CME Group Inc. (CME Group) is a derivatives marketplace.
CME Group enables clients to trade futures, options, cash, and over-the-counter (OTC) products, optimize portfolios, and analyze data - empowering market participants worldwide, the ability to efficiently manage risk and capture opportunities. CME Group provides primary price discovery and referential pricing information through its market data in a variety of formats, including real-time, historical, and derived data for customers in bot...
CME Group Inc. (CME Group) is a derivatives marketplace.
CME Group enables clients to trade futures, options, cash, and over-the-counter (OTC) products, optimize portfolios, and analyze data - empowering market participants worldwide, the ability to efficiently manage risk and capture opportunities. CME Group provides primary price discovery and referential pricing information through its market data in a variety of formats, including real-time, historical, and derived data for customers in both listed and cash products. The company also offers industry-leading research and analytics tools to provide customers with market education resources. In addition, the company operates one of the world's leading central counterparty clearing providers.
CME Group exchanges offer the widest range of global benchmark products across interest rates, equity indexes, foreign exchange (FX), and agricultural, energy and metals commodities. The company also offers cash and repo fixed income trading via BrokerTec, and spot and OTC FX trading via EBS. Additionally, the company operates one of the world’s leading central counterparty clearing providers.
Derivatives Exchange Business
Through the company’s derivatives exchanges and clearing house, its customers prefer CME Group's diversity of products, liquidity, price transparency, and technological capabilities. The company’s products provide a means for hedging, speculation, and asset allocation related to the risks associated with, among other things, interest rate-sensitive instruments, equity ownership, changes in the value of foreign currency, and changes in the prices of agricultural, energy, and metal commodities.
CME's product slate includes agricultural, equities, FX, OTC Interest Rate Swaps complex, cryptocurrencies/alternative investments, and interest rate products, including Secured Overnight Financing Rate (SOFR) futures and options, Fed Funds futures and options, livestock and cash-settled contracts based on the S&P 500, Micro E-mini Equity Index contracts, Nasdaq-100, FTSE Russell, Nikkei, and Bitcoin and Ether futures and options.
CBOT's product slate consists of agricultural, equities, and interest rate products, including contracts for the United States (U.S.) Treasury futures, soybean, corn, and wheat, and contracts based on the Dow Jones Industrial Index.
NYMEX's product slate consists of energy and metals products, including contracts for crude oil, natural gas, heating oil (or low sulfur diesel), gasoline, emissions (GEO, N-GEO, and C-GEO), platinum, and palladium.
COMEX's product slate consists of metals products, including contracts for gold, silver, copper, and other base, ferrous, and battery metals.
The company’s asset classes contain products designed to address differing risk management needs, and customers are able to manage risks and achieve operational and capital efficiencies by accessing its diverse products through its platforms and its clearing house.
CME Group products are traded primarily through CME Globex, as well as by open outcry in Chicago for SOFR options and through privately negotiated transactions.
The company strives to provide the most flexible and scalable platforms to support the operational and capacity needs of its business, along with the delivery of innovative technology solutions to the marketplace. The company’s CME Globex electronic trading system operates its central limit order book markets and is available on a global basis nearly 24 hours a day throughout the trading week. The CME Globex platform is accessible through a wide variety of vendor-provided and custom-built trading systems that benefit from its open application programming interface approach. For electronic and privately negotiated markets, the company offers brokers and customers the CME Direct platform for arranging, executing, recording, and risk-managing trades across all six major asset classes. The company also provides the functionality to connect to CME Direct on a mobile device through its CME Direct Mobile application, with full trading and on-the-go order management capabilities.
Together, the company’s platforms offer certainty and flexibility of execution; extensive capabilities to facilitate complex and demanding trading; direct market access; open access, price transparency, and anonymity; convenience and efficiency; connectivity through highly secure, resilient, and low-latency network options; access to market data; and global distribution, including connectivity through high-speed international telecommunications hubs in key financial centers.
The company maintains comprehensive business continuity and disaster recovery plans, as well as facilities designed to provide nearly continuous availability of its markets in the event of a business disruption or disaster. The company also maintains incident and crisis management plans that address responses to disruptive events.
The customer base of the company’s derivatives exchanges includes professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers, governments, and central banks. Rights to directly access the company’s derivatives markets will depend upon the nature of the customer, such as whether the entity or individual is a member of one of its exchanges or has executed an agreement with the company for direct access.
