to become a spot dealer. This is not something a retail participant is prepared to do. We talked about how retail participants activity normally is. But I also think it lends to an opportunity for them to be looking at our markets and our retail products as it goes forward. So some of these entities that are listing some of these products, whether they're purpose or other type of products on retail, I think directly or indirectly could benefit CME greatly as time continues to move forward.

So again, it's like an incubator system that I'm not paying for and they are. So we are working our retail business like we have in a very judicious, educational way to make sure we have sustainable clients going forward. There's other people that I would suggest that maybe are not doing the same, some are that could potentially be a part of CME Group going forward. I'm a big believer that large commercial institutions drive the marketplace. They drive the price discovery function and then it trickles down from there and other participants will participate in those products. The question is at what size meets their needs? And we have shown that we have done and catered to the institution by taking -- and I mentioned this earlier, in S&P 500 from the year 2001 or '02 to a multiple of 250 to a minute to a micro to something smaller than that to meet the needs of different participants.

So I think that some of these new online offerings could feed right into the growth of CME's retail business with the products that we have and the cohort of institutions that we have, the 130 million open positions that we have today, the $95 billion of efficiencies at that 130 million open interest receives on a daily basis. That's very attractive. Now the question is, can we create smaller products for the -- of those products for the institutions to trade that are potentially trading at another venue right now in an incubator type system? I work with some of our retail partners today. And and I will mention a few, Ninja being one of the top step being another. These are people that are very committed to bringing their client base into CME in the right way, the right form.

There are many, many others, and I maybe shouldn't have called out, too, because there's multiples, but I happen to meet with both of those recently. So they're top of mind. And they are looking at new ways and how to bring their client base into our retail products. And to me, that is very exciting. So I look at the competition and the landscape of this world as it relates to retail, and I can actually see a benefit of them coming into our markets ultimately.

We'll take our last question from Ashish Sabadra with RBC Capital Markets.

SP139213807 This is Will Qi on for Ashish Sabadra. I appreciate you guys squeezing us in. Maybe just a question more on market data and the trends there. With the growing usage of AI and get tools within financial market participants, have you seen that as a meaningful demand driver for CME's data solutions just around the factors?

That's a good question. Well, thank you very much. Julie?

Yes. I would say it's still relatively early days of trying to both think about what is coming next with the data. The primary means of which we distribute our data today is certainly from a real-time basis and through our market data channel, yet again, the way that consumption is happening in the future, is changing. And so we have been actively in this space also working on our policies as well to ensure that we are going to meet people where they're going to be consuming dates data in the future as well as continuing to offer the feeds that we do today.

And so, again, I think a lot of it is we've got a lot of very valuable intellectual property, and we want to make sure that we continue to protect that. And as we've demonstrated, we are in a great period of growth. And so it's both the defend as well as the grow mentality that we have to take with that.

The next question in the queue is from Michael Cyprys with Morgan Stanley.

Thanks so much for taking the follow-up. Just coming back to this perp discussion. If you step back from it for a moment, one of the broader trends across crypto and prediction markets as this move to a more vertically integrated direct-to-customer marketplaces with firms owning both customer relationship as well as the trading venue. So I guess, how do you see this as a competitive threat to CME here or maybe even longer term? Talk about how you're thinking and approaching that some of the steps you might take? I know you do have your own FCM that you've started to use on the prediction market. Just curious how you're thinking about that and as market structures continue to evolve.

Yes. Mike, that's a great question. And I think when you talk about virally integrated, and that's basically the same as talking about disintermediation of participants in the marketplace today. So we have a whole list of FCMs. We've got our own FCM, which we do not compete with our existing FCMs on. We believe in that model, we think that, that is a good marketplace.

I also believe in the neutral facilitator risk management, which is critically important, and that's what CME provides today. We don't participate in the markets. And I think that lends to the credibility of all participants, whether it's the smallest sale of retail participants to the largest institutional trader. So when they start to look at vertically integrated entities that are maybe participating in the market, managing that risk and doing other things on behalf of the client, there could be a bit of -- no, I don't want to say confusion, but people might be a little concerned about conflicts is the word, I guess I was looking for. And I'm not suggesting there would be, but the appearance of Calix could be there.

So I think that participants are savvy today. They're smart today. I think that they're looking for efficiencies that's being proven by our offering today -- and I think when you look at vertically integrated institutions, you have to see what is vertically integrated. And if it's the food chain of creating efficiencies for marketplace, yes, I think that continues. If it's participation in the market in itself, I think that lends to a certain credibility issues for that entity. That's kind of how I look at it from a risk perspective. Maybe Suzanne, do you want to comment at all how that could potentially have an effect or not?

\No, I think that covers it.

Okay. And I don't know if anybody else has anything to reference on that. But Mike, I hear what you're saying and there might be a day when that happens with CME to, right? But that's the reason why when I put forward that we are going to have our own FCM a couple of years ago, it was due to as you would call at the time, FTX and what they were trying to accomplish.

And I was not going to be unprepared for whatever the scenario may or may not be in the future to have a structure in place for CME to compete in the world that you outlined. But I assure you, I don't want to be a leader in that, but I will be prepared for that.

Showing no further questions, I will now hand the call back over to management.

Before we wrap up, I just -- we talked about a lot of different things here today, but one of the largest asset classes we have is rates. And we are continuing to create efficiencies. And I just want to touch real quick if the question didn't come up on it and I thought it should is on the Treasury Link. Mike, can you just give a quick explanation on how that's going to work and the benefits for in?

Yes, sure. Thanks, Terry. Appreciate you calling out Treasurer link. We're excited to announce Treasury Link. It's really an industry-first treasury functionality that will enable transparent centralized spread trading between treasury futures and broker-type cash treasuries on CME Globex. We're leveraging proven FX-linked technology. It's expected to launch in Q4 2026. So this new offering connects the 2 leading U.S. treasury liquidity pools, bringing unique innovation by enabling a common execution of cash for future spread transactions and eliminating lagging risk in the process.

The team and I have been out front of clients, and we see strong demand for both existing and prospective new participants who are interested in realizing execution efficiencies between cash and futures. Notably, the lag of various relative value trades takes place away from BrokerTec, and this offering will be highly complementary to the existing BrokerTec liquidity and expensive to total BrokerTec trading activity.

Treasury Link really represents the next stage in our initiative to bring our cash and futures markets closely together, delivering unique efficiencies while enhancing liquidity and price discovery the broader U.S. treasury market. Look, it's really an evolving time in the treasury landscape. We have a new side chair who is committed to overhaul in their communication style. We continue to see record debt levels in this country. and we will see the treasury and repo clearing mandate phased in over the next year.

So Treasury Link is just another example of how the CME Group continues to innovate and deliver efficiencies for our clients alongside the $27 billion a day in margin savings across futures options, swaps and cash. We're very excited to announce Treasury Link, and I appreciate, Terry, you calling it out.

Thanks, Mike. I appreciate the explanation. It is important. We could caught up a little bit on soup du jour. And I want to thank everybody on this call. This gave us an opportunity to hopefully set the record straight on where our business is at, where we feel from a competitive standpoint. And what exactly are the products that are supposedly competing with our core business and what our core business looks like today.

I can't thank each and every one of you enough for your very pointed questions and I think they're all great, and we are excited about the new offerings we have going forward. We're exciting about the new cohorts and clients that will be coming into our marketplace.

And again, I think that we look at the $95 billion of efficiencies when you look at we are accomplishing here the 94% of our trade being institutional and how we think that could add and grow to our retail business down the road and do it in a thoughtful educational way that's sustainable for a long time to come. We appreciate your questions, and we wish you a good day, and thank you very much for your interest in CME Group. Thank you.

This concludes today's call. Thank you for your participation. You may disconnect at this time.

All right, everyone. Welcome to -- I think the session everyone in this room has been looking forward to most. It's my pleasure to welcome Terry Duffy, Chairman and CEO of CME Group. CME is the world's largest futures exchange. Terry has led CME, I think, for over 2 decades now, around 2 decades, been a staple of this conference for many, many years. Always appreciate your support and you making the trip up here.

My pleasure, Patrick. Thank you.

Yes. Thanks for coming. All right. So I want to start off, let's just address the elephant in the room. On Friday, the CFTC moved to approve the Bitcoin perpetual futures contract for Kalshi. I know you went on CNBC yesterday. I thought you laid out your case. Can you just maybe for everyone in this audience, what do you think of that ruling and what it means for your business?

Well, first of all, I think the ruling -- can you guys hear me okay? Okay. Thanks. It was called in our world was a 40.3. So a 40.3 ruling means it goes up for a full review, meaning that if there is something there that the industry should comment on that's new or novel or complex, the CFTC does what's called a full review. They did a review in less than what's called a self-certification, which is a 40.2. So a self-certification means if there's no objection in 24 hours, you can go ahead and list that product. That's how the 2 rulings work.

So they said they did a full review, and they did it actually shorter than they did on a self-certification on something in their own words, in their own order were called novel and complex, which troubled me. Secondly, in 2000, I'm just -- I'm old enough to know all this stuff. There was something called the Commodity Exchange Act. It was the last act passed for all the core principles of the laws of our industry. And in that, there's a centerpiece that suggests -- because you have to have a centerpiece to all legislation, what is the centerpiece.

The centerpiece was what is the futures contract. And then you define the core principles afterwards. So the Commodity Exchange Act defines the futures contract as a contract to be traded with a delivery date at a later date or an expiration date at a later date. Nowhere does it contemplate that it can go on in perpetuity. So a perpetuity or perpetual is a contract that never ends and the way they keep it on track is through a funding rate. So I said that, that is not a futures contract. That is a swap if it's anything.

So I totally disagree with the government, and I'll deal with it as the way we need to move forward. So I'm concerned about this and for a whole host of reasons. Perpetuals in the European Union today trade anywhere from 20x to 250x leverage. So let's think about 20x to 250x leverage on an auto liquidation model and how it works. So at CME, we have the largest open interest of institutional crypto in the United States. The leverage that we extend is 5:1. Leverage in the European Union is anywhere from 50 to 250:1. How can that possibly be something that's sustainable?

So I have great concerns with the way these contracts are set up. They're also set up just so you understand what a perpetual is. On a perp, there's a funding rate associated with it to keep it tied to spot. So if you're long a contract and the other person is short a contract and the contract is going up, the long has to pay the short in order to keep it tied to the spot contract. So if you're American Airlines or you're an airline and you put on a perpetual hedge during the Iranian war where the crude oil went from $55 a barrel to $110 a barrel, you would have paid funding rates all the way up.

So your hedge that you thought was good would have been eroded by the funding rate cost to the short side of the market on the way up. So it does not work for institutional hedging at all. So then let's talk about the retail, why the retail likes to participate in this product. Any time you give somebody $1 and you say, listen, we'll let you leverage it for $100, they're probably going to do it. That's just the nature of what people do. That doesn't make it right. I've spent 30 years in my career building, nurturing and bringing in retail participants into the market with tools and education so they can be sustainable and help them grow.

I'm really concerned that -- and I said this yesterday, I really believe it's 2007, the housing market has been slanted by the speculation market, including predictions and everything else, and this could be a disaster waiting to happen. That doesn't suit anyone's interest. Ecosystems are important for all participants, and I don't like to see people that don't understand products to potentially get blown out of a contract that they shouldn't be in, in the first place.

So I'm concerned the way the government did this, and I'm concerned on how they go forward. And so then you have to look at the use case, and we'll see how that pans out. But as I clearly described, there's no way that anybody is going to use this from an institutional standpoint when the hedge is not a one-to-one hedge. It could be eroded against your risk on the other side of the trade.

That's helpful. So I think the one thing a lot of people in this room are wondering about is you're obviously concerned with what the CFTC has done. How are you -- like do we think that this is going to be done on a case-by-case basis and they're going to move meaningfully beyond just Bitcoin? And obviously, that's the fear, but have you had conversations with them? Is this something you think they're going to do?

I've had a lot of conversations with the agency, of which none of them have come to fruition to what they told me. So I'm very disappointed, to be honest with you on that. I don't know what they're going to do, to be honest with you, Patrick. And they believe that innovation is critical. I believe innovation is critical, too. I also believe that good, smart regulation is a hell of a lot more important than innovation because if you don't have good smart regulation, you don't -- not going to have any innovation whatsoever.

So I will -- I don't know what their plans are moving forward. They have not announced them. They haven't even talked about what the leverage they're going to offer from these products. So they're just going to adopt the European model and allow leverage like that. And if they do so, they will go against their own regulatory framework that they have at the CFTC. Today, you have to be in compliance for a futures contract to have 99% margin coverage, example being if the West Texas Intermediate has a 10% margin associated with it and you have a 15% move all of a sudden, that means you're 5% breach of the 99% because you'd be at 5% or 94% on your coverage.

Well, you can't do that. You have to be at 99%. So you have to immediately take it back up. So when you offer leverage of this nature throughout the union, the way some of these platforms that are unregulated today, whether they're on DeFi or others, they just don't fit with what the agency has on its own books. So are they going to change the rules for the sake of innovation? And that's why I say it's potentially 2007 for retail.

I'm very concerned about this because it's not healthy. And it's not a competitive issue. I mean retail is not the biggest part of CME's business. I'm an institutional exchange managing risk for the largest companies in the world. And that's what we do, and we're really good at doing that. So retail is just another component. I think people should have the ability to participate at a size level that meets their needs. It doesn't mean they should be able to do that in a reckless manner that could potentially impact prices throughout the day.

So you drew an analogy on CNBC last night that I want to touch on. You said that this reminded you of Sam Bankman-Fried and FTX, not regarding the fraud, but regarding the auto liquidation mechanism and specifically, if perps proliferate in the U.S. and exchanges were put in a position where someone like yourself, and this would be a question within a question.

But if you were forced to participate in this market, how -- where would the systematic risk actually sit? And is the U.S. clearing and market infrastructure ready to absorb it? And I get that, that might be a difficult question to answer when we don't know what the leverage is. But how do you think about that if you were forced to move forward?

Yes. So you asked a lot of questions in there. First of all, when it relates to Sam Bankman-Fried and what his model was, it was flawed. I knew it was flawed. I think I got a call last night from Tarek from Kalshi and he's all upset because he thought I gave the analogy that he is Sam Bankman-Fried. I never said he Sam Bankman-Fried. I said I've just seen leverage models like this before. I didn't say Tarek was a criminal. I guess some of his friends thought I call him a criminal. I didn't. I actually like the young man. I think he's an interesting guy. But your question is how would I operate in a world of perpetual.

Yes. Well -- so when it came to prediction markets, one of the things you said when people were saying is this gambling is not gambling. Well, you said it doesn't matter what I think. But if the regulators are going to allow it, I'm going to be prepared to...

I said that as it relates to prediction markets. I never said that as it relates to the definition of a futures contract. So the definition of a futures contract, and I'll say it again, is a contract that is listed for trade with a future expiration. That is not a perpetual contract. So you can't draw the same distinction, Patrick, between prediction markets and the definition of a futures contract. Those are 2 different things. I won't fall for that trap. You want to talk about predictions, I'll talk about them. You want to talk about perps, I'll talk about them, but they're not one and the same.

Yes. No, I'm not trying to trap it. I'm just saying if -- so your stance is that if this is to proliferate and the CFTC starts approving these perps, you CME as an exchange will not act to participate.

I never said such a thing. I didn't say that. I didn't say I would or I would not. I don't know what we would do if, in fact, that the world believes that this is a new world order. I already described how they do not work for institutional participants.

So when 85% to 90% of my business is institutionally driven, do you think it's a smart move or my investors think it's a smart move for me to pull all the stops out to try to go after a few percent of business on something that doesn't even work because a perpetual is unhedgeable. A perpetual is tied to the spot market. So if I was to list perpetuals, I would be saying to myself, well, I think the spot market might be broke and here's maybe a better way to help fix the spot market, but it's not a futures market. Does that make sense to you?

Yes.

It's not your answer that you want. I get it. But I'm not going to sit there and say what I would do if perpetuals become the law of the land because they're unhedgeable and I have 90% of my markets institution who hedges products. I have 135 million open positions on CME, more than any other exchange in the world. I'm holding $400 billion of capital on behalf of the largest institutions of the world.

I'm not in there battling away for the small retail participants with no capital. My retail participants are retail participants who trade anywhere from 10 to 50 contracts every day, every single day, not once in a blue moon or taking a prediction on will somebody arrest Maduro tonight or tomorrow or will a war break out? Or will the price of oil go down if I make this comment. I'm not in that world.

Okay. Last one on perpetuals. Trade XYZ, S&P licensed the S&P 500 perpetual to the company Trade XYZ on the hyperliquid blockchain. I asked you about it on your earnings call. Have you had any discussions with S&P about it? Do you feel like this is infringing on your licensing agreement with them? Any thoughts there?

I know it's infringing on my license agreement with them, and I'm sure my lawyers are infringing right now, but that's just the way it goes. They infringed with this. We are convinced of that. I've been working with my partners at S&P Global, and I think we'll come to a solution that it might take a little time, but we'll get there, as I said on my earnings call. But yes, I feel that they infringed on my intellectual property.

