CME Group Inc. · NASDAQ:CME
CME — Corporate Update (March 2012)
73 slides from CME's corporate update, Mar 15, 2012
Slide 1: CME Group Customer Forum Q1/Q2 2012
CME Group Customer Forum Q1/Q2 2012 Singapore March 15, 2012 Hong Kong March 20, 2012 Seoul March 22, 2012 Chicago March 28, 2012 New York April 3, 2012 London April 19, 2012
Slide 2: Agenda
Agenda 1. Update on Regulatory Reform 2. Update on OTC Initiatives • Products • OTC Solutions: CME ConfirmHub, CME ClearPort 3. CME Clearing Europe 4. e-Trading Updates • Globex Performance Enhancements • Global Network Update • NY DR Datacenter/Disaster Recovery • CME Co-Location Services • Market
Slide 3: Agenda, continued
Agenda, continued 5. New or Recently Launched Products • Metals: • Coil Options • Copper Calendar Swaps & Average Price Options • Energy: • Thermal Coal • Crude & Refined products • Natural Gas • Interest Rates: • Product Expansion • Economic Trends • Margining Efficiencies • FX: • Order Execution D
Slide 4: Financial Reform Rulemaking
Financial Reform Rulemaking CFTC, SEC, Treasury continue rulemaking to implement Dodd-Frank CME Group agrees with the core tenets of Dodd-Frank: • Safety and soundness of central counterparty clearing • Price transparency • Liquid markets with low transaction costs • Market integrity and customer pr
Slide 5: US Ahead of EU in Timing of OTC Reforms
US Ahead of EU in Timing of OTC Reforms CFTC Final Rules EU Final Rules • Ag commodity definitions • EU Financial Services Legislation to • Process to review Swaps for Mandatory Clearing take place through 2012-2013 EU • Entity process for registered Entities • EMIR covers clearing/trade Implementat
Slide 6: Key Dodd-Frank Issues
Key Dodd-Frank Issues Issue Status Implications Phasing of OTC Proposed: Potential for Appropriate phasing will facilitate buy side Clearing mandated clearing to and sell side clearing begin in fall of 2012 Centralized Proposed: Final rule Could limit innovation & reclassification of Trading expecte
Slide 7: Looking Ahead
Looking Ahead • US: • CFTC, other regulators to adopt final rules over next several months with phased implementation for clearing and other requirements likely • Legislative proposals to amend Dodd-Frank will likely continue, however, divided congress and election year complicate passage of such pr
Slide 8: Agenda
Agenda 1. Update on Regulatory Reform 2. Update on OTC Initiatives • Products • OTC Solutions: CME ConfirmHub, CME ClearPort 3. CME Clearing Europe 4. e-Trading Updates • Globex Performance Enhancements • Global Network Update • NY DR Datacenter/Disaster Recovery • CME Co-Location Services • Market
Slide 9: Agenda, continued
Agenda, continued 5. New or Recently Launched Products • Metals: • Coil Options • Copper Calendar Swaps & Average Price Options • Energy: • Thermal Coal • Crude & Refined products • Natural Gas • Interest Rates: • Product Expansion • Economic Trends • Margining Efficiencies • FX: • Order Execution D
Slide 10: CME Group OTC Clearing
CME Group OTC Clearing Overview and Background CME Group has worked closely with buy side and sell side participants to build a multi-asset class, market leading OTC clearing solution Over $410 billion in notional has cleared since launch and open interest is over $236 billion Successful new p
Slide 11: Record Customer Clearing Activity
Record Customer Clearing Activity CME Group has built the leading OTC IRS and CDS clearing service by U.S. customer volume Interest Rate Swaps Credit Default Swaps Total Volume Cleared = $360.0 billion Total Volume Cleared = $50.2 billion Open Interest = $203.8 billion Open Interest = $32.9
Slide 12: Cleared OTC Financial Products
Cleared OTC Financial Products CME Group is delivering a comprehensive global product scope across IRS, CDS, and FX Existing Products • USD, GBP, EUR Interest Rate Swaps (IRS) out to 50 years; CAD out to 30 years • CDX IG Index, Series 9-17 – 3, 5, 7, and 10 year tenors as applicable • CDX HY Index,
Slide 13: Open Access Clearing Solution