The U.S. trading rights and privileges are exchange-specific. Open outcry trading is conducted exclusively by the company’s members. Membership on one of the company’s derivatives exchanges also enables a customer to trade specific products at lower fees. Under the terms of the organizational documents of its exchanges, the company’s members have certain rights that relate primarily to trading right protections, certain trading fee protections, and certain membership benefit protections. In 2024, 85% of the company’s contract volume was from trades by its members.
CME Clearing Business
Through the company’s clearing house operated by CME, it provides clearing and settlement services for a broad range of exchange-traded futures and options on futures contracts and OTC derivatives. The company’s integrated clearing function is designed to ensure the safety and soundness of its markets by serving as the counterparty to every trade, becoming the buyer to each seller and the seller to each buyer, and limiting counterparty credit risk. The clearing house marks open positions to market at least twice a trading day, requiring payments from clearing firms whose positions have lost value and making payments to clearing firms whose positions have gained value. For select cleared-only markets, positions are marked-to-market daily, with the capacity to mark-to-market more frequently, as market conditions warrant. The CME ClearPort front-end system provides access to the company’s flexible clearing services over multiple asset classes.
The majority of clearing and transaction fees received from clearing firms represent charges for trades executed and cleared on behalf of their customers. One firm represented at least 10% of the company’s clearing and transaction fees revenue for 2024. In the event a clearing firm were to withdraw, the company’s experience indicates that the customer portion of the firm's trading activity would likely transfer to one or more other clearing firms of the exchange.
Cash Markets Business
The company’s cash markets business comprises BrokerTec and EBS, primarily operated on CME Globex. Certain BrokerTec products are cleared through third-party clearing houses. BrokerTec is fully integrated with all major ISVs for order entry and staging, as well as post-trade for clearing and settlement, offering an efficient and fully electronic end-to-end trade workflow solution. BrokerTec and EBS offer anonymous and disclosed trading venues, offering clients multiple execution and distribution options, and the benefit of an established and far-reaching distribution network of liquidity providers and consumers.
BrokerTec operates global electronic trading for fixed income and money market products, with a leading position in cash U.S. Treasuries, European Government Bonds, and Repo on the European Union (E.U.), the United Kingdom (U.K.), the U.S., and other international G10, emerging market fixed income instruments, and Supranational and Agency Bonds. It facilitates trading for banks and non-bank professional trading firms. The BrokerTec Central Limit Order Book is a dealer-to-dealer electronic trading platform operated on CME Globex. BrokerTec Quote is a Request For Quote platform provided on third-party technology, that offers a dealer-to-client trading solution for the global government bond repo (including Emerging Markets) and credit repo markets. BrokerTec Quote also offers securities lending in European debt. BrokerTec Stream is a relationship-based trading platform offering the U.S. Treasury instruments.
EBS provides for the trading of global FX products across major and emerging market currencies and Spot Precious Metals. EBS Market is a Central Limit Order Book electronic trading platform for spot FX, Spot Precious Metals, and NDFs. EBS Direct is a relationship-based trading platform offering Spot FX, Spot Precious Metals (and previously, FX forwards and FX swaps until the cessation of that business in April 2024).
Market Data Business
The company offers a variety of market data services through industry-leading market data platforms and third-party distribution partners, which are designed to meet the risk management, trading, investment, and business needs of its global client base. To this end, the company provides proprietary real-time and historical market data related to CME Group’s deeply liquid exchanges and cash markets businesses. The company further offers derived cash markets pricing, third-party and alternative data sets, as well as a wide range of analytic tools. As customers continue to leverage cloud technology to improve and evolve their businesses, CME Group has taken a leading role by becoming the first derivatives marketplace to provide live market data natively on the Google Cloud. CME Group is also the distributor of leading benchmark equity and commodity indices on behalf of third parties, as well as a distributor and licensor of its own proprietary benchmarks and indices, including CME Term SOFR Reference Rates (CME Term SOFR) and Term €STR Reference Rates, which adhere to the IOSCO Principles for Financial Benchmarks and are administered by its U.K. regulated subsidiary, CME Benchmark Administration Limited.
Strategic Initiatives
The company’s strategic initiatives are to maximize futures and options growth globally; diversify its business; deliver unparalleled customer efficiencies; and partner with Google Cloud.