All right. So let's shift gears. Let's talk about the environment for your business. So CME has posted a record quarter just in the first quarter, ADV was up 22%. Open interest was up 11%. You have records across all 6 asset classes simultaneously. How are you feeling about the macro backdrop heading into the back half of 2026?

I think that there's a lot of people being a little bit dismissive of what's going on in the world. And I've been saying this for quite some time, geopolitical risk is absolutely the biggest risk that the world has no matter what they say. And what we're not talking much about, like we're talking a lot about what's going on in Iran, and it seems like the narrative of the story changes by the second. And I understand that it is war, and we're not going to get the full information.

The intelligence in the government needs to be somewhat cooperative amongst themselves and not tell us every little thing. So I understand that. I think that the investor community might get a little bit misled because here they are hearing certain iterations coming out of the administration that this could end next week, and then it's 2 months later, and then we're probably maybe in a worse situation than we were 2 weeks ago, I don't know. So I think that's a very big issue.

No one's talking about what's going on with Russia and Ukraine. I mean Russia is taking out parts of Kyiv now. I mean no one thought that was going to get to that part because the United States was going to jump in and bail everybody out. That doesn't seem to be the case now. And then I think the biggest issue geopolitically that I think is -- it may not be the tail at the end of this year, but it's coming, and that's going to be China and Taiwan. And it will not be a war. I don't see it being -- I don't think it will be one bullet fired.

China is going to surround it, and it's going to be game over and out they go. And we are not going to be able to do a damn thing about it because I can't see us getting into a war with China. I just don't see that. So the question is, what does that mean from an investor standpoint? What does that mean if, in fact, China takes over Taiwan with the infrastructure they have in Taiwan, but it's run by the Chinese. I guess we'll have to wait and see.

But if we don't think that, that risk is coming, I think we're being a touch naive. So I think -- what does that mean? I think that from a geopolitical risk and a market potential risk and an investor risk, I think you have to be very prudent. And I'm not just talking my book. I think that risk management diversification of portfolios is critically important. I know we're all trapped in 7 stocks. I know we're all trapped in artificial intelligence.

But I think there's going to be other companies that you're going to need to mitigate your risk, whether it's energy or financials or others to diversify that because this is not going away. So I've been saying it for years, and I think it's come to fruition. And I don't -- when you have something like this happen, it's not made for TV. And we all want wars to be made for TV, but wars are ugly, and they take time, and there's a lot of costs that go into them. And unfortunately, a lot of lives get lost. So I'm concerned about that.

All right. We're running a little low on time. I'm going to try catch that...

Perpetual thing that you got all caught.

Well, I wanted to let you talk on it. I mean it's very relevant, and we all wanted to hear your perspective. So we appreciate it. In terms of product innovation, you're going to launch -- relaunch single stock futures here pretty soon. What's structurally different this time around that makes that something that you're examining?

Nothing. Timing. In 2000, when we listed One Chicago, you dropped something -- One Chicago. It was a joint venture between Chicago Board of Trade, Chicago Mercantile Exchange and Chicago Board Options Exchange, CBOE. And 3 different parties with 3 different ideas of what they wanted to see single stock futures with 2 different regulators, SEC, CFTC, none of that has changed. The world was not ready, in my opinion, for single stock futures in 2000, nor when T-bills went away, everybody said it will never come back until the short end of the funding rate became very attractive and all of a sudden T-bills are back in vogue again for a second.

I think it's about timing with single stock futures and especially as we look at some of the mega market cap stocks that we're looking at all trading at today that I referenced a moment ago, I think single stock futures, the timing is perfect for them right now for a risk management tool. So if you're long NVIDIA and you want to sell some futures against it, if you're going to own a $1.7 trillion SpaceX IPO, you may want to sell some futures against them. We'll list some of the top market cap companies in the world. We'll keep it probably around 50 companies or less.

And we think it's going to be a very attractive proposal, not just for the retail, but we think for the institutional participants because like I said earlier, a lot of us are holding the same portfolio, so we need to have some risk management tools against it. So I think the time is right. Who does it -- what does it impact? I think it impacts the stock loan business. So some of the companies that are on the stock loan business probably won't like it as much. I'll work with them. I'm working with the dealers today to make sure I don't impact their business. But at the same breath, I think people want to make sure they can get in and get out of liquid markets in order to mitigate some of the risks with single stocks that they can -- that they will be able to do versus borrowing the stock and doing it that way.

Another big opportunity product on the product front for you, I think, is compute futures. So last month, you announced the Silicon Data Compute Futures partnership. How do you think about that as a tradable asset class and that kind of opportunity it presents?

I love it. Don Wilson came to me, Don owns DRW, some of you may know Don. Don is a brilliant human being. I've known Donnie for 40 years, and -- he came to me with this concept. And we took a small piece of the company through our ventures fund also. But I like this a lot. I think if, in fact, we're going to continue down this path. We do need some kind of risk mitigation for these GPUs and CPUs. They have some other products in the pipeline, they want to list as well.

So I'm really excited by this. I'm curious how, again, the concentration -- I keep going back to it, with the concentration of ownership in stocks and especially with data and data centers, how do we start to lay out some of these risks. So I'm excited by this, but it will be the first of its kind to be traded. So we'll get it up and running. And we don't have the product specs out yet, so I can't talk about it too much in depth. I'm more excited about the potential of the asset class to be traded.

All right. And then touching on prediction markets since going live in December, you've surpassed $270 million of contracts traded, attracted over 150,000 new accounts. Walk us through where the prediction market business stands today, the partnership with FanDuel, how that's evolving and how you're thinking about bringing on additional FCMs. I saw interactive brokers recently. How does that pipeline look?

Well, I think it's interesting because with prediction markets, my whole goal and motive with FanDuel was not so much to have sports. Obviously, we didn't want to do that. But when the prediction markets came about, I think the online brokers got caught a little bit off size and they needed to do something quickly. So as a partner with FanDuel, we decided to go ahead and list some of these things that I felt we're comfortable with. They did not violate what's Core Principle 3 of the Commodity Exchange Act, which is readily susceptible to manipulation.

So outcome-based, I was okay with, even though it doesn't change my opinion, is this gambling or is this a market risk? You already heard what I said earlier. I think it's gambling, but that's just me. But it doesn't matter what I say because it's what the government says. And then as you said earlier, I participate. So now I'm talking about that asset class. I think it's relatively interesting what's going on. I didn't think that we would get much trade outside of sports. I think when you look at Kalshi, I think 80% of their trade is sports related outside of some of the other events that they list.

I think for the first time, and maybe Adam can correct me, but I think it's for the first time last month, we surpassed market event contracts versus some of our sports listed contracts, pardon me, on a couple of days. So that to me tells me that I was looking for the 13 million eyeballs that FanDuel has because most of those people participate at night.

And if they want to go ahead and look at my markets during the day, great. And I look at it as a distribution play for CME for the future. All of a sudden, this has turned into people are actually looking to participate in some of these events on economic indicators, which I find very encouraging. I'm not going to speak to the sports side of it very much because I'm not a sports guy. So I'm a sports guy, I'm just not a gambler.

Got it. Let's talk capital allocation. You returned $3.2 billion to shareholders in the first quarter, another $758 million in asset sale proceeds that are still left to deploy. How are you thinking about capital allocation priorities? And how does M&A factor in relative to continued return?

Well, I mean, I'm a big believer in returning capital to shareholders. I have been since I took CME public in 2002. I was one of the first companies back then post 9/11 that did a dividend stock when everybody told me that if I do a dividend stock, I'm not a growth stock, so the company won't go forward. I never subscribe to that model. I've been a dividend-paying stock since day 1. So I want to return capital to shareholders. I also want to do smart, good acquisitions that make sense for my users, then in return, that will make sense for my investors.

And that's what exactly what we have done. We did that with the Chicago Board of Trade. We did the New York Mercantile Exchange and COMEX. We've done that with our JV, joint venture. So some of the things that we have done, I think we've done now with Google, even though they invested in us. So M&A, I believe, needs to benefit the users because that's what benefits my shareholders. So I'm very focused on that.

And in fact, we don't go out looking to kick all the tires on everything out there or buy anything that's available. I don't think that's a smart, prudent way to run a business. you have to be a good steward of your shareholders' money. And the way to be a good steward of your shareholders' money is to understand what your clients' needs are. Because if you don't do that, you can't run money on behalf of your shareholders. So I stay focused on that. And if we don't have something that we think is meaningful to enhance the business, then I will return it through capital versus M&A.

Great. So last quarter...

We return it through dividends and other share repurchase and things of that nature as well.

Got it. All right. So ending last question. You have a lot of irons in the fire right now, retail expansion, 24/7 trading, which I think you just launched in crypto for the first time was it 2 weeks ago?

Last week.

Last week. Prediction markets, digital infrastructure, where do you see the biggest opportunity for CME over the next 3 to 5 years?

Yes. I think that there's a lot of things that could come up, so you don't ever want to put yourself into a situation where you said, well, you said this is the biggest opportunity and you went in a different direction. I think you have to keep your eyes and ears open to see how the world is shaking out with the exception of perpetuals. I couldn't help that. I had to say that. And then -- but I really believe that efficiencies are where it's at.

So when I can create $85 billion a day, which I do every single day for the largest participants in the world to free up that capital so they can deploy that in other ways of running their business. That's a very, very effective way of running your marketplace. So I think for CME, efficiencies will continue to meet the needs of the clients, whether it's through stable coins, not a floatable stable coin, but a stable coin potentially just for my ecosystem, which can eliminate friction on payments, which could help support 24/7 trading on some of my products or it just eliminates some of the cost of moving money. So there's all other ways, but I think efficiencies through some of these innovations is where CME will be at for the next several years.

All right. Well, that's all the time we have, Terry. It's been a pleasure. Thanks for joining us.

Thank you, Patrick. Appreciate it.

Welcome to the CME Group First Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. Earlier this morning, we released our earnings commentary, which provides extensive details on the first quarter 2026, which we will be discussing on this call. I'll 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.

With that, I'll turn the call over to our Chairman and CEO, Terry Duffy.

Thanks, Adam, and thank you all for joining us this morning. I'll make a few brief comments about our record quarter before turning it over to Lynne to provide an overview of our financial results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks.

I'm proud to announce that CME Group has achieved a record-breaking start to 2026. Our outstanding performance in the first quarter reflects the essential role we play in the global economy and the trust our clients place in our markets to manage risk during periods of significant economic transition.

The first quarter average daily volume of 36.2 million contracts was the highest quarterly average daily volume in CME Group's history and represented an increase of 22% compared to the same period last year and 6 million contracts a day higher than any previous quarter. For the first time in our history, we achieved simultaneously record volume across every 1 of our 6 asset classes: rates, equities, energy, agricultural products, metals and foreign exchange. In aggregate, our commodity sector volume grew by 38% and our financial products volume grew by 18%.

Building on the momentum of our record 2025, our global expansion continues to accelerate. International average daily volume reached a record 11.4 million contracts, a stunning 30% increase in 2025. The EMEA, APAC and Latin American regions all posted record highs. Remarkably, our international business also saw a record volume in all 6 asset classes simultaneously, proving that our value proposition is resonating globally.

We aren't just growing volume, we're growing client value. We delivered record levels of capital efficiency, saving our customers an average of over $85 billion in margin per day. Additionally, open interest ended the quarter up 11% over the past year and up 19% since the beginning of 2026. During the quarter, U.S. treasury open interest reached an all-time high of 36.3 million contracts, driven by unprecedented demand for U.S. treasury futures and options. This growth reinforces CME Group's role as the deepest and most efficient liquidity pool in the world.

We continue to innovate and provide the tools our clients need, and in an environment that is always risk on. These include last week's CME FICC, or Fixed Income Clearing Corporation, cross-margining agreements received approval from both the SEC and CFTC to expand to our end user clients beginning on April 30. 24/7 crypto trading scheduled to go live on May 29. Also, we're excited to announce that we will be filing to change our Micro Equity Index options to be financially settled to better serve the users of those products. Our new environment in Dallas is on track to open this summer, and we will provide a critical testing ground for our clients in advance of 2 of our agricultural products migrating to the cloud by the end of the year.

As we look to the rest of 2026, we are confident in our ability to continue to deliver value to our clients and shareholders. Our strong performance, coupled with our ongoing investments in technology and product innovation, provides a solid foundation for future growth.

With that, I'll now turn the call over to Lynne to review our financial results in more detail.

Thanks, Terry, and thank you all for joining us this morning. As Terry mentioned, the first quarter was record-breaking across the board. This included growth in our clearing and transaction fee revenue of 15% year-over-year. The average rate per contract for the quarter was $0.652. Our pricing strategy includes volume tiering, which results in decreasing rate for contracts at higher levels of volume. With volume records in every single asset class this quarter, this volume tiering encouraged incremental trading, providing risk management benefits to our customers and driving highly profitable incremental volume to the exchange. The combination of our volume growth and pricing structure resulted in an increase of $205 million in clearing and transaction fees for the quarter.

Market data revenue also reached a record level, up 15% to $224 million, marking 32 consecutive quarters of year-over-year market data revenue growth.

In aggregate, CME Group generated record revenue of $1.9 billion, up $238 million or 14% from the first quarter of 2025. Adjusted expenses were $512 million for the quarter and $405 million excluding license fees. Our adjusted operating income was $1.4 billion, or a 72.8% adjusted operating margin, the highest in our history.

Adjusted net income and adjusted diluted earnings per share came in at a record-setting $1.2 billion and $3.36 per share, 20% higher than Q1 2025. This represents an adjusted net income margin for the quarter of 64.9%, with $200 million of the $238 million increase in revenue accruing to adjusted net income.

We returned $3.2 billion to shareholders during the quarter, with $2.7 billion in variable and regular quarterly dividends and $536 million in shares repurchased.

This quarter delivered the highest volume, revenue, operating income, adjusted net income and diluted earnings per share in the history of CME Group. These results are a reflection of our position as the world's premier risk management destination. As our clients continue to navigate uncertain times, we remain fully committed to meeting their evolving needs through continued innovation and deep liquidity.

We'd now like to open up the call for your questions.

[Operator Instructions] The first question in the queue is from Patrick Moley with Piper Sandler.

Terry, you mentioned that you've received regulatory approval to expand the DTCC cross-margining agreement to end user clients. At the same time, the DTCC has been running a pilot program to tokenize U.S. treasuries as collateral. So as you think about the intersection of these 2 initiatives, I'm curious how you see enhanced collateral mobility impacting CME's clearing business. And then more specifically, with customers having the ability to move tokenized treasury collateral in real time, just what that could mean for the industry write large?

Thanks, Patrick. Suzanne Sprague is here, and she's been working very closely with both FICC and folks at DTCC and the regulator. So I'm going to ask her to opine on that question to start, and then I'll go.

Yes. Thanks, Patrick. We are continuing to work with FICC as well as internally on various tokenization efforts. So we think that there is a benefit for the industry to be able to reduce friction moving collateral, especially for collateral that does not settle naturally same day. Treasuries is a good example of that. So we will continue to explore what we could do together with FICC as well as other initiatives that we're pursuing at CME, including the tokenization of cash and our partnership with Google, as well as looking at other assets that might be of interest in the ecosystem today to be able to reduce some of those frictions and free up liquidity by moving those assets on digital technology.

Patrick, just to add on to that, I have said and the team has said, we're looking at potentially our own stablecoin here. We're looking at multiple different ways to make that $85 billion a day of margin efficiencies continue to grow, and not only just the margin efficiencies, but the capital efficiencies about how we move money back and forth each and every day and what's the best interest of every single client. So whether it's through tokenization, stable, using cash and treasuries, other forms of margin that they use with us today, we want to make it as effectively for them and efficiently for them.

So I think it's an exciting time for us, and we look forward to informing you more as we continue to roll out these proposals.

Okay. That's great color. As a quick follow-up, we've seen some pretty interesting developments in the perpetual future space this year. The S&P Dow Jones JV recently granted an exclusive license for the S&P 500 perpetual futures to a relatively lesser-known company [indiscernible] blockchain. And on that platform, we've seen volumes explode in commodity perps. So just with your goal to try and attract more and more retail eyeballs to CME's product suite, I'm curious how you're thinking about perpetual futures as a product structure that could eventually become a more meaningful driver of [ retail ] engagement. And then just if you could maybe talk about some of the regulatory or market structure hurdles that I guess would need to be cleared before we get there.

So thanks, Patrick, and I'm glad you raised that. There's a couple of things I want to unpack there. First, we'll talk about the JV venture, then I want to talk about some of the commodities, and Derek can address that, and what the true volumes are associated with that.

It looks very large in the way they're trading, but remember, those are in notional value, not in contract terms the way we calculate our business. So, and who's on those platforms, how those platforms work, what's the risk management associated with it and why would that institution potentially want to participate in something the way those are structured.

First of all, perpetuals are against the law in the United States of America. That's first and foremost. That is where it's at today. They are not allowed under the Commodity Exchange Act of 2000. The centerpiece of that act was how do you define what a futures contract is. It wasn't a bunch of other things in the act. The centerpiece was what is a futures contract. And it was defined as a contract for future delivery. It was not designed as a contract that never ended.