Open Access Clearing Solution Several market leading affirmation platforms and Swap Execution Facilities have already connected directly to CME Clearing CDS Migration Bloomberg ICE Link Javelin MarkitSERV TradeWeb CME ClearPort Utility CME Clearing Bank of Deutsche Barclays BNP Paribas Citigroup Cre
Slide 14: Trade Workflow Mechanics
Trade Workflow Mechanics Straight Through Processing allows for real-time clearing and trade confirmations 1 – Dealer and Client agree to trade Client 1 Dealer 2 – Dealer alleges swap to Client through the Affirmation Platform 3 2 Affirmation Platform 3 – Client selects Clearing Member and verifies
Slide 15: Customer On-boarding Resources
Customer On-boarding Resources CME CORE Margin Tool Web-based margin tool that enables customers to generate initial margins for IRS and CDS portfolios CME CORE can be accessed by doing the following: • Create a CME SMART Click ID at https://cmecore.cmegroup.com/span/ • Once a SMART Click ID is
Slide 16: CME ConfirmHub
CME ConfirmHub • Front Office STP - Real-time trade flow to the trader’s desktop or risk management system • Back Office Trade Management – Trade reporting and workflow management with brokers • Broker Confirmations – Standardized broker confirmations with broker fees © 2012 CME Group. All rights re
Slide 17: CME ConfirmHub Front Office STP - LiveBlotter
CME ConfirmHub Front Office STP - LiveBlotter LiveBlotter toolbar application shows new, alleged trades with a popup, much like MS Outlook mail. “Trader Verify” to catch errors directly in the Front Office © 2012 CME Group. All rights reserved
Slide 18: CME ConfirmHub Back Office Trade Management
CME ConfirmHub Back Office Trade Management See all trades across brokers in real-time If traders or counterparties reject trades, this is immediately visible Focus on erroneous trades and outliers more efficiently Reduced need for expensive end-of-day matching services Reconcile broker fees Full Hi
Slide 19: CME ConfirmHub Broker Confirmations
CME ConfirmHub Broker Confirmations View standard confirmations across all brokers Single format across brokers and Exchange Fully automated Available from LiveBlotter and Back Office Trade Management © 2012 CME Group. All rights reserved
Slide 20: CME ClearPort 2012 Update
CME ClearPort 2012 Update • New product launches including expanded IRS and CDS, as well as additional Energy markets • Enhanced registration processes across asset classes and user type • Increased integration with CME ConfirmHub © 2012 CME Group. All rights reserved
Slide 21: CME ClearPort Trade Entry Process
CME ClearPort Trade Entry Process 2. Trade 3. Trade Blotter 1. Trade Entry Verification Displays the Input transaction Displays transaction broker’s transaction details (Commodity, information broker status and gives Start and End has entered and brokers the ability to Terms, Quantity, requests void
Slide 22: Agenda
Agenda 1. Update on Regulatory Reform 2. Update on OTC Initiatives • Products • OTC Solutions: CME ConfirmHub, CME ClearPort 3. CME Clearing Europe 4. e-Trading Updates • Globex Performance Enhancements • Global Network Update • NY DR Datacenter/Disaster Recovery • CME Co-Location Services • Market
Slide 23: Agenda, continued
Agenda, continued 5. New or Recently Launched Products • Metals: • Coil Options • Copper Calendar Swaps & Average Price Options • Energy: • Thermal Coal • Crude & Refined products • Natural Gas • Interest Rates: • Product Expansion • Economic Trends • Margining Efficiencies • FX: • Order Execution D
Slide 24: CME Clearing Europe: Solid growth of Volume and Open Interest
CME Clearing Europe: Solid growth of Volume and Open Interest and a strong start into 2012 Consistent build out of volumes and open interest over Q3/Q4 ‘11and in early ‘12 Volume build outs confirm that CME Clearing Europe is a way for CMEG to deliver CME products to clients outside of the US wh
Slide 25: CME Clearing Europe will deepen its OTC Commodity Offering in 2012