Patents, Trademarks, and Licenses
The company offers equity index futures and options on key benchmarks, including S&P, Nasdaq, Dow Jones, FTSE Russell, and fixed income index futures. These products are listed by the company subject to license agreements with the applicable owners of the indexes, some of which are exclusive. In connection with S&P Dow Jones Indices, the company has a license agreement (S&P License Agreement) for certain S&P stock indices and related trade names, trademarks, and service marks in connection with the creation, marketing, trading, clearing, and promoting of futures contracts and/or options on futures contracts that are indexed to certain S&P stock indices. The company’s license for the S&P 500 Index will be exclusive for futures and options until one year prior to the termination of the S&P License Agreement, and non-exclusive for the last year. The license for the other S&P stock indices is generally exclusive for futures and options. The term of the S&P License Agreement will continue until the date that is one year after the date that CME Group ceases to own at least 5% (accounting for dilution) of the outstanding interests in S&P Dow Jones Indices. Upon the occurrence of certain events, including certain terminations of the joint venture, the term may be extended up to an additional ten years. In connection with S&P Dow Jones Indices, the company also has an exclusive license agreement (Dow Jones License Agreement) for certain Dow Jones indices. The initial term of the agreement is through June 30, 2026. Following the initial term, the Dow Jones License Agreement will automatically renew for renewal terms of five years thereafter, so long as there is open interest in any of CBOT’s or its affiliates’ products based on one or more of the Dow Jones licensed indices. In the event there is no open interest in any such products, then the company may terminate the agreement. The company also has an exclusive license agreement for certain Nasdaq indices through 2029. In 2015, the company entered into an exclusive license agreement with FTSE Russell and launched the E-mini Russell 2000 futures in 2017. The company pays the applicable third party a revenue share under the terms of these licensing agreements. A copy of the S&P License Agreement has been filed as a material contract.
Additionally, CME Group is the distributor of CME Term SOFR, a daily set of forward-looking interest rate estimates, calculated and published for 1-month, 3-month, 6-month, and 12-month tenors, and administered by CME Group Benchmark Administration Limited, a U.K. regulated subsidiary.
Competition
Derivatives Exchange Business
The company’s competitors include, among other entities, exchanges, such as Intercontinental Exchange, Inc. (ICE), Cboe Global Markets (Cboe), Euronext N.V., the Hong Kong Exchanges (HKEx) and Clearing Limited, and Deutsche Börse AG.
CME Clearing Business
The company’s competitors in the clearing services space include, among others, companies, such as ICE, LCH Group, OCC, Cboe Clear, Depository Trust & Clearing Corporation, HKEx and Clearing, Japan Securities Clearing Corporation, LME Clear and Eurex Clearing.
Regulatory Matters
The company’s operation of its U.S. futures exchanges and its derivatives clearing business are subject to extensive regulation by the CFTC that requires its regulated subsidiaries to satisfy the requirements of certain core principles relating to the operation and oversight of its markets and its clearing house.
In connection with the global offering of the company’s products and clearing services, this business is also subject to the rules and regulations of the local jurisdictions in which it conducts business, including the European Securities and Markets Authority (ESMA), the U.K. Financial Conduct Authority (FCA), and Bank of England, the Netherlands Authority for the Financial Markets (AFM), and the Federal Financial Supervisory Authority (BaFin) in Germany, among others.
In 2024, the company’s subsidiary, F&O Financial LLC, received approval from the National Futures Association (NFA) to operate as an FCM. F&O Financial was established to prepare for potential future changes in the marketplace.
Cash Markets Business
The operation of BrokerTec subjects the company to regulation by the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC) as a broker-dealer and alternative trading system operator. BrokerTec is also subject to regulation in the U.K. by the FCA, as a multilateral trading facility (MTF), in the E.U. by the AFM, as a regulated market, and by the applicable regulators in Singapore and Canada.
The company’s EBS business is regulated by the CFTC as a registered swap execution facility (SEF) and by the FCA and AFM as a registered MTF. It also holds various permissions, approvals, and exemptions globally, including those that subject certain of its activities to CFTC, FCA, AFM, Monetary Authority of Singapore, Australian Securities and Investments Commission, Hong Kong Monetary Authority, and Canadian oversight.
The settlement of matched principal and exchange-traded businesses requires access to clearing houses either directly or through third-party providers of clearing and settlement services. BrokerTec Americas is a member of the Fixed Income Clearing Corporation (FICC), through which it clears the U.S. Treasury and repo products. The company’s BrokerTec business operated in the E.U. also connects to LCH Limited, LCH SA, BME Meff Clear, and Cassa di Compensazione e Garanzia (CC&G), which act as central clearing participants in the European and the U.K. gilt repo markets.
Market Data Business
The company’s subsidiary, CME Group Benchmark Administration Limited, is a registered benchmark administrator, authorized and supervised by the FCA under the U.K. Benchmark Regulations. CME Group Benchmark Administration Limited administers a variety of different multi-asset class data products, including CME Term SOFR.
History
The company was founded in 1898. It was incorporated in 2001. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in 2007.
