CME Group Inc. · NASDAQ:CME
CME — Q2 2017 Earnings Presentation
51 slides from CME's earnings presentation, April 2017
Slide 1: CME Group Customer Forum Q2 2017
CME Group Customer Forum Q2 2017 Singapore: 25 April Hong Kong: 27 April London: 10 May US Webinar: 11 May CME GROUP INTERNAL © 2017 CME Group. All rights reserved.
Slide 2: Disclaimer
Disclaimer CME Group, The Globe logo, CME, Chicago Mercantile Exchange, CME Direct and Globex are registered trademarks of Chicago Mercantile Exchange Inc. ("CME Inc."). CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. ("CBOT"). ClearPort, New York Me
Slide 3: Agenda
Agenda • Product Updates - Interest Rates - New Equity Products - FX - Energy - Agriculturals - Metals • Globex Technology Changes • Update on Risk Management • Customer Tools & GUIs • Partner Services • Q&A CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 3
Slide 4: Interest Rates Highlights
Interest Rates Highlights Ultra 10 Futures Update - Traded over 25M contracts by 400+ global participants in 16 months since launch - Record Q1 ADV of 104K, and record open interest of 359K contracts on April 10 - Record 66 Large Open Interest Holders, as reported by the CFTC’s March 14 Commitment o
Slide 5: New Equity Products at CME
New Equity Products at CME April 2017 CME launched: • Monday Weekly Options on E-mini S&P 500 • Very successful launch with over 600,000 contracts traded in April • Allows client to further refine trading horizon to target specific events e.g. the French Election • This follows successful launch of
Slide 6: Record Usage of CME FX Futures Drives Demand for Monthly Contracts
Record Usage of CME FX Futures Drives Demand for Monthly Contracts Capital constraints have reduced liquidity in the cash FX market, driving client demand for additional FX futures maturities to efficiently manage exposures Large Open Interest Holders in CME FX Futures Now Available Monthly FX Futur
Slide 7: Volatility-Quoted Options (VQO)
Volatility-Quoted Options (VQO) VQO enables clients to trade an option in terms of volatility instead of price with an “auto-hedge” into the corresponding underlying futures contract. Volatility-Quoted Options Product Overview Quote the standard CME expiration contracts in annualized implied volat
Slide 8: NYMEX Natural Gas Update
NYMEX Natural Gas Update Coming Soon- Four New European Natural Gas Futures Contracts on NYMEX • UK NBP Natural Gas (USD/MMBtu) (ICIS Heren) Front Month Futures (NBP) • Dutch TTF Natural Gas (USD/MMBtu) (ICIS Heren) Front Month Futures (TTE) • Henry Hub NBP (ICIS Heren) Natural Gas Spread Futures (N
Slide 9: OPEC Volatility Risk? NYMEX weekly options on crude oil futures
OPEC Volatility Risk? Manage it with NYMEX weekly options on crude oil futures • What impact will the May 25th OPEC meeting have on crude oil markets? • Use weekly options on NYMEX WTI and Brent futures to precisely manage your risk • Liquidity in our weekly options continues to grow as average dail
Slide 10: EU Wheat contract: May '17 Update
EU Wheat contract: May ‘17 Update • Allows traders to deliver, re-deliver and carry certificates • Listed on CBOT, allows margin offsets vs SRW, HRW Wheat (60%) and corn (50%) • Over 100,000 lots traded since Sept 12 launch (ADV 800 lots) • Over 5 million tonnes of wheat • 65 lots delivered against
Slide 11: The Growth of the KC Hard Red Winter Contract
The Growth of the KC Hard Red Winter Contract • KC Hard Red Wheat volume and open interest have been trending upward in recent years and reached an all-time highs recently • Over 288,000 contracts of Open Interest as of April 21 • Increased liquidity makes it easier for you to transact daily, allowi
Slide 12: Overview of CME Group's Precious Metals Products
Overview of CME Group’s Precious Metals Products • April Highlights include: • Grew Gold futures and options ADV 30 percent to 289,000 contracts • Increased Silver futures ADV 18 percent to 112,000 contracts 2017 Q1 Average Daily Volume % Change from Open Interest Product Code Volume in ounces 2016
Slide 13: COMEX Copper – Liquid and Transparent Futures Market
