CME Group Inc Q2 F2026 Earnings Call Transcript

Welcome to the CME Group Second Quarter 2026 Earnings Call. At this time, I would like to inform all participants that your lines have been placed on a listen-only mode until the question and answer session of today's conference. I will now turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. Earlier this morning, we released our earnings commentary, which provides extensive details on the second quarter of 2026, which we will be discussing on this call. I'll start with the safe harbor language and then I'll turn it over to Terri. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in a statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements. With that, I'll turn the call over to our Chairman and CEO, Terry Duffy.

Thank you, Adam, and thank you all for joining us this morning. I'll make a few comments about our strong quarter, and then before I turn it over to Lynne to provide an overview of our financial results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks. The second quarter averaged daily volume of 29.8 million contracts, represented the second highest Q2 in our history, and was within 1% of our record second quarter a year ago, with May and June particularly strong following the tough April comparisons. Open interest ended the quarter up 8% over the past year and up 16% since the beginning of this year. Additionally, we delivered record level of capital efficiencies, saving our customers an average of over $95 billion in margin per day. Recently, this strong business performance has been overshadowed by discussions surrounding perpetual futures. While this product may be dubbed futures, they function more like leveraged spot products. They may appeal to certain retail traders seeking high leverage, but they are not appropriate for the institutional risk managers who comprise the vast majority of our business. Perpetual futures are highly engineered instruments that rely on frequent funding rate adjustments that revert the position back to the spot price. They are known for high leverage and automated liquidations. They offer limited investor protections and introduce heightened market risk, particularly for retail participants. These products do not appeal to our core customers. Through the first half of 2026, 94% of our volume originated from institutional customers. Perpetual futures are in no way substitutes for the institutional hedging tools that these customers rely on. Perpetuals do not provide price or time certainty, two necessary components for hedging exposures. When taking into account both of the transaction fee and the daily funding cost, the total cost to trade perpetual futures is typically orders of magnitude more expensive than our highly efficient futures contracts. We have the full technical and operational capabilities to launch perpetual futures. We have contract specifications and are prepared to bring these products to market should evolving demand or structural shifts make it appropriate to do so. However, we have not heard demand from our customers for these products. Crypto perpetuals are not new and existed before we even launched our crypto futures complex in 2017. We have built that business over the last nine years because our futures fill a market need that was not met by traditional crypto products, including perpetuals. Our crypto futures volume is up over seven-fold in the past three years, despite the existence of crypto perpetuals. We remain deeply committed to ensuring market integrity and we'll never sacrifice core protections in the name of innovation. Instead, we continue to launch innovative products while preserving the safety and soundness of our marketplace. In the second quarter, we successfully introduced 24-7 trading of crypto futures and this weekend we are launching 24-7 trading of our one ounce gold contract. Next week, we'll be launching single stock futures which will simplify directional trading with exceptional capital efficiency. In the fourth quarter, we plan to launch Treasury Link to link our U.S. Treasury futures and cash Treasury liquidity pools. We're also partnering with Silicon Data to launch a pioneering compute futures market later this year. We expect our innovative new offerings to further accelerate our growth as we build on our record-breaking performance in the first half of 2026. Our robust product pipeline and ongoing investments in our technology evolution position us well to drive continued value for both clients and shareholders. With that, I will turn the call over to Lynne to review our financials, and I look forward to your questions.

Thanks Terry, and thank you all for joining us this morning. As Terry mentioned, CME Group delivered strong financial results in the second quarter. Our revenue of over 1.7 billion was up 1% from the second quarter in 2025. This marks a record for second quarter revenue and the second highest all-time quarterly revenue behind Q1 of this year. The average rate per contract for the quarter was 67.8 cents, a 2.6 cent increase from Q1. Market data revenue achieved another record quarter, up 20% to $238 million, continuing our trend of 33 consecutive quarters of year-over-year market data revenue growth and our eighth consecutive quarter of record revenue. Adjusted expenses were $521 million for the quarter and $412 million in concluding license fees. Our adjusted operating income was $1.2 billion, or 69.5% adjusted operating margin. Adjusted net income and adjusted diluted earnings per share were $1.1 billion and $2.99 per share, 1% higher than Q2 2025. This represents an adjusted net income margin for the quarter of 63.4%. We returned $1.2 billion to shareholders during the quarter, with $468 million in regular quarterly dividends and $695 million in shares repurchased. CME Group continued to build on its record 2025 performance through the first half of 26. Volume through the first half was 10% ahead of last year, with open interest growing 8%. Revenue increased 8%, and adjusted diluted earnings per share climbed 10% in the first half of the year. Further, we set new records for our large open interest holders in interest rates, equity index, and FX since the start of this year. Third quarter volume has started out strong, with July to date tracking 18% ahead of last year. Our strong financial performance this year reflects CME Group's established role as the world's premier risk management destination. In times of uncertainty, our robust market infrastructure and deep liquidity pools allow participants to manage exposure with confidence. As the market landscape continues to evolve, we remain committed to driving innovation and delivering the capital efficiencies our clients rely on.

