CME : Q4 2022 Earnings Commentary

4Q 2022

Earnings Commentary

	Revenue	Adjusted
	Adjusted Expense*	Diluted EPS
	in millions
$1,400			$2.00

$1,050										$1.50

$700

$1.00

$350

$0.50

$0

$0.00

4Q and 2022 Summary

• CME Group's performance in 4Q capped off the best year in the company's history with 2022 record annual average daily volume (ADV) of 23.3 million contracts, up 19% compared with 2021, and included annual ADV records for financial products, options and international
• • 4Q22 ADV of 21.8 million contracts was up 6% compared with 4Q21, and represented the highest 4Q ADV to date

•	Equity Index ADV up 26%	•	Metals ADV up 7%
•	Foreign Exchange (FX) ADV up 25%	•	Record SOFR ADV

• 4Q22 Options ADV increased 13% to 4.2 million contracts, with year- over-year (YoY) growth across 4 of 6 asset classes

• Record Equity Index options ADV	• 4Q22 SOFR options ADV of
of 1.3 million contracts, up 33%	a record 900K contracts, up
• Metals options ADV up 25%	54% versus 3Q22

• Despite significant global markets disruption beginning with the Russia and Ukraine conflict, 2022 non-U.S. ADV achieved double-digit growth from 2021 to a record 6.3 million contracts
• • Europe, Middle East and Africa (EMEA) up 10%, Canada up 21%, Asia Pacific (APAC) up 27%, and Greater Latin America (LatAm) up 30%
  • 4Q22 non-U.S. ADV of 5.6 million contracts - although down slightly from 4Q21, 4Q22 activity included double-digit ADV growth across APAC, LatAm and Canada, as well as YoY growth in Equity Index, FX, and Metals
• Customer focus and strategic execution led to adjusted net income attributable to CME Group of $698 million and adjusted diluted earnings per common share of $1.92

Order of Contents		ADV in millions		OI in millions*
1 4Q / 2022 Summary	24			120

2 4Q / 2022 Primary Highlights/Commentary

3	4Q 2022 Product Detail - Financials	16		80

4 4Q 2022 Product Detail - Commodities

5	Financial Results & Guidance	8		40

6 Forward Looking Statements

7	Q&A Conference Call Details	0			0
4Q19	4Q20	4Q21	4Q22
*•
Represents quarterly adjusted operating expense excluding licensing and other fee agreements which is the basis for expense guidance
•	A reconciliation of the non-GAAP financial results mentioned to the respective GAAP figures can be found within the Reconciliation of GAAP to Non-GAAP
•	Measures chart at the end of the financial statements
All growth rates included in this document refer to 4Q22 vs. 4Q21, unless otherwise noted. Additionally, all global data/statistics exclude the open outcry
•	venue
OI within the chart, and throughout this document, includes only benchmark product within Energy (Crude Oil, Natural Gas and Refined Products)

4Q Primary Highlights

(ADV and open interest (OI) stated in contracts, except for cash markets)

• 4Q22 ADV increased 6% to 21.8 million, and was the highest 4Q ADV on record

4Q 2022 Earnings Commentary - Unaudited

CME Group's highly diverse product set positions the company well for varying macroeconomic backdrops

• Equity Index ADV up 26% to 7.5 million	Includes		4Q 2022		Includes
		Revenue Mix	EBS(~$35M)
• Options ADV up 13% to 4.2 million	BrokerTec (~$38M)
• FX ADV up 25% to 1 million	Interest Rate
Swaps Clearing (~$15M)	FX
• Metals ADV up 7% to 508K			7%	Agricultural
		Equity Index
• Base Metals momentum continued with 24%			8%
	21%
growth in 4Q22 and record Aluminum ADV				Energy
• Total Micro products ADV up 29% to 3.2 million
			11%
with Micro WTI futures and options ADV increasing
28% to 100K					Metals
• Record quarterly ADV for combined SOFR futures				4%
Interest Rates
and options, Equity Index options, E-mini S&P 500		30%	Market Data
options, E-mini Euro FX futures, Copper options				13%
and Micro Copper futures			Other
• Record quarterly average daily notional volume (ADNV) for		6%

BrokerTec US Repo of $281 billion

• Record Interest Rates Large Open Interest Holders (LOIH) reached on November 15, 2022, and peaked again in mid January 2023
• Record Equity Index LOIH reached on November 22, 2022

2022 Primary Highlights	75	# of Days Trading Volume	75
• 2022 ADV increased 19% to a record
	Surpassed 25M Contracts
23.3 million, including several annual

ADV records:

• Financials futures and options products	50
ADV up 25% to 19.5 million
• Interest Rate ADV up 18% to 10.8 million
• Equity Index ADV up 39% to 7.7 million	25
• Treasury futures ADV up 8% to 4.8 million