CME Clearing Europe will further deepen its OTC Commodity Offering throughout 2012 1 Existing OTC Commodity Suite: Energy, Agricultural, Freight & Metals Crude Oil Outrights Refined ProdOptions Petrochemicals Ethanol Crude Oil Spreads Natural Gas Options Refined Prod Spreads Freight Swaps Crude Oil
Slide 26: Expansion into OTC Financials, IRS and FX, key priority for CME Clearing Europe
Expansion into OTC Financials, IRS and FX, is key priority for CME Clearing Europe in 2012 EUROPE Launching OTC IRS and FX English Law CME Group’s Global Clearing Capabilities are built to accommodate clients’ regional clearing preference CME Clearing Europe is bringing CME’s US offering into a
Slide 27: Clearing houses delivering efficiencies across CME Group
CME Group’s clearing houses are focusing on delivering efficiencies across CME Group 6th May 2011 T+1 T+2 T+3 CMECE CMECE Launch INTRA-CLEARING HOUSE EFFICIENCIES (CMECE) 200 risk offsets in launch prod. suite As the scope of products and asset classes available for clearing through CMECE extends,
Slide 28: Agenda
Agenda 1. Update on Regulatory Reform 2. Update on OTC Initiatives • Products • OTC Solutions: CME ConfirmHub, CME ClearPort 3. CME Clearing Europe 4. e-Trading Updates • Globex Performance Enhancements • Global Network Update • NY DR Datacenter/Disaster Recovery • CME Co-Location Services • Market
Slide 29: Agenda, continued
Agenda, continued 5. New or Recently Launched Products • Metals: • Coil Options • Energy: • Thermal Coal • Crude & Refined products • Natural Gas • Interest Rates: • Product Expansion • Economic Trends • Margining Efficiencies • FX: • Order Execution Dashboard • Committment of Traders Report • Ex-pi
Slide 30: CME Globex Performance Enhancements
CME Globex Performance Enhancements Significant CME Globex Architecture Changes planned for Q3 2012 • Application and infrastructure redesign • All engines, all products (except Partner Exchange order routing markets) • iLink and FIX/FAST performance improvements iLink: Enhanced Performance and Redu
Slide 31: CME Globex Performance Enhancements
CME Globex Performance Enhancements Migration Strategy • Details will be communicated via the CME Globex Notices • New Source IPs for FIX/FAST MDP channels • Several mock trading sessions will be offered • Connect to and trade on the new architecture • Peak production data replay • iLink Early Adopt
Slide 32: CME Globex Performance Enhancements
CME Globex Performance Enhancements Future Outlook • Further network re-structuring is anticipated • Exploring emerging technologies and next generation hardware • Hardware acceleration • Additional feed granularity • Microsecond measurements and beyond… Stay Tuned • The Client Impact Assessment wil
Slide 33: Global Network Update
Global Network Update CME Group is re-engineering its global infrastructure to accommodate recent and potential future growth initiatives • Implement a high capacity, high availability, low latency, multi-purpose Global Backbone with a target Q1 2013 completion. • Completion of Global Backbone provi
Slide 34: Global Network Update
Global Network Update Status of initiatives to support CME’s Global Backbone: London: • All customers have been contacted by CME Global Account Management • Customers can order up to 1Gb copper hand-off to our new locations • Interoute (suite within the Docklands Global Switch facility): • Customers
Slide 35: CMEG's NY Data Center / Disaster Recovery Update
CMEG’s NY Data Center / Disaster Recovery Update • Protects against operational, facility and environmental risk • Adds another layer of protection to CMEG’s Business Continuity strategy • Provides Chicago-based customers with geographical diversification by using a back up VPN • CME has added a con
Slide 36: CME Co-Location Business Update
CME Co-Location Business Update • January 29, 2012 – Live Trading Launched out of Co-Location facility • Customers are seeing expected latency savings on the network • 80% of Phase 1 capacity has been reserved • 100+ Customers have signed up globally • CFTC rules on co-location are still pending • 1
Slide 37: Who is Onboard?
