|CME Group, Inc.|
|Founded||July 12, 2007 (through Chicago Mercantile Exchange Holdings and CBOT Holdings merger)|
|Headquarters||Headquarters: 20 South Wacker Drive, Chicago, IL 60606 (plus other CME Group offices domestic and international)|
|Key People||Terrence Duffy, Executive Chairman/President; Phupinder Gill, CEO|
|Products||Interest rate, equity index, foreign currency, commodity futures and options and alternative investments (e.g. weather, real estate)|
JLN News Feed
CME Group, Inc., based in Chicago, is a global derivatives marketplace that handles, on average, 3 billion contracts with a notional value of $1 quadrillion daily. The company, which in 2002 transformed from a privately-held, member-owned exchange to publicly traded company, has a market cap of $30 billion, as of January 2016. The group consists of four U.S. exchanges the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), New York Mercantile Exchange(NYMEX) and COMEX, and CME Europe, launched in 2014, offering futures on 30 foreign currencies and biodiesel.
CME Group's product complex spans all major asset classes, including: futures and options on interest rates, equities indexes, currencies, commodities, energy products, precious metals and alternative investment instruments such as weather and real estate derivatives. The exchange also pushed into the OTC interest rate swaps space in 2012, offering futures and clearing of those contracts. 
CME Group’s trading runs largely on its electronic platform called Globex with local electronic access hubs around the world that provide trading almost 24 hours per day, six days per week. Traditional floor-based trading is still featured at its trading facilities in Chicago in the Chicago Board of Trade building and New York on the former New York Mercantile Exchange floor, but is largely being phased out. Other exchanges, such as the Minneapolis Grain Exchange and Kansas City Board of Trade, which was acquired by CME in 2012, also run their electronic trading on the Globex platform.
The exchange is supported by CME Clearing, which clears not only its traditional futures contracts but also OTC contracts in interest rates, swaps, FX and commodities.
For a recap of the history of each of CME Group's business units pre-merger, visit the following pages:
- Chicago Mercantile Exchange
- Chicago Board of Trade
- New York Mercantile Exchange, Inc. (which merged with COMEX in 1994.
Also See: CME Group History Timeline
Exchange Demutualization, Mergers and the End of Open Outcry
Up to the 1990s, exchanges were made up of member-owned, privately held organizations, with boards, and thus the decision-making process, comprised of members (called "seat owners"). In anticipation of transitioning to a publicly traded company, the exchanges, beginning with CME, "demutualized," or split each seat into two parts - trading rights (which allowed members to act as traders and brokers on the exchange), and equity shares. This move essentially transferred the decision making process from members with often competing interests to a board whose chief concern is to act in the best interest of the company as a whole.
In 2002, CME became the first U.S. exchange to go public, with an initial public offering (IPO). CBOT and NYMEX followed in 2005 and 2006 respectively.
Once the demutualization and IPO phase was complete, the merger phase began. In July 2007, the 109-year-old Chicago Mercantile Exchange (CME) and the 159-year-old Chicago Board of Trade (CBOT), its former rival, agreed to a merger under the name "CME Group."  The group expanded further with its August 22, 2008 acquisition of energy and metals exchange NYMEX Holdings, Inc., which included the NYMEX energy products plus the metals complex at NYMEX's COMEX division. The acquisitions resulted in CME Group becoming the largest U.S. futures exchange, which at the time represented 98 percent of the US futures volumes.
In February 2015 the company announced it would close most of its futures trading pits in Chicago and New York, and July 5, 2015 marked the last day for nearly all of the floor-based futures pits. One exception is the S&P 500 futures market, which remains open on the Chicago trading floor. The options pits, which have remained active in the face of electronic trading, will mostly remain open in both cities. CME said it expects to save $10 million per year by closing the futures pits.
For more on the company's mergers, acquisitions and initiatives, see the "Strategic Investments: An In-depth Look" section below
Products and Services
CME Group earns its revenues in three basic categories - trade execution, clearing and data services, including connectivity and access
The exchanges offer contracts in all major asset classes:
- CME Group interest rate products
- CME Group foreign currency products
- CME Group stock index products
- CME Group commodity products
- CME Group weather products
- CME Group real estate products
- CME Group metals products
- CME Group energy products
Additionally, CME Group offers trading on hundreds of OTC derivatives contracts, including:
- Interest rate swaps, including deliverable swap futures of the two-year, five-year, 10-year and 30-year interest rate maturities.