• Options ADV up 23% to 4.1 million
• Micro E-mini product futures ADV up 49%

to 3.1 million

0

• Combined SOFR futures and options ADV of 2.2 million
• FX ADV up 24% to 987K, achieving the 2nd highest annual ADV of all-time - record FX futures ADV of 945K
• Record Aluminum futures/options ADV up 84% for the year and record average daily OI (ADOI) - levels surpassed in January 2023
• Record Global Emissions Offset futures ADV and peak OI of over 29K reached on December 27, 2022

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4Q 2022 Earnings Commentary - Unaudited

Strong Equity Index performance - Investments made over time to innovate/diversify the portfolio have made way for stronger performance in recent years despite lower volatility relative to historical peaks

• 4Q22 Equity Index ADV of 7.5 million contracts was the third-highest quarterly ADV. 2022 had the highest four all-time ADV quarters to date
• 4Q22 record Equity Index options ADV of 1.3 million, up 33%
• No matter the backdrop, CME Group is positioned well as home to all the major equity index benchmarks
• • 4Q22 E-mini ADV up 24% to 4.4 million
  • 4Q22 Micro E-mini Equity Index ADV up
    30% to 2.9 million
• Buyside adoption of our OTC alternative products is on the rise. 2022 YoY ADV growth:
• • S&P 500 Adjusted Interest Rate Total Return futures increased 47%, S&P 500 Annual Dividend futures grew 34%, E-mini Sectors up 8%, and Basis Trade at Index Close (BTIC) up 28%

9

6

3

0

Equity Index ADV

in millions

#1 #2 #4 #3

• Derived block trades (eligible as of 2Q22) more than quadrupled from 3Q22 to 4Q22. $6.5 billion has transacted across 14 different Equity Index Sector futures products in 2022

Client education, curated incentives, innovative execution and available margin efficiencies all facilitated an extremely successful LIBOR to SOFR transition which is essentially complete

SOFR Futures	4Q21	4Q22	YoY Growth
Average Daily Volume	277K	2.1M	8x
Average Daily Open Interest	1.4M	8.5M	6x
Large Open Interest Holders	249	727	3x

SOFR Options	4Q21	4Q22	YoY Growth
Average Daily Volume	4	900K	225,000x
Average Daily Open Interest	3K	19M	10,000x

CME Term SOFR Usage

OTC Derivatives Referencing Term SOFR	$800 Billion
Loans Referencing Term SOFR	$3+ Trillion across
5,400 Loans
Licenses Issued	7,700+
# of Firms under License	2,000+

4Q22 capped off a critical year as our industry and its participants collaborated to shift trading behavior, order flow, and open interest to SOFR

• Communicated well in advance with clients
• • CME's mid-April 2023 fallbacks conversion announced in September 2022
  • SOFR First for Options executed between June and August 2022
  • Efficient trading mechanisms are in place for shifting positions to SOFR prior to conversion
  • Global sales force client conversion campaign
  • SOFR and Treasury options were added into CME Group's Portfolio Margining with OTC Swaps on December 12, 2022. Client average daily savings were $8.4 billion in 4Q22
  • December SOFR futures RPC is closely approaching legacy Eurodollar futures RPC

• New Interest Rates and OTC products (since 2012) are now contributing nearly $350 million of annual revenue, comprising roughly a third of the 9% Interest Rates and OTC 10-year revenue CAGR

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• Interest Rates options ADV up 8% to 2.3 million

• Treasury options ADV up 5% to 943K and weekly Treasury options ADV up 27% to 271K

• Equity Index options ADV up 33% to a record 1.3 million

• Metals options ADV up 25% to over 60K

• FX options ADV up 5% to over 40K

• Following the successful launch of E-miniS&P 500 Tuesday/Thursday weekly options in April 2022, we launched E-miniNasdaq 100 Tuesday/ Thursday weekly options early in 4Q22

• 4Q22 E-miniS&P 500 weekly options ADV increased 24%

• 4Q22 E-miniNasdaq 100 weekly options ADV increased 29%

• Shorter expiries are adding value across many of our asset classes. We've seen a recent spike in Gold weekly options in early 2023, and WTI Weekly options reached record ADV in 2022

• 4Q22 Options ADV highlights:

4Q 2022 Earnings Commentary - Unaudited

With significant rally of the U.S. dollar throughout most of 2022, and varying pace of global central bank policies causing interest rate differentials, the global foreign exchange market is in a higher- volatility environment and CME Group FX ADV has come alive