So I really believe that for perpetuals, I think convergence is massively important to the commercial producers and other participants that these contracts are designed for. Contracts are not designed, not, I repeat, not designed for speculators or hedgers or not to design for speculators or just a pure retail. They're designed for hedgers, commercials and producers. That's the way they -- you have to have a natural buyer, a natural seller. And they need to have convergence between cash and futures in order to run their business, which benefits the participants, not only in the United States, but globally. You need to have these markets.

As the great Dr. Milton Friedman said to me in 2002, if we did not have futures contracts today, we would need to invent them in order to move forward and progress. But that -- the way the market works between cash and futures is critically important. So the decisions that people want on perpetuals, they seem to me more of they're trying to create a contract for the speculator. That's not the mission of the commodity exchange. That's not the definition of it. So I -- that's something that I'm very much involved with as it relates to perpetuals.

Your other part about the volume going into some of these products, I assume you're referring to some on silver, some on oil, and so let's talk about that for a second. When they listed those on [ XYZ on hyper liquid], as you know, the way that market works, if in fact they were to have a tip-over in [ the auto ] liquidation, they've been very fortunate to have an orderly market for the most part, but if in fact, you had an auto liquidation, the money from the losers, it comes from the winners.

It's a very difficult proposal for any institutional hedger to use a product such as that where if they're due $1 and they get $0.45 back because the other side of the trade just got beat up and so that's where they got the money from. So I am concerned about some of those rules, and those are done on a perpetual basis.

I think the agricultural communities, the energy communities and others are not completely pleased with some of the pricing of those products. But I'll let Derek talk about that. But what's important, before he mentions it, we have to think about the timing of when those products were listed. You got to remember, silver went from $50 to $118, I believe, Derek, is that about right? High, and then back to $86. Oil went from $50 a barrel for almost 4 years to north of $100, and then back down $86. So that was where that activity kind of caught. Now the question will be, is that sustainable? So I'll let Derek comment on those particular products.

Yes. I appreciate it, Terry. I think if you look at the results of this last Q1 and even continuing into Q2 of this year, you're seeing exactly what Terry talked about. The purpose of futures contracts are to enable hedgers to be able to know that they can identify the forward curve. These products then converge to physical delivery and physical markets, whether it's corn, whether it's livestock, whether it's oil, whether it's gold, all come to physical use.

So we look at the end-user commercial need of these customers. When you look at the growth and record activity in our commodities portfolio as a whole, you'll see that every single portion of our client segments grew with double-digit growth in every single group led by commercial, corporate banks buy side and [ prop firm ]. So retail is a part of that, but financial customers will follow where the end user manages and hedges their underlying risk, and that's in our futures market.

And so on the first part of your question with the S&P listing on that, we were not made aware of that, even though we own 27% of the index business. We were not made aware of that decision. We got made aware once they listed it, literally several hours before their press release went out. Their press release went out, and which coincided with the opening of that market. We've been engaged with conversations, as you can imagine, with our partners. We both have a deep respect for intellectual property. We've made our points very aggressively on that, and I think they understand that now. And so we are continuing to work with our partners at S&P to make certain that, as we go forward, we're all on the same page.

And the next question in the queue is from Dan Fannon with Jefferies.

So Terry, I wanted to follow up on your comments about the Micro Equity Index option to change. I think you finally are making to be more financially settled. So just wanted to talk about why now and what you see is the opportunity going forward with that.

I'll let Tim chime in, but I will tell you why now is -- maybe we should have done it a little bit sooner, but why now is because the client base continues to go across multiple different versions of the equity complex, whether it's the larger [ E-mini ], whether it's the micro or something smaller, and how they participate. This client base in the micros seem to be more of a retail focus. They really don't want to deliver their options into a future where the people that are trading the larger clients do want to deliver their options into the future. So we felt very strongly that the micro contract would make more sense for that constituency.

But at the same breadth, we didn't think it made sense to change all of our equity contracts to deliver into cash settled. Basically we'll keep them as deliverable into a future. But Tim, you can add to that.

Great. Thanks, Terry, and thanks, Dan. And I think part of it is, as Terry said, as CME Group is the comprehensive leader in risk transfer for the S&P 500 and the NASDAQ complexes. It's important for us to continue to evolve our products to meet the risk management and market access needs of our customers. And that's the feedback that we're receiving. When we look at the micro-size products and how those strategies are deployed, to hedge other parts of their either stock portfolios or ETF portfolios, or looking to access the market, that they prefer the financially settled mechanisms where they could have the options expire against the futures daily settlement price. And that is the change we're looking to file.

It will then, as Terry said, be different than the institutional-grade E-mini offerings and options on those products, which serve a very specific and highly utilized function of the market of delivering the underlying futures, which is a benefit to the institutional community and the hedgers out there, particularly when they're looking to access the almost $40 billion per day of capital efficiencies in our equity complex at CME Group. We've actually seen continued adoption of our E-mini products by clients where several large buy-side clients are also switching some of their structured product strategies to utilize the efficiencies and the benefits of trading futures-based options at CME Group on the S&P 500. So we think this will further grow the complex as we remove some of the barriers to entry for clients and give them a better tool that serves the risk management needs of their portfolio.

And just so you not think I'm talking [indiscernible] my mouth, in this particular contract, we didn't design it as a financially settled in the micro because it's just for retail or speculation. It's not. You have to look at the value of the S&P 500 and who uses that contract today.

For your historians that may or may not know this, we started with an S&P 500. And then we cut the multiplier of the 250. As the contract continues to go up and value, participants, even the large ones, need to trade a smaller contract or they need to trade a bigger contract, depending on what their needs are. So we are trying to take these pools of liquidity for the constituents to across the entire spectrum of CME's equity products. And it's basically the decisions are being made for the value of the index itself, not for just the constituents who are trading in. So I think that's a really important distinction.

The next question in the queue is from Ken Worthington with JPMorgan.

Can you talk a bit about the evolution of WTI and how you see the ongoing growth of U.S. Gulf oil playing into the dominance of the Cushing's settled product? And secondly, how do you see the changes in Venezuela and the conflict in Iran changing global supply chains? And how might this feedback into CME energy activity and CME oil market share?

Ken, that's a really good question. I think a lot of people like to have the answer to that one, especially in the industry for sure. I'll let Derek talk a little bit about the TI because I think it's important. But when we get into geopolitical, like what it means for Venezuela, I mean, we know what has been said publicly by the administration, but we don't ultimately know what's going to happen. So I think we'll stick with what we think on TI right now, Derek.

Yes. I think that's a great question, Ken. It's certainly timely in light of what we've been seeing in terms of restrictions and constrictions of [indiscernible] supply. 20% of the crude oil market, as you know, comes from the Middle East, flows out in the global network. That has been disrupted. We've been talking for years about the ways in which we have continued to evolve WTI as a global benchmark. Ever since the export ban was lifted in 2014, U.S.-produced WTI, and nat gas, in fact, have been flowing out into global markets.

So I think that to us, this is just another confirmation point of the absolute essential nature of U.S. produced energy products, both WTI and Henry Hub, that is now being produced and exported at record levels outside the U.S. And this is just another marker of adoption globally of the -- what these markets mean and what these products mean to risk management across the board. We have seen outsized growth for 4 years in a row now of global adoption of commercial end-user customers in Europe and Asia as both the Russian conflict with Ukraine disrupted supplies, this is another supply disruption, meaning a greater reliance on another provider of last resort. And that is the U.S. right now.

As it relates to your specific question on the crude grades, we launched these contracts back in 2018, 2019, fully expecting a global adoption of WTI. When you have a physical contract that delivers in Cushing as we see record amounts flowing out into the U.S., we needed to provide a risk management tool to get physical in Cushing down to the Gulf Coast enter the export market. I think what you're seeing in the record volume in open interest and our crude grade contracts, it's really solidifying WTI as a dependable supplier of oil to the world. We think that continues to reinforce WTI's importance globally. And you look at the dependability of physical deliveries, we continue to dependently deliver those barrels month after month. In fact, our GME -- our state in the GME Global Mercantile Exchange in Dubai, which delivers the [indiscernible] crude contract, also physically delivered outside the Strait of Hormuz, has been uninterrupted in delivering 15 million to 20 million barrels a day as well.

So the market needs to find dependability of supply. They found that in WTI. That's the reason why we're exporting not only record amounts of WTI and Henry Hub, but also [ RBOB ] gasoline and HLR diesel contract as well. So it confirms the importance of that in global products for global customers that we are the dependable provider, and we continue to ramp up exports, and that further solidifies U.S. energy products in the portfolios of global customers.

And Ken, I don't want to be dismissive, so I want to go back to the beginning of your question on Venezuela. Can you ask that question now separately so maybe I can address it? But I may not be able to.

So it was just about how the changes in Venezuela impact global supply chains and what it means for CME activity and share?

So I think for -- not quite sure what that's ultimately going to mean with Venezuela. I think that the verdict is still out about how that country is going to run. As everybody knows, I think that their production got run way down. Their infrastructure in Venezuela was not doing what it was at peak. So those are all issues that they need to have addressed going forward. And then there's going to be a lot of politics and other people trying to deal with that particular issue.

So as far as our share goes, I think what is important, and Derek touched on it, WTI is no different than Brent, another one, these are global markets. Whether it's produced in the United States or it's produced in Saudi Arabia or UAE or Qatar, these are global markets and people are going to sell to the highest bidder. And that's just how the oil market has worked.

So I think sometimes people here in the United States think that we have this massive supply of WTI so our gas prices should be a lot lower. Our producers sell all over the world. And that's the way this market is, it's global. But the good news is, I think what Derek is saying, is the benchmark at WTI is getting a much higher visibility, and I think that will continue, which will bode well for CME's risk management [indiscernible]. Derek?

I think one little last piece that's worth noting on the share piece here is that Venezuelan crude is extremely [ heavy ]. It's going to take a long time to rebuild the infrastructure in Venezuela, import that and then actually resource some of the refineries in the U.S. to adopt that. So we think that's a term impact. If you look at the forward curve of the oil market, you'll see a backwardation, lower prices [indiscernible] expecting more U.S. flow in.

The last point I want to note is on the share piece of that. I think if you've seen record amounts of activity in global energy markets, we have seen share increases back in CME WTI north of 79%, 80%. And that's just confirmation that when markets are going through times of undue stress, market retrenches to core liquidity on the home exchange. We've seen that in WTI futures and options over this last 3 to 4 months.

And the next question is from Ben Budish with Barclays.

I wanted to maybe start with market data. It looked like this quarter's recurring revenue growth was the fastest I think you've seen in several years. I'm just curious if there's anything you can share there. To what extent are these contracts volume based? To what extent are these from new FCMs kind of joining the platform? And how sustainable do you think this growth is over the near term?

Thanks, Ben. We'll turn it over to Julie Winkler, who heads up this area for CME. Julie?

Thanks for the question, Ben. Yes, it was a great quarter. We had record $224 million in revenue. So we are up 15% from Q1 of 2025.

And I'd say one of the biggest shifts that we've seen is really a surge in the simulated trading environment. So what's happening there is really strong growth, and I would say maturity among these platforms. And so these environments are really allowing new traders access to our market data. They're learning how futures products work. And they're taking advantage of the educational resources provided within these platforms. And really using it as part of the customer journey become successful new active retail traders. And so we've seen very strong year-over-year growth in these participants utilizing these sim environments to begin their trading journey in futures, that we believe is really going to be additive over the long term to the retail ecosystem.

So sim participation was up significantly. And so that is really kind of driving that retail or nonprofessional participation in our market data business. We've also made -- we continue to make policy changes, right, in thinking about data feed licensing and how that all needs to work. That has contributed to some of that recurring revenue growth that you're seeing.

And then lastly, subscriber growth has continued on the professional side as well. We were up about 1% from Q4 and up about 2.45% from the number of professional subscribers we had a year ago. So I'd say it's a number of fronts. A lot of this is relatively sticky revenue in that sense. And we continue to work with our customers to ensure that our benchmark data is provided and they're getting the data in the way that they want it.

If I could just reinforce a little bit of what Julie said, I mean I think what we're really pleased with is kind of broad-based growth. So we're seeing that subscriber growth. We're seeing the new product growth as well as some of the changes just with pricing. But this is a really healthy ecosystem that we're seeing across the market data business.

All very helpful. Maybe just a follow-up, maybe sticking with the retail team. You mentioned in the earnings commentary that on the prediction market side, you've now seen it looks like about 15% of volumes are kind of markets related. So curious if there's any further details you can share, what, if you have any visibility on, what types of customers are trading those contracts rather than sports? I would imagine all this is happening within your 2 current FCMs. But just curious what that customer base looks like. And maybe any color you can share in terms of the pipeline of potential additional FCMs would be helpful.

Thanks, Ben. Tim, do you want to address that?

Yes. Thanks, Ben. So when we went live with our prediction markets and event contracts offering back in December, we've seen strong growth both in terms of adoption and volume where we recently surpassed the $220 million contract mark. And then when we look at the participation across those contracts, we started a marketing effort in the middle of March with our partners at FanDuel. And since then, the actual participation or the distribution of volume towards the market-based contracts across equity, crypto, energy and metals actually exceeded 30%. That's a shift that we're pleased with. And I think it speaks to the attractiveness of the offering where we're looking at attracting these next-generation traders to our markets. They're coming in through the apps through our FCM partners, and they're trading all types of the event contracts, both sports and the market space contracts. And that's something I think that reinforces the value prop of CME, that we have some of the world's leading benchmark products at CME Group and now we're making them more approachable and more accessible to the individual and next-generation trader through the fully funded or fully collateralized event contracts and prediction markets offering at CME.

And the other thing that we're pleased to see is since December, we've had over 150,000 new accounts trade at CME Group in these products, which is off to a fantastic start. We're continuing to work with our partners that are currently trading, and we have a pipeline of FCMs we're still working to get on board and offer these products to their end users. So optimistic about the future, but a first few good months here out at CME Group in our prediction market offering.

So Ben, just to emphasize a little something, when we originally negotiated this deal with FanDuel, our goal and objective was it had nothing to do with sports. Our goal and objective was to do with markets and distribution. And that is exactly what we're starting to see happen. Even though it's very, very early innings, to say the least, for baseball season, Tim is absolutely right, what's going on here. And that's exactly what we were hoping to see.

And if, in fact, both our partner, if FanDuel wanted to have [indiscernible] so we were accommodating to them, but that was never our goal and objective. Our goal and objective were markets, on events, on markets, for their participants and ours. And that's what we're starting to see. And for me, that's exactly what we wanted to see happen.

The next question in the queue is from Alex Blostein with Goldman Sachs.

I had a follow-up on the energy markets. And just curious to get your thoughts on the health of the underlying customer. Obviously, we've seen extreme volatility, which feels like it might continue for some time. There's always a debate about good vol, bad vol. This doesn't feel like great vol. So if you think about what's happening with the underlying users and the durability perhaps of the customer base on the go-forward basis, I'd love to hear your comments on that.

Derek?

Yes, it's a great question. I think that when you look at markets in times of stress, as I mentioned before, you're going to see liquidity retrench back to home markets. And we've absolutely seen that. When we think about healthy markets, we think about a couple of different markets. Number one, we want to see health across the entire breadth of the portfolio. So we saw record activity not just in WTI futures, but options. We saw record activity and open interest being held in the crude grade contract, as I mentioned before. We're seeing record uptake and actually fastest uptake in Europe and Asia. And we're seeing options set records, particularly in the short-dated part of the curve as well. So broad-based activity across all products. We're not seeing activity spikes in one.

We're also seeing, despite the fact that we're seeing some pretty unprecedented volatility times and uncertainty, open interest in energy has been extremely resilient. If you look at open interest since the deck 31, our open interest in energy is up 14%. Even on a year-on-year basis, open interest is up 1%. So open interest is a marker of the sustainability and health of activity, and that is still holding in well.

One of the other markers we look at is the breadth of activity across client segments, and every 1 of our client segments continues to perform up double digits across the board, led by our commercial customers, not surprisingly, in markets like this. Retail has returned over this last quarter as we saw in the metals markets as well, very much wanted to be actively involved in our micro contracts. But I would say the growth and the sustainability in the open interest holdings continue to be -- show positive trends. And we're seeing sustained activity. We are not seeing activity that we saw immediately following COVID, which was a spike in activity closing open interest and reduction in activity across client segments.

So we are seeing a healthy amount of activity. I would attribute at least a portion of that strength in these markets to the growth in our options business, particularly with the short-dated options business that are giving customers the ability to discretely manage event risk like we're seeing right now. And that's why we're seeing records in weekly options that I think customers are using to manage short-dated risk around longer-term core exposure. So at this point, we're seeing into April a strong participation, open interest holding there, and good participation across clients.

And just to add to that, Alex, I think you got to look at the entire industry, and it's not just oil, it's the shipping industry. These are billion-dollar ships that are sitting out there that need to be insured. Insurance companies are very nervous about extending insurance to some of these billion-dollar ships that could be blown up in a heartbeat. So they are looking to offset some of their risk on the insurance side, whether they're creating a swap or trading futures against it.