- Credit default swap indices, via a 2009 licensing deal with Markit
- FX OTC non-deliverable forwards (NDF) on Brazilian real, Chinese Renminbi Yuan, Philippine Peso, Malaysian Ringgit, Indian Rupee, Korean Won, Taiwan Dollar, Chilean Peso, Colombian Peso, Peruvian Sol, Russian Ruble and Indonesian Rupiah. The exchange also offers cash settled forwards (CSFs) on 26 currency pairs.
- Commodities such as energies, agriculture, metals and commodity index swaps.
Trading occurs primarily on Globex, its electronic trading platform versus, which went live in 1992. A fraction of its futrures and options volume is transacted via open-outcry, but as of 2015, the trading puits are being phased out. CME Direct is the exchange's side–by–side platform for online trading of exchange listed and OTC markets through a single application. In 2012 CME launched Direct Messenger, an instant messaging platform for energy traders which is part of CME Direct and is fully integrated with CME Clearport. CME's subsidiary Pivot Inc. created the technology surrounding the platform. The tools the platform provides are expected to increase the distribution of request-for-quotes, block orders, complex options and other energy and equity order types. 
CME Clearing is the exchange's central futures clearing mechanism, which settles all trades and acts as the counterparty between buyers and sellers, thus virtually guaranteeing the creditworthiness of every transaction. In its history, CME Clearing has never experienced a default.
In early April of 2012, CME announced to users of the market that it would adopt several enhancements to its reporting requirements in an effort to further safeguard customer funds at the firm level. Enhancements were put forward in conjunction with recommendations from the National Futures Association (NFA), Futures Industry Association (FIA) and others. In addition to increased reporting requirements, limited reviews of customer segregated, secured and sequestered statements would be put into play on a surprise basis outside of the regular examinations.
|CME Clearing Europe|
|CME Clearing Europe was launched in May 2011. The London-based clearing house, a wholly-owned subsidiary of CME Group, clears more than 200 OTC products. The clearing house handles OTC contracts including: energy, agriculture, freight and precious metals with plans to include OTC financial derivatives. The move to launch CME Clearing Europe stemmed largely from the European Market Infrastructure Regulation (EMIR) which is due to start in 2013 and force mandatory clearing of OTC trades.|
| In 2008, CME introduced Clearing360, an extension of its clearing services to the over-the-counter marketplace. Clearing360 allows hedge funds, proprietary trading firms, and regional banks to substitute OTC trades for cleared only futures positions. The first OTC marketplace to participate in this service was the short-term interest rate swap marketplace, which parallels the CME Eurodollar market. CME expects to extend CME Clearing360 services to other markets in the future.
On Nov. 19, 2008, CME Group announced that it had named Michael O'Connell managing director, clearing business development. O'Connell would be responsible for developing CME Clearing products and services. He would report to Kim Taylor, managing director and president, CME Clearing.
On Nov. 12, 2009, CME Group announced the launch of clearing services for cash-settled swaps on the Dow Jones-UBS Commodity Index (DJ-UBSCI SM) to be launched Monday, December 7. Clearing services will be available through CME ClearPort.CME Group clearing member firms can be found here.
|On May 31, 2002, NYMEX launched ClearPort as a clearing service for bilateral over-the-counter (OTC) natural gas contracts. The platform was started in the aftermath of the Enron scandal, in order to allow energy market participants to mitigate counterparty credit risk.  Over the next five years, NYMEX added product listings in electricity, coal, crude oil, soft commodities, and metals. After NYMEX merged with CME Group, ClearPort was renamed CME ClearPort, and began listing swaps and OTC derivatives associated with other CME Group asset classes. To view a 2-minute video on CME Clearport, click HERE.|
| In 1988, CME launched its Standard Portfolio Analysis of Risk, or SPAN as the first system to calculate performance bond requirements solely on the basis of overall portfolio risk at both clearing and customer level. SPAN calculates value-at-risk (VaR by using a formula that considers price and volatility scans, inter- and intra-commodity spread adjustments, spot risk, and short option premium risk.
