Welcome to the CME Group Fourth Quarter 2024 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 would now like to turn the call over to Adam Minick. Sir, please go ahead.

Good morning, and I hope you're all doing well today. We released our executive commentary earlier this morning, which provides extensive details on the fourth quarter 2024, which we will be discussing on this call. I'll start with the safe harbor language and then I'll turn it over to Terry. 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 results and outcomes may differ materially from what is expressed or implied in any 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 Terry.

Thanks, Adam, and thank you all for joining us this morning. I'm going to make a few brief comments about our record year in 2024 and some thoughts on the current business environment. Following that, Lynne will provide an overview of our financial results and our 2025 guidance. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks. 2024 was the best year in CME Group's history and our fourth consecutive year of record volume with average daily volume increasing 9% to 26.9 million contracts. This growth was broad-based, with volume increasing year-over-year in all six asset classes, including all-time volume records in our interest rate, foreign exchange, metals, and agricultural complexes. It was also a record year for our international business, which averaged 7.8 million contracts per day or up 14% from the previous record set in 2023. In addition to our impressive volume results, we continue to provide unmatched capital efficiencies for our customers. We have previously discussed that within our interest rates alone, the breadth of our offering results in margin savings in excess of $20 billion per day for our clients. It is worth noting that this margin savings applies across all the asset classes we clear. As you may have seen in the commentary we released this morning, our customers are now saving approximately $60 billion per day across all six asset classes. Commodities were the third fastest-growing asset class in 2024, with metals volume up 23%, energy up 17%, and agricultural products up 13%. These businesses combined to generate a record $1.7 billion in revenue in 2024, up 16% versus 2023 and are off to another great start in 2025. Commodities growth came from every customer segment, led by the buy side, where we've seen significant increases in activity by global multi-strategy hedge funds as they expand in commodity-focused strategies. Geographically, the fastest-growing growth came from EMEA, where our year-over-year volume was up 34% across the commodities business. Commodity options also demonstrated strong growth with volumes up 29% versus 2023. Our growth has been driven by strong new client acquisition across both institutional and retail sectors. I've said many times in recent years that it's going to become more and more difficult to distinguish between retail and institutional trading behaviors. Technology is equalizing the access to data and improving the flow of information. This is bringing a new type of trader into our markets and will continue to grow the overall financial system. Over the last year, several large retail broker partners have joined our markets to meet this customer demand. As discussed throughout this year, we have increased our allocation of expenses to marketing and education of potential new clients. Given the strong financial results, we further increased this investment during Q4. In total, new clients added in the last five years have generated approximately $1 billion of revenue, including approximately 5% of transaction and clearing revenue in 2024. Moving into 2025, we continue to see strong volumes to start the year with new volume records in January and ongoing customer needs through efficient trading and hedging solutions. Shifting views around the global economy, persistent inflation, potential for changes in tariffs, and ongoing geopolitical tensions, all contribute to potential market movement and the need for effective risk management, which we will continue to provide to our clients. In addition to the impressive volume results I've outlined, we've delivered record financial results. With that, I'll turn the call over to Lynne to review these results in more detail.

Thanks, Terry, and thank you all for joining us this morning. As Terry mentioned, we had very strong financial results, delivering our third consecutive year of record revenues and earnings in 2024. Our revenue of $6.1 billion grew 10% compared to 2023 and included all-time revenue records in all six of our asset classes. Our annual adjusted expenses, excluding license fees, were approximately $1.59 billion, including $85 million related to our cloud migration. Our adjusted operating margin for the year expanded to 68.3%, up over 140 basis points from 2023. We delivered $3.7 billion in adjusted net income, resulting in 10% earnings per share growth for the year. During the fourth quarter, CME Group generated more than $1.5 billion in revenue, a 6% increase from Q4 2023 on similar volumes. Market data revenue grew 9% from last year to $182 million. Expenses were very carefully managed, and, on an adjusted basis, were $520 million for the quarter and $436 million excluding license fees. CME Group had an adjusted effective tax rate of 21.8%, which resulted in adjusted net income of $919 million. Our adjusted earnings per share were $2.52, up 6% from the fourth quarter last year. Capital expenditures for the fourth quarter were approximately $28 million, and cash at the end of the year was $3.1 billion. CME Group declared dividends during 2024 of approximately $3.8 billion, including the annual variable dividend of $2.1 billion, which was paid in January. Turning to 2025 guidance, we expect total adjusted operating expenses, excluding license fees, but including cloud migration expenses, to be approximately $1.65 billion. Total capital expenditures are expected to be approximately $90 million, and the adjusted effective tax rate should come in between 22.5% and 23.5%. In December, we announced transaction fee adjustments, which became effective February 1st. Assuming similar trading patterns as 2024, the fee adjustments would increase futures and options transaction revenue by approximately 1% to 1.5%. Market data fees were increased by 3.5% at the beginning of the year. Additionally, we announced a 10-basis-point non-cash collateral surcharge effective in April for participants that do not post at least 30% of their margin requirement in cash. This change will ensure a minimum level of cash for risk management purposes. The financial impact of this requirement will be dependent on customer decisions and may result in an increased average rate on non-cash collateral or an increase in cash posted at the clearing house. As always, we focused on the total cost of trade for our clients and considered the impact of the collateral fee changes when reviewing adjustments to the clearing and transaction fees this year. In aggregate, the fee changes and cash minimum could add 2% to 2.5% to pre-tax income, assuming a similar volume and collateral levels. In summary, we're very proud of the results we were able to deliver as a firm this year, driving 10% revenue growth and 10% adjusted earnings growth from our previous record year of 2023. Consistent with the growth goal we discussed coming out of 2022, this year represented our third consecutive year of double-digit earnings growth. We'd now like to open up the call for your questions.