So I think the client base will continue to expand because this -- even though, whenever this gets resolved, people are still going to be very concerned. So I think we'll get a new constituency of participants, not too dissimilar from the mortgage industry and others, from insurers and reinsurers from the energy business using our products and others in order to manage that risk going forward. These are very expensive vessels that they cannot afford to have being sunk in the Strait of Hormuz or anywhere else.

So I think it's a very interesting what's going on. You mentioned good vol and bad vol, Alex. I want to touch on that for a second. So good vol is the volatility that market kind of goes orderly in a direction and it maybe goes into a different direction. When you see pockets of volatility with not much [indiscernible] that to me is bad volatility. But that's headline volatility. And headline volatility can be very disruptive to the marketplace. And there's a lot to that, but that normally is short-lasting as well on the bad volatility. So we'll see how that continues to proceed going forward.

Got it. Yes. No, super helpful. One quick follow-up just on the numbers. Obviously, with a lot of volumes coming through, RPCs came down a bit. And I was hoping you could maybe frame how to think about near-term RPC across, particularly the energy markets where we're seeing the bigger decline.

Thank you, Alex. Lynne?

Yes. So I would keep in mind a few things when you look at the energy volume and the RPC in this quarter. First, as Derek touched on, we obviously had record volume there. But you also had some real spikes in short periods of time. So March, the level of activity we saw there is certainly impacting the numbers.

So if you look at the total volume growth, you would expect additional usage of volume tiering. You also saw a mix shift towards crude, which tends to be lower priced than things like our nat gas. And Derek also touched on one other thing, the micro business really grew significantly. So we saw about 315,000 micro energy contracts a day this quarter. That was up from about 80,000 contracts a day in the same quarter last year. So that is going to have a dampening effect on the weighted average. Those are at about $0.52 a contract.

So I think those 3 factors really are what weighed in on the energy RPC. The last one that's a little bit harder to see is just the shift towards more member trading. So that's really where we saw that impact. So going forward, I would look at that overall level of volume in terms of volume tiering. And then I would look at those mixes in terms of crude versus nat gas, and then the micro versus full-sized products.

The next question is from Michael Cyprys with Morgan Stanley.

I was just hoping you could update us on your partnership with Google, including tokenizing cash, what the time frame and key milestones are there, how you see this playing out? And if you could also update us on the prospects for CME stablecoin as well.

Yes. Thanks, Michael. I'll have Suzanne and Lynne touch on both, because they're both working on those projects. So Suzanne, why don't you talk a little bit about the tokenized Google and timing and things of that nature?

Yes, thanks for the question. So we are working with the settlement banks in our ecosystem as well as clearing members to be able to advance stages of tokenizing cash. You may have seen a press release from Bank of Montreal in the last few weeks, announcing publicly that they have been working with us and Google on the tokenization project. And so the goal there really is to be able to increase the testing capabilities within the settlement bank ecosystem as well as start integrating clearing members into that testing process this year, with the goal of being able to go live by the end of this year.

And again, the tokenization of cash really for us enables movement of value outside of traditional banking hours, especially looking at 24/7 trading activity, as Terry mentioned in his opening remarks. It's a key component to being able to enable the movement of value in the off hours, as well as allow us to build upon other tokenized assets using the Google Cloud Universal Ledger.

On stablecoin, we also continue progressing that effort with regulatory engagement. And as Terry mentioned there, we are looking to be able to seek a license to be able to issue stablecoin. And we're exploring technology partners that can help us do that as well. We plan to be able to advance that effort this year, although we can't opine on the regulatory engagement time line. Happy to have Lynne add anything else as well for stablecoin.

Yes. I'll actually add 2 things that are a little further afield related to Google. So first, you heard Terry mentioned that we are getting close to opening our Dallas facility for testing with our clients with the goal of ultimately operating markets in the cloud. So we're excited about that progress that we've made with Google. That was something that has been several years in the making.

We're also -- that was a big part of the investment that Google originally made in CME. So I just want to make sure you all noted that the Google shares, which were preferred shares, the only difference between those shares and common was that they did not have voting rights. Those did convert into common during this quarter. So you will see that in the basic and diluted share count rather than seeing that separate class of preferred stock. So going forward, you will also see just that earnings that was allocated to the preferred stock, it will show up just in the basic and diluted. So you won't see that differentiation going forward. I just want to make sure you captured that.

Do you have anything on stablecoin, we'll get -- Michael, hopefully that addresses your question?

Yes. Just a quick follow-up, if I could, on the cloud. So with the contracts migrating to the cloud. I was hoping you could maybe elaborate on the benefits that you see the steps that you're taking to help facilitate that. How do you see the scope and path for migrating other contracts eventually to the cloud or what that might look like and how you sort of evaluate that and what the benefits could be?

Well, I'm a big believer that this is the future. And I think if you were to start an exchange or any other business today, you would be in the cloud. We are 175 years, 200 years old at this stage of our proceedings. I think this is the future of markets, having access to be in the cloud. I think the efficiencies that a hyperscaler like Google will be able to provide to CME and its clients will be second to none. And I think that is really exciting.

You have to start somewhere. We wanted to start with our less latency-sensitive products, which are the agricultural complex and that commodity side. So I think this will be the catalyst that show people how the benefits of having markets in the cloud and the redundancy that they will have with 20 other centers just in the United States alone, if in fact we needed to go there.

So it's pretty exciting from my standpoint. This was our vision going way back during the pandemic in '20 and '21 to do this with a big partner like Google. And I think the future, not only it was looked at, is starting to be realized. So I think it's exciting and I'm looking forward to this progressing forward, and I'm looking forward to every single product being in the cloud, as long as, and I'll say it again, as long as Google's technology and facilities are better than what we have right now. And I believe they will be.

The next question in the queue is from Bill Katz with TD Cowen.

Maybe, Terry, one for you. if you can update us on your thinking on capital allocation at this point in time. Obviously, you have the dividend, but I'm sort of curious of what your thinking is on M&A. In particular, it seems like there's a lot of different vectors of growth in the industry, both de novo and inorganic, and how that might shape your views on priorities.

I missed the latter part. But on the capital allocation, Bill, I think is what your question was, the first one, and I'll let you take the second one. But on capital allocation, I think from the beginning, Bill, going back to '02, I was a big proponent of paying a dividend at CME when everybody else said you shouldn't do that. But I thought it served our interest really well. I still think it does, and I think returning capital to shareholders is really important.

But at the same time, I don't want to be stuck in a situation where we're afraid to do something that we think can grow the business, whether it's through M&A or something else, if the opportunity presents itself. So I think instead of putting myself in a box or the company in a box about capital allocation, right now, we are in a really strong position with our dividend, we're in a strong position on repurchasing shares, as you heard Lynne talk about earlier. But again, if there's an opportunity that we see that makes sense for our shareholders, without going out too far outside of the scope of what we do, we will be evaluating those, and that might change our capital allocation at that time. But right now, we're pretty committed to where we're at on the allocation of dividend and share repurchase for now.

And what was that the latter part of your question?

It was all the same question. And then maybe just a quick follow-up, one for Lynne. If I look at your adjusted expenses, excluding licensing fees, it looks like it was up about 7% year-on-year, if I did the math correctly. I think the -- I think you affirmed your guidance for $1.695 billion for the year. Can you sort of unpack what the growth was in Q1 and how we should think about maybe the -- just sort of the pacing as we look through the rest of the year?

Yes. So certainly, and your numbers are correct, so we saw about a 7% growth rate in Q1. Obviously, with a high level of activity, you saw some of the variable expenses come in a bit higher. So you'll see that in compensation, you will also see that in technology where we did see more activity going across the system.

So we'll continue to monitor as we go forward. We sometimes see these spikes in activity. We're seeing a little bit of softer activity so far here in April, but it tends to be different periods of time over the course of the year. So we'll continue to look at that guidance as we move forward. But at this point, we're comfortable with where we're at.

I would point out that we do expect the occupancy cost to continue to grow over the course of the year as we do things like opening the Dallas facility. You will expect technology to continue to grow as we move more into the cloud environment. The others don't have as many specific drivers that I'd call out.

Next question is from Craig Siegenthaler with Bank of America.

We were looking for an update on your prediction markets FCM JV with FanDuel just given FanDuel's announcement earlier this month that they will launch a new FCM. So I assume they're going to favor the new venture where they can keep 100% of profit. So are there any major differences in the offering?

Yes. Thanks for the question, Craig. And I think there's a bit of confusion on what they can and cannot do with that potential application process. I'll let Lynne describe it to you so we're all on the same page.

Yes. So certainly, this is something that we were aware of, that they were going to make this application. I think it's important to note the difference between an application and a launch. So similar to the way we started an application process, and it took several years to get that approval, they want to be prepared for any future changes and registration requirements or the like. So this actually doesn't signify any change in our relationship or the partnership going forward. And as Terry mentioned, and as you would expect, there are some contractual restrictions in terms of operating alternative venues during our partnership.

And I think that's really important, Craig, they can't just get an FCM license, apply for one or buy one and compete with the JV that we put together with them. That is obviously contractually against what we originally stated with them. So I think it was a bit confusing to begin with at best.

That's helpful. And just one follow-up on prediction markets. Any update on the DCM side and volumes where there's multiple entities hooked up to, including DraftKings?

Is there any volume up there with DraftKings?

No, I think, Craig, just sort of to my earlier comments when we were speaking about prediction markets, we just recently crossed the $220 million contract volume threshold since going live in -- back in December of 2025.

I think the notable thing from volumes is, again, as we were covering, is that the percentage of volume in market-based contracts across the CME Group benchmark products in equities, cryptocurrencies, energy and metals is in excess of 30% since mid-March when we -- with our partner at FanDuel increased the marketing efforts, and we've had 150,000 accounts trade at CME Group. So those are the sort of numbers-based updates for prediction markets. And we would say off to a great start and optimistic about the continued growth from here.

Craig, what I think is also important is there's a lot of activity, for lack of a better term, going on around the sports prediction markets between the states and the providers. Where there's not a lot of noise, and nor should there be, is around the market event contracts or prediction markets on financial products. And I think that's why we're seeing them grow.

And I think that's a very good sign for the future. And I think you're going to start to see other people probably leaning that direction more than just looking at the pure sports itself. So we'll have to wait and see, but I think that bodes very well for CME if in fact that goes there because potentially the offsets you can be looking at against our multiple asset classes that we have here at CME Group that others don't. So I'm pretty interested to see how this all plays out in the future investments going into prediction markets on the sports side of the equation.

The next question is from Brian Bedell with Deutsche Bank.

Maybe just staying with that very line of your answer on the prediction markets, good to see that market side rising as a mix of the percentage of volume. What is your view on potentially creating company KPI types of contracts, like financial KPI contracts? And I know -- I believe, maybe you can weigh in on this, but I believe they most likely would need to be SEC regulated. So maybe your view on any kind of time line of that, if that is something that is -- that you're interested in developing. And then also if you could just confirm, I think the rate capture on the contracts for you guys is about $0.01 a contract. I just wanted to confirm that.

Okay. Thanks, Brian. So do you want to address the first on that.

Yes, sure. Brian, and thanks for the question, we're certainly seeing a lot of interest in other economic or market-based contracts where we've seen good growth in the economic indicators as well as the benchmark products at CME Group. I think with respect to anything that is financial or KPI or individual stock related, that is something that we continue to engage with customers on. But as you noted, there are some regulatory questions and clarity required about how those products would be brought to market and what the security versus commodities-based offering might be. So that's something we continue just to engage with the regulators. So I'd say stay tuned on that, but no imminent plans or a path forward for those just yet.

And in terms of pricing, we don't break out entirely, there's obviously different pieces depending on where the volume comes from either through the various channels. Obviously, the clearing and transaction fee is transparent. But again, for us, this is about getting the traction with the potential customer base and getting the eyeballs in that distribution and getting kind of that community exposure to our products, which we're seeing good uptake on that right now.

Great. And then maybe if I can ask Lynne, if you could just talk about the April collateral balances that you're seeing so far and if that's -- if you're still managing about a 30 basis point spread in those balances. I said 30 basis points -- 10 basis points on the noncash, I think, and 30 on the other, on the cash.

Sure, Brian. So in Q1, we did show an average of balances for cash of about $149 billion. That is up a bit so far here in April at $153 billion. In Q1, we averaged about 33 basis points on the cash. I don't -- typically don't disclose for the partial period how we're doing so far in April, but that held steady at about 33% versus last quarter.

Then on the noncash in Q1, we had $171 billion on average at that 10 basis points. So far in April, we're averaging $174 billion. So both up slightly in terms of the average balances.

The next question in the queue is from Ashish Sabadra with RBC Capital Markets.

This is Will Qi on for Ashish Sabadra. I appreciate you guys squeezing us in. Just wanted to maybe follow up on some of the comments around market data and information services. I think last year you guys had some data license changes in regards to the introduction of the end-of-day data category versus real-time delayed and historical. It seems like clients are still kind of generally building out the infrastructure to kind of track that data and they've been back-billed for that charge. How much of a contributor is that license change to the market data and information services growth? And are there any other policies that we should be aware of that are notable as well?

Julie?

Yes. Thank you for the question. Certainly, that was a change in policy. And part of it, right, is just to protect what we believe is a strong intellectual property of our data assets and just changing business practices within the space. So it has in the past and will continue to be of real-time professional subscribers being the core of that market data revenue line. And so while data licensing such a end of day is adding to the growth of the business. It is not a significant driver of that revenue that we talk about each quarter. That continues to be that real-time professional subscriber.

I'd say policies in general though, I mean, this is where -- and Lynne mentioned it earlier, right, there's this blend of utilizing policies, introducing things like enterprise pricing with our core partners, simulated trading environments, things like that, that we are going to continue to do, [ Term SOFR ] is another great example of our build-out of our benchmark space. So these are all things that the team is actively working on as this space continues to evolve and change. And I think it's working given the 32 consecutive quarters of year-on-year growth.

So we'll continue to update you on that. But I think, again, strategic and pricing-related initiatives as well as new product development is going to be a core of us continuing to drive this growth going forward.

The next question in the queue is from Simon Clinch with Rothschild & Co. Redburn.

I was wondering if I could just ask about [ BrokerTec ] and BrokerTec Chicago in particular. I was wondering if you give us an update on how that's progressing. Any benefits you're seeing also what kind of behavioral changes you're seeing across that treasury complex? And I guess, how we might think that could impact the overall treasury performance of BrokerTec in the future?

Thanks, Simon. Mike?

Yes, Simon, thanks for the question. While still early innings, adoption of BrokerTec Chicago is expanding as clients leverage the platform's value proposition of smaller tick sizes, and co-location alongside our core futures and options markets in Aurora.

What I like about BrokerTec Chicago is it gives our clients choice and execution venue, depending on their trading strategy and market conditions. We have over 35 clients connected to the platform already. And that includes several participants from the derivative space who exclusively trade U.S. cash treasuries on BrokerTec Chicago.

ADV grew 93% month-over-month in March, and we saw a record day of $1.2 billion on April 8. So additionally, we view BrokerTec Chicago as an important foundation in a larger effort to deliver unique new trading efficiencies by bringing our cash and futures markets closer together. So we're pleased with BrokerTec Chicago so far, and we'll keep you updated on new features as it progresses.

Great. And just a follow-up on prediction markets. Terry, could you expand a little bit more about on the -- I think you said 150,000 new contract -- new accounts that sort of started trading on CME's platform, having come through that predicting market funnel. I was wondering if you could talk about just what you're seeing, the early behaviors of those kinds of accounts, what -- how you think it might evolve as you sort of try and graduate those kind of customers across the actual traditional futures [indiscernible]?

So I'll let Tim comment, Simon. But I think when you look at those new accounts coming in to trade that particular product, it's really difficult to predict what the next 6 months or a year is going to look like with that constituency. It could be a whole new group of them. The market can get a little bit stale or could get exciting. You just don't know what's going to happen that would drive the growth of those new accounts or take it away from it.

So I hate to try to make a prediction on that. I would rather try to create efficiencies for each and every client and build the business that way. But I'll let Tim talk more about it. As I said earlier, when we originally did this deal with FanDuel, it was about distribution and having people look at our products and then participating, and then hopefully they would be graduating into the other parts of our industry, which we think they are and they will. So to me, that's the long game here, and we are going to continue to stay focused on the new client acquisition, as we talked about for many, many years. And this is just an extension of the new client acquisition through our FanDuel partnership. Tim, do you want to expand?

Yes. Thanks, Terry. I think the one thing I would expand on that is when we think about the original thesis of why we're trying to attract the next generation of trader to our markets, it's because we want to get our benchmark products and these benefits and the value prop of CME Group into the traders earlier in their life cycle as a market participant. So when we think about what is exciting about the prediction market is prior to the introduction of the full value margin of event contracts that make it easier to access some of these markets at CME Group.