By 2010, the CME SPAN entered its fourth generation, and consists of three software products:
In November 2013, the European Securities and Markets Authority (ESMA) approved the CME European Trade Repository as a Trade Repository (TR) under the European Market Infrastructure Regulation (EMIR). The multi-asset trade repository will accept submission of trades across all mandated derivative asset classes, namely interest rates, FX, credit, commodities and equities. It will be based in London.  
- CME Group's Colocation Services, which consists of hosting, connectivity and support services, began operating out of a new facility in Aurora, IL on January 29, 2012. The facility offers equal access for all participants, including equal pricing, equal terms and conditions, and equal lengths of fiber between customer cabinets. The Aurora data center consists of 428,000 square feet of of space, and is served by two 138,000 volt electric service; each originating from a separate generation plant. To view a video overview of CME Group's Colocation Services, click HERE.
- Terrence Duffy, Executive Chairman/President
- Phupinder Gill, CEO
- Kathleen Cronin, Senior Managing Director, General Counsel and Corporate Secretary
- Bryan T. Durkin, Chief Commercial Officer
- Julie Holzrichter, Chief Operating Officer
- William Knottenbelt, Senior Managing Director, International
- Kevin Kometer, Chief Information Officer
- James Parisi, Chief Financial Officer and Senior Managing Director, Finance and Corporate Development
- Hilda Harris Piell, Senior Managing Director and Chief Human Resources Officer
- John W. Pietrowicz, Senior Managing Director, Business Development and Corporate Finance
- Linda D. Rich, Senior Managing Director, Government Relations and Legislative Affairs
- Derek Sammann, Senior Managing Director, Commodity and Options Products
- Kim Taylor, President, Global Operations, Technology & Risk
- Sean Tully, Senior Managing Director, Financial and OTC Products
- Ken Vroman, Senior Managing Director, Commodity Products, OTC Services and Information Products
- Julie Winkler, Senior Managing Director, Research and Product Development
- Sunil Cutinho President, CME Clearing
- Robert Zagotta, Senior Managing Director, Strategy & Execution
|Year||Total Annual Volume||Percent Change|
|Chicago Mercantile Exchange||1,775,988,677||14.4%|
|Chicago Board of Trade||1,171,499,384||7.4%|
|New York Mercantile Exchange||495,278,881||(-) 4.6%|
(*)Volumes include CBOT and NYMEX. 
Strategic Investments: An In-depth Look
|Chicago Board of Trade, 2007|
| On July 9, 2007, the Chicago Mercantile Exchange officially became the winner in the bidding war for the CBOT, as its members approved CME's offer, thus ending decades of competition and rivalry between the two exchanges. According to then-CBOT chairman Charlie Carey, it was "a great day for the city of Chicago." The final deal, valued at $11.9 billion, was 25 percent higher than CME's first offer nine months prior, as a rival bid by Atlanta-based Intercontinental Exchange led to a bidding war.
The final deal gave CBOT shareholders 0.375 shares of CME Holdings stock for each share of CBOT Holdings stock, up from 0.35 shares in oroginal offer. CBOT shareholders received a 36% ownership stake in the combined exchange, and also received a cash dividend of $9.14.
The formation of CME Group did not result in any change to trading privileges for CME and CBOT members. CME members can trade legacy CME products at member rates directly from the trading floor; CBOT members enjoy the same benefits on CBOT products only.
In addition, in January 2008 all legacy CBOT products migrated successfully to the CME Globex platform from e-cbot.. CBOT had already moved clearing of all trades to CME Clearing from its legacy clearing provider, the Board of Trade Clearing Corp., in 2003; thus, this was one huge operational hurdle that did not require consideration during the migration. Phased integration of the trading floors took place between March and July of 2008, into the trading facility at 141 W. Jackson, the CBOT Building.
|New York Mercantile Exchange (NYMEX), 2008|
| On March 17, 2008, CME Group announced its plan to acquire NYMEX. The terms called for NYMEX shareholders to receive $36 and 0.1323 shares of CME Group for each NYMEX share. It also included a bid to buy the 816 NYMEX memberships for $612,000 each. On July 18, CME increased the offer for NYMEX memberships to $750,000, from $612,000. Under the terms, members are allowed to keep their rights to lease seats on the floor trading and maintain the floor trading seat market. CME agreed to keep the trading floor in New York as long as it was profitable and met certain trading thresholds.