Certainly. The first question will come from Patrick Moley of Piper Sandler.

Yes, good morning. Thanks for taking the question. In the release today, you mentioned that retail remains a bedrock of the new customer acquisition strategy. You're currently in the process of rolling out futures to Robinhood's 24 million customers. So, I know it's still pretty early, but I was hoping you could talk about maybe how additive you think that this rollout could be to volumes this year, and then if you could just maybe speak to the broader retail strategy and any other opportunities that you see out there on the horizon.

Thanks, Patrick. Let me turn it over to Julie Winkler. She can discuss a little bit about that and I'm going to chime in after she's done.

Sure. Thanks for the question, Patrick. On the new client acquisition front, about two-thirds of that $1 billion number that Terry referenced in his comments is driven by our retail business. Q4 was another really strong quarter for us in terms of total participation being up, the number of traders being up 6%, and that NCA number was up another 23% year-on-year. All regions, we saw growth there as well, and that was great because we saw that really also across all of our asset classes with kind of FX and metals certainly leading the charge there. The micros, volume is in product, I think it's continued to be a sweet spot for us in our retail business. So that volume was up 2.8 million contracts and ADV in Q4. So that was up 11%. And what this all has meant and you referenced it is we've been working with many new futures brokers over the last year. I think their interest in coming into this space is that sophistication of trader that Terry mentioned earlier, a lot of this is about reaching this customer base with education and growing awareness. And what is also appealing is our very diversified product offering. So, while we have the micro equity suite, we are also seeing a lot of uptake in crypto and commodities as well, which is great. Robinhood did launch a couple of weeks ago. They are continuing to do a phased rollout among their customer base, so very similar to what we've seen with other broker partners as they enter into the space. We're excited about that and certainly opportunity to work with all of these global partners. We have about 100 that we partner with around the globe, and we do have some other additional ones coming online as we look ahead into 2025. And I think the other kind of context around this is just this retail business is also a huge contributor to that international performance as well. And so, as we see retail grow, that is a big contributor to those international results with the 7.8 million in ADV, which was up another 13%. So, we're excited with our diverse product offering, the global appeal of our products and certainly being able to partner with these great broker partners and providing education and awareness. So, we feel like the outlook is good.

So, Patrick, what I would just add to what Julie said is that I think, as I said earlier, the lines between institutional and retail are continuing to get more and more blurred. We're referring to our current retail business, which is more of a professional trader. I think the definition of that retail participant is going to continue to evolve over the next several years, and we might be saying something a lot different about what a retail participant looks like. So, to say what it can look like just that one particular broker or another may not be fair. How they access markets, the ease of accessing markets, the new risk management tools that technology and artificial intelligence will allow us to deploy will help us broaden the scope of what we define as retail today and tomorrow. So, that's what's more exciting to me than just a current retail trader. Even though it's an exciting business, I think that's going to continue to evolve and be defined in different ways in the upcoming years.

Okay. Thanks for that. And then, one quick follow-up, Terry. In the fourth quarter, you received approval from the NFA to establish your own futures commission merchant. You did put out a press release after saying that you're committed to the existing FCM model. But just was hoping you could maybe talk about what strategic benefit does this give you going forward, and would there ever be an instance where you would look to utilize it? Thanks.

I don't know if there would be a situation for me to utilize it or not. At this given moment in time, there is not. And I have said that we will not dislocate our current FCM partners with our FCM license that we now hold. I think it's important and I've said this for a lot of years, you cannot try to get prepared when things change. You need to be prepared prior to that happening. And this is just another step in us putting pieces of different parts of the equation in place if in fact, market structure changes, behavior changes, or the business changes a little bit. I'm not going to wait or the future of this company will not wait until that happens and try to deploy those types of assets that you don't have at the time. So, it's really important for us to have those in place. My viewpoint has not changed. I am not looking to dislocate or disintermediate any of my FCMs today.