Who is Onboard? For more information please refer to: www.cmegroup.com/colo © 2012 CME Group. All rights reserved 37
Slide 38: Market Data Update: OTC Products Support
Market Data Update: OTC Products Support • Settlements for new CME cleared “Pure OTC” products • End Q1 2012 launch of CME CDS cleared OTC settlements in Streamlined FIX/FAST format, channel 170 • Channelization by asset class • Balance of all pure OTC settlements delivered over 2012 • Data will inc
Slide 39: Market Data Initiatives: CME DataCloud
Market Data Initiatives: CME DataCloud An ‘On-demand’ web services offering for access to CME settlement and partner market data With DataCloud; distributors, vendors and customers will: • Reduce time & cost to access data For More Information: • Eliminate data management datacloud@cmegroup.com • Ge
Slide 40: Market Data Initiatives
Market Data Initiatives Interest Rates Swap Futures. NEW Data. NEW levels of market transparency. • Flexible futures that embed the cash flows of OTC interest rate swaps, traded on Eris Exchange and cleared by CME Clearing • Streaming, real-time central limit order book trading in benchmark USD-deno
Slide 41: CME Firm Administrator Dashboard (FADB)
CME Firm Administrator Dashboard (FADB) Launched in 2009, the FADB allows clearing member firms and customers to efficiently access information relating to CME Globex and Clearing services. • In 2010, FADB enables clearing firm administrators to self-service iLink Cancel on Disconnect (COD) • Elimin
Slide 42: Risk Management Tools: Globex Credit Controls (GC2) update
CME Group Risk Management Tools Globex Credit Controls (GC2) update • Coming in July 2012: Mid-week adds • Currently GC2 limits for Globex Execution Firms created mid-week take affect on Sunday prior to market open • Clearing firms will have the ability to apply credit controls to Globex Execution F
Slide 43: Risk Management Tools: Risk Management Interface (RMI)
CME Group Risk Management Tools Risk Management Interface (RMI) On April 1st, CME Group will introduce the Risk Management Interface (RMI), an API and GUI that support granular, pre-trade risk management for Clearing Firms. RMI consists of two components (interface & GUI) and offers the following se
Slide 44: CME Group Risk Management Tools
CME Group Risk Management Tools RMI Graphical User Interface (GUI) • Web-based interface that allows Clearing Firms to: • Block/Un-block order entry at the same levels as the API • View current blocks Access to the RMI API is limited to Clearing Firms’ certified proprietary and third-party risk mana
Slide 45: CME Globex Technical Documentation
CME Globex Technical Documentation A wiki format for CME Globex technical information • Replaces the current PDF-format Software Development Kits, Client Impact Assessments and User Guides – Core and Advanced Functionality – Messaging Specifications – Electronic Trading Concepts – Risk management ov
Slide 46: Agenda
Agenda 1. Update on Regulatory Reform 2. Update on OTC Initiatives • Products • OTC Solutions: CME ConfirmHub, CME ClearPort 3. CME Clearing Europe 4. e-Trading Updates • Globex Performance Enhancements • Global Network Update • NY DR Datacenter/Disaster Recovery • CME Co-Location Services • Market
Slide 47: Agenda, continued
Agenda, continued 5. New or Recently Launched Products • Metals • Coil Options • Copper Calendar Swaps & Average Price Options • Energy: • Thermal Coal • Crude & Refined products • Natural Gas • Interest Rates: • Product Expansion • Economic Trends • Margining Efficiencies • FX: • Order Execution Da
Slide 48: Metals - Hot Rolled Coil Options (HRO)
Metals - Hot Rolled Coil Options (HRO) Tailored for Commercial Operations of Steel Producers and consumers to tailor the risk every day, not just on futures delivery day. Options settles against 4 (sometimes 5) weekly assessment in a given month. • NYMEX product, Financially Settled • Over-the-count
Slide 49: Metals - Copper Calendar Swap and Average Price Options