On August 18, 2008, Nymex Holdings shareholders voted to approve the deal. As of the approval date, the value of the acquisition was $8.3 billion.
|Kansas City Board of Trade (KCBT), 2012|
| On Oct. 17, 2012 CME Group announced that it would acquire the Kansas City Board of Trade for $126 million in cash. The board of directors of KCBT unanimously approved the transaction.|
The deal, which was completed on December 3, 2012, allows CME Group access to the market for hard red winter wheat, Kansas City's flagship contract. In February 2013, CME Group announced it will close the Kansas City trading floor and shift operations to its Chicago floor as of July 1, 2013, pending regulatory approval. Also, CME announced it will begin clearing KCBT contracts at CME Clearing beginning April 15, 2013. 
|S&P Dow Jones Indices, 2012|
|In July 2012, McGraw-Hill, owner of the Standard & Poor's ratings service and related companies, announced a joint venture with CME Group, S&P Dow Jones Indices, which publishes thousands of indices across equities, fixed income, commodities, real estate, strategy and specialty. |
Under the terms of the deal, McGraw Hill owns 73 percent of the company, CME Group owns 24.4 percent, and Dow Jones owns 2.6 percent. Also, under the deal, CME Group sold its stake in Credit Market Analysis (CMA) to McGraw-Hill, who then folded it into its S&P Capital IQ unit.
|Credit Market Analysis, 2008 (sold in 2012)|
|Credit Market Analysis, Ltd. (CMA) is a data and information company specializing in OTC derivatives markets, founded in 2001 by a group of credit derivative specialists who identified a need to bring transparency and improved information flow to the OTC market. |
CME Group acquired CMA in March 2008 as the exchange sought to expand its reach into credit derivatives execution and clearing. In July 2012, CME Group sold CMA to McGraw-Hill as part of the deal that created S&P Dow Jones Indices, a joint venture between CME Group and McGraw-Hill.
|FXMarketspace, 2006 (closed in 2008)|
|FXMarketSpace was an over-the-counter (OTC) foreign exchange (FX) platform which was announced in 2006 as a 50/50 joint venture between CME Group and Thomson Reuters. The idea was to introduce the central counterparty clearing and straight-through processing model to the OTC forex market.
Trading on FXMarketspace began in May of 2006 in seven currency pairs, including the U.S. dollar versus the yen, euro, pound, Swiss franc and Canadian dollar, as well as four currency cross-pairs. Processing functions were provided through a deal with FX post-trade service firm Traiana.
While FXMarketspace opened to much fanfare and was initially supported by the banking community, interest in the platform waned, and the platform was shuttered on Oct. 17, 2008.
|OneChicago is a fully electronic exchange owned jointly by Interactive Brokers, CBOE, and CME Group, that lists futures contracts on single stocks, narrow-based equity indexes and exchange traded funds. It is a privately held company and is regulated jointly by the Securities and Exchange Commission and the Commodity Futures Trading Commission.|
OneChicago was created in May 2001, as a result of the Commodity Futures Modernization Act of 2000 (CFMA), which legalized single stock futures. The exchange began as a joint venture between the CME, Chicago Board Options Exchange, and the CBOT. In March 2006, electronic broker-dealer Interactive Brokers Group LLC took a 40 percent stake in the venture. After the CME and CBOT merger in 2007, the ownership structure is as follows:
CME Group has pursued partnerships, memorandums of understanding (MOU) and other deals with exchanges, index providers and others in an effort to secure a global presence.
Exchange partners include BM&FBOVESPA, Bursa Malaysia Berhad, Dubai Mercantile Exchange, GreenX, Johannesburg Stock Exchange, Kansas City Board of Trade, Korea Exchange, Minneapolis Grain Exchange, Multi Commodity Exchange of India, National Stock Exchange of India Ltd., Osaka Securities Exchange, Russian Trading System Stock Exchange and Singapore Exchange Limited.