Okay. Thanks. That's it from me.

Thanks, Patrick.

The next question will come from Alex Kramm of UBS. Your line is open.

Good morning, everyone. I would like to ask about capital allocation, specifically regarding stock buybacks. I believe you haven't provided any updates since receiving the $3 billion authorization. Can you share your thoughts on the buyback strategy? Is it a consistent approach or influenced by the stock's performance? Also, have you been purchasing shares so far, and what are the near-term plans for buybacks? Thank you.

Thanks, Alex. Lynne?

Yeah. Thanks, Alex. So, I would say, as you saw with our most recent announcement on our dividend last week, we raised that from $1.15 to $1.25. We continue to view that as an important use of our capital. And just a reminder that we did pay out the variable dividend here in mid-January. So, our excess cash that we built up over the course of last year just was paid out in that variable dividend. So, as we look to go forward with this new lever we have with the repurchase program, I would describe it as opportunistic. We're viewing this as kind of the third means that we have to return capital to our shareholders, and we'll continue to use those three levers that we have.

All right. That's it from me.

Thanks, Alex.

Thanks, Alex.

The next question will come from Michael Cyprys of Morgan Stanley. Your line is open.

Hey, good morning. Thanks for taking the question. Just wanted to ask around product development opportunities around climate events. Just given we've seen more severe weather patterns and natural disasters and events in recent years, just curious how you see the opportunity to help more customers manage risk here. You already have weather contracts. I guess, what's the potential to broaden out that product set more fulsome? It seems the insurance industry may have some challenges from some of these events. To what extent can a capital markets-based contract be part of the solution? How are you thinking about that?

Yeah. Thanks, Mike. I'll let Derek address that and then I want to give a comment also to it.

Yeah. Thanks, Mike. The short answer is the market is already using our products and services today. You made a great point about weather patterns. That's one of the primary drivers of what's going on in our record activity in our agricultural markets from 2024. And if you look at where we're starting 2025, our agricultural business is up 32% year-to-date and growth in almost 20% of open interest as well. So, I think we're seeing significant participation for folks looking to understand the impacts on real economies. They're playing that through our agricultural markets and our grains and oilseeds markets. We're also seeing that play through the energy markets, particularly in natural gas, since natural gas is becoming increasingly the power source for both heating and cooling. When you look at our record results in last year from natural gas and carrying over into this year, most importantly, our options are up 61% last year. So, as these unplanned but now is, to some degree, expected dislocations in weather patterns, we're actually seeing folks increase their use of our energy products to adapt for that and using options as a large proportion of that. You also rightly mentioned our weather-driven market. We are the largest weather-driven market out there. We finished the year at about 90,000 contracts open interest. 70% of that is in the form of options. And that tells you, I think we've got sophisticated end-user buy side and commercial customers using that market, not just directly in our own derivatives, but that actually sets a lot of the prices for a number of indexes and OTC transactions that trade off the back of that, are indexed to and then hedge back into our weather market. I think the kind of last piece to this that we're seeing this play out is in the energy transition economy. When you look at our metals business, we are the leader in putting up substantial growth in our battery metals business, whether it's cobalt, lithium, or the spodumene product we launched just a few months ago, as folks are looking at not just the disruptions to market, but what the alternatives are. They are playing that through our battery metals market. They're playing that through our ethanol contract with the largest ethanol market out there. And we just launched a physical ethanol contract last week. And the first two trades were actually two large agricultural customers. So, the last piece of that is what we're seeing in the industrial metals market. So, as more work is put into the grid to reinforce our energy sector here in the US and globally, that runs right through the middle of the copper market as well as the battery metal market. And those are two markets where we're seeing record growth. So, we certainly see that the weather-driven niche itself has room to grow, but we're seeing the market already adopting market-based solutions in CME Group products. And that's why Terry referenced at the top of the script that our commodities asset classes, energy, agriculture, metals, are the three fastest-growing products in '24 and we're out of the gate strong in 2025 with agriculture up 32%, energy up 25%, and metals up 14%. So, we'll continue to talk to our customers and fill that need into the portfolio, but we're seeing them already use market-based solutions here at CME Group.