The phone lines are now open for questions. If you would like to ask a question over the phone, please press star 1 and record your name. To withdraw your question, press star 2. The first question in the queue is from Dan Fannin with Jefferies. Your line is open.

Thanks. Good morning. Terry, I was hoping you could expand upon your comments on perpetuals. Clearly, the market is focused on this topic. Can you expand upon what you're hearing from customers, if anything, around the potential innovation that might be coming from perpetuals?

Yeah, Dan, that's a great question. I've spent a lot of time over the last several weeks Going to each and every one of our asset classes, talking to the highest levels of those institutions who participate in our business. One of the great benefits of being in my role for the last 30 years is I've built a lot of good relationships and they put me in the right direction with the participants. So I'll give you an example. The largest, second largest energy participant in the world. of commercial participation. So there's been a lot of talk about oil as it relates to perps and other, and of course it's in the headlines today as it relates to the Iranian war. I have had conversations with the CEO of this firm and his derivative participants from different parts of the world. and they reassured me 19 times because I asked them if they wanted me to list this product. They do not want this product. They do not know how they would possibly risk manage the Exposures that they have on their books with a perpetual contract. It does not work for them. They made it quite clear to me that this product that we have today and other energy products that are available to them, whether it's at ICE or somewhere else, are critically important to what they do to manage their business. So that is one example. and I've also done the same thing as it relates to our other products such as rates and equities and I've had very similar conversations. So when these products have end dates associated with them on the cash market side and you have a product, as I said in my opening comments, that trade around a leveraged spot price, that does absolutely nothing for them in order to risk manage their product. Now, it might do something for the retail participant who wants to just trade back and forth. But it does nothing for the 94% of the business that I outlined earlier in my comments. And I think anybody on this call knows me. I'm a pretty forward straight shooter. And I even mentioned that in my opening comments, if I thought we needed to list these, we would do so. And I said that we were prepared to do it if we needed to do it. But that's not what we are hearing. We are hearing quite the contrary. Institutional Participants. And I want to be careful about the names that I use, but I will tell you that these are significant players. These are not third or fourth tier players. These are top tier players who are the open interest in CME Group.

Thank you. The next question is from Alex Cram with UBS. Your line is open.

Good morning, everyone. I guess I'll stay on the same topic, even though you brought it up twice already, Terry, that if there's demand, you would meet it. So maybe just talk a little bit more philosophical. Why on the retail side, you don't think there's demand yet? Because clearly you've been expanding into retail aggressively. And I know that's not your core market, but it's been a nice growth area. And clearly, it seems like there is interest from retail. So just maybe can you give us some more Thank you for the question.

are out there competing with our products today. So Tim's going to walk through some of the statistics around what the retail is doing in that particular asset class. But I want to make a point, and I think this is really important as it relates to perpetuals. I want to ask anybody, or it's a rhetorical question, how many people have been talking about the funding rate and the cost of the funding rate as it relates to a perpetual, and how many people have been talking about the auto liquidation risk management model on the back end of the market? The answer to that, because it was rhetorical, is zero. The only thing they're talking about, about a perpetual, is there is no expiration date associated with it. I will tell you that we are not seeing anybody Nor do we hardly ever see anybody in the retail division hold on to these products long enough to ever go to an expiration. So that is not the issue. And then I clearly outlined if they did, the cost associated with going to roll the product versus paying the funding rate and the cost to trade the product, which is sevenfold higher than CME's execution cost, would way overshadow the cost that it would be to roll your position. So that demand is still not there. But just to reinforce that, I'm going to ask Tim to walk through an apples-to-apples comparison on the crypto side, because that's what we've seen to date that's been approved. Tim? Thanks, Terry, and thanks, Alex, for the question. As Terry said, it is Business at CME Group has continued to grow year over year, the nine years we've been in it, alongside the existence of professionals in the crypto native ecosystem outside the U.S. And when we look at the growth we've had, we look at the suite of crypto products at CME Group, that grew 32% compared to Q2 2025. Our suite of cryptocurrency futures and options is up 40%. Smith, and many more. Now, as Terry said, if we look at some of the numbers at CME Group, we're doing between $4.5 and $6.5 billion per day of trading in our cryptocurrency complex versus about $270 million at the Bitcoin PERP introduced by Cauchy in the month of July. And then if you look at open interest, again, which, as Terry is saying, is a proxy for

We have between $9 and $10 billion of average daily open interest for June and July versus $10 million of open interest in the perpetual product that was introduced at the end of May, beginning of June.

So I think these numbers speak for themselves and are a long, almost nine-year growth trajectory of serving this community, along with the introduction of additional cryptocurrency futures, the introduction of 24x7 trading, and many more. We continue to innovate our products and add what we are seeing as demand coming from that retail customer.

So we're certainly hearing interest in our products and continuing to expand our suite both in terms of availability and products to meet that need.