We were on the life cycle of perhaps a trader started in other markets, whether it was single stocks or ETFs or options and then eventually cross over to CME Group to open a futures account, work with our futures brokers and start trading either full size or micro-sized contracts at CME Group. What's exciting though we don't know the exact motivation of all those 150,000 traders at CME Group is with the smaller-sized, full value margin contract, we now have the opportunity to perhaps be their first trade in the financial markets. And that is something that is evolving and transformational for our opportunity here at CME Group, that we can meet these clients earlier in their journey. And then as you noted, Simon, once they are then in the ecosystem at the CME Group, we're optimistic they will look at other products. But hard to say exactly what that graduation or life cycle will look like. But capturing them earlier in that journey is one of the things that we find attractive about this opportunity. And it's great to see that bear fruit this early on in the endeavor.

And the next question in the queue is from Chris Allen with KBW.

Just a quick one following up on the capital discussion from earlier. I just want to ask about the buyback philosophy. So the buyback level doubled this quarter versus the prior quarter, even with the stock improving materially this quarter. So I'm just kind of curious how you're thinking about it from a -- you view it as opportunistic buyback or is it -- is there anything related to the preferred conversion to common shares? Any color there would be helpful.

Thanks, Chris. Lynne?

Yes, sure. So Chris, one thing that you are saying is we did comment that we will be using the OSTTRA proceeds and putting those to work in the repurchase. So we will continue to be opportunistic with repurchases, but we also will be using that $1.55 billion that we received from the OSTTRA sale and putting that towards repurchases. So between last quarter and this quarter, we've completed about half of that. So we had about $758 million remaining in cash from the OSTTRA proceeds at the end of Q1.

And the last question in the queue is from Michael Cyprys with Morgan Stanley.

I was just hoping to circle back to the cross margining where you see the regulatory approval to launch the expanded treasury cross-margining to end clients in the coming weeks. So I was hoping you could help quantify the impact of that in terms of added margin and collateral efficiency for customers, how you see the scope for expanded client engagement, velocity and what that path might look like?

That's a good question, Mike. And I don't know if we're going to have complete visibility into what it's going to look like ultimately. But we are excited by the beginning of it. I'll let Suzanne talk about from her end, what she's seeing.

Yes. Yes, thanks for the question. We are excited to be bringing those 2 big liquidity pools together in the interest rate space. We think that just as we've seen in the House program, we do have the ability to offer a pretty compelling savings the 2 clearing houses. We anticipate the savings can be upward of 80% for the client book just like we've seen on the House side of the program today. We are at about 22 clearing members today that have signed the agreements for the House program. And although we've just announced the approval, we do already have 1 clearing member that signed the agreement for the customer program scheduled to go live at the end of this month, and are engaging with a number of other clearing members to offer the client program as well. .

So hard to speculate on the dollar savings, but we do anticipate the ramp-up will be similar to what we saw on the health side and that we'll be able to deliver significant savings for customers, just like we have so far on the House program.

And I would just add that this is a unique benefit that they're able to get those offsets between their activity at CME and at FICC. So it does help reinforce the value proposition of our offering.

And what were the savings on the House side?

Max savings have been about $1.5 billion. Average daily is closer to just over $1 billion.

And showing no further questions. I will now turn the call back over to management.

Well, thank you. Our record-breaking start to 2026 underscores the importance of our risk management ecosystem.

I want to harp on one thing that Lynn talked about earlier. We have continued to grow this business, exponentially grow the client base globally and bring more participants in here to mitigate and manage risk. The rate per contract is always something that's difficult to figure out. And I think when you look at that, you need to focus on that just a little bit more as we continue to grow our business because we actually think this is a really good thing as we continue to grow. So this is not new. We're growing the business and we're really excited about that because it allows multiple participants to continue to grow their business here at CME and pay a price that makes sense for them and for us and for more importantly for you. And we're seeing unprecedented engagement across all of our global asset classes today. We remain focused on disciplined execution and delivering superior value to our shareholders. Once again, I want to thank you all for joining this call today.

This concludes today's call. Thank you for your participation. You may disconnect at this time.

All right. Good morning, everybody. We'll go ahead and get started. I'm Patrick O'Shaughnessy, the Capital Markets technology analyst here at Raymond James. And up next, we have CME Group. And on their behalf, we have Derek Sammann, Head of Commodities Markets. Great time to have Derek here given what's happening in the commodities markets.

Our format is going to be a presentation. If there's time left over, we'll do a short Q&A at the end. Otherwise, there will be a breakout session downstairs afterwards.

So with that, Derek, welcome.

Great. Thanks, Patrick. Appreciate it. Thanks for all coming this morning. Probably just want to start the conversation today, the fact that I've been in this industry for 35 years. Gray hair shows it, I think. I've been at CME this year 20 years. And I would say without a doubt, this is probably the most interesting time in my career to be in financial services. And being at CME Group where the crossroads of market structure is unfolding literally before eyes is a pretty exciting place to be. So as we talk through the conversation today, for those of you that don't know the company, hopefully, you understand more about CME Group in 30 minutes from now. And for those that do know us, hopefully, you'll find some insights and if not in our presentation today, in conversation as we go into the rest of the day.

So I want to start by just noting the fact that for those that may or may not know us well, we are the world's leading derivatives exchange. And we effectively operate on a dual mandate. On one side, our core responsibility is providing price transparency in markets across the world. That comes in a couple of different ways. We have a group of benchmark products, which you'll see sort of our rate in this circle here on the graph, where we have benchmark products and benchmark liquidity in every single major asset class out there. The 6 that we typically refer to between fixed income, equities and FX on the financial side, and on commodities, we've got our energy business, our metals business, agricultural products business. We also have a crypto business that rolls up on our equities.

So no matter what price formation is taking place in any product, we've got standardized listed futures and options that provide lit, transparent markets 23.5 hours a day, 5.5 days a week that global participants access and use to either expose themselves to market risk or mitigate market risk they actually have. So that dual mandate on the price transparency side really comes in two forms. On the one side is our product set. So in every major asset class, we've got benchmark products and fixed income. It's the entire yield curve from overnight Fed funds out to 30-year treasury.

In equities, it's the whole span of the primary U.S. indices between Dow Jones, S&P 500, Russell, et cetera, futures and options and all of those. In the foreign exchange market, it's all major G7 players plus a number of nondeliverable forwards or NDFs, which are small regional currencies around the globe. On the energy side of the business, our primary benchmark markets are WTI crude oil, certainly in the news over the last 72 hours at the events of the Middle East. In fact, yesterday, we had another top 5 day in our crude and refined business, not surprisingly, with the uncertainty happening in the globe. When risk hits markets, customers come to CME to manage their risk.

On the metal side of the business, our benchmark products are mostly in the precious metals business, gold and copper. Gold, obviously, top of mind also given the rally and the flight to quality, story that we've been seeing unfold for the last year or so, particularly the last few months. We also have a business in battery metals, where we are effectively 100% of the futures market for battery metals globally, whether that's cobalt or lithium, spodumene and a few of the smaller products inside of that. And then our agricultural products, which is mostly grains and oilseeds, which is looking a lot more like an energy business every single day with renewable biodiesel and ethanol crossing over into energy land.

The other part of our dual mandate on the price transparency side is what we do on the technology side to deliver our prices to our customers. We use our system called Globex. It is a system that directly distributes liquidity out to 180,000 customers globally. We'll talk about kind of that global dispersion of participation in our markets. And we have also partnered with Google over the last 4 years in a strategic partnership. They took a $1 billion stake in CME Group, where we are building out cloud capabilities, migration and looking at ways to evolve financial services to that next iteration of what this market looks like today. So back to the point I made about being -- it's a very exciting time to be in financial services, particularly at CME Group.

The other half of that mandate is risk management. We own our own clearinghouse. So if you -- there's a nuanced difference, but a huge difference between businesses that are regulated by the CFTC derivatives like CME Group and SEC-regulated securities exchanges. In derivatives, we get to own our own clearinghouse. That means we have a vertically integrated clearing house. So all products that trade on CME only get cleared at CME. So that provides very unique, both offensive and defensive nature to our business model means high barriers to growth. It is not a horizontal model where you can put a trade on one clearing house one day and clear that at another clearing house and extinguish that position. All positions have the open and close within CME on our same clearing house. So very high defensive walls around the business. You'll see some of the margin numbers on the following pages very high. That's one of the contributors to that.

There are a number of competitive advantages that we have as a result of that, not the least of which are the deep pools of liquidity that we talked about, the benchmark product set that we have. We have an intense customer focus. We'll talk about how we're rate and how that differentiates our service and capabilities versus our peers in the space. And we have an $800 million proprietary data business that grew 13% last year and probably close to 8% or 9% cumulative average growth rate over the last 10 years. So a lot to like about this business, high barriers to entry, defensible business model, a lot of recurring revenue alongside a lot of transactional revenue.

Moving on to a very brief overview of our recent performance, as you'd expect, in a market that is replete with examples of uncertainty globally, this is exactly the market that CME is built for. Now that said, while we are thriving in conditions of high degrees of volatility, we've also proven over the last 25 years that we can also grow in 10 years of 0 interest rate policy. So we are built and we continue every day to innovate such that we can grow when we have volatility when it's blowing favorably, but we can also grow when we have headwinds of volatility or regulatory uncertainty. And we'll talk to some of the multiyear growth on a couple of following slides here.

So when you look at where we are this year, over the course of the last 12 months, so calendar year 2025, you saw that we were able to grow our volumes at 6% and our revenues at 6%. That's unique. Typically, when you see volumes growing, you would tend to see revenue grow a little bit more slowly than that. But because of a very disciplined pricing power that we exercise across our markets and the ways in which we continue to evolve, our service generate new revenue streams, we can grow our volume and our revenue and locks up with one another. You'll see some of the key highlights on the left side of the slide here, 69.4% adjusted operating margin. That's unheard of in most industries. And that is both a function of the expense discipline that we have, the network-based model that we have and kind of the fixed cost model that we have. So that as we grow our business, we continue to drop more of that marginal dollar right to the bottom line, and that means more capital return to you, our investors.

When we look at the volume last year, we averaged that 28.1 million contracts a day. ADV stands for Average Daily Volume. It's the number of contracts that trade on average every single day. The year-on-year growth up 6%. You'll see about $5.3 billion of transactional revenues. We'll talk about the non-transactional revers, which is another $1.7 billion, and that's been a pool of revenue growth for us as well.

So 28.1 million contracts a day. That was a record last year. We've set consecutive reverse for multi years in a row. Year-to-date, we are doing 35.5 million contracts a day. So we're building on that record year. That's up 16% year-to-date yesterday. We did 45 million contracts. So -- as you can see, when the market is facing risk, facing uncertainty, the world comes to CME Group, and we see that in the growth across all of these 6 asset classes that we're referring to here today.

When we think about who's in our markets and why they're in our markets. We think about our markets being either a risk-on position or a risk-off position. And for the last couple of years, this is very much a risk-on environment for our customers. So despite uncertainty, despite the headwinds of some of the challenges of whether it's global trade tariffs, whether it's disruptions in the Middle East or otherwise, meaning the number of contracts the customers are carrying, meaning carrying more risk and they're trusting CME Group to carry that risk in this market. We're seeing all of our client segments grow, and we'll talk a little bit about that in a moment. We're seeing all of our geographies growing fast. Our non-U.S. business is growing faster than our U.S. business. We're seeing growth across both futures and options. Those are all characteristics of a risk-on environment. So we see healthy growth. We see diversified growth. We see sustainable growth and the investments that we're making in technology, in product development, reaching our customers. Our partnership with Google are always to make sure that we're building on that, expanding our customer base by putting new products out there, accessing new venues to reach those customers and then pushing the technology side in partnership with Google.

This is one of those charts that is a fabulous upward to the right graph. It's just -- it's a picture of what I've been talking about, strong multiyear growth. This is a graph on the left-hand side here of our average daily volume, as you can see increasing over the last 10 years, that cumulative average growth rate, 7%, adjusted net income growth, 12% over that same time line. So think expense discipline, think scalable business model, think defensible business model. As we grow and position ourselves competitively, we're doing that in a more profitable way year after year so that you, our investors, can benefit from our capital return policy. We'll talk about that in a moment as well.

That single bar right there, just the year-to-date, as I mentioned before. Last year was a record at 28.5 million contracts a day; year-to-date, 33.5 million contracts a day; yesterday, 45 million contracts a day. So in times of stress, the market comes to CME to manage that risk with us.

A couple of other stats here that are worth noting. If you look at the number of trading days, we see in excess of 30 million contracts a day you can just see a higher proportion of plus 30 million contracts a day happening every single year over the last 5 years, more than 3/4 of our days last year or this year, year-to-date are above that 30 million contract threshold. So just significant growth, sustainable growth in ways that we continue to invest in our infrastructure to continue to grow this business.

Globalization, if you ask me for what the 3 or 4 levers of growth are, and that's one of the first questions we get in almost every investor meeting, this is always within the top 3. Our growth in non-U.S. business, non-U.S. customer growth is a huge part of what we do. I joined CME in 2006. I lived in London and Paris for 13 years as a trader. I never heard of CME. We had 3 people in our London office. I think we had maybe one person at the time in Singapore and almost the entirety of CME Group's resources this before the acquisition of Board of Trade or NYMEX and COMEX, they had salespeople only in Chicago. Fast forward to today, we have the majority of our salespeople in our London office. Our marginal growth is taking place outside the U.S. So as that business continues to grow, as you see these on the bar chart here, that average daily continue to grow, an increasing percent of that continues to take place with our non-U.S. customer base.

Now I say our non-U.S. customer base, I mean, the customer base that we're continuing to grow and expand on every single year. So this is a chart that just shows you on a stacked bar chart, the total average daily volume coming in aggregate from non-U.S. broken between Europe, Asia Pacific and LatAm markets. The biggest of that is the dark blue in the European business.

We're putting boots on the ground, have for the last 10 years and a client segmented sales force that brings in net new customers, and that also means that we're bringing new product ideas to us as well. So much of our product innovation and technology innovation is us continuing to expand our footprint with our non-U.S. client base. This is not to say that our U.S. client base is static. That's continuing to grow low single digits. We're growing our non-U.S. business, close to 10% -- actually 10% over the last 5 years. So substantial growth there.

Why that's important to you as investors? Because this non-U.S. business tends to come in at a higher margin to the company. We've got a rate per contract as the dollar value associated with every contract that trades on the exchange on average. So our non-U.S. business tends to come in at a higher rate per contract, meaning more of that drops to the bottom line for you, the investor.

Very quickly on the right-hand side of this chart, when you look at the distribution of non-U.S. participation in our markets just using fourth quarter of last year, as an example, you'll see global products tend to be the products that are most global in our world as well. So you think foreign exchange, you think markets like gold, those are global products that are positioned all over the world. It's not like a U.S. equities benchmark or U.S. fixed income. So you'd expect that a higher proportion of those truly global products trade outside the U.S. and that is true. 47% of both our foreign exchange business as well as our metals business, almost half is kind of from outside the U.S. 3 of the top 4 or the highest percent of non-U.S. businesses are commodities businesses, our metals business, our energy business, and our agricultural products business.

Think about the real economy, think about what changed in 2020 when people fundamentally rethought supply chains. We'll talk about commodities in a moment, but just over a preview on that, that's been a substantial structural growth driver for change and an accelerant to the growth in our commodities business where we're the market leader.

Retail is obviously something that's on top of mind for a lot of folks, whether it's the recent conversations around things like event markets or event contracts, prediction markets, [indiscernible] market, et cetera. We ourselves have done a strategic partnership with FanDuel and Draftkings. We've listed a number of products there that we think are additive to the overall opportunity set. But really, historically, CME Group has been and at its core will always be an institutional market. Now what we have done, I think, a fantastic job of, so I'm so excited about where we are right now, we have continued to add products and capabilities that are well suited for individual retail traders. Historically, I'd say up until about 2 years ago, our retail and everyone in this room would probably define retail slightly differently, but our retail focus has really been on what we'd consider, we define it in a made-up term that we use called Protail, Professional Retail Trader. Think about it as a very, very small institutional trader or an individual that's really -- that's the primary source of income. So our focal point has really been on a very, very small institutions, folks that come through and interact with brokers or Charles Schwab or a typical kind of broker intermediary.

With the growth of a number of what we call new to futures market participants like Tastytrade, like Plus500, Webull, Robinhood, this has opened up a whole new client segment that historically have not focused on futures that those brokers have determined that there is a desire to get access to futures markets if we have the right products to bring them in the door. So we've done a fantastic job of building products. This is the right-hand side of this chart now on building products that are well suited for the smaller retail-oriented individual. This is a graph that shows the aggregate average daily volume of what we call our micro product suite. And micro products are effectively bite-sized versions of our standard contracts. So if our gold contract is 100 ounce, our micro gold is 10 ounce. We now actually have a 1-ounce contract as well based on the significant and record-breaking growth we're seeing in this client segment.

In our equities business, we have -- we've got an E-mini and then a micro E-mini, so just much smaller versions of that. As we build out our footprint with this new mass retail segment, this is new found business for CME Group. This doesn't displace, this doesn't self-cannibalize. This is net new. And so as we continue to focus on making sure that we are the primary source and the reference price for every global major asset class, we're also making sure that we're growing with our retail broker partners and being able to develop products and partner with them to equip them to bring their customers into the futures world. This is a big source of revenue growth. If you listen to Robinhood's calls, if you listen to any of those brokers calls, you're going to hear them talk about the growth of futures, the majority of that is happening on our exchange in our product set. So we're excited about what we're seeing in this world. But I'll say again, this mass retail is a net new client base for us to add that next strata layered below our kind of professional retail crowd that sits nestled below our institutional crowd.