Just to add to that, Mike, I think what the comment that I read yesterday by Fed Chair Powell about talking about how mortgages could be unattainable in many parts of the country due to insurance reasons, and you raised this in your question, and I think it's a much bigger concern than people are thinking about. Derek referenced our products today that can help manage and mitigate some of those risks, but we're looking at other ways to continue to roll out products that might be more tailored towards that industry. Again, this is just in the pipeline with nothing to announce now. But I do think that is becoming more and more of an issue when it's not so much about can you qualify for a mortgage, can you qualify for a mortgage and get insurance also. So, that's a big issue, and again, I think that's another reason why risk management is going to be a priority in the outyears going forward.

Great. Thank you.

Thank you.

The next question will come from Benjamin Budish of Barclays Capital. Your line is open.

Hi, good morning, and thank you for the question. Terry, could you elaborate a bit more on your product expectations in the retail sector? It seems that the equity indices are a significant focus among your microproducts. What are your expectations regarding engagement for this product? How do you view the competition with other S&P derivatives? Additionally, I have a follow-up question about pricing.

Thanks, Ben. The retail business is experiencing significant growth. As I mentioned earlier, technology is enabling more individuals to manage their own risk and understand these products. Education is extremely important for retail, and we're focused on ensuring they grasp what they are doing. In retail, speed-to-market is crucial; people don’t want to wait weeks to open an account, so it’s important to accelerate that process. I believe this sector will keep growing as more young people take charge of their own risk management, and that trend will continue. I’m excited about the retail landscape. Additionally, how we define retail will be vital for the industry’s growth. Will it lean more towards mainstream or professional, or be a mix of both? The professional segment may just expand. Many different factors can influence this simultaneously, which is quite thrilling. I’ll invite Julie to provide more insights regarding retail and its growth.

Yeah, it's a great question. I do think similar to my answer from earlier, I think the diversity of our product suite is a real differentiator for CME. So, while we have historically seen retail customers come to us first to trade our micro equity suite, I'd say that trend tends to shift given those strong macro trends that Derek spoke about earlier. The commodities interest there, especially when we look over to APAC, is really strong, which is contributing to our recent announcement as well about the micro ag contracts coming. So, we believe both with that as well as what we see with crypto, it's interesting that we are attracting customers with new products differently than maybe what we had in the past. I think the other trend that supports that is some of our new to futures participants are actually targeting a different segment, right? So, they may be existing CFD providers. And so, their entry point to come over into futures is going to be different than our traditional partners in this space. But the great thing is, we're still continuing to see really strong year-on-year growth from our existing partners as well. So, a lot of this comes down to building awareness, making sure they have the product education that they need, and our team is working very closely with them on that front. And this allows us to easily cross-sell with what is interesting and what products are moving at that point in time.

And just to add to that, the new reference competition, and Julie touched on a little bit, for us, with all the different asset classes that I referenced in my opening remarks hitting all these new highs, it is really important that you introduce new potential retail clients into something they feel they know something about today. So, if you come up with a very difficult product for them to try to understand, so if you listed a SOFR contract to the retail participants, they might have a more difficult time participating in that than they would in a gold, silver, oil, or some of our other contracts that are more mainstream that they hear about every single day. So, the question is how could we customize those products for their ability to participate? And those are the things that we're working on. So, I think from a competitive standpoint, to your competitive question, Ben, along with the crypto, we're in a really strong position to introduce these to a whole new audience of retail participants.

Great. I appreciate all the color. And just one housekeeping question maybe for Lynne on the sort of pricing change expectation. I just want to make sure I had it correct. The fee adjustments on the trading side, 1% to 1.5%, and then adding the sort of fee changes to cash minimum, so that add another 1% on top. So, the total is 2% to 2.5%. And I also wanted to double-check, does the transaction fee piece, is that sort of net of incentive changes, or is that the sort of pricing changes in isolation?

Yeah. So, the incentives are included in that. So that's the expectation. We always are looking at not just rack rate changes, but also incentive changes. So, if you look at that 1% to 1.5%, that is inclusive of the changes being made there. Now, the thing you have to be conscious of on the other elements, so the collateral fee, it's going to be based on customer choice. So it could lead to a higher rate that we capture on the non-cash collateral that would flow through other revenue, but it also could mean that our customers would post more cash, which is the goal of this structure because we want that cash from a risk management perspective. So, if we see a shift to cash, you would see more of that come through in the non-operating income. So, when we talked about that 2% to 2.5%, that's a pre-tax earnings number because we don't know yet if we'll see the increase in the other revenue or in the non-operating income. It will depend on that decision by the customer base.

Okay. Very helpful. Thank you.

Thanks, Ben.

The next question will come from Chris Allen of Citi. Your line is open.

Good morning, everyone. Thanks for taking the question. Wanted to ask about your securities clearing build-out there. Just kind of where that stands currently? You talked in the past about having this as an option if the marketplace demanded relative to the kind of incumbent. So I'm just wondering where that kind of stands and how you think about it from a revenue opportunity standpoint longer term.