For more see CME Group's "Global Presence" Page.
MF Global And Peregrine
After the bankruptcy of MF Global in October 2011, CME Group Executive chairman Terry Duffy testified before three separate Congressional panels investigating the bankruptcy. CME Group was the designated self-regulatory organization for the bankrupt FCM. Duffy said in his testimony that customer money had been transferred out of segregation to firm accounts and commingled. 
In response to the eroding customer confidence in the wake of the MF bankruptcy, on February 2, 2012, CME Group announced the creation of a $100 million protection fund for farmers and ranchers. The Family Farmer and Rancher Protection Fund, which began accepting applications on April 3, 2012, will bank individuals up to $25,000 and cooperatives up to $100,000 in the event of a broker bankruptcy where there is a shortfall of segregated funds. If a bankruptcy were to exceed the money in the fund, participants would receive a pro rata share.
In late July of 2012, CME Group distributed a letter to customers and to the media, saying that the organization was "appalled by the recent misuse of segregated funds by two firms, MF Global Inc. and PFG, particularly since there has never been anything like it in the history of the futures industry" and said "But while these firms may have been at fault, it's nevertheless our problem as an industry, and this problem needs a solution. Not protecting customer funds is such a fundamental breach of trust that, without question, the current system in which customer funds are held at the firm level must be re-evaluated." CME Group explored the concept of having clearing houses or other depositories hold all customer segregated funds while returning any interest earned on that money back to the FCMs, however, that idea did not garner traction within the industry.
John Lothian News Interviews
|(VIDEO) Allan Schoenberg on the Evolution of CME Group’s Social Media Strategy, December 2012|
Allan Schoenberg on the Evolution of CME Group’s Social Media Strategy
Schoenberg cites relationships with BM&FBOVESPA, MexDer, Dubai Mercantile Exchange and exchange partners in Asia that help CME Group distribute regional, language specific content to unique international audiences. Specifically, CME Group has used Weibo.com (a Chinese language micro-blogging site) and Youku (a Chinese language video sharing site) to initiate discussions with potential financial market participants in China.
Schoenberg contrasts Twitter’s broad appeal with StockTwits’ ability to focus conversations on specific topics and products. He also discusses how CME Group has leveraged their historical exchange photos and research images to create image based stories on Pinterest over the last year. Published Dec 18, 2012. Watch at JohnLothianNews.com
|(VIDEO) CME Group’s Sean Tully Introduces Deliverable Interest Rate Swap Futures, December 2012|
CME Group’s Sean Tully Introduces Deliverable Interest Rate Swap Futures
Tully is a 20-year veteran of the financial sector who, prior to joining CME Group in August 2011, led the fixed income trading group at German banking firm WestLB and, prior to that, spent over ten years as a derivatives trader with Citibank and Greenwich Capital. Tully spoke with John Lothian News Editor-at-Large Doug Ashburn about the new interest rate swap futures contracts, which launched on December 3, 2012. Watch at JohnLothianNews.com
|Five Minutes with Scot Warren - Ibovespa Futures Contract, October 2012|
|Scot Warren is senior managing director of equity index products and services at CME Group, a position he has held since February 2010. He is responsible for leading the company’s equity and equity index product lines, including new product launches such as the U.S. dollar-denominated Ibovespa futures contract, which is set to launch Oct. 22, 2012. Warren spoke with John Lothian News Editor-at-Large Doug Ashburn about the new Ibovespa contract, how it differs from the existing Brazilian real-based Ibovespa that trades at BM&FBOVESPA (“BVMF”), how this product launch fits with current trends in market participation, capital and regulation, and how it fits with CME Group’s global strategy.|
|Five Minutes With Bluford Putnam, February 2012|
|Bluford Putnam has served as managing director and chief economist of CME Group since May 2011. He is responsible for leading economic analysis on global financial markets by identifying emerging trends, evaluating economic factors and forecasting their impact on CME Group and the company's business strategy. He also serves as CME Group's spokesperson on global economic conditions and manages external research initiatives. He recently talked with JLN Managing Editor Christine Nielsen.|
- Cleared OTC Interest Rate Swaps: Overview. CME Group.