So Alex, hopefully that gives you some more color about what we are really seeing versus what is being written upon or potentially propaganda coming out of other entities or what they may or may not be doing.

Very good. Thank you. Thank you.

The next question is from Chris Allen with KBW. The line is open.

Yeah, morning, everyone. Thanks for the question. Maybe if we could switch gears a little bit and talk about compute futures. Seems like a really interesting product opportunity. I wonder if you could give us any color on customer demand here, and how do you think CME's product construction will be differentiated versus other competing launches?

You know, that's a great question, Chris, and thank you for that. When this was originally introduced, I found it fascinating that this market was really underserved as far as a risk management asset for the growth of not only data centers but just compute in general. and working with some of our, and this is the beauty of CME Group, having the business partners with our FCMs and our clients and working together to bring product together to go forward and serve the interest of many, many participants. So Compute Futures, You know, whether you're a believer in AI or not, or whether you're a believer in the proliferation of data centers or not, some things have just become undeniable. And I think this might be one of those scenarios, because the artificial intelligence serves so many different industries outside of finance and the benefits it could derive. But you need to have the risk because you've seen some of these compute stocks or AI stocks, the volatility that can be inherent in them, the multiples they trade at. So I think this will give them a massive risk management tool to use going forward. And I am really excited by the growth of this product. And we're going to do it and do it properly with our partners. And for me, I think this is another innovative concept idea as the world continues to evolve. We're reintroducing single stock futures, as we said in earlier comments. I'm probably the only one that's old enough to remember that when we first introduced them the first time, they failed miserably. Sometimes timing is really important when you list products. And I will say timing is massively critical right now when we get ready to list futures. So just as I do with single stock futures, the time is right for that product as well. So I'm going to ask Derek Sammann, who kind of just falls under his belt,

I think as Terry and Lynne both mentioned, we continue to innovate product based on client demand and client need and those continue to evolve every single day despite the headlines of what the flavor of the month is in retail. When we look at the compute future specifically, there is certainly an unmet need in the world in which we operate where data centers are front and center of driving economic growth and AI is in the middle of every conversation right now. We are going to be the first daily benchmark tracking the spot hourly rental costs at NVIDIA, each 100 GPUs. And what that means is that we're going to be partnering with Silicon Data as the price reported agency, as Terry referenced, for these rental indices. And what this means is it allows customers to be able to manage their risk and price certainty and price curves around the input and their data center business. It's going to provide a mechanism for financing for a lot of these companies. There's no real price discovery mechanism today. That's the business that we are in, whether it's ags, whether it's equities, whether it's energy. This falls right under our price discovery mechanism. It allows customers to manage their procurement planning process, which they can't do now with a forward curve. and it allows for clear budgeting as well. When you think about who we think the users of these products are, it's not just the commercial end users, AI labs, cloud providers, asset managers looking to get exposure to growth drivers of the AI economy, banks, energy firms, hedge funds and professional trading houses. and when you take a step back this actually sits, nestles well inside our commodities portfolio because if you think about what this allows us to do, this allows customers to effectively hedge a data center. Think about that for a minute. We've got our copper contract. We've got our aluminum contract. We've got our nat gas which is typically the energy input in the most data centers. We've got a power business. We've got compute futures. So we think about what that portfolio product means to our commercial end users as well as Asset managers and buy-side firms that are looking to get exposure. This is the next evolutionary step in product innovation that continues to expand our portfolio based on customer need and our ability to innovate in a rapidly changing environment.

Ken, hopefully that gives you a little bit of color on the compute futures.

Thanks. Thank you, buddy.

The next question, the queue is from Ken Worthington with JP Morgan. Your line is open.

Hi, good morning and thanks for taking the question. So Trump has launched Project Vault in minerals and metals with copper, silver, aluminum, lithium, and some others on the list. Are there positive implications for COMEX from Project Vault or other Trump metals and mineral initiatives? Thanks. Thanks, Ken. Appreciate the question. Derek, you want to address it?

Yeah, again, Ken, appreciate the question. There's certainly a lot of discussion around what it means for reinforcing U.S. fiscal supply chains. I think, let me take a step back. Project Vault is out in the market alongside a lot of other growth drivers that have led to our record first half revenues and volumes in our metals business and our second best second quarter ever in our metals business. When you look at what Project Vault is focused on, it's really about reinforcing U.S. supply chains. and that means it's reinforcing the value of U.S. benchmark, which is exactly what CME Group is all about, whether it's our copper business, whether it's our battery metals business, where we are the single largest venue for risk management and price discovery in battery metals. This is contributing all to the focus on U.S. benchmarks, the products we run, And if you follow that value, what's happening? We see our copper volumes up 4% this year. We see record amounts of physical copper in COMEX warehouses, just under 700,000 short tons of copper in U.S. warehouses, directly responding to the focus on U.S. supply chains and on-shoring the ability for customers and U.S. infrastructure to enable access to this critical minerals and battery metal. and many more. Thank you. And thank you for the question.