Thanks, Chris. It's a good question. And I'll turn it over to Suzanne Sprague, our Chief Operating Officer and Head of Risk and Clearing. Suzanne?

Yeah. Thanks, Chris. So, we're pleased that our application for our securities clearinghouse has been published now in the Federal Register in January of this year, and we continue engaging with the SEC toward approval. We are excited about the opportunities that that license could bring in terms of generating additional value for our customers. We also continue partnering very closely with the Fixed Income Clearing Corporation to expand our cross-margining program with FICC, not only for the existing house account structure that's in place today, but to expand that offering to clients as well. So, capital efficiencies is a large focus for us as we've talked about already on this call, and both with our own securities clearing offering and continuing to expand that partnership with FICC, we're looking forward to being able to deliver that in a larger way.

So, Chris, it has been noted recently that some people are saying there might be delays, which isn’t surprising. Whenever a new policy is implemented, there’s often a belief that everyone is ready, but that's not always the case. What’s crucial, as Suzanne mentioned, is the benefits that this clearing offering provides to clients by freeing up a significant amount of capital for them. Even if there are delays and some individuals may not see the value, the savings are unmistakable. We are talking about $60 billion in margin efficiencies and $20 billion in rate efficiencies just within CME. I recall testifying in 2010 during Dodd-Frank, where the biggest opponents are now the primary beneficiaries of central clearing, enjoying the offsets that help them manage their balance sheets better amid new requirements. This is a substantial advantage for participants moving forward. Ultimately, regardless of whether they choose the fixed offering or ours, we believe this will benefit the entire industry, and we are eager to pursue it.

And just on that point, have you done any work to kind of quantify what the margin-saving potential that you would theoretically see for the industry?

No. At this point, it's hard to tell. I think choice is important here. We have seen an increase in clearing members to take advantage of the existing house account program with the Fixed Income Clearing Corporation, and with expanding it to clients, that presents additional opportunity for clients to be able to maintain that relationship that they have today in the marketplace and gain the efficiencies at the clearing level through the existing structure, as well as bringing online new offerings through the CME securities clearing house. So, there's a lot of moving parts. I think choice is key for these market participants, especially as the clearing mandate evolves. It's hard to anticipate what those numbers will look like given all of those variables.

Thank you.

Thanks, Chris.

The next question will come from Dan Fannon of Jefferies. Your line is open.

Thanks. Good morning. Terry, I was hoping you could elaborate on your comments regarding the outlook for activity. While it's clear you don't have a crystal ball, could you discuss the current situation in mid-February 2025 after several record years of growth? What do you see as the key components for growth and activity as we consider 2025 from a transaction perspective?

My outlook hasn't changed much over the past few years. It will be a tough environment for many companies and individuals globally, and it's crucial to manage and mitigate that risk. Aside from acquiring a bit more debt, not much has shifted since last year. With $36.5 trillion in debt and a $1.9 trillion deficit in the U.S., along with the political discussions about spending cuts and potential tax reductions, there are many moving parts. It's difficult to suggest that people will be unable to handle that kind of risk, given its significant impact on every business depending on rate changes. Even minor adjustments in rates can drastically affect balance sheets when such large numbers are involved. Geopolitically, we're watching the conversation around deregulation, which hasn't fully materialized under President Trump due to his extensive agenda. It's an intriguing situation, with twists and turns that reflect what the American public elected him to address, all of which will affect economies both in the U.S. and globally. People need to manage that risk. I believe we will see a very active marketplace. There will likely be more commodity index funds getting involved to help manage risks from tariffs, weather, and other factors. Currently, foreign exchange is quite volatile due to potential tariffs that haven't been prominent recently but may resurface in 2025. Overall, I'm optimistic about all six asset classes for CME. There are many opportunities, but despite the positive outlook on our lives and business, there are still significant economic challenges globally that we need to navigate. This is what we aim to manage.

Great. That's helpful. And then, just as a follow-up, in terms of capital return, I understand the buyback and the dividend, but on an inorganic or M&A perspective, can you remind us around the framework of how you're thinking about that? And ultimately, has that changed at all given maybe looser potentially standards around M&A that maybe broadens what you would be looking at under the current administration versus prior?

Yeah, I'll take the second part of the question, and then I'll give the first part to Lynne. It's yet to be seen what the regulations are going to be around M&A or not. It was a difficult environment under the Biden administration from the DOJ perspective to get some deals done and even IPOs out the door. People are talking about how this could be different this year. It's really hard to draw a conclusion, Dan, when we're a couple of weeks into the year and we haven't seen a whole lot of activity just yet on deregulation or new companies coming forward. So, I think that's going to take some time to get into the system to see if that materializes one way or not. And I will let Lynne talk about the former, on the repurchase.