- http://www.cmegroup.com/stories/#!3-ipos. CME Group.
- "CME and CBOT Agree to Increase Merger Offer,” 7/6/08. CME Group.
- "Shareholders Approve $11.9 billion CME-CBOT Merger," 7/10/07. Seeking Alpha.
- "CME Group Inc. Completes Acquisition of NYMEX Holdings, Inc., Expands Its Diversified Product Offerings to Include Energy and Metals and Also Announces Preliminary Election Results". CME Group.
- CLeawood firm is acquiring Board of Trade building. Kansas City Star.
- CME Group to close most floor-based trading in Chicago, New York. The Chicago Tribune.
- Ending an Era, CME Group to shutter most futures pits. Reuters.
- CME options traders see open outcry resisting fate of futures pits. Reuters.
- CME Group Expands Multi-Asset Class OTC Offering with First Cleared FX Non-Deliverable Forward. CME Group.
- CME Group deal with Markit Brings It Closer To Credit Default Swap Market. NewsCred.
- CME Group OTC FX Clearing. CME.
- About OTC Derivatives. CME Group.
- CME Direct Messenger. Reuters.
- CME Clearing Europe Expands its Metals Offering with Two Iron Ore Contracts. CME Group.
- European Clearing for OTC Commodity and Financial Derivatives. CME Group.
- CME to push clearing rate swaps in London. FT.
- Press Release. CME Group.
- CME Group Announces the Launch of Dow Jones-UBS Commodity Index Swap Futures. PR Newswires.
- CME ClearPort: Celebrating Seven Years of OTC Clearing. CME Group.
- How Does Your Margin Grow?. Investopedia.
- SPAN. CME Group.
- CME Group Announces Approval of CME European Trade Repository. PR Newswire press release.
- CME European Trade Repository. CME Group.
- CME Co-Location Services launch date announced. Automated Trader.
- CME Co-Location Services. CME Group.
- Management Team. CME Group.
- Trading Volume Statistics. Futures Industry.com.
- CME/CBOT merger goes through. Futures Magazine.
- CBOT Holders Choose To Merge With CME. Forbes.
- "Membership at CME Group”. CME Group.
- CBOT Agricultural and Equity Index Products Begin Trading on CME Globex. CME Group.
- CME boosts NYMEX trading rights offer to $750,000 7/18/08. Dow Jones.
- CME 'sweetens' NYMEX offer with buyback, dividend 6/23/08. MarketWatch.
- Nymex Shareholders Approve $8.3 Billion Takeover by CME. New York Times.
- CME Group to Buy Kansas City Board of Trade for $126 Million. Bloomberg.
- Press Release. PR Newswire.
- CME Group Completes Acquisition of Kansas City Board of Trade. PR Newswire, via CME Media Room.
- CME to Close Kansas City Board of Trade Pits in June. Dow Jones Newswires, via NASDAQ.
- About S&P Dow Jones Indices. S&P Dow Jones Indices.
- CME-McGraw-Hill Launch S&P-Dow Jones. Zachs.
- About CMA. CMAVision.com.
- CME Group to Acquire Credit Market Analysis. Bloomberg.
- CME Group and Thomson Reuters to Close FXMarketSpace Joint Venture. CME Group.
- Who’s afraid of single-stock futures?. Medill Reports.
- The Wallendas Hit Wall Street. Forbes.
- National Stock Exchange of India and CME Group Announce Cross-Listing Relationship. PRNewswire-FirstCall.
- Growing Global Presence. CME Group.
- CME's Duffy Says MFGI Moved Customer Funds. Futures Magazine.
- CME Will Protect Farmers' Hedges. Wall Street Journal.
- CME Group opens registration for Farmer Protection Fund. Futures Magazine.
- CME Creates $100 Million Fund for Farmers and Ranchers. New York Times Dealbook.
- Open Letter. CME Group.
- Allan Schoenberg on the Evolution of CME Group’s Social Media Strategy. John Lothian News.