The next question in the queue is from Patrick Moley with Piper Sandler. Your line is open.

Yes, good morning. Thanks for taking the question. So, Terry, earlier this month, the CFTC stayed your 24-7 crude oil contract the day before launch while the 24-7 gold contract went forward. And Chairman Seelig was fairly pointed about the self-certification timing. So what do you make of the commission timing? drawing a line between those two products. And do you see any read-through there on how they're maybe approaching the perpetual futures question and allowing 24-7 trading in those products potentially? Thanks.

Yeah, thanks, Patrick. I appreciate the question. I think that when you look at the stay on our 40.2 is what Patrick was referring to. There's two ways to certify contracts. 40.2 is self-certification. 40.3 is a full review. We actually filed both, as everybody may know. But the contract we filed was not novel or complex. It was an existing contract, just with a smaller size to it. So we felt, you know, we announced the date, the 40.2 was the right approach for us to do, which by law, we have the ability to file either one. We're not compelled to file a 40.3 or a 40.2, but we did file both of them. So my read on that is that they stayed the contract. I guess that's their priority to do so. I guess I don't want to get into too much of the idiosyncrasies of some of the products they have not stayed, but it is kind of interesting how some of the 40.2 filings that have gone through the agency and I guess I can go through an example of the Ridiculous and others, but let's just talk about the 4th of July contract that they did not stay on a 40.2, which was Kelsey Nathan's hot dog eating contest, that that was actually a contract that went through and I guess that had an economic interest to somebody, I'm not sure who, but 24-7 needed to be stayed on his existing contract. So, you know, that to me is a little concerning about, you know, readily manipulable, susceptible to manipulation under core principle three, which we have been very adamant about these contracts. So we didn't see anything novel or complex as it relates to our small oil contract. We have talked to, as I said earlier in my comments, some of the largest producers in the commercial side of the energy. They understood what we were trying to effectuate. We have 24-7 oil being traded today by entities that are supposedly not allowed to have U.S. participants into it, but yet we've yet to see how the federal government is policing U.S. participants from not participating in these 24-7 markets or how they're not having an influence on the weekends. Certain markets, I'm not suggesting they are, but how they're not. So then we also have prediction markets that have prices of oil that trade 24-7. So I was a little surprised by that, but I guess I shouldn't be because there's certain other contracts that take priority when you're in the hot dog business. So there's a lot of things going on right now, Patrick, and I'm surprised by it. And I'm not trying to be too flippant about it, but I am trying to point out that we are trying to run contracts here that are meaningful for commerce, that we think are critical for commerce. And there are other participants that are listening to this and we are being held up by the agency, but they are not telling us or the world how they are policing U.S. participants from not participating in 24-7 oil today or how they can square up that predictions on oil prices for down the road that trade 24-7 are any different from our kind of small contract. So a little surprised by it, but not really.

All right. Very helpful colors. Thanks, Terry.

Thanks, Patrick.

Next question in the queue is from Brian Bedell with Deutsche Bank. Your line is open.

Great. Thanks. Good morning, folks. Thanks for taking the question. Maybe just to switch back to perpetuals and really focusing on the retail side and maybe a futuristic scenario. And that would be, you know, Terry, what would your view be on any potential down the road CFTC approval of equity perps, particularly S&P? What kind of process do you think that ought to go through given that market is many multiples the size of the crypto market and could have systemic issues? So if you could talk about that. And then if you were to launch those, I would assume they would not be risk-margined with your existing clearinghouse. They would be separate. So could you theoretically launch those for retail at lower leverage? and would you view yourself as having the exclusive right to the S&P license in a perp future, or I shouldn't say future, but a perp contract, which I guess is a CFTC regulated swap, as opposed to a future?

Brian, great question. A lot in there to unpack. Let me unpack it. First of all, your last comment was the right comment. We still believe, and our litigation will show, that these are swaps, not futures. Anytime two parties exchange payments as they do in the funding rate, under the Dodd-Frank Act, which I had the distinct pleasure of testifying 20 to 30 times on in 2010, long before anybody at the CFTC was there, I know what Dodd-Frank says. That is a swap contract. So we feel very confident that that is a swap contract for starters. Let's fast forward, though. You asked another question. Would we list those contracts on equities, I believe that you said, in a separate entity? No, we would not need to list them in a separate entity of clearing. We could list them in our existing clearing because it doesn't mean if you list a PERP that you have to have an auto liquidation margin methodology in order to have a perpetual. So we would not need to do that. if in fact you went down that path. That's a long way from even having a discussion. Your third question was as it relates to our relationship with S&P Global. Anything that is considered a future and cleared by our agreement is the exclusive right under the index of CME Group. So no one else could be able to list that contract. That is the intellectual property that is owned in partnership with S&P Global. So we would be the only ones that could list a perpetual if we went down that path. on equities on the indices of the S&P, of the Dow Jones. And we have the agreements with NASDAQ and with Russell that they have the understanding that those are intellectual property products. If they're deemed futures, they fall under the scope of our agreement. So we're the only ones that can participate in that particular asset class on the indices. I don't know if I touched on three of the four or all four.