Yeah. So, I think, Dan, our approach to M&A is the same that it has been. We put ourselves in a good position from a balance sheet perspective. We're very conservative there so that if the right opportunity comes up, we have the capacity and the ability to act, but we tend to be a bit more choosy, I guess, I would say, and not as acquisitive as some of the others in our space. We typically are looking for things where there's a clear path to value and something that is in our core competencies, if that's risk management, running markets, creating capital efficiencies for our clients. So, we continue to look just as we always do, and if the opportunity were to be there, we're more than happy to execute on M&A.

Yeah. Dan, we're focused on so many different things. But one of the things I keep telling my team is you have to be able to look over your shoulder and see a pipeline of clients coming down in the future in some way, shape, or form, because there's a lot of business turning around right now and not seeing anybody. That's not the situation for CME and we're going to make sure it continues that way. So, we are looking at not just some of your traditional ways if you want to call M&A, but other avenues in how we build this business. But it's really important, as I referenced earlier, to make sure that that customer base is continually educated and coming into your doors at the pace that they need to come in here with. But it's important to make sure you look over your shoulder and know there's a pipeline of participants coming. And that's what we are working towards and doing right now.

Thank you.

Thank you.

The next question comes from Brian Bedell of Deutsche Bank. Your line is open.

Good morning, and thank you for taking my questions. Returning to the topic of retail, Terry, your comments about the overlap between individual and professional users are interesting. Could you clarify if they are primarily coming from retail-focused FCMs, or is there ambiguity in their origins? Is the overlap mainly between retail and professional traders, and how do you differentiate between them? Additionally, how directly are these users engaging with CME in terms of data and analytics compared to their retail brokerages? How significant is this as an opportunity to enhance data and analytics for the retail segment?

Thank you for the question, Brian. In my initial remarks, I was addressing the concept of retail blurring, particularly focusing on the institutional side rather than getting into the specifics of how we define retail clients now versus in the future. I believe the definition of retail will evolve over time, but I haven't indicated that it has changed yet. When I refer to this blurring, I mean the distinction between retail and institutional clients today. This is largely due to the advancements in technology and other resources that professional retail clients have access to now, which were not available five to ten years ago, and these tools are becoming more cost-effective. That was the essence of my comment about the overlap between current retail and individual clients. Furthermore, the differentiation between retail and individual clients will also shift, although that definition hasn't been established yet. I want to clarify that I’m not saying this change has happened already; I am suggesting it is expected to happen soon. This change will occur through our existing Futures Commission Merchants (FCMs) as they adopt and integrate new tools that help clients feel more at ease in managing their investments. There has been some resistance from certain parties regarding the inclusion of certain clients in their FCMs due to associated risks, which is understandable. However, I believe that the introduction of new technology and risk management strategies will help expand this client base. That was the point I wanted to make. Now, I will invite Julie to provide insights on data and analytics.

That's a great question. We've observed some positive trends in this area. It highlights the increasing sophistication of our users, who heavily utilize data and analytics for their trading decisions. Additionally, the way these communities are interacting online and sharing trading ideas is also driving the retail flow we're noticing. In terms of our data business, we had a record quarter, with a 9% increase. Specifically regarding non-professional device usage, we experienced nearly a 40% increase from Q3 to Q4 based on the reports from our vendors and brokers concerning non-professional or retail users. The demand and interest are indeed strong, and our retail brokers are responding by offering comprehensive data and analytics to better attract and inform these users about the market. Another significant trend is the rising use of options among retail clients, which further illustrates their growing sophistication. Many of our retail brokers are preparing to offer more options as we move through 2024 and into 2025, aligning well with the demand for data and analytics.

That's helpful. And can you cite like what portion of your revenue you think is coming from that retail or pro-retail? Or is that too difficult to assess?

We have broken out some of the retail revenue, but it's not very detailed by individual. I think, Julie, you have some...

Yeah. I don't think we've historically disclosed what that portion is. What we've said is of our new client acquisition, that's two thirds of the $1 billion that we've seen over the last five years, which was contributing 5% of our transaction revenue.

Thanks, Brian.

The next question will come from Lynne Fitzpatrick.

Operator, I'm not sure what you mean by that. I am still here.

The next question will come from Owen Lau of Oppenheimer. Your line is open.

Good morning, and thank you for taking my question. So, you mentioned crypto multiple times on the call. With increasing regulatory clarity, how does CME think about further expansion into this space? Would you consider launching more derivative products for tokens other than Bitcoin and Ether? And what does it take to go there? Thanks.