Metals - Copper Calendar Swap and Average Price Options (HGS and CAP) Tailored for Commercial Operations of Copper Producers and Consumers to tailor the risk every day, not just on futures delivery day. • COMEX Product, Financially Settled • Over-the-counter with central clearing via CME ClearPort •
Slide 50: Energy - Clearing Thermal Coal through CME ClearPort
Energy - Clearing Thermal Coal through CME ClearPort Combining new with existing coal products, CME offers a comprehensive and global risk management solution for companies with swap futures and options on the following markets: • API2 CIF ARA (Argus/McCloskey) • API4 FOB Richards Bay (Argus/McClosk
Slide 51: CME Non-US coal swaps
CME Non-US coal swaps Recent marketing efforts have seen tremendous growth in our non-US coal products 8000 7000 6000 5000 4000 CME non-US coal swaps TOTAL 3000 2000 1000 0 *Graph indicates average per month © 2012 CME Group. All rights reserved 51
Slide 52: Energy – Crude & Refined Products
Energy – Crude & Refined Products NBZ: NYMEX 25-Day (Platts) Brent Futures Symbol NBZ Final • Based on Platts 25-Day Brent cash assessment from the 16:30 London close. Settlement • Substantial improvement over existing ICE Brent’s black box settlement formula that is not relevant as a convergence me
Slide 53: Energy – Natural Gas Products
Energy – Natural Gas Products Continued opportunities in NYMEX Natural Gas products, spurred by low prices and increasing volatility • Benchmark NG Henry Hub contract has had record volumes and record open interest levels in Jan/Feb 2012 • LN Henry Hub look-alike Henry Hub Natural Gas Futures Price
Slide 54: Interest Rate Futures and Options Expansion, Liquidity, Opportunity
Interest Rate Futures and Options Expansion, Liquidity, Opportunity “Out the Curve” Risk/Opportunity • Deferred Eurodollar Futures-Years 3-10, Expanded Market Maker Programs • Ultra Bond Futures and Options- ADV > 47,000 • Fed Funds Futures-Added a 3rd Year • Fed Funds Mid Curve Options-6 mo. And 1
Slide 55: Products and Liquidity Reacting to Fed Policy and Customer Demand
Products and Liquidity Reacting to Fed Policy and Customer Demand 2-Year "Green" Mid-Curve Annual ADV 3-Year "Blue" Mid-Curve Monthly Ex. March 2012 Option on March 2014 Underlying Eurodollar Future ADV Ex. March 2012 Option on March 2015 Underlying Eurodollar Green Mid-Curve Future 180,000 Blue Mid
Slide 56: Margining Efficiencies-Futures and IR Swaps
Margining Efficiencies-Futures and IR Swaps • Launched October 2011, Euribor Futures offer capital efficiencies between CME Group Interest Rate Products • Ability to test margin offsets for clients as needed Short 200 Euribor Long 100 2 Year US Treasury Note Futures Dollar Amount* Long 132 Eurodolla
Slide 57: FX Order Execution Dashboard
FX Order Execution Dashboard New On-Line Tool Launched December 2011 • Customize data views by order size, time of day (market open, midday and market close) and product • See the distribution of order fill percentages • Check out average execution speed of various order sizes • View slippage rates
Slide 58: FX Order Execution Dashboard currencies available
FX Order Execution Dashboard 6 currencies available EUR/USD AUD/USD JPY/USD GBP/USD CAD/USD CHF/USD Go to FX Landing page for links http://www.cmegroup.com/trading/fx/ © 2010 CME Group. All rights reserved 58
Slide 59: FX Commitment of Traders Report
FX • Longs/Short • Grouped by client segment • Presented to quickly digest information • Updated weekly © 2010 CME Group. All rights reserved 59
Slide 60: FX - Commitment of Traders Report
FX - Commitment of Traders Report 6 currencies available EUR/USD AUD/USD JPY/USD GBP/USD CAD/USD CHF/USD Go to FX Landing page for links http://www.cmegroup.com/trading/fx/ © 2010 CME Group. All rights reserved 60
Slide 61: Ex-Pit Volumes
Ex-Pit Volumes Ex-pit Volumes Since 2009/ADV lots • Includes Blocks and EFP’s • Bilaterally agreed trades • Runs parallel to our OTC FX Clearing initiative • Utilises ClearPort • 2011 posted 933% increase in ClearPort FX volumes • Popular way to mitigate counterparty exposure • Draws OTC and listed
Slide 62: Record FX Open Interest !