Just the systemic risk of potentially approving an equity PERP, given that equities are obviously massively larger than crypto.

Yeah, Brian, I'm sorry, I don't mean to cut you off, but the systemic risk of an equity PERP, If you were to try to list an equity PERP the way they are designed today and listed today in crypto, I think it could be a systemic issue for the marketplace because of no one understands full well how that funding rate would work and how it would be calculated because as we said earlier, it's technically not a future. It's a spot leverage product, so that right away has a problem for that particular asset class. and secondly on the auto liquidation of a market the size of the U.S. equity or other equity markets and the participants thereof could be very systemically risky as they auto liquidate on a whole host of mathematical and many more. So I think it's important to look at these equations and how they liquidate those products. How much percent does each entity want to preserve to liquidate? And what would happen in a cascading market up or down on liquidation on both sides of the market? And would they have to introduce tariffs as their first line of defense, not their last line of defense? And that, to me, would be a systemic risk, not just to the participants. That would be a systemic risk to the U.S. equity market. There's a systemic risk to the world.

Very clear. Thank you. Thank you.

Next question is from Alex Blasting with Goldman Sachs. Your line is now open.

Hi, good morning. Thanks for taking the question. Terry, I was hoping to go back to the point you were making around single stock futures. and the fact obviously that's been tried before, you think the time is sort of right now for these to be more successful. Why now, I guess, what makes it different and maybe talk through how you're planning to partner with various retail distribution platforms to perhaps make this a more successful product now and again, ultimately competition from some of those platforms directly to launch other forms of sort of leverage bets on underlying equities.

Thanks, Alex. Interesting question. So why timing now? I've been around, like I said earlier, a long time, and I've seen a lot of products come and go. And I like to tell people that when you've seen a lot of things, you've seen a lot of people make money being wrong, and you've seen a lot of people losing money being right, and it's all about timing. Right now, the world's evolved since 2000 when the single-stock futures, one Chicago joint venture was put forward with three separate entities with three Thank you for joining us. You know, throughout our process. And we relisted T-bills for, and we did quite well with them. And that can happen in different times in the world of economic finance. I think that single stock futures with proliferation of the markets itself, and I'm not suggesting markets are going higher or lower, but When you see the appreciation in the equity markets today, I think people are now looking for other tools on how to hedge out that product where they may not be looking at that with a valuation of the S&P, then 500, much lower as it was in 2000 or the Dow where it was at and the Russell and NASDAQ. So now with these different levels, I think people are looking at different tools in order to And you don't need to read the daily paper to know that people like to talk about the MAG-7, the MAG-9, whatever the MAG is of the day, what is in vogue. So there's people that are looking to hedge out those risks in a liquid marketplace where they feel comfortable doing so. We think CME is the right place for that. We think that the products that we're going to offer them will be the right products for them to mitigate and manage that risk. And the reason why, Alex, I feel so compelled about it is because of the participation levels not only for the institutions but for all the different cohorts and the valuation of the indexes in of themselves need to have tools to manage risk and this is just another tool for them to do so and we think it's efficient. You asked another question which I'm going to ask Tim and then Julie Winkler on the retail partner side or the partner side in general how we're going to move Cameron, did I touch on? Yeah, thanks, Terry, and thanks, Alex, for the question. I think also when we look at the timing of introducing single stock futures at CME Group next Monday is if we look at the momentum we're seeing in the equity complex at CME, where for Q2, an 8.6 million ADV, which is up 13% year over year, June delivering 10.1 million contracts up 54% year over year. And if we look through where we are in July, about 7.8 million contracts per day, which is up about 40, between 40 and 50% versus July of 2025. It's clear that the market needs and wants more risk management and access to equities. So offering single stocks alongside the natural home of risk transfer and price discovery that we offer our equity index contracts makes a ton of sense.

It's also worth noting that these single stock futures will be financially settled against the closing print of the name, which is a different and many more.

Sunday night through Friday of our traditional equity complex of CME Group alongside the nearly $45 billion per capital savings per day that our equity complex delivers to the market.

That is what we think is different about it right now and that's why I think Terry is absolutely right where timing matters and we're optimistic about the timing of the market and the gravity of the complex of CME and look forward to the launch on Monday.

Alex, it's such a good question and I don't want to work too long on it, but Julie, I do think it's important

Yeah, so our retail brokers globally are extremely excited about this new product innovation. They are seeing it as the single biggest retail growth catalyst of the year. This is something we've been working on for some time and also, you know, we've been working with them and see them very actively in testing this within their systems. This product is a very straightforward way for both single stock and single stock options traders to add futures to their trading portfolios. And we believe this is going to continue to introduce a broader retail audience and attract them to CME Group markets. So with the 22 biggest names, those are certainly going to be very appealing to retail traders. We have over 35 retail partners that are targeting their readiness for day one, kind of week one activity. So we do believe this is going to build over time, but we feel very good about the retail brokers as well as the liquidity providers that we have ready to go for Monday.