Thanks, Owen. I believe this is a very compelling asset class. We were among the pioneers in launching a crypto product with Bitcoin back in 2017, following the guidelines we established, which we consider to be a strategic approach. The current numbers reflect the growth of that product alongside Ether. For other products, it is crucial for us to engage and collaborate with the SEC to ensure we align with their definitions of securities. This determination is still pending from that agency. We continue our discussions with them, but we will not take any preemptive actions regarding other cryptocurrencies until we have more extensive discussions. However, there is interest in the market. I will now hand it over to Tim McCourt, who oversees that asset class, to discuss the potential demand for those other currencies.

Great. Thanks, Terry. And Terry is absolutely right. Our longstanding approach to the cryptocurrency business at CME Group is to be the trusted and transparent regulated venue, and we're going to continue to wait for the regulatory clarity and certainty before we introduce additional products on additional tokens and cryptocurrencies. We've been rewarded to date because of that because the secret to our success is listening to clients for demand-driven product development to meet their risk management needs in this new asset class. It continues to grow. And when we look at just even this month in February, we had our largest trading date in cryptocurrency with almost 700,000 contracts trading on February 3rd, continuing to establish records across Bitcoin and across Ether in both standard and micro-sized contracts, and continuing to innovate in the Bitcoin and Ether lanes. That is where we have the certainty and clarity at present with our regulators, and we continue to introduce products like the Bitcoin Friday futures, the financially cash-settled Bitcoin Friday future options, and continuing to introduce additional order types and transactional handshakes around Bitcoin and Ether. And that will continue to grow in 2025, and we look forward to working with our clients and the regulators to see what additional products make sense in the future.

Got it. That's super helpful. And then quickly, going back to the fourth quarter futures and options RPC, it was $0.701, up from $0.666 in the third quarter because of a mix-shift towards higher-price commodity activity and less volume tiering. Could you please unpack a little bit more on that volume tiering and how could it potentially impact your RPC in 2025? Thanks.

Lynne?

It's distinct for each asset class and the products within that asset class. The impact largely hinges on the volume we experience. A significant increase in volume typically results in lower pricing, while a decrease tends to yield the opposite effect due to the structure in place. This aspect is crucial for us since we aim to encourage incremental trading and support our clients in maintaining their trading activities. It offers some flexibility to our pricing structure, but the mix of assets is very important. Therefore, pricing will vary based on each asset class rather than applying uniformly across the entire organization.

Let me add to that, Owen. Our philosophy regarding contracts, whether they are full-sized, micro, or mini, focuses on the constituency participating in them. We no longer look solely at a notional value, which has been a historical perspective from 10 or 12 years ago. This approach can influence the RPC based on how the products used by participants grow. As Lynne mentioned, it will fluctuate, but we believe we are gaining a better understanding of our clients from a pricing perspective, rather than simply assigning value based on the product and its size. It's essential to consider the use case for the participant.

Got it. So, just want to understand better. So, does that 1% to 1.5% capture that volume tiering, or is this not the right way to think about that?

Yeah. So, the assumption for when we put forward the pricing estimates, it's assuming a similar mix and volume level as the prior year. So, if you had changes in those elements, it would adjust that percentage, but we're basing it on a similar trading experience we saw in 2024, that would be the impact.

Got it. Thanks a lot.

Thanks, Owen.

The next question comes from Kyle Voigt of KBW. Your line is open.

Hey, good morning. Maybe I just wanted to come back to the commodities discussion, but more specifically around the increases in activity by global multi-strategy hedge funds that you mentioned in your prepared remarks. I guess, can you just expand a bit on when you start to see those or a material pickup from that user base? What specific products you mostly seeing those users trade? And I'm just trying to get a sense if this is cyclical because there is simply more going on with inflation and tariffs and macro volatility? Or whether this is the start of a secular trend in growth from that user base?

Thanks, Kyle. Derek?