So interesting part of the business, and we continue to roll out products that suit their needs. For example, our benchmark silver contract is a 5,000-ounce contract. That's a big contract when Silver is trading $100 an ounce. We actually have a $2,500 or 2,500-ounce silver contract that's still -- that's a $250,000 face value contract. So we rolled out a 100-ounce contract, which is significantly smaller and suits the needs. It's $10,000 face contract. We have a 1-ounce gold contract. So you can trade clips of gold in $5,000 as opposed to $500,000. So we just continue to roll products out in partnership with our retail distribution partners. They do the heavy lifting with their end users. We partner with the sellers of our products. We educate the educators. We train the trainers. We sell to the sellers. Our relationship is with the broker, broker relationship with end customer. We get paid to the transactional chain.

And one last comment here because I want to take this back to revenue and why this is interesting to you as an investor. This client base, particularly on the commodity side of the business is where we've been able to exercise some very -- I would say, diligent but consistent pricing power. I'll use one example and I'll quickly scoop through so we don't miss any time here. But our main contracting gold is a 100-ounce contract. For a nonmember customer, call it a retail customer, they pay $1.55 a contract. Our micro contract, which is a 10-ounce contract, 1/10 the size, we charge $0.65. So call it 40% of the cost for a contract size at 1/10 size. We rolled out last year, actually at the end of 2024, a 1-ounce gold contract that is 1/100 the size of our main contract, and that's priced at 35% of the main contract. And this business still continues to set records year after year.

So there's where we can exercise, I'd say, prudent pricing power in some of the retail segments, particularly on the commodity side, there's a price in elasticity that we made able to take advantage of. So when we talk about the client growth here, which is the chart on the left, that's the number of net new clients to the CME on the retail side, that's coming in at -- on a notionalized basis, a much, much higher margin business to CME. So there's a lot to like in that story and a good chunk of this, and Adam, keep me honest, I think about 45% of our retail business comes from outside the U.S. So it's another story of high-margin business, found clients new to CME, new to futures and they're establishing their futures trading at CME Group. So it's an important part of our ongoing growth story.

Physical commodities, I'll try to be brief, but you let me, I'll spend a full hour here. There's so much happening in the commodities world, not just in the last day or week or month. This has been a multiyear growth of our commodities business. We make a little over $1.8 billion a year in transaction fees in our commodity business. That's the aggregate of our energy business. We think about the benchmarks of WTI crude oil and Henry Hub Natural Gas. And we also have kind of the complex around RBOB, which is basically diesel, which is gasoline and then HO, which is diesel. Our agriculture products business, mostly grains and oilseeds, $500 million. We make $650 million in ags, about $500 million of which is corn wheat and beans. We also have the dairy business and a livestock business that makes up the balance of that. And then our metals business, about $350 million a year in revenue, and that's probably 75-25 split between precious metals, gold, silver, platinum, palladium. And then our industrial metals business, which is a combination of kind of your base metals like copper and aluminum and then battery metals, which is a fascinating new evolving part of the market where we are 100% of that market right now.

And we do have a Venn diagram here because the reality is the lines of distinction between energy, ags and metals are blurring into one another as we used to see ag customers trade ag products, energy customers trade energy products, metals customers trade metals products. With the evolution of the energy transition that has blurred these lines. We've got our biggest ag customers that would trade soybean and soybean oil, now trade energy because soybean oil is the primary feedstock into renewable biodiesel. Corn traders are now trading a lot more energy because it's correlation because corn is the primary entry point into and the feedstock for ethanol.

We have energy traders trading a lot more metals right now because copper, aluminum and battery metals are all components into the EV transition and transmission lines generally solar panels, everything in that complex. So we're seeing these crossover client bases, and this is the benefit of being a multi-asset class exchange, where everything is cleared in the same clearing house. You have a number of correlations between these products because in the same clearing house, we unleash up to $80 billion a day. We'll talk about this in a moment, $80 billion a day in margin offsets that means capital back into our customers' pockets to deploy either into more trading or investing in different parts of their business. That is a huge part of our defensive moat around this business and it makes switching costs very, very high. If customers have more trades that are offset against one another, and they get that benefit in terms of margin return back to them, lower risk as a spread, they get that money back. They get to be more efficient in a non-zero interest rate world, that means we typically see more business from them.

It's also offensive in nature, defensive in that it makes that barriers to entry and competition really, really difficult to dislodge us. And it makes switching costs moving from our products to somebody else's very, very high. So we'll have to go in here, but we've got 6 minutes left. So I need to keep ripping, ripping along here.

When we talk about the transactional side of the business, we make $5.3 billion, $5.4 billion a year. We generated that in transactional revenue last year. We make another or made another $1.7 billion in non-transactional business, some of which you could think about as recurring revenue as well. Really, these 3 pieces here on the left-hand side is our market data business. That's a business that, over time, I think 10 to 12 years ago, we did not charge for market data. We considered that if you were trading our products, then that was going to be our monetary and financial relationship with you with the rise and value of data. And to be super clear, this market data business that grew 13% this year, generated over $800 million of revenue. This is proprietary CME Group market data. It doesn't exist anywhere else.

No one could access it unless we permission and we get paid for it. Typically, we don't do that. We like to monetize this market data ourselves. So this is a business that's been growing 8%, 9% for the last 7 to 10 years, grew 13% last year. Think of that as people buying our real-time data. So if you're in any market, and you didn't know what's going on in the treasury market, the FX market, the equities market, the oil market, the gold market, the ags market, you have to buy our data. So we've been monetizing that, and we've been growing that not only adding subscribers, but also making sure that we're selling them different kinds of even treated data, and that's a business growth opportunity going forward as well.

That second bucket there is the revenue that we -- nonoperating income that we get from our partnership with the S&P Dow Jones Indices. We own 27% stake in them. So that business means that -- not only are we making record amounts of revenue in our own S&P futures business on CME Group, as that business grows on a different exchange, we get paid for a part of that because we have a 27% ownership stake in that entity. So whether that business grows on futures or grows on another exchange trading S&P products in the SEC regulated market, we get $0.27 on the dollar back to us on that. So it just allows us to diversified footprint, and that has been just a really, really strong part of our nonoperating income story.

The last piece of this is the interest income that we generate on collateral balances that we hold in the clearing house. So as you recall, and I talked at the top of the conversation around the dual mandate of price transparency and risk management. The risk management piece, we actually get paid on because of the collateral balances that we hold, we hold that at the Fed in Chicago. We paid interest on that. We share a portion of that with our customers. We keep a portion of that. So this interest income, which was just through a little short of $600 million last year, is a nice part of that nonoperating kind of below the line additional revenue to the firm. Again, $1.7 billion here. So you've got the $5.3 billion in transactional last year and the $1.7 billion on the other side.

So I'll quickly touch on this and try to stick the landing, if I can. The -- I talked about the gross margin and the margin benefits that accrue to our customers. When customers come to CME Group, it's very rare that they trade a single product. If they're trading a single asset class, it's even more rare than just trading futures or just trading options. Almost every one of our customers, and if they're not, we have an extensive cross-sell and upsell program in our sales team to ensure that they do, trades more than one product. When you do, they're typically spreading futures against options, futures against futures, asset class against asset class. Where that happens within our benchmark products at CME Group, because that sits in the same clearing house, you get recognized as a margin offset.

Think about a very simple example of a calendar spread. I'm going to buy March and I'm going to sell June. The risk of that spread is much smaller than having just an outright March position and an outright June position. When you have offsetting positions that reduce risk, we return capital back to our customer, lower risk means lower collateral held at the clearinghouse.

When you look at that in aggregate across the firm, we continue to grow the ways in which we can offer customers to use CMG Group to be the most capital and operational efficient means to trade and risk and manage their risk. That number of margin offsets is up to $80 billion this year. You can see 40% in the equity complex, 35% in rates. Think about as a SOFR position like the old Ted spread, treasurers against Eurodollar, so front end long end, think about futures versus -- think about swaps against futures against options. And then on the other side, other products, the majority of that other bucket is energy because that's one of our biggest products and margin offsets outside of fixed income and equities.

So this matters because this also, as I mentioned, makes competing against CME very, very difficult. The switching cost, if somebody wants to compete with us in the short end of the fixed income curve by offering SOFR futures, someplace else. A customer would need to pull their SOFR futures out of CME, lose all the cross margining in products that are not missing on the competitor exchange, and they're incurring significantly increased cost to manage the same overall risk profile. So it's both offensive and defensive. And as part of the capital and operational efficiency story that makes us so valuable to our global client base. We're continuing to invest and add in that by expanding our participation in partnership with DTCC, which is a current firm for treasuries.

Stick the landing here. We have our privileged position and our hard-fought well-earned leadership position in this business, coupled with our growth orientation make CME Group what we think is a very compelling investment. I didn't even get a chance to talk about the capital return policy, but we have not only increased our quarterly dividend every single year. We've also increased our annual variable dividend every year. Our dividend yield, I think, going back here, and I neglected to mentioned this, shame on me, 4.1% dividend yield in a stock that is growing the way we are, set a new all-time high, I believe, yesterday. And at 4.1% is inclusive of the annual variable dividend that we just announced as a $6.15 return to you, our shareholders, on top of which is our recently announced and currently being executed share buyback scheme.

So with that, I'm hoping that you'll join us for a breakout session after this. And if we're going to meet with you separately, look forward to following up. But it's a great story, and this is a fabulous time being financial services. Great time to be in CME stock. So thank you. I appreciate your time.

Welcome to the CME Group Fourth Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Adam Minick. 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 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.

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, 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. 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. 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 U.S. 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 U.S. Treasury clearing mandate. 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 throughout the launch of event contracts on financial and commodity products, economic indicators and sports. This initiative represents the next step in our multiyear 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.

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, in 2025, was a record-breaking year for CME cryptocurrency trading at CME Group. In the fourth quarter, average daily volume across the complex of $379,000 was up 92% and represented over $13 billion in notional value traded per day. 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 February 9. 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.

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 5 out of our 6 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. During the fourth quarter, CME Group generated revenue of $1.65 billion, an 8% increase from Q4 '24. 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. Cash at the end of the quarter was approximately $4.6 billion, including $1.3 billion in remaining OSTTRA 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 April 1. Taken in aggregate with the market data fee change, which took effect January 1 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.

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 are 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.

[Operator Instructions] The first question will come from Dan Fannon of Jefferies.

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. 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.

Yes, 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 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, 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. So I would say the customer is healthy because of the market direction in 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?

Yes. 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 kind of indicators of a risk-on environment. 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 an institutional customer, specifically to do their business at CME Group.

The next question will come from Patrick Moley of Piper Sandler.

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.

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 and sports and the other things you referenced. 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.

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.

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 could 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.

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 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. 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 is 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 -- 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.

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.

The next question will come from Benjamin Budish of Barclays.

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 the 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.

Yes, 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 a really important component of the CME, and then Lynne can address the other part of your question. Julie?

Yes. Thanks for your question, Benjamin. We did in January 1, 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 in ensuring that our data business certainly remains resilient. And 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 revenue up 15% to $208 million.

And just to dig into that a little bit more of talking about the quality of that growth. So our nonrecurring 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. 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 in really monetizing both the retail growth that you 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. 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.

Lynne?

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 3 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. 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 going to 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.

The next question will come from Craig Siegenthaler of Bank of America.

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. 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? Because I thought the old method worked pretty well, and it provided transparency into CME's long-term revenue growth rate.

Yes, 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 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 one way or another.

The next question will come from Brian Bedell of Deutsche Bank.

Maybe just back to prediction markets. Can you talk about 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, other retail partners to engage with prediction markets on the CME platform?

And then also how you're thinking about future product rollout, the potential for you to really broaden the range of the types of contracts. I know you don't want to get into obviously political or culture, 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 contracts?

Thanks, Brian. Let me touch on a couple of things. You did say something, I'm going to turn it 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 are not suggesting that we would not take a look at them. But I just want to make sure you understand that we do and are looking at some of the political contracts on the larger scale, but 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 is being referred to as. 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. 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.

Tim?

Yes. Thanks, Terry. And Brian, thanks for the question. 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. 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. 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 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. 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. 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 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 going to 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.

The next question will come from Bill Katz of TD Cowen.

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 fourth quarter 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 OSTTRA proceeds and 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-on-quarter. I 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 expectation around sort of subscription and data packages given AI disintermediation risk?

Thanks, Bill. Yes, 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. 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?

Yes, correct.

Bill, this is Lynne. So your question on the buyback, we have discussed with our Board, and we'll be using the OSTTRA proceeds towards repurchases. So you've seen us start along that path, and we will continue to be deploying those -- that capital towards repurchases over time.

And then, Julie, if you maybe want to address some of the market data questions?

Yes. I think the importance 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, 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. 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 proper hedging as well as liquidity into our market space. And so while AI is, and the use of data is important there, 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 are 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 Bill, I assume your question was related to around some of our competitors as it relates to mortgage businesses and some of the 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 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 and enhance our business going forward, not disintermediate or disrupt it.

Does that make sense? I think that's where your question was going, even though you didn't ask it that way.

Well, I was trying to be a little bit more neutral on it, but thank you. Yes, appreciate it.

Bill, you know me, I'm very -- I kind of get to the point.

The next question will come from Ashish Sabadra of RBC Capital Markets.

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 expect it for 2026.

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.

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.

Yes. So on the -- in 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. 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, the $1.695 billion, that is inclusive of all the tech-related spend, both Google and the remaining on-premises.

The next question will come from Michael Cyprys of Morgan Stanley.

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 can elaborate more broadly on the steps that you're taking this year to tokenize collateral.

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, we have an initiative that we're rolling out with Google that will 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 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 taken or not? And what's the entity that's issuing the token to give us for 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. 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. 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.

And we'll take the last question from Ken Worthington of JPMorgan.

You mentioned that the CFTC approved cross-margining for client accounts you'll 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 2 initiatives to impact collateral balances over time?

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.

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 $1 billion, $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 -- generally, the -- our portfolio margin savings, we are generating about $25 billion in the interest rate complex that includes the $1.5 billion, which includes future swaps and cash products.

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.

Yes. There was 2 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 repo side...

Yes, that's one that Sunil just referenced. We are still waiting from the SEC to approve. The CFTC has, the SEC has not yet. We're hoping that comes shortly.

Got it. Okay.

And then the other part of your question was around the benefits of CME treasury clearing. Is that right?

Yes. Like just on your collateral balances, what are you kind of anticipating there? When is the big deal?

Yes. 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, so some of the new types of clients that might need to clear going forward, that could be additive to the -- 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 all of our futures and options, the swaps that we're clearing here at CME as well as the offsets 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 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.

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, I believe, a day with just the FICC offsets. That's uptick several hundred million over the last $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. 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.

And at this time, I will turn the call over to Terry Duffy for closing remarks.

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 road map, 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.

Welcome to the CME Group Third Quarter 2025 Earnings. [Operator Instructions] I would now like to turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. We released our executive commentary earlier this morning, which provides extensive details on the third quarter 2025, which we will be discussing on this call. I'll start with the safe harbor language, and 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.

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

Thanks, Adam, and thank you all for joining us this morning. I'm going to make a few brief comments about the quarter. and the overall environment. Following that, Lynne will provide an overview of our third quarter results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks.

The third quarter average daily volume of 25.3 million contracts represented the second highest third quarter average daily volume in our history, following the record quarter a year ago. Customers continue to turn to our markets to manage their risk exposures as demonstrated by year-end open interest of 126 million contracts, the highest open interest at end of September in the last 5 years and continuing to grow in October. We also set records in large open interest holders in interest rates, equity indices, and cryptocurrencies in September despite a general pullback in volatility across asset classes during the quarter.

Our team remains focused on future growth and innovation, including the extension of our product offerings. Our crypto complex traded a record 340,000 contracts per day in the third quarter and was up over 225% relative to a year ago. This growth was aided by the early success of Solana and XRP futures, which we launched earlier this year. Other new products with record volume in the third quarter include credit futures, 1 ounce gold futures and agricultural weekly options. We also introduced trading opportunities that facilitate stronger links between cash and futures markets.

FX SPOT plus, which was launched earlier this year and provides the benefits of future capital efficiencies and to spot market participants set new volume records in every month in the third quarter. BrokerTec Chicago launched just 2 weeks ago is also off to a strong start and enables participants to trade futures and cash products side by side in our facility here in Chicago. Going forward, innovation will continue to be a key driver of our performance and our ability to serve clients in an increasingly complex and volatile global market. During the quarter, we announced the upcoming extension of our cross margin agreement with DTCC to enable increased margin savings to end user clients.