Thanks, Jill. Thanks, Tim. Alex, thank you. That was a very good question. We appreciate the opportunity to explain that.

Great. Thanks, guys.

Next question is from Ben Budish with Barclays. Your line is open.

Hi. Good morning and thanks for taking the question. So I wonder if you could unpack the strength in market data growth this quarter. Even better than last quarter, it looks like a pretty big sequential step up again. You called out pricing, which I think went into effect in January. You called out new products. I assume there's some new products. Broker Partners, and things like that. But just curious if you could unpack that a little bit, and how should we think about the next couple of quarters, given we have the pricing, but what else to think through in the near term? Thanks.

Yeah, thanks, Ben. Great question. Julie?

Yeah, so certainly this has been our Q2 was, again, a strong, very strong in this quarter on record. $238 million in revenue. We saw an increase of 20%, as Lynne pointed out earlier, and this was a 6.2% sequential growth over last quarter. It's really coming down to a few main factors, the price increase that you mentioned, but a lot of other things as well. We saw a strong growth of 3.5% quarter-on-quarter growth for our professional subscribers, and this is just reinforcing the points that we've made throughout this call of having access to such a wide array of benchmarks. This real-time data is extremely important, and that is happening across all of our asset classes. We've seen continued revenue expansion in our derived data business. That team is working through the sales pipeline. And there's also a variable component of many of these agreements, which is going to drive additional revenue as other performance-based measures kick in. And as we discussed a bit with you last quarter, these performance-based simulation training device accounts are really starting to grow rather significantly. Those were up 56% year over year. and really what these simulated trading environments are doing is they're acting as an incubator for both our market data business as well as our transaction-based retail business. So what we see is a robust pipeline of traders that graduate from these simulation environments after they get education, after they get exposure of how to trade and they then become professional data subscribers in their own right. So it's really a great catalyst for that type of revenue growth. and, additionally, it's just worth noting this quarter included approximately $7 million in audits and catch-up payments for prior periods. You know, that was compared to $3.8 million in Q1. These are non-recurring, so, you know, we expect those payments are going to fluctuate quarter on quarter. But I'd say, you know, this performance isn't, you know, a single tailwind but a deliberate part of our multi-pronged strategy really across the data offerings, building demand and expanding that use also of our benchmark pricing. with things like terms so far.

Thanks, Jules. Okay, great.

Thank you.

Thank you.

Next question is from Michael Cypress with Morgan Stanley. Your line is open.

Great. Thank you. Good morning. Just a question on prediction markets. I was hoping you could update us on the traction that you're seeing, particularly outside of sports, and if you could talk to some of the steps that you're taking to drive greater engagement and connectivity What's on the product roadmap and more broadly, can you speak to the market data opportunity ahead with prediction markets? Thanks.

Yeah, thanks, Mike. The prediction markets, interesting, there seems to be a lot of activity I want to ask Lynne to talk a little bit about how the revenue kicks out on top of those and the way they are structured. We'll try to keep the sports out of it because I've been pretty public about this. A lot of these prediction markets on sports are gambling. I think that that is going to find its way to the Supreme Court. That is not something that we want to be a part of participating in right now. As I said earlier, I think a lot of these and so forth. Those are not markets. Those are gambling. So we'll talk more about the predictions on economic outcomes and things of that nature and give you some stats on that. We've broken some of those out and we can give you those.

Thanks Mike for the question. So a couple of points there. So if you look since launch we've done about 525 million event contracts. That includes about 48 million contracts related to market events. So about 9% of the total. That does tend to fluctuate depending on what is going on in the markets themselves. So things like large events like the World Cup, you tend to see a bit of a shift. As Terry mentioned, our product set is much more narrow than some of what you might see on some of these other platforms, and that is intentional because we want to be very careful with what we are putting out for trade to make sure that it meets all the requirements that we see from our regulator. A couple other points I would note. We had over 140,000 accounts that were trading event contracts this quarter. That was up about 13% from last quarter. And we also saw some good growth in the average daily volume traded. So we were up over 4 million a day. That was up about 40%. and Tim, add a little bit more there. I guess one thing before I do, the market data question, I think that's still a bit of a ways off in terms of monetizing anything related to these markets. Given the level of volume, we'd want to see that really have a lot more seasoning before we would start talking about that. Tim?

Yeah, thanks, Lynne. I think just maybe one thing to add is as we continue to see sort of consecutive months of growth in our ADV in the totality of the complex, we are also pleased to see and the likes of World Cup that Lynne mentioned. But on some of those days we are seeing our market volume participate alongside upwards of 20% of the volume that we're seeing. So it just reinforces this hypothesis of getting these traders into our market, continuing to work to attract the next generation of traders. So we're pleased to see that we're seeing balanced growth both in sort of the markets as well as the sports. We're very pleased with the progress today. Mike, appreciate the question. Thank you.

Thank you.