Yeah. Kyle, it's a trend we pointed to in previous calls. 2024 was a record year for us on the commodity side, as Terry mentioned, not just on the revenue side across all of each of those asset classes, but by penetration into particularly EMEA, but APAC, and Julie mentioned a little bit of that as well. When you actually look at the fastest-growing client segment among that record of generated activity in 2024, the fastest-growing client segment was that buy-side community. So, this isn't a trend that we're seeing emerging. We saw this emerge over the last 18 months that accelerated into the back-end of '24, helping us put up the record volumes, and most importantly, the record revenues because that buy-side business tends to come at a higher RPC for us in already high RPC commodities products. So, that's a trend that we've seen in place for the last 12 months to 15 months. Given the movements in headcount from places like bank trading desks and commodities trading desks into multi-strat hedge funds globally, we see this as very much an investment by the buy-side community to build this out as an alternative income stream beyond just typical equities and fixed income. So, we are seeing, I would say, some secular trends of growth and the enhancement on buy-side serving client need who are seeking access to physical markets in a way that we haven't seen in a very, very long time. So, I would say that this has been a significant component in growing our 34% growth in EMEA over the course of 2024. And as I mentioned that in one of my earlier comments, our business kicking off into 2025 has started extremely strong with our overall business up, in ags up 32%, energy 25%, and metals up 14%. So, we see the secular trend. And the only other point I would make inside of that is that, and Julie mentioned this before, we're seeing an increased participation not just on the future side, but an outsized growth in options as well. So, that was an area saw record growth in 2024, and we're seeing that kick off very strong in 2025. So, we see this as additive to the overall customer mix that we have. Julie spends a lot of time working with myself, and Tim and Mike making sure that healthy ecosystems of each different kind of clients in our markets. Buy side is crucial to come up alongside banks, commercial customers and retail, and their client-segmented sales teams bring to us ideas and opportunities for unmet need and that is a source of new product development. That's one of the reasons we built out a physical ethanol contract, micro ags, and short-dated options in ags as well. So, we see that a secular continuing and continuing a trend from the last 12 months.

And Kyle, I just think that when you look at the world today and what's going on, not just with inflation, but the amount of people that we need to continue to feed, and these products, even though they come and they go, it appears from the front page, they are always critical to each and every one of us as we go forward. So, I don't know if I don't want to call them secular, secular, or whatever, I think that they're constant. And the question is what page of the newspaper are they on. So, we're going to have ebbs and flows, but these are products that we are very excited about. We have been for a lot of years, and I think they'll continue to go forward and people will need to use them.

That's great. And if I just ask a quick follow-up for Lynne, really sorry, but just to be very clear on the pricing changes, the 2% to 2.5% pre-tax impact that you mentioned, that is an aggregate figure inclusive of the transaction fees, correct?

As well as market data and the collateral fee changes. Correct.

Perfect. And then, on the collateral fee changes, roughly what percentage of the non-cash collateral balances would that additional 10 basis point fee apply to you today if no customers change their cash collateral allocations? Just for modeling. Thank you.

Yeah. So, we can't break that out right now, Kyle, just given it's a customer-based decision. We'll continue to provide updates as we see the change roll through, but there's still a couple of months for them to optimize their positioning. If you look at the total cash collateral versus the total collateral, you're going to see that in the high 20% right now, but it's going to be based on the individual firms, not the aggregate.

Yeah. Thank you.

Thanks, Kyle.

The next question will come from Ken Worthington of JPMorgan. Your line is open.

Hi. Good morning. This is Madeline Daleiden on for Ken. Thanks for taking our question. May you please talk about BrokerTec and the updated market share trends there with leadership likely moving to Washington at Phoenix? Do you feel that this puts BrokerTec in a better or worse position in the coming years to drive higher market share? Thanks so much.

Thanks, Madeline. I will ask Mike Dennis to address that.

Good morning, Madeline. I appreciate the question on BrokerTec. When we benchmark ourselves for market share around BrokerTec, we focus on the FINRA TRACE number. Our share versus TRACE fell slightly in Q2, it's down about 1.2%. January is much better with ADV up 29% month-over-month, and market share ticking up about 0.5% versus December despite volatility remaining near recent lows. I think one thing that's important to highlight around BrokerTec is, BrokerTec is more than just a central limit order book for US treasuries. BrokerTec is a strategic asset of the CME Group, and it helps us drive our core futures and options business. Overall, revenues for BrokerTec were up 7% in Q4. We have a strong business in both US and EU repo, where we saw record ADV in 2024 across the repo complex. So, additionally, we've had some solid client adoption in some of our newer trading modalities, which we launched via our relative value curve offerings, which include cash spreads and cash butterfly spreads. And then lastly, one thing I want to focus on as it relates to BrokerTec is when the clearing mandate happens, we feel that BrokerTec can provide benefits as clients adapt to this new regulatory landscape. So, I hope that answers your question.

Thank you.

Thank you, Madeline.

The next question is from Simon Clinch of Redburn Atlantic. Your line is open.

Hi. Thanks for taking my question. A lot of them have been answered already, but I was wondering if you could talk about the market data business. You mentioned that there's, I think, it was 3.5% pricing taken already this year. How should we think about the breakdown of volume growth here and the growth going forward given it's been consistently in that kind of high-single-digit range for some time now? Thanks.

Julie, do you want to address that?

Yeah, thanks for the question. The data business, we had a very strong quarter, right, $182 million in revenue, up another 9%. And that was driven, I would say, by a couple of different factors. Certainly, we had a price increase of 3.5% that took effect throughout 2024, but also