We are also pleased to announce the extension of our FTSE Russell index derivatives license through 2037. This announcement will ensure the continuity efficiency and value to our clients along with our other suite of equity products. Additionally, we announced our intention to offer 24/7 trading of cryptocurrency futures and options beginning early next year. Finally, we announced a partnership with FanDuel to develop and distribute event-based contracts beginning later this year, which we look forward to talking to you about today. While we are proud of our record results, we have delivered the last several years, our focus will always be on the future needs of our customers and how we can continue to evolve to meet those needs.

With that, I'll now turn the call over to Lynne to review our financial results in more detail.

Thanks, Jerry, and thank you all for joining us this morning. During the third quarter, CME Group generated revenue of $1.5 billion, down 3% from the very strong third quarter in 2024. The average rate per contract for the quarter was $0.1702 resulting in clearing and transaction fees of $1.2 billion. Market data reached a record level, delivering over $200 million in quarterly revenue for the first time, up 14% to $203 million. Continued strong cost discipline led to an adjusted expenses of $487 million for the quarter and $405 million, excluding license fees.

Our adjusted operating income was $1.1 billion, or a 68.4% operating margin for the quarter. CME Group had an adjusted effective tax rate of 22.6%. Adjusted net income and adjusted diluted earnings per share came in at $978 million and $2.68 per share, both slightly above the extraordinarily strong third quarter last year, and represented the third highest quarter of any in our history. Capital expenditures for the third quarter were approximately $19 million, and cash at the end of the quarter was approximately $2.6 billion. CME Group paid dividends of $455 million in the third quarter and approximately $3.5 billion over the first 9 months of the year.

Turning to guidance. We expect total adjusted operating expenses for the year, excluding license fees, to be approximately $1.625 billion. That's $10 million below our prior guidance and a total of $25 million below our expectations to start the year. All other guidance remains unchanged. We're proud of the continued strong results the firm has delivered during the quarter. During the first 3 quarters of 2025, CME Group reported the 3 highest quarterly adjusted net income and adjusted diluted earnings per share in our history. Year-to-date 2025, we have grown adjusted earnings per share by [ 5% ] over a record 2024. We continue to see strong customer demand for our products as demonstrated by growing open interest and new records in large open interest holders. Our focus remains on driving earnings growth for our shareholders by expanding our customer base during the needs of our clients through innovative products and providing unmatched capital efficiencies.

We'd now like to open up the call for your questions.

[Operator Instructions] Our first question comes from the line of Dan Fannon with Jefferies.

Terry, can you talk about your long-term retail strategy. This quarter, you announced the partnership with FanDuel, you obviously have your micro complex. As you think about your offering today, do you think you can scale this offering organically to where you want it to be? Or is this an area where we could see potential M&A?

It's a good question, Dan. And I will tell you that the strategy evolves. I don't think that a lot of people would have seen what we saw happen over the last 5 to 7 weeks as it relates to prediction markets in the NFL with retail and they had that penciled into their analysis a year ago. So my point being is this market is ebbing and flowing every single day. Our strategy is one, and I've talked a lot about it is distribution and efficiencies. I think that the announcement with FanDuel is very important for CME.

We're looking at 1 million potential accounts that will have access to CME's products, but more importantly, have access to have a view of CME and our distribution of our product lines for the future. as we work with our retail brokers today who have continued to grow and if they didn't, you'd have to wonder why certain people's valuations are going up dramatically. So you look at the sale of like an ingatrader, to Kraken for a very large sum that goes to show you that the retail business seems to be doing quite well in our industry with the valuations being put on them. We are in a very strong position.

I will say this, and I'll say it again. I haven't said it in a while. But in 2017, when we went forward with Bitcoin, a lot of people thought, well, what are we doing? I think that our credibility of our institution, which we protect very mightily is very important to the institutional participant who wants to also participate with retail in some of these newer asset classes. And that's something I think that we can work with and partner with some of the new retail entrants coming in, whether they're in the prediction market side, whether they're in the gaming side with our partner FanDuel or whether the Robinhood or others that are opening up futures accounts by the second.

So our retail strategy is vast. It's global, and it's going to -- I think it's going to continue to grow, it doesn't necessarily mean that you have to do an acquisition to grow that strategy. I think with what we have in place and we've put in place over the years is what others are looking to utilize in order to grow their business. I will say credibility is absolutely paramount in markets. And CME is a very credible institution that's looking at different asset classes with the retail participants, and I'm excited about the future. So I don't think there's ending off the table, Dan, I don't want to say, but I think we're in a strong position to grow our retail business with or without having to do M&A. And I would suggest right now we would probably be more inclined to do it without M&A.

Our next question comes from Patrick Moley with Piper Sandler.

So we have, like you said, see explosive growth in event contracts. A lot of that growth has come from sports-related event contracts I think in the initial press release that you put out with FanDuel, there was no mention of sport contracts, but there's maybe been some media reports that suggest that you're looking at sports. So to the extent you could comment on whether that's in the cards would be much appreciated.

Thanks, Patrick. And I will comment on that because I think sometimes, unfortunately, headlines can be very deceiving and you need to read the entire article to understand what is being said. I think you're referring to the Bloomberg article that came out recently that CME is going to list sports events in their headline. And then if you go on to read it, you will see that I have said numerous times on podcast publicly on television to you to others that my partner offend when they are prepared to move forward, which with events on sports, I would be prepared on day 1 in order to offer that to them on my DCM as long as the United States government is not going to object to the self certification of these and consider these swaps and not gaming.

Well, it doesn't matter what my opinion or anybody else is that's the government's opinion and we will proceed accordingly. So that is yet to be decided, Patrick. That will be a big decision for my partners in the JV at Fanduel to decide how they want to proceed. But I think it's undeniable as I stated earlier, that no one saw this coming. And now this might be a football phenomenon because there's a lot of eyes on football. So we'll have to wait and see how the sports prediction markets play out post football. There are certain event contracts that I'm not very enamored with. When you look at some of these predictions on political events, I think those can be very dangerous to participate in.

I do understand the size of a presidential election that maybe you can say that's okay. But some of these smaller elections I get concerned about and some of these other events that are out there that to me, just are nothing more than readily manifitable markets, which is against the Commodity Exchange Act. And so I think you have to really be eyes wide open when you're looking at this. But you're correct, Patrick. Most of these are sports events contracts. And for us to say that we're going to list them or not is a decision yet to be made. And I'll make it in connection with my partner at FanDuel, which would that has not been resolved just yet.

Yes. And Patrick, just to add 1 thing. As you noted in our release, and we just put out some more information to our clients about the products that focused on markets. As Terry mentioned before, for us, this is really about distribution and getting our products in front of that retail community. So that has been and continues to be our focus.

Okay. That's great color. And then if I could just is a quick follow-up. And given that a significant amount of the user volume on some of these traditional sports books is being done in Parley, do you think it's feasible to offer parlays on a large scale in prediction markets considering that the venue doesn't act as the house? And then what are some of the considerations that would be necessary to facilitate parlays.

So before I get into the operational issues of how you would run a parlay, I guess we'd have to say, our -- these have not been out very long. They've been on what a couple of weeks, I think, right now on these parlays, I don't know how much uptake they're getting I haven't followed that market on the prediction markets. But I will say this, a swap is categorized or defined as something that's commercially or economically benefit. So when you start getting into parlays on prediction on sports, I think sometimes you might be crossing that line is this legitimate or not. Is this a sports jumbling contract? Or is this an economically beneficial and has the -- has exposure for the client that is commercially concerning which is the definition of a swap contract today. It has to have an economic benefit to it.

So I'm not sure how they're looking at these parlays at the agency. I have not spoken to them. The government has been closed. The government has been closed for 3 out of the 4 weeks, I believe, since these parlays have come out. So I don't know if they've got an opportunity to opine not to my knowledge. So Patrick, to be honest with you, I don't know from an operational standpoint. I'm not going to even ask my team to speculate because this is something that we are not taking a big look at on the Parlay side.

Our next question comes from Ben Budish with Barclays.

Maybe just 1 more follow-up on the prediction market side. Just as you think about the range of contracts you might offer over the next several years, it does seem like there's some differences to your traditional product suite, more frequent events that might require different kinds of data feeds. Is there anything structurally different about this market that might necessitate like higher -- or lower operating margin, higher spend that does it require more advertising to reach retail customers? Does it require more frequent listing of new contracts that aren't as long tenured as things like your WTI contract and SOFR contracts. Just curious how you're thinking about those other sort of operational aspects.

Thanks, Ben. And you're only strictly speaking about events on markets and not on sports, correct.

Yes. Really, any event contract. I mean I think sports are the obvious example because there's so many different events like the frequency is much higher, but more generally about event contracts and then -- so I guess...

I'm going to -- yes, I get your question, but I want to be cautious about making sure that when we answered the questions from you and others that we are defining a market prediction market on markets and a prediction market on sports because those are 2 different things that are obviously somewhere in the courts. There's some objections to others. Prediction markets on markets is allowed in all states and is not being contested in any state or opposed, I should say.

So Tim, I'll let you talk about that on the operational side, and on the sales side and the promotion of I'll ask Julie Winkler to comment as well.

Great. Thanks, Terry, and thanks, Ben, for the question. So I think even when we look at the product announcement we put out the last few days, with respect to the event contract offering at CME Group on our traditional benchmark products. We are introducing things such as hourly event contracts. We're introducing multiple enacts throughout the day. across our traditional markets as well as Bitcoin and Ether. So when we look at what makes CME Group a very useful tool for our clients across all customer segments is we have tremendous amount of scale, both on the operational and technological front that we have the capabilities to list these event contracts intraday.

We scale very well in terms of whether you look at it as our existing option complex, where we have options in every asset class on every day of the week. The ability to meet the customer demand for where they want to trade these events throughout the day is something that we're well established in doing at CME Group. And I think, frankly, differentiates us in the marketplace and why customers come to us. And then when you look at the scale that we have, both from the operational aspects, the clearing aspect as well as the distribution we have with over 130 retail partners. This is something we tap into with every new product launch that we do whether it's event contract or an institutional grade new equity index contract. So the way we approach building markets is to leverage the scale we've built over the last several decades, and this will be no exception with respect to OPEC contracts.

Julie, do you want to comment about how the cost of going forward promoting these as new products. I was asking on.

Yes. Thanks for the question, Ben. What -- how we think about this, I mean, we have 130 of these critical distribution partners that Terry referenced earlier. And when you think about that customer journey, those partners are the ones that are responsible for opening the accounts for those retail accounts, onboarding them, doing the KYC. And so for us, we certainly have cooperative marketing agreements with them to help with what Tim was referring to new product launches. But in general, those firms are going to continue to spend money of well above that in order to attract new clients to their platform. So we don't see a demonstrable change in that spend going forward to be able to offer these products.

Thanks, Julia. Thanks. Ben -- also to Dan and Patrick, I want to be perfectly clear when it comes to sports events. CME Group is not opposed to listing sports events on our contracts on our DCM. What is critically important is the federal government has to make certain that they approve these contracts I won't sit on the sidelines. It doesn't matter what my opinion is what these are or not they are. If they are allowed, CME will participate in some way if we think it's the right thing to do for our clients. and our ecosystem as it goes into what Dan was referring to earlier, our total retail strategy. So I just don't want you to think I'm dense around the question. I'm not -- we will be prepared. We are operationally ready to do this stuff. The question is we want to make sure that our partners are good to go, and this is the right thing for us. So we don't have an opinion to a point where we're not going to do it because we think they're gambling or we're not going to do it because certain people didn't ask us if the federal government allows it, we will be taking a strong look at listing these markets. I just want to make sure everybody's clear on that, that we're not shying away from that.

Our next question comes from Brian Bedell with Deutsche Bank.

Sorry to stick with prediction markets here, but maybe just to focus on the financial contracts only that are core -- can you talk about the structure of this arrangement. First of all, this central is this cleared in a cloud fashion. And in the -- with the FCM that you're cooperating here with FanDuel. Just to clarify this, would this then be open to all other retail platforms to connect into. So I guess, would you be lifting these prediction contracts on CME and therefore, your 130 retail partners can also link into these and trade them? And is that the financial arrangement around that, is that -- would that flow directly to CME for those other retail partners? Or is that part of the joint venture with Sandol.

So the answer to your latter part of your question is absolutely, everybody will have access to our contracts regardless of the relationship that we have with FanDuel. So when it relates to the economics with FanDuel, I don't know how much we've disclosed. But Lynne, if you want to comment any further on that. But we have a relationship with them in the ownership of the FCM our nonclearing FCM, I should say. And that's that.

Yes. So thanks, Brian. As Terry mentioned, our FCM would be one of many potential participants, just like any other contract on CME this is open to any of our FCMs that choose to offer that product as they meet the requirements. So this is not a not an exclusive relationship. RFCM will provide access to comments that want to come through that. And Steve, but there would be several others that provide that service to clients as well.

Brian, as far as if you're asking how we're looking at the economics going forward, I think that is something that's still a work in progress. And we have to see, as always, how new markets, how they grow, what they look like how we structure them and then how we price them. But we have many different models, as you can imagine, depending on how this goes forward on the market side and potentially on the sports side, there's the entertainment side. There's the political side. these things may not be able to concise fits all type of pricing model either. But we don't have the answer to that question yet. .

And maybe just to clarify, so the -- if the clients are coming through FanDuel, like if they're Fanta clients or they're coming through that I would imagine, obviously, then that's going -- the economics of that are consistent with the joint venture arrangement. But if it's coming through a different online broker coming directly to your markets, would that still be part of this JV or that would be just going right to the end.

You summarized it yourself properly, Brian, but I'll let Lynne finalize it.

Yes. So I think the thing you need to think about is our and DCO fees are consistent just like they are for all of our products. That's something that's available to you all participants, the FCM would be no different than any of our other FDM participants. Then would be just like the current market, the FCMs will have a fee commission that they charge to clients that come through their entity. So that piece will flow through the FCM. But what ends up being charged to the to the clients and the FCM is going to be consistent across the board because it's a requirement. That's just part of how we need to operate. So nothing is different about this arrangement that changes how those clearing and trading fees will be charged to the market.

Our next question comes from Ken Worthington with JPMorgan.

I'm not going to ask on predictive markets.

Come on, Dan, you know you got 1.

Energy volumes were down this quarter after a long run of really strong growth, like more than a year, with geopolitical risk stabilizing and moderating, I guess, what is the outlook for growth for energy, particularly in the context of particularly strong volumes you had earlier this year? And then what are the factors that might be driving share shifts in oil and gas markets? Because we've seen share move around more recently?

Yes. Ken, it's Derek. Thank you. We are certainly seeing a market that over -- let's be honest, over the last 2.5, 3 years, we've seen WTI trade in effectively $10 range. I think we had done a lot to develop and grow and expand participation in our energy markets overall, particularly in crude. You've seen us push out growth in our options contract, short-dated options in low volatility environments, those have proven to be very successful tools for adapting to a different volatility environment. We actually set some new records in volume and shortened options over the course of WTI earlier this year. You've also seen us push out very successfully a record growth in our crude scarce contracts, which actually put a moat around our physical WTI business as WTI continues to globalize where you see growth in our complex year-to-date in crude oil specifically, we're seeing that most effectively in Europe and Asia, where we continue to see double-digit growth there as U.S. crude and refined its boats hit the shores of Europe and APAC and more customers in those these are trading our products.

When you look at the share shifts this quarter, we've actually seen WTI futures shift back to CME. I think we're at 76% for Q3. That's up from 74% last quarter. We are maintaining our roughly 91% share in our WTI options market we continue to innovate there. When you step back and look at the broader drivers yet, there were very much some geopolitical tensions earlier this year that drove activity. When you look at the year-to-date business in both crude and refined as well as natural gas, both those complexes are up about 10%, 11%. When we look at Q3 specifically, while WTI drift a little bit lower that sequentially saw some decrease in growth lower volumes across the board for everybody. We saw share shifts back into CME. Where we're really focused right now is the natural gas business. Even in Q3, we saw our natural gas complex grow 2%, led by natgas options up 12%.

When you look at the continued record amount of liquefaction and export of U.S. LNG today at 15 or 16 Bcf, that will go to almost [ 25 ] in the next 3 years. That means more U.S. gas priced an index directed Henry Hub, the market that we've got 7% to 9% share of continuing to globalize. So we see very much energy as part of the overall picture. Natural gas is not just a transition fuel as a fuel for the future. So when you look at the strong growth in our OI this year, continued growth in the innovative part of the curve that we built and developed on crude and the continued push into natural gas we think we're answering customer needing growing globally. I'm confident that we can continue to do that as the world consumes more U.S. energy products.

Our next question comes from Chris Allen with Citi.

Wanted to ask about the stale. What are the proceeds after tax? And then how are you thinking about capital deployment here given your buyback flexibility, current stock price balancing that with the first dividend.

I'll let Lynne comment to start, and then I'll join when she's finished.

Yes, the proceeds from the sale were about $1.5 billion. The net proceeds are going to be very similar. We were able to bring back some cash from the SPV as well. So I would use that as your starting point. In terms of the use of those proceeds, we are bringing a recommendation to our Board in the coming weeks. We certainly have a number of balls in place that we can use, but we want to -- given the current environment, make sure we've done a full review with our Board on the potential uses of that capital.