Next question in the queue is from Bill Katz with TD Cal, and your line is open.

Great. Thank you very much for taking the question.

Just a two-parter for me. Lynne, congratulations on the promotion. I'm wondering, I know it's a little bit of a ways off yet, I'm wondering if you could maybe talk about early views of strategically what are the top two or three priorities as you're ready for the new role. And then, Terry, just sort of curious, where do you stand in terms of timeline, you think,

on the case with the CFTC. Which district do you think might have an opportunity to take a look at this? And any timing on milestones or pacing would be very helpful.

Thank you.

Yeah. Thanks, Bill. And I appreciate you reaching out and congratulating Lynne because that's the right thing to do. So, Lynne, tell us all about your strategic vision so we can all have it going forward since you've been working on that.

Yes. Well, thank you, Bill. I appreciate it. So I guess what I would say in terms of the strategy is, as you know, I've been with the firm for about 20 years now, so a long time. And during my time here, I have been involved in kind of all of the strategic side of the business, so the M&A transactions, the partnerships we've done over time, working very closely with Terry and the team as we've looked at those. My vision for the firm is not a strong departure from what we've delivered over the last 20 years. I think we have done well in terms of staying with what we are good at, really running the world-class exchange that we do, and looking for ways to bring on more product, bring on more customers, and create more capital efficiencies for those clients. So my focus is going to be to continue that, build on what we have, and continue that momentum to make sure we're delivering for those clients. So I wouldn't expect a large-scale departure in that way going forward.

Yeah, thanks, Bill, and thanks, Lynne, for giving us an update. Bill, on the CFTC and the litigation, it is, just so you know the process, what we file The agency has 60 days in order to respond to that filing, so that will come about in August, and then I believe they have the ability to push it a little further before anything else can happen. So that's just when you are in litigation with the government agency, there's a timeline associated with it. It's not like a traditional suit against another party for a car and the government. And again, at 60 days, then again that can be continued. There has been a judge assigned to the case. So that will move forward, but I think we'll know more at the end of August as it relates to what the CFTC's response is to the court to our case, and then we'll have more to report out. But right now, that's the process that we are aware of to date. We don't have much more information than that. Wish we did, but that's just a process that happens when you go with the government.

And the next question in the queue is from Simon Clinch with Rothschild and Redburn. Your line is open.

Hi, everyone. Thanks for taking my question. Apologies. I'm going to bring it back to perpetual futures again, Terry.

But I was curious, Terry, the market is really focused on sort of The competitive threat to derivatives franchises from perpetual futures. But I'm interested in your perspective of whether you see any actual sort of adjacent opportunities or symbiotic opportunities between listed futures and perpetual futures in the long run, should they become a more substantial market for speculative retail? Thanks.

Interesting, interesting question, my friend, Simon, because I do. I do see opportunities. As people continue to introduce these products that I believe are swaps. And when they're classified as swaps, as you know, Simon, swaps need to be margined for five days. You need to become a swap dealer. This is not something a retail participant is prepared to do. We talked about how retail participants' activity normally is. But I also think it lends to an opportunity for them to be looking at our markets and our retail products as it goes forward. So some of these entities that are listing some of these products I think directly or indirectly could benefit CME greatly as time continues to move forward. So again, it's like an incubator system that I'm not paying for and they are. So we are working our retail business like we have and in a very judicious and many more. I'm a big believer that large commercial institutions drive the marketplace, they drive the price discovery function and then it trickles down from and other participants will participate in those products. The question is at what size meets their needs. And we have shown that we have done and catered to the institution by taking, and I mentioned this earlier, an S&P 500 from the year 2001 or 2002 to a multiple 250 to an e-mini to a micro to something smaller than that to meet the needs of different participants. So I think that some of these new online Offerings could feed right into the growth of CME's retail business with the products that we have and the cohort of institutions that we have, the 130 million open positions that we have today, the $95 billion of efficiencies that that 130 million open interest receives on a daily basis. That's very attractive. Now the question is, can we create smaller products of those products for the institutions I work with some of our retail partners today, and I will mention a few, Ninja being one of them, Top Step being another. These are people that are very committed to bringing their client base into CME in the right place. There are many, many others, and I maybe shouldn't have called out two because there's multiples, but I happened to meet with both of those recently, so they're top of mind. And they are looking at new ways on how to bring their client base into our retail products, and to me, that's very exciting. So I look at the competition and the landscape of this world as it relates to retail, and I can actually see a benefit of them coming into our markets ultimately.

That's great. Thanks, Terry. Appreciate it.

Thanks, Simon.

And we'll take our last question from Ashish Sabhadra with RBC Capital Markets. Your line is open.

Hey, good morning, guys. This is Will Chee on for Ashish Sabhadra. Appreciate you guys squeezing us in.

Maybe just a question more on market data and the trends there. You know, with the growing usage of Gen AI and Gentic tools within financial market participants, Have you seen that as a meaningful demand driver for CME's data solutions, just around those factors? Thanks.