COMEX Copper – Liquid and Transparent Futures Market Average Daily Turnover = 100,435 lots = Exceed 1.1 mil mt per day COMEX Copper ADV +22.8% COMEX Copper Month-end Open (YoY Jan-Apr) Interest +39.5% YoY 120,000 300,000 100,435 247,772 100,000 250,000 81,818 80,000 200,000 177,668 Lots Lots 60,000
Slide 14: Agenda
Agenda • Product Updates • Globex Technology Changes - Expansion of Triangulation for FX Vol Quoted Options - Market By Order Update - CGW Upgrade & IP Change - New iLink & Drop Copy Logon Process - iLink 3.0 • Update on Risk Management • Customer Tools & GUIs • Partner Services • Q&A CME GROUP INTE
Slide 15: Vol Quoted Options & Triangulation Functionality
Vol Quoted Options & Triangulation Functionality • Launched Vol Quoted Options November 2016; Triangulation on Australian Dollar in February 2017 • Expanding Triangulation to the CME FX Majors • Pooled liquidity and price discovery across different quoting conventions - Volatility Quoted Options, Pr
Slide 16: Example: Quoting in Volatility
Example: Quoting in Volatility 6EH6 6EH6 C13500 BID ASK BID ASK (10) 1.3500 1.3502 (30) I (20) 0.0138 0.0140 (50) I I (10) 1.3494 1.3508 (20) I (20) 0.0136 0.0142 (40) 6EH6 VC13500 BID ASK (30) 10.00 10.05 (50) Bid 6EH6 C13500 0.0140 (10) Fill 10 6EH6 VC13500 @ 10.05 Fill 10 6EH6 C13500 @ 0.0140 Fil
Slide 17: Expanding CME FX Vol Quoted Options & Triangulation
Expanding CME FX Vol Quoted Options & Triangulation Triangulation for Japanese Yen, British May 21 Pound and Swiss Franc Triangulation for CME Canadian Dollar June 18 and EuroFX CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 17
Slide 18: CME Globex Changes for CME FX Enhancements
CME Globex Changes for CME FX Enhancements Venue changes to enable future CME FX Enhancements May 21 – CME Commodity Options & CBOT IR Options CME Commodity Options CBOT Interest Rate Options New MSGW and DC IPs New Source IP for MDP3 New Source IP for MDP3 New config.xml files New config.xml files
Slide 19: Market By Order Market Data
Market By Order Market Data CME Globex Market By Order (MBO) provides: • Size of individual orders at a price • Individual queue position • Full depth of book MBO and Market By Price (MBP) Information on a Single Feed • Avoids the need to arbitrate between separate MBO and MBP feeds • MBP remains un
Slide 20: Market By Order Market Data Rollout
Market By Order Market Data • Phased Production Rollout by DCM • NYMEX, COMEX and DME: Complete • CBOT and MGEX: Complete • CME: May 14 – May 21 • BMD/KRX: June 4 • Production mocks available for all channels • MBO historical data will be captured as products are enabled with MBO in production CME G
Slide 21: Market By Order Market Data Bandwidth Impacts
Market By Order Market Data Bandwidth Impacts • As projected, overall incremental feed bandwidth has increase 30-40% on channels with MBO. • During peak times, the number of incremental feed packets per millisecond has increased up to 40-50%. • To address possible microbursts CME Group has implement
Slide 22: 3rd Party System Providers Certified to MBO
3rd Party System Providers Certified to MBO • Activ Financial Systems Inc. • Netcope • Barcharts • Onix Solutions • Celoxica • Quanthouse • CME Direct • Rithmic • CQG • Stellar Trading Systems • EPAM Systems • Strike Technologies • Exegy Incorporated • Trading Technologies (Next Gen Platform) • Fide
Slide 23: Convenience Gateway Upgrade: June 2017
Convenience Gateway Upgrade: June 2017 After the successful launch of the MSGW architecture, we are now making improvements to our CGW architecture: • CGW hardware upgrade • Fewer CGWs reduce the necessary IP management • Preparing for Fault Tolerance change to designated primary in 2nd half of 2017
Slide 24: CGW Upgrade Roadmap
CGW Upgrade Roadmap Mandatory migration on June 25; optional earlier migration on June 18 June 24 & 25 • Customer mock Available Now • Mandatory • New IPs and Ports for migration to new all CGW sessions IPs June 3 June 17 & 18 Q4 • Last day to • Customer mock • Fault register for • Optional Toleranc
Slide 25: New CME Globex API Logon Authentication