• 4Q22 FX ADV up 25% to 1 million contracts
• • Euro FX futures and options ADV up 27%
  • Japanese Yen futures and options ADV up 41%
  • British Pound futures and options ADV up 25%
• 2022 record FX futures ADV of 945K, up 24% (prior record was 930K in 2018), and record 2022 FX futures average daily OI (ADOI) of 2.0 million
• 2022 record FX Link ADV of $2.2 billion notional, up 90%
• Continued regulatory tailwinds support our efforts to continue to attract OTC participants to CME Group FX futures and options
• • The most significant impacts from the Uncleared Margin Rules (UMR) began with Phase 6 which occurred in September 2021

1

0.9

0.8

0.7

0.6

Rolling 4-Quarter FX ADV

in millions

• • CME FX futures can be materially more efficient for banks faced with the new standardized approach for counterparty credit risk (SA-CCR) - mandatory compliance date was January 1, 2022
  • 4Q22 targeted FX sales campaign grew ADV from our buyside client targets by more than 30% and successfully brought in new customers in FX Blocks and Exchange for Related Positions (EFRPs) - examples of transactions that bring efficiencies to OTC market participants
• Large scale EBS cross sell campaign kicked off in 2H22 and is gearing up further in 2023. Following the completion of the migrations for both BrokerTec and EBS, the full year 2022 cross-sell conversion was up 200% versus 2021

Options have continued to be a critical tool for market participants driving 2022 record annual ADV and 13% ADV growth in 4Q22 to 4.2 million contracts

ADV

Weekly Options on Futures ADV

• of Total Options ADV

1,400,00030.0%

1,200,000	25.0%

1,000,000

20.0%

800,000

15.0%

600,000

10.0%

400,000

200,000	5.0%

- 0.0%

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4Q 2022 Earnings Commentary - Unaudited

Non-U.S. ADV was 5.6 million contracts in 4Q22 and a record 6.3 million in 2022

4Q22 non-U.S. ADV highlights:

• 8th consecutive quarter with ADV above
  5 million contracts
• Asset Class ADV detail:

• FX up 17% • Equity Index up 9%

• • Metals up 3%
• Region ADV detail:
• • LatAm up 20% with double-digit growth across Interest Rates, Equity Index and Energy
  • Canada up 16% with double-digit growth across Interest Rates, Equity Index, FX and Metals
  • APAC up 11% with double-digit growth across Equity Index, FX and Agriculture

2022 non-U.S. ADV highlights:

• Asset Class ADV detail:
• • Equity Index up 26%

3.2Non-U.S. Quarterly ADV by Product Line

ADV in millions

2.4

1.6

0.8

0.0

Interest Rates	Equities		FX		Energy	Agricultural	Metals
			4Q21		4Q22

3.5Non-U.S. Annual ADV by Product Line

ADV in millions

2.8

2.1

1.4

0.7

• • FX up 22%
  • Interest Rates up 19%
  • Double-digitEnergy growth in APAC
    (+15%) and Latam
    (+70%)
• Region ADV detail:
• • LatAm up 30%
  • Record APAC up 27%
  • Record Canada up 21%
  • Record EMEA up 10%
• Options ADV up 12% with double-digit growth across APAC, Latam and Canada

0.0
Interest Rates	Equities	FX	Energy	Agricultural	Metals

Regional commentary:	2021	2022

• While the EMEA region has been challenged due to economic conditions in continental Europe and the UK, the Russia and Ukraine conflict and shifts in European energy, the region still exhibited record full-year performance in revenue and ADV. Equity Index and Interest Rates remain the highest performing asset classes
• The largest proportion of APAC's activity was in Retail with particular strength in Korea. Mainland China pressures have stabilized, and new volume growth is beginning to emerge. We also saw solid volume growth from Prop firms driven primarily by Singapore and India
• The LatAm region continues to show consistently strong growth in volume. Regulatory barriers are beginning to ease - new regulation issued in Brazil in December 2022 will allow funds to invest up to 100% offshore, versus the prior cap at 20%. Recent economic and political uncertainty in Brazil will continue into 2023 following contentious presidential elections in Q422
• Canada had YoY growth across 5 of 6 asset classes in both 4Q22 and 2022

We continue to innovate, and leverage the powerful characteristics of our business model, to create more opportunities and provide liquid markets for our current and new clients

• Euro Short-Term Rate (€STR) and RepoFunds Rate (RFR) futures - Launched in 4Q22, these contracts bring enhanced trading and risk management to three key eurozone interest rates: the €STR, the German RFR and the Italian RFR, and are proving to be a valuable product for market participants faced with heightened interest rate differentials. Trading in €STR futures has been especially active around the Fed and ECB decisions, as well as following important economic data releases, and more than doubled sequentially in January 2023

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