That's a good question. Well, thank you very much, Joel.

Yeah, I would say it's still relatively early days of, you know, trying to both think about what is coming next with the data. You know, the primary means of which we distribute our data today is certainly from a real-time basis and through our market data channel. Yet again, the way that consumption is happening in the future is changing and so we have been actively in this space, also working on our policies as well to ensure that we are going to meet people where they're going to be consuming data in the future as well as continuing to offer the feeds that we do today. Thanks, Joel. Thanks, Will. Thank you, guys.

The next question in the queue is from Michael Cypress with Morgan Stanley. Your line is open.

Thanks so much for taking the follow-up. Just coming back to this PERP discussion, if you step back from it for a moment, one of the broader trends across crypto and prediction markets is this move toward more vertically integrated direct-to-customer marketplaces with firms owning both customer relationship as well as the trading venue. So I guess how do you see this as a competitive threat and a number of others. and many more. Thank you. We don't participate in the markets. And I think that lends to the credibility of all participants, whether it's the smallest of sales or retail participants, to the largest institutional traders. So when they start to look at vertically integrated entities that are maybe participating in the market, managing that risk, and doing other things on behalf of the client, there could be a bit of, you know, I don't want to say confusion, but people might be a little concerned about conflicts is the word I guess I was looking for. And I'm not suggesting there would be, but, you know, The appearance of conflicts could be there. So I think that participants are savvy today. They're smart today. I think that they're looking for efficiencies that's being proven by our offering today. And I think when you look at vertically integrated institutions, you have to see what is vertically integrated and if it's the food chain of I think that lends to certain credibility issues for that entity. That's kind of how I look at it from a risk perspective. Maybe, Suzanne, do you want to comment at all how that could potentially have an effect or no?

No, I think that covers it. Okay.

And I don't know if anybody else has anything to reference on that. But, you know, Mike, I hear what you're saying. And, you know, there might be a day where that happens with CME too, right? But that's the reason why. When I put forward that we were going to have our own FCM a couple years ago, it was due to, as you recall at the time, FTX and what they were trying to accomplish. And I was not going to be unprepared for whatever the scenario may or may not be in the future to have a structure in place for CME to compete in the world that you outlined. But I assure you, I don't want to be a leader in that, but I will be prepared for that. Great. Thanks so much. Thanks Mike, appreciate it.

Showing no further questions, I will now hand the call back over to management.

Before we wrap up, we talked about a lot of different things here today. and we are, you know, continuing to create efficiencies. And I just want to touch real quick because the question didn't come up on it and I thought it should, is on the Treasury Link. Mike, can you just give a quick explanation on how that's going to work and the benefits for our client?

Yeah, sure. Thanks, Terry. I appreciate you calling out Treasury Link. We're excited to announce Treasury Link. It's really an industry-first Treasury functionality. that will enable transparent centralized spread trading between treasury futures and broker tech cash treasuries on CME Globex. We're leveraging proven FX-link technology and it's expected to launch in Q4 2026. So this new offering connects the two leading US treasury liquidity pools, bringing unique innovation by enabling atomic execution of cash for future spread transactions and eliminating lagging risk in the process. The team and I have been out in front of clients, and we see strong demand from both existing and prospective new participants who are interested in realizing execution efficiencies between cash and futures. Notably, the leg of various relative value trades takes place away from broker tech, and this offering will be highly complementary to the existing broker tech liquidity and expansive to total broker tech trading activity. TreasuryLink really represents the next stage in our initiative to bring our cash and futures markets closer together, delivering unique efficiencies while enhancing liquidity and price discovery for the broader U.S. Treasury market. Look, it's really an evolving time in the Treasury landscape. We have a new Fed chair who is committed to overhauling their communication style. We continue to see record debt levels in this country, and we will see the Treasury and repo clearing mandate phase in over the next year. So TreasuryLink is just another example. of how the CME Group continues to innovate and deliver efficiencies for our clients alongside the $27 billion a day in margin savings across teachers' options, swaps and cash. We're very excited to announce TreasuryLink and I appreciate, Terry, you calling it out.

Thanks, Mike. I appreciate the explanation. It is important. I know we got caught up a little bit on soup du jour. And I want to thank everybody on this call. This gave us an opportunity to hopefully set the record straight on where our business is at, where we feel from a competitive standpoint. and what exactly are the products that are supposedly competing with our core business and what our core business looks like today. I can't thank each and every one of you enough for your very Very poignant questions, and I think they were all great, and we are excited about the new offerings we have going forward. We're excited about the new cohorts and clients that will be coming into our marketplace. And again, I think that when you look at the $95 billion of efficiencies, when you look at what we are accomplishing here, the 94% of our trade being institutional, and how we think that could add and grow to our retail business down the road, and do it in a thoughtful, educational way that's sustainable for a long time to come. We appreciate your questions and we wish you a good day and thank you very much for your interest in CME Group. Thank you.

This concludes today's call. Thank you for your participation. You may disconnect at this time.