Chris, I think it's really important that I think everybody understands our debt-to-EBITDA is the lowest in the sector. We have been very disciplined, making sure that we don't have a lot of debt. We've been able to grow organically. We've been able to do things whether it's to JVs, whether there's 2 partnerships that are not multibillion-dollar investments. So we've been very blessed to grow our business with that respect, the examples being 1 with Obviously, Google, the other with FanDuel and some of the other things that we're continuing to focus on. So we understand that we don't need to be sitting on mountains of cash like this. So we -- I don't want to front run my Board by any stretch of the imagination. So we will be forward to bringing in a proposal that how we return that capital very shortly to you and the rest of the team.

Our next question comes from Michael Cyprus with Morgan Stanley.

I wanted to focus on 24/7 trading understand in crypto markets, you're going to be enabling that early next year. I was hoping you could elaborate on some of the hurdles you've had to overcome -- and what could be the scope to enable 24/7 trading for other products? What could make sense next the time frame around that? And then just more broadly, how do you think about the role of tokenization as a catalyst to support 24/7 trading over time? How are you experimenting with that today? or May over the next year or so?

Michael, thank you. All 3 of those are very good questions. And I'm going to take them in reverse order because in order to get to 24/7 and do some of the things that you referenced you need to have potentially a tokenization of tokenized cash in order to facilitate. So I will ask Ms. Sprague give you a little update as our project with Google on tokenized Cash is looking, how was going with that, and then she can even go into the 24/7 from a risk management standpoint. We'll save the other products for myself, and I'll talk about that at the end of [indiscernible] Suzanne and Sunil can comment on the operational and then the tokens cash.

Yes. So thanks for the question. So as Terry mentioned, we do know that tokenization is a hot topic, and you've been fortunate to be partnering with Google over the past few years towards that initiative. So we do continue to progress our efforts with them, starting with tokenizing cash to begin with. The technology that they bring to the table through the Google Cloud Universal ledger does enable tokenization of other types of assets, both on the product side and the collateral side. So we plan to continue progressing with our initial phase, tokenizing cash through the end of this year and enabling that for go live in 2026, that will allow a value outside traditional banking hours you're in with cash and then actually other assets in the future. It is an important element to risk management, as Terry mentioned.

On the general risk management side, we also think it's prudent to make sure that our collateralization in the system supports those exposures that can accumulate especially over the weekend. And so our approach will be to make sure that collateralization in the system is consistent with the risk that participants can bring over the weekend, just how we monitor that activity today knowing the markets open on Sundays, for example. So we look forward to the operating building in many phases and think that the tokenization efforts we have under way with Google are timely and being able to roll it out for 2026 as well. .

So you really had -- on the operational side, I think the -- we were the first exchange to operate 23 hours every day of the week. Here, we are just adding additional sessions over the weekend. We are well positioned to do so, especially because of our investment in our Google transformation. This gives us the ability to actually give our clients access to our markets and our clearing services while also continuing to do maintenance and upgrades. So that's the challenge that not just us, but our industry has to overcome to provide 24/7 services across markets, I'm clearing.

And Michael, as it relates to other asset classes, I have said this for a while now that I think 24/7 is coming across the world, whether we like it or not. And again, this is not something that we're leading I think going forward, with crypto makes a ton of sense for CME Group because they do have a market that go 7 days a week today, we do have the reference rate pricing associated with it because there's cash markets that are facilitating 7 days a week, some of these other asset classes, there's not been a huge conversation or a demand coming from them to go 24/7. It doesn't mean that won't change I think we'll have to do a wait and see how it comes out with crypto to begin with, again, I don't know if we'll be a leader or a fast follower on other asset classes on 24/7.

We'll analyze that as time goes on. But I will tell you there has not been a big demand coming from my other asset classes to trade on 7 days a week. There's a cost associated to the FCMs, there's a cost associated to many different entities that they're not quite sure if the squeeze is worth the juice as they say. So we're waiting to see how all that plays out. So we're not saying that's not going to happen, but we're not leading with that, obviously, and we'll keep a close watch on that. But I will tell you what we will always be prepared if in fact, that's where the market has gone.

Got it. So it sounds like you're preparing for 24/7 to be in the position for that -- would that be for next year, but it seems like you're waiting maybe for client interest before you pull the trigger on is that...

We're prepared for 24/7 for crypto for 2026. I would say that internally, we've looked at other asset classes if in fact, we needed to go there or wanted to go there or there's a demand to go there. I think operationally, Sunil said it right, where we're 23.5 hours a day, 5.5 days a week now, 6 days a week, I guess, on Sunday. So we are basically there if we wanted to go there. So we have to add in Saturday and it's just adding in a couple of sessions. The question is, what's the cost associated with for the client and what's the demand for the clients. So I don't see a big hurdle we're talking to my team if, in fact, we want to go to these other asset classes -- but again, there's other factors that take in place. The U.S. Treasury market might be different than the ag market and the ag market might be different than the equity market. You have to align with different associations, different cash markets, what they want to do, not do. the crypto market is pretty much a [indiscernible] right now because of the structure it has in place.

Our next question comes from Alex Blostein with Goldman Sachs.

This is Anthony on for Alex. I wanted to hit on collateral balances and to what extent maybe you're seeing the 30% cash minimum affecting client allocation decisions? And if you could give an update on what that looked like in the third quarter and what that stands at now?

Thanks, Anthony, and I'll let Lynne comment.

Sure. So our averages in the third quarter for cash, we averaged $135 billion. we earned 33 basis points on that. On noncash collateral, we averaged $156 billion earning 10 basis points. So far in the first half of October, the cash balance has been fairly steady. We're at $134 billion on average. And the noncash has ticked up a bit. We're at $164 billion on average. So if you look at the percentage, the 30% minimum, we are still seeing a bit more in cash. So this third quarter, we were at about 46% in cash. That's obviously a customer decision on how they want to allocate their collateral. We also have seen in past volatile times where we might see more cash upfront and it might kind of normalize over time. So I wouldn't be surprised if there's a little bit more optimization going forward, but it's held pretty steady at that mid-40s percent last quarter and this quarter.

Our next question comes from Kyle Vogt with KBW.

Maybe a follow-up on the Google partnership, but more related to the Google-related investment spend. Can you just give us an update on where you expect that to ultimately shake out in 2025. And then remind us how you expect that component of trend into 2026 as we're thinking about the building blocks for 2026 expense growth. And Lynne, outside of the Google spend, any other notable puts and takes on the expense side we should be aware of as we look out into 2026.

Thanks, Kyle. Lynne?

Yes. So expenses related to Google this quarter were about $27 million. The vast majority of that $26 million you'll see in the technology fees with about $1 million in professional fees. So year-to-date, we're running at about $71 million in total spend related to Google. Our guidance embeds within that, about $100 million in total expense, that is down, and that's part of the reason why we did cut our guidance. At the beginning of the year, we were expecting more like $115 million. So we were able to identify a number of savings opportunities working closely between the technology and finance team. We've really been managing that spend in the cloud as we're getting more fast with some of the different tools we have.

So we've generated a fair bit of savings there. And also, we've been really moving a lot more towards internal support. So those prophy numbers last year were more in the $4 million to $5 million per quarter, and they're now down to about $1 million. So that is where you're seeing some of those savings come through on the expense side. In terms of 2026, we'll certainly provide detail on that. It will be part of our overall guidance. I would say with our changes to expenses this year, some of these savings, we've been able to generate, not just on the pro fees and the cloud expenses, but also you've seen our depreciation and our occupancy expense come down pretty meaningfully. Over the course of the year. So our cost growth this year is relatively low when you look at that versus our historical levels. I would view this as kind of the baseline that we will be building off. But just some of these opportunities are more ones that we were able to find and take advantage of, but these aren't necessarily annual type of events where we'll have that level of cost offset. So we'll provide more guidance in February. But I would say this cost growth being lower is more the ability to take advantage of some of those opportunities that we had.

Our next question comes from Simon Clinch with Rothschild & Co.

I was wondering maybe, Terry, if you could talk about the BrokerTec Chicago and just give us a sense of, I guess, what how this strategy might actually change the fortunes of BrokerTec within the context of U.S. treasuries. And actually, from a competitive standpoint between all the different protocols, is this something that can actually provide the fortunes of say club versus streaming, et cetera, et cetera?

Yes, that's a great question, Simon. I'm going to ask Mike Dennis to chime in and then I'll make a comment when he's finished, but I'll have Mike chime in since he's been leading this initiative. Mike?

Yes. Thanks, Terry and Simon. Appreciate the question. Broker tech Chicago went live on October 6. And it's very exciting is this is the first time in CME Group history, that we have our cash fixed income market with our core futures and options markets. We had a very successful market on Open, and we experienced 2 sided markets and all 7 of our cash instruments. We had trades happen in the overnight session on Sunday and into the first day of trading. And over $1 billion of notional has traded since launch across all 7 tenders, and we launched about 2.5 weeks ago. The full curve is being quoted more than 90% of the trading day. What's also exciting is that over 25 firms have connected to the new central limit order book, including banks, drops and brokers.

To kind of answer a little bit of your question, 66% of the volume has traded at price points, not available on the BrokerTec New York lab, which gives clients choice depending on their trading strategy. And market conditions. And we've also seen some new to broker tech clients continue. We've also seen to be new to broker tech clients connect to the new club and place trades already. we're pretty excited about new client acquisition and also what we can do next with BrokerTec Chicago on different trading modalities, product enhancements, et cetera. So just to add to that, I think what's really important in I don't want to gloss over it, Simon, is when you looked at our press release on BrokerTec Chicago and you had dealers in there being quoted about how important this offering was to them.

They were a driver of that with Mike and his team about putting these side-by-side for the efficiencies thereof. As you know, you referenced it in your question, the treasury market and go to multiple different places. But when you have some of the largest participants in the world looking for this type of offering from CME Group, which we gave them, it does attract other participants, which Mike referenced from the props to the hedge funds. So we think this could continue to grow, and we're excited by the leadership of the dealers pushing this going forward. So we're excited by BrokerTec Chicago and what we think it can do for our cash franchise, which in return will help grow our futures franchise.

Our next question comes from Craig Siegenthaler with Bank of America.

So market data revenues were strong and up 14% in the quarter. Can you provide any context behind the good quarterly result? And also, can you talk about opportunities to raise pricing in data next year?

Thanks, Greg. Julie? .

Yes. So it was our 30th consecutive quarter of revenue growth, a quarter of record. So we're very excited about that over 14%. Really what we're seeing, Craig, is increased growth across nearly all of the segments of the business, both on the professional and the nonprofessional subscriber side. And I think it just speaks to the depth of our product offering. I particularly point out this quarter of just the growth overseas of subscribers. And so our market data business significantly based on our international customer base. And so seeing really good signs in APAC and EMEA of demand for our market data, which typically then leads us to see transaction-based revenue to come at a later point in time. So I think in terms of pricing, we have already announced and did so in August about the price increases for next year of 3.5%, and that will be across many of our data products across the rack rates. So that will -- that change will take effect on January 1, 2026.

And Craig, just to emphasize what Julie said, not would be directed to your question. But when you look at the value of market data, especially CME's market data, what it can do to help some of our clients grow through risk management to other protocols that they use our data for it's very exciting about the growth of that business along with our product lines that are tradable. So we're excited by the growth of this business and -- you got to remember, just 10, 12 years ago, we were charging 0 for market data. So we've come a long way growing this business 15 years ago now. But we've come a long way growing this business. And again, I think it's been a very prudent strategy for us.

We also had a follow-up on BrokerTec Chicago to Simon's question. Where do you expect the volume mix to end up balancing or normalizing between broker tech Chicago and BrokerTec a caucus. And I know it's very early innings here. I think you launched on October 6. But roughly what percent of the volumes have been from new clients to brokerage. Can you just highlighted that in Simon's question.

No, are you referencing [indiscernible] or Chicago or both or combined?

So the -- you had kind of 2 part of there, but what is the -- what do you think the mix ends up between broker tech Chicago and broker [indiscernible], like [ 20 80 ].

Yes, I got it out, Craig. Yes. Yes. Mike, do you want to, a speculative answer, but...

No, I appreciate the question, Craig. It's hard to say. It's been about 2 weeks since we launched BrokerTec Chicago. I think forecasting how volumes are going to be split or are going to how volumes are going to look is very difficult. I do think you saw in the press release dealers that are excited about the launch. We mentioned Morgan Stanley, we mentioned Citi, we mentioned JPMorgan I think it's going to be dependent on market conditions. There could be times when people point to the Chicago Club, just because they might be trading a relative value strategy where the market might be a little quieter and they can trade in I think people will continue to trade on the New York Club, especially in terms of heightened volatility, where they want to move large stacks of liquidity. So early days, it's hard to speculate, but we're excited to see it live. We're excited to have these products sit side by side with our core futures and options products and we're excited to attract new clients to the venue. Like I said, earlier, we've seen some new clients who have never traded on BrokerTec, trade on BrokerTec already. So we're excited about new client acquisition as well.

Our next question comes from Ashish Sabadra with RBC Capital Markets.

This is Qi on for Ashish Sabadra. Maybe if you could just provide a little bit of commentary on RPC. I know there's a lot of moving parts there. But I think at the summary, you guys mentioned that it was kind of a lower proportion of micros and decreased volume tiering could you give us a sense of maybe the impacts of those 2 effects? And does the shift in micros have any shifts in retail trading behavior?

Lynne?

Yes. So where are you going to see the largest impact on the shift in micro, that's really going to impact the equity portion of our RPC. We saw kind of a similar contribution in metals from micros is about 36% of Micro's volume in equities, it went from 47% last quarter down to about 43% this quarter. So you saw an uplift in our equity RPC largely due to that shift from the gross to ports full side in the mix. So it's hard to disaggregate entirely these shifts in which were the pieces that impacted that rise in RPC because it's going to get into not just that shift, but also the customer mix between member and on member.

Our final question comes from Michael Cyprus with Morgan Stanley.

Just wanted to ask about credit futures. I was hoping you could elaborate on the progress there, how you see the use cases versus other alternatives in the marketplace. And if you could elaborate on some of the steps that you're taking to broaden out user engagement in credit futures. And then more broadly, as you facilitate a stronger link between cash and futures markets and rates and FX I guess, to what extent might connectivity with cash credit markets makes sense to enhance client value and support growth.

Thanks, Mike. Mike Dennis .

Yes, Michael, it's a great question. I'll talk a little bit about credit futures and kind of some things we're thinking about in the cash markets. we highlighted a cash market initiative BrokerTec Chicago. I'll ask Tom McCourt to talk about another cash market initiative we had this year, FX. For Credit Futures, we saw strong growth this quarter in credit futures OI at a record in September. The outreach with Julie's team, the CF team has been very strong. There is a great mix of clients that are reaching out to the CME, who are reaching out to talk about credit futures, many asset managers, hedge funds, banks and props. What we're hearing from the customer base is that our central limit order book for credit futures is very liquid, and there's tight bid-ask spreads.

And credit futures are just an extremely valuable product for the fixed income markets place because it allows asset managers greater flexibility in managing credit exposure. And these products are unique. We have margin offsets for treasury futures as well as S&P 500 futures. So we're excited to see this product growing and feedback from our clients has been very positive. We have about 300 sales opportunities in the pipeline for credit futures. So those 300 opportunities are across all different client types. It takes time for folks to onboard often for products, but we're very happy about the directory. And Tim, I don't know if you want to share a little bit on FX spot plus.

Sure. Thanks, Mike. I think a consistent theme that you've heard in our opening remarks is around continued product innovation and meeting customers where they are to make sure they have the risk management tools they need to access our markets and manage the risks. And I think certainly, credit futures is a great example of that. And another one we mentioned where it's really about bringing these markets together and offering new transactional handshakes to allow clients to act our market is FX SPOT plus. That is something we launched back in April. And since its launch, over 70 entities have traded on FX SPOT plus, including 40 banks the majority of which have not previously interacted with the FX futures market. And as Terry mentioned, off to a great start, where we had a single day record of over $5.6 billion on September 11 and we've had single day volumes exceeding $5 billion for SPOT plus over 4 days throughout September and continue to grow from here. So when you look at the innovations we've rolled out over CME, we continue to introduce new products, new offerings and combining cash and futures markets to make sure our clients can access all the liquidity they need during these continued uncertain times when they might need it the most.

And Mike, I think it's interesting when you look at the U.S. corporate -- or U.S. debt today at $37.5 million, $38 trillion, god knows what. And that market versus the corporate market, people are deciding where they want to participate. they feel more comfortable in a corporate bond versus U.S. government, okay, I'm not so sure they do. But because there's such leverage in both right now or such debt in both, it's a very interesting dynamic the way I look at it. So I think both of these different markets between the cash, U.S. treasury market and the corporate or the credit markets will be very active over the next several years as we continue to go through these cycles of high valuations of corporation on the stock market and then the demand for people needing to sell debt. So it will be quite fascinating to see how this all plays out.

Thank you. I would like to hand the call back to management for closing remarks.

Well, thank you all very much. We appreciate your interest in CME and have a great holiday season to be safe. Thank you.

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