New CME Globex API Logon Authentication Overview To ensure the highest levels of security, CME Group will implement further hardening of the iLink and Drop Copy session authentication at login New Logon Procedure • Keys are generated by CME and distributed via the Request Center every 12 months or u
Slide 26: Request Center Key Management
Request Center Key Management Keys will be requested and managed via the Request Center CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 26
Slide 27: New iLink and Drop Copy Logon Process
New iLink and Drop Copy Logon Process Customer CME Globex Create a FIX logon FIX logon message including the HMAC, Access Key ID, and HMAC message and Algorithm ID Generate the HMAC using the logon Validation of HMAC message and the secret Logon Ack and message key timestamp Documentation: Q3 2017 N
Slide 28: iLink 3.0
iLink 3.0 Overview • Improved performance and reduced variability - Streamlined, efficient message designs - Fixed message sizes, regardless of content • Consistent message format for order entry and market data - Reduces cost and complexity of doing business on CME Globex • Customer-driven function
Slide 29: iLink 3.0 - Features
iLink 3.0 - Features Layer Feature Customer Impacts Presentation Simple Binary iLink messages are controlled by template, like Encoding (SBE) market data If iLink changes message layout, customers must update template Session New FIXP protocol Session protocol header only when needed Application mes
Slide 30: iLink 3.0 Migration Plan
iLink 3.0 Migration Plan: • iLink 3.0 and iLink 2.0 will be available in parallel for both CGW and MSGW sessions • iLink 2.0 will be decommissioned at the end of the parallel period • Drop Copy will support both iLink 3.0 and iLink 2.0 source sessions • Drop Copy applications must support both iLink
Slide 31: iLink 3.0 Target Timeline
iLink 3.0 Target Timeline Message Q3 2017 Specification Available New Release Two phases: • Q1 2018 – Protocol, encoding, session model • Q2 2018 – Customer-Driven Functionality Production 2H 2018 Decommission Early 2019 legacy iLink 2.x CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 31
Slide 32: CME Globex Execution-Related Enhancements
CME Globex Execution-Related Enhancements • New tag to enhance straight through processing via a new common trade ID which traces each individual execution across CME Globex and through clearing • iLink tag 37711-MDTradeEntryID • MDP 3.0 tag 37711-MDTradeEntryID • CME STP and CME STP FIX MDTradeEntr
Slide 33: Agenda
Agenda • Product Updates • Globex Technology Changes • Update on Risk Management - In-Line Credit Controls - New Cross Venue Risk - SMP Phase 3 • Customer Tools & GUIs • Partner Services • Q&A CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 33
Slide 34: In-Line Credit Controls
In-Line Credit Controls CME Globex Pre-trade Risk Management: • A more granular type of pre-execution risk coverage than Globex Credit Controls (GC2), via CME Account Manager • Daily maximum long & short position limits, per product, at the account level • Limits set separately for future and option
Slide 35: Cross Venue Risk
Cross Venue Risk The next stages of CME Account Manager risk management enhancements include several functions that can be categorized as Cross Venue Risk Cross Venue Risk functions will allow clearing firms to set a one stop, real time set of dollar based limits encompassing both OTC and exchange t
Slide 36: Self-Match Prevention: Current & Future
Self-Match Prevention Current & Future SMP 1 & SMP 2 SMP 3 2017 Self Match Prevention 3 2013 Self Match Prevention 1 Extend SMP functionality Prevent the matching of orders across multiple Globex for accounts with common Firm ID's within or across ownership using the same clearing firms. Globex Firm
Slide 37: Self Match Prevention Phase 3
Self Match Prevention Phase 3 Key Facts Self Match Prevention Identifier (SMP ID): • Functionality remains optional and prevents one or more CME Globex Firm ID(s) from trading against its own opposite side order that contains the same Self Match Prevention Identifier (SMP ID) in tag 7928. • Trading
Slide 38: Self Match Prevention Phase 3 Key Customer Events and Dates
Self Match Prevention Phase 3 Key Customer Events and Dates Testing and Certification • All customers and system providers can test SMP functionality in New Release environment before launch. • Certification is not required for SMP Phase 3 functionality. Self Match Prevention Phase 3 Date New Releas
Slide 39: Agenda
Agenda • Product Updates • Globex Technology Changes • Update on Risk Management • Customer Tools & GUIs - CME Direct Releases - New FirmSoft - STP - DataMine • Partner Services • Q&A CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 39
Slide 40: CME Direct – Futures, Options, OTC Markets on a Single Platform
CME Direct – Futures, Options, OTC Markets on a Single Platform • Real-time streaming quotes with market depth • Globex RFQs, option strategy creation, including covered and • Multiple order types, including automated orders, order duration multi-leg and order protection functions • Real-time option
Slide 41: CME Direct – Recent Release April 3rd 2017
CME Direct – Recent Release April 3rd 2017 Customer feature rich release including: (http://www.cmegroup.com/trading/cme- direct/new-features.html) Contract Links - Creates an interactive menu for contracts and strategies in CME Direct. Displays a color notification for CME Globex, OTC and Staged
Slide 42: CME Direct – Upcoming Release July 2017
CME Direct – Upcoming Release July 2017 Synthetic Iceberg Functionality Example: Limit Order to buy 100 CL at 55.50 • Managed by CME Direct using native Globex orders • Set maximum disclosed quantity = 10 • Different order Id with each quantity refresh • Set quantity difference percentage • Ability
Slide 43: New Look – CME Direct Mobile
New Look – CME Direct Mobile • View and cancel orders from desktop • Continuous market updates across all and your phone devices • Monitor markets and your orders from • Trade across multiple clearing accounts anywhere 43 CME GROUP INTERNAL © 2017 CME Group. All rights reserved.
Slide 44: New FirmSoft Version
New FirmSoft Version Try the New FirmSoft Today A new, user-friendly version is now available at https://one-nr.cmegroup.com. • What’s new? - Updated look-and-feel for easier navigation - New search and cancel by Market Segment Gateway ID functionality - Mobile-friendly access to features you need o
Slide 45: Benefits of CME STP
Benefits of CME STP Capture your Cleared Trades Data directly into your risk system • Direct feed, at no cost, from Exchange to customers • Customers do not have to rely on FCM for data, one source for all exchange transactions • STP for all cleared trades regardless of venue, exchange, front-end sy
Slide 46: CME STP Trade View – Coming Soon
CME STP Trade View – Coming Soon View all CME Group, Bilateral and Cleared Elsewhere trades across all venues CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 46
Slide 47: CME DataMine
CME DataMine • Official source of the most comprehensive historical price information available for all CME Group markets. • Data spanning back to the 1970s. • Self-service cloud solution. • Data is available as a one-time download or as an on-going subscription. • 24/7 market data access to CME Bit
Slide 48: Agenda
Agenda • Product Updates • Globex Technology Changes • Update on Risk Management • Customer Tools & GUIs • Partner Services • Q&A CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 48
Slide 49: Partnership Updates
Partnership Updates • The Royal Mint The Royal Mint and CME Group are collaborating to create the first ever digitized gold contract; Royal Mint Gold (RMG) is a cryptographically secure alternative to buying, holding or selling spot gold • Crypto Facilities CME Group Bitcoin Spot Real Time Index (BR
Slide 50: Reference of Important Dates
Reference of Important Dates Topic Date Market by Order (MBO) CME DCM rollout 14 – 21 May Triangulation - Japanese Yen, British Pound, and Swiss Franc 21-May CME Commodity Options - New MSGW and DC Ips, new source IP for MDP3, and new config.xml files 21-May CBOT Interest Rate Options - New Source I
Slide 51: Q&A?
Q&A? CME GROUP INTERNAL © 2017 CME Group. All rights reserved. 51