Record FX Open Interest ! • March 7th, CME FX recorded an Open Interest volume at 2,018,586 across FX Futures and Options venue. (Notional US$240.6 Billon) • This is 2% higher that our record open interest in June 2007 • With FX volumes down globally, this growing Open Interest displays not only the
Slide 63: E-mini S&P Select Sector Futures
E-mini S&P Select Sector Futures Growing Buy-side Momentum in contracts • Single day volume record of 5,398 contracts • Record open interest of 8,243 positions ($367 mm notional value) • Tight bid/asks spreads (approx. $0.01 - $0.03) that are ETF equivalent with robust refresh rate (more liquidity /
Slide 64: Short-Dated Options on Futures
Short-Dated Options on Futures Weekly and month-end index options complement existing quarterly and serial expirations, offering: • Flexibility and precision to manage shorter duration large-cap U.S. equity market exposure • More trading opportunities around economic releases and market events End-o
Slide 65: Agenda
Agenda 1. Update on Regulatory Reform 2. Update on OTC Initiatives • Products • OTC Solutions: CME ConfirmHub, CME ClearPort 3. CME Clearing Europe 4. e-Trading Updates • Globex Performance Enhancements • Global Network Update • NY DR Datacenter/Disaster Recovery • CME Co-Location Services • Market
Slide 66: Agenda, continued
Agenda, continued 5. New or Recently Launched Products • Metals: • Coil Options • Copper Calendar Swaps & Average Price Options • Energy: • Thermal Coal • Crude & Refined products • Natural Gas • Interest Rates: • Product Expansion • Economic Trends • Margining Efficiencies • FX: • Order Execution D
Slide 67: Latin America Order Routing Partner Exchanges
Latin America Order Routing Partner Exchanges BM&FBOVESPA • All BVMF derivative futures and options offered via North-to-South on MDP channels 24 (futures) and 25 (options on futures) • BVMF launched its new order routing interface in February 2012 as a part of the new BM&FBOVESPA PUMA Trading Syste
Slide 68: Latin America Order Routing Partner Exchanges – cont.
Latin America Order Routing Partner Exchanges – cont. MexDer • MexDer interest rate and equity index derivatives product market data is available on the CME Globex platform via channels 26 (futures) and 27 (options on futures) • MexDer’s plan to combine its dual match engine offering to a single, mo
Slide 69: Bursa Malaysia Derivatives Initiative
Bursa Malaysia Derivatives Initiative Launching 2 new options contract in Q2, 2012: Proposed Re-launch of FBM KLCI Options Proposed Introduction of Crude Palm Oil (OKLI) Options (OCPO) Underlying FBM KLCI Futures (FKLI) Crude Palm Oil Futures (FCPO) Type European Style European Style Contract Size 1
Slide 70: CME Group Exchange Partners on Globex
CME Group Exchange Partners on Globex Exchange Type Benchmark Product(s) Launched BM&F BOVESPA N-S Order Routing iBovespa, Interest Rates September 2008 S-N Order Routing CME Group Products February 2009 Bursa Malaysia Hosted Crude Palm Oil October 2010 Dubai Mercantile Exchange Hosted Oman Crude Fu
Slide 71: QUIZ & Q&A
QUIZ & Q&A © 2012 CME Group. All rights reserved 71
Slide 72: Appendix: Summary of Important Dates
Appendix: Summary of Important Dates Events 2012 Dates NYDC Mock Testing Q3 2012 Globex Performance Enhancements Q3/4 2012 Hong Kong hub launch Q4 2012 Consolidated Fills - postponed Q2 2013 For critical product and system updates, please sign up for the weekly CME Globex Notices at: www.cmegroup.co
Slide 73: Futures trading is not suitable for all investors
Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a leveraged investment, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for a futures position. Therefore, traders sh