CME Group Inc. · NASDAQ:CME

CME — Q2 2015 Earnings Presentation

54 slides from CME's earnings presentation, May 2015

Slide 2: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP • Partner Exchange Updates • CME Portal & SmartClick
Slide 3: MDP 3.0: Features and Benefits
MDP 3.0: Features and Benefits Launched Market Data Platform (MDP) 3.0, CME Group’s next generation market data protocol All CME and Hosted Partner Exchange markets available BVMF and MexDer channels launching in 2nd half of the year State of the Art Technology • Outperforms legacy market data feed
Slide 4: MDP 3.0: Customer Adoption by the Numbers
MDP 3.0: Customer Adoption by the Numbers Executing Firms Listening Firms Certified Firms to MDP 3.0 Displaying their Channels Order Numbers 202 141 51 (65%) (61%) (8%) © 2015 CME Group. All rights reserved. 4
Slide 5: MDP 3.0 vs. FIX/FAST: Feed Statistics
MDP 3.0 vs. FIX/FAST: Feed Statistics MDP 3.0 95 Avg pps 251,974 Avg bps MDP 3.0 FIX/FAST • 147,831,544 Avg Daily Msg • 139,058,784 Avg Daily Msg Count Count • 38,019 Avg Peak # of Msgs • 27,182 Avg Peak # of Msgs • 110 Mbps Avg Peak b/w • 71 Mbps Avg Peak b/w Stats from week of 3/16/2015 © 2015 CME
Slide 6: MDP 3.0: Schedule
MDP 3.0: Schedule Order Routing Partners Available Shutdown FF No ALL FF Longer a Channels MexDer Feed of Mid-Oct Record 2015 NR: Aug 2015 End of Sep BVMF Prod: Sep 2015 2015 NR: Jul 2015 Prod: Aug MDP 2015 3.0 / FF Parallel Current © 2015 CME Group. All rights reserved. 6
Slide 7: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP • Partner Exchange Updates • CME Portal & SmartClick
Slide 8: Drop Copy 4.0
Drop Copy 4.0 In Q3 2015, CME Group will introduce a new Drop Copy implementation featuring: • Architectural changes to align it with the upcoming new iLink architecture • New messaging • Functionality changes ***Note that certification is required for all Drop Copy clients and is a pre-requisite fo
Slide 9: Messaging Overview
Messaging Overview Highlights of Message Level Changes Connectivity Management • CME Group recommends a heartbeat interval of 30 seconds. Must be between 5 and 60 seconds else the logon message will not be acted upon. Message Recovery: Drop Copy to Client • CME group strongly recommends the use of E
Slide 10: Current Drop Copy Architecture: CGW Sessions
Current Drop Copy Architecture: CGW Sessions DC CGW Target session OYZV2K sequences messages from multiple iLink Gateways © 2015 CME Group. All rights reserved. 10
Slide 11: New Drop Copy 4.0 Architecture: MSGW Sessions
New Drop Copy 4.0 Architecture: MSGW Sessions MSGW DC Target session OMADGF sequences messages from each MSGW iLink Gateway © 2015 CME Group. All rights reserved. 11
Slide 12: Fault Tolerance and Bandwidth Impacts
Fault Tolerance and Bandwidth Impacts Fault Tolerance • Client systems must always connect and log into the designated primary gateway as long as it is available. An attempt to log into the designated backup while designated primary is available will result in a forced logout. • Customers can only r
Slide 13: Mandatory Drop Copy 4.0 Certification
Mandatory Drop Copy 4.0 Certification • All current DC customers must certify for and migrate to Drop Copy 4.0 - Prerequisite for systems who wish to consume MSGW source session data - Certification required for both session models • The Client Impact Document, the specifications and the FAQ are ava
Slide 14: Production Migration
Production Migration Separate CGW and MSGW Target sessions • Once certified, customers should contact their GAM to set up a new Drop Copy 4.0 group to migrate • Customers can choose to hot-cut or to run CGW groups in parallel - GAM will create a new production Drop Copy 4.0 group – a duplicate to th
Slide 15: Production Migration
Production Migration Example of the Drop Copy Group Production Migration Drop Copy Group A - 2.0 Drop Copy Group A - 4.0 OYZV2K OYZV3K OYZV4K OYZV5K OMADGF AB1 BC1 AB1 BC1 EF1 AB2 BC2 AB2 BC2 EF2 AB3 BC3 AB3 BC3 EF3 AB4 BC4 AB4 BC4 EF4 • Only CGW Source sessions • Drop Copy CGW Target sessions with
Slide 16: Production Migration
Production Migration The current Drop Copy architecture will be phased out • Drop Copy 4.0 Production Launch date: Q3 2015 • Fees remain unchanged - The parallel, duplicated Drop Copy groups will be free of charge for 6 months from launch - Customers who continue to run in parallel beyond 6 months w
Slide 17: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP • Partner Exchange Updates • CME Portal & SmartClick
Slide 18: New iLink Architecture: Market Segment Gateways
New iLink Architecture: Market Segment Gateways Q4 Launch of New Order Routing Architecture Market Segment Gateways (MSGWs) • FIFO message handling per market segment • Consistent performance across iLink sessions - Single entry point for all traffic for each market • New Session Access Model • New
Slide 19: New iLink Architecture: Launch
New iLink Architecture: Launch MSGW Internal Launch Internal roll out of MSGWs into the iLink Infrastructure – Q3 • CGWs will route through the new MSGWs • No direct customer access to the MSGWs • Includes a failover behavior change, which will affect all clients. Optional Direct Access to MSGWs – Q
Slide 20: New iLink Architecture: Session Model
New iLink Architecture: Session Model Shared SessionID Among All MSGWs CGW iLink Sessions iLink iLink Session EF1 will be Convenience Convenience replicated across Gateway-1 Gateway-2 MSGWs SessionID:Port SessionID:Port AB1:9000 BC1:9000 MSGW iLink Sessions AB2:9001 BC2:9001 IP 10.10.1.1 IP 10.10.1.
Slide 21: New iLink Architecture: Timestamps
New iLink Architecture: Timestamps • MDP 3.0 introduced Globex timestamps in Match Engine nanoseconds with microsecond precision • Market Segment Gateway adds additional timestamps 1 in nanoseconds with microsecond precision 1 • New timestamp (1) on iLink and MDP representing when orders reach the M
Slide 22: New iLink Architecture: Launch Milestones
New iLink Architecture: Launch Milestones Available Now • Client Impact Document • New Release: MSGW for all markets Summer 2015 Autocert+ Test Suite available Q3 2015: Pre-Launch • Internal MSGW rollout for all markets • Mock trading sessions for customers to interact with the system and experience
Slide 23: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP • Partner Exchange Updates • CME Portal & SmartClick
Slide 24: New Session Policy: Components
New Session Policy: 4 Components A new policy will be rolled out in conjunction with the launch of the Market Segment Gateway (MSGW): Port Monthly Inactivity Volume Excess Activation Charge Tiers Capacity Charge Charge CGW / Both Both MSGW MSGW MSGW Level Globex Session ID Session ID Session ID Appl
Slide 25: Recent Session Policy Updates
Recent Session Policy Updates Based on recent customer feedback and to render the policy more flexible, we are making these changes: • Tier assignment will be based on ADV during the greater of the last two quarters • Firms who fall into a lower tier will be allowed to keep sessions above their new
Slide 27: Example: Customer XYZ Trading
Example: Customer XYZ Trading Time Period Executing Firm ADV Q4 ADV Q1 Tier MSGW Session Allowance MSGW Sessions Subject to ECC April 1st 2015 111 -‐ XYZ Trading 55,000 35,000 4 30 25 0 • The above represents the first ADV calculation to identify the tier for a GFID • In this case the customer woul
Slide 28: Milestones
Milestones April/May: Customers notified by their GAM of estimated Q2 Phase 1 and 2 MSGW session allocation 2015 • Based on greater ADV during Q4 2014 & Q1 2015 July: Updated estimates provided based on Q1 and Q2 2015 for Phase 1 and 2 MSGW session allocation Q3 2015 September: Customers notified of
Slide 29: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP • Partner Exchange Updates • CME Portal & SmartClick
Slide 30: Implied Options
Implied Options Creating liquidity in spreads and back months through implied functionality • Enhance options market quality and liquidity to advance migration to CME Globex Option Spread Type and Product Eligibility • 8 recognized UDS strategies will be available for Implied Options: • Calendar, St
Slide 31: Comparison to Futures Implied Functionality
Comparison to Futures Implied Functionality Feature Implied Futures Implied Options Frequency / Pace Streaming On-Demand driven by RFQs, Configured with Delay + Duration Implication Direction Complementary; Complementary; INs + OUTs INs + OUTs Implied Generations Up to 2nd Generation 1st Generation
Slide 32: User Defined Instruments (UDI)
User Defined Instruments (UDI) • Allows users to dynamically create new option strikes. • For options in Energy and Metals only. • UDIs can only be created using CME Direct. • Once created, market data will be published on MDP 3.0 and order entry through iLink will be supported • Both Put and Call w
Slide 33: Leap Second
Leap Second What is a Leap Second? • A Leap second is a one-second adjustment that is occasionally applied to Coordinated Universal Time (UTC) to keep in synch with the mean solar time.1 • Previously, the leap second was added while the market was closed. • A positive leap second will be introduced
Slide 34: CME STP
CME STP Key Benefits • Allows free connectivity to receive all trades cleared at CME for all firm types • Reduces dependency on report generation from FCM to Trading/Broker entity • Ensures real-time regulatory compliance • Uses an industry standard protocol and access via the Internet or leased lin
Slide 35: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP • Partner Exchange Updates • CME Portal & SmartClick
Slide 36: Global Partner Updates
Global Partner Updates China Financial Futures Exchange (CFFEX) • Only state-approved financial derivative exchange in China. Its flagship product is CSI300 Index Futures. • CME Group will provide data administration services including licensing, onboarding, invoicing, fee collection and audit on be
Slide 37: Global Partner Updates
Global Partner Updates Korea Exchange • On December 8th, KRX launched USD/KRW FX futures on CME Globex for night time trading. • The FX contract is growing MoM with ADV of 83 in Jan, 536 in Feb, and 1,339 in March. Dubai Mercantile Exchange • DME had a positive 2014, with trading volumes up 33% year
Slide 38: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP v CME Direct • CME Portal & SmartClick • Product Upd
Slide 39: CME Application Portal is Evolving into a Single Point of Access
CME Application Portal is Evolving into a Single Point of Access For All CME Applications Individual Q1 Q1 Application 2016 2014 2015 Links © 2015 CME Group. All rights reserved. 39
Slide 40: CME Application Portal Roadmap 2015 and Beyond
CME Application Portal Roadmap 2015 and Beyond Administration FirmSoft BPS CME CORE CoLo Portal (Q2 2015) RAV Manager EFS Portfolio & Risk Risk Management Tools Administration Firm Admin Dashboard Positions (Q2 2015) GPS Web GalaxC (Q4 2015) Membership Portal Request Center ClearPort Deliveries Plus
Slide 41: Agenda
Agenda • E-Trading Update Ø Market Data Platform 3.0 Ø Drop Copy 4.0 Ø New iLink Architecture – MSGW Ø Revised iLink Session Policy Ø Other Upcoming CME Globex Releases v Implied Options v User Defined Instruments v Leap Second v CME STP • CME Portal & SmartClick • Product Updates © 2015 CM
Slide 42: CME Direct: Continued expansion of features, users and FCM support
CME Direct: Continued expansion of features, users and FCM support CME Direct is the Exchange-provided trading CME DIRECT system - Electronic trading for futures & options - Integrated, real-time option analytics - Submit off-exchange trades quickly, e.g. block trades, EFP - View all your listed and
Slide 43: 2015 CME Direct Roadmap
2015 CME Direct Roadmap Four more releases in 2015 CME DIRECT MOBILE - Focus on options trading and block trade workflows - SMART Click ID and .NET 4.5 required from May 18 Online Interest Rate and FX block trade entry CME Direct Mobile in Q2 EOS Trader end of life - EOS Trader users to migrate to C
Slide 44: Product Updates – Interest Rate Macro Factors
Product Updates – Interest Rate Macro Factors Rapidly Expanding Product Scope to Fit Client Needs • Since 2008 CME has continued to expand the product scope, including Ultra T-Bond Futures and options, mid-curve options, and weekly option expirations in both Treasuries and Eurodollars. • Products la
Slide 45: Product Updates – Interest Rate Futures
Product Updates – Interest Rate Futures Traders are turning to short term interest rate products (STIRs) to position portfolios for potential changes to FOMC policy • 2Y Note Futures: Treasury product witnessed record trading activity with Q1 2015 volumes increasing 50% YoY to 1.1 Million contracts
Slide 46: Product Updates – Interest Rate Options
Product Updates – Interest Rate Options Electronic trading continues to drive the growth in interest rate options § Treasury Futures & Options: • Incremental growth in Treasury options has been driven by increased activity in the electronic marketplace, as floor volumes have remained relatively con
Slide 47: Product Updates – FX
Product Updates – FX CME Group FX Options continue to see volumes grow. • March 2015 +119% on March 2014 • Year to Date on 2014 volumes are +57% © 2015 CME Group. All rights reserved. 47
Slide 48: Weekly Options continue to attract trading interest
Weekly Options continue to attract trading interest • April Weekly Options ADV was 18,123 • Weekly FX options volume up 49.3% YTD CME FX G6 American-Style Weekly Options ADV 25,000 20,000 15,000 10,000 5,000 - Jan Jan Jan Jan Sep Sep Sep May May May 2012 2013 2014 2015 48 © 2015 CME Group. All right
Slide 49: CME FX Options – ADV and % Electronic
CME FX Options –ADV and % Electronic YTD Options ADV 93,735 FX Options ADV 120 97%100% Thousands 90% 100 80% 70% 80 60% FX Options ADV % Electronic 60 50% 40% 40 30% 20% 20 10% - 0% Jan Jan Jan Jan Sep Sep Sep May May May 2012 2013 2014 2015 49 © 2015 CME Group. All rights reserved. 49
Slide 50: Product Updates – FX
Product Updates – FX Eurozone, Back in the Forefront CME Group FX futures LOIH at 990, New All-time high. Euro and the Majors as a group hit all-time highs of 249 and 799 LOIHs, respectively, March 10 © 2015 CME Group. All rights reserved. 50
Slide 51: Product Updates – FX
Product Updates – FX Why People are Choosing FX Futures FX Futures OTC FX Pricing • Central Order Limit Book (CLOB) • No/Limited Transparency • Transparent – listed • Fragmented liquidity across all dates and dealers • Concentrated liquidity points • Price discovery via quotes from relaEonship deale
Slide 53: CME Group brands and risk disclosure
“CME Group”, “CME Europe” and “CME Clearing Europe” are brands of CME Group Inc. and its subsidiaries, members of which include Chicago Mercantile Exchange Inc., CME Europe Limited, CME Clearing Europe Limited and CME Marketing Europe Limited. Exchange traded and Over-The-Counter (OTC) derivatives a

CME Group — Q2 2015 Earnings Presentation on 6ix

CME — Q2 2015 Earnings Presentation

Slide 1: CME Group Customer Forum Spring 2015

Slide 2: Agenda

Slide 3: MDP 3.0: Features and Benefits

Slide 4: MDP 3.0: Customer Adoption by the Numbers

Slide 5: MDP 3.0 vs. FIX/FAST: Feed Statistics

Slide 6: MDP 3.0: Schedule

Slide 7: Agenda

Slide 8: Drop Copy 4.0

Slide 9: Messaging Overview

Slide 10: Current Drop Copy Architecture: CGW Sessions

Slide 11: New Drop Copy 4.0 Architecture: MSGW Sessions

Slide 12: Fault Tolerance and Bandwidth Impacts

Slide 13: Mandatory Drop Copy 4.0 Certification

Slide 14: Production Migration

Slide 15: Production Migration

Slide 16: Production Migration

Slide 17: Agenda

Slide 18: New iLink Architecture: Market Segment Gateways

Slide 19: New iLink Architecture: Launch

Slide 20: New iLink Architecture: Session Model

Slide 21: New iLink Architecture: Timestamps

Slide 22: New iLink Architecture: Launch Milestones

Slide 23: Agenda

Slide 24: New Session Policy: Components

Slide 25: Recent Session Policy Updates

Slide 26: Globex Firm ID MSGW Session Allowance Tiers

Slide 27: Example: Customer XYZ Trading

Slide 28: Milestones

Slide 29: Agenda

Slide 30: Implied Options

Slide 31: Comparison to Futures Implied Functionality

Slide 32: User Defined Instruments (UDI)

Slide 33: Leap Second

Slide 34: CME STP

Slide 35: Agenda

Slide 36: Global Partner Updates

Slide 37: Global Partner Updates

Slide 38: Agenda

Slide 39: CME Application Portal is Evolving into a Single Point of Access

Slide 40: CME Application Portal Roadmap 2015 and Beyond

Slide 41: Agenda

Slide 42: CME Direct: Continued expansion of features, users and FCM support

Slide 43: 2015 CME Direct Roadmap

Slide 44: Product Updates – Interest Rate Macro Factors

Slide 45: Product Updates – Interest Rate Futures

Slide 46: Product Updates – Interest Rate Options

Slide 47: Product Updates – FX

Slide 48: Weekly Options continue to attract trading interest

Slide 49: CME FX Options – ADV and % Electronic

Slide 50: Product Updates – FX

Slide 51: Product Updates – FX

Slide 52: Thank you!

Slide 53: CME Group brands and risk disclosure

Slide 54: CME Group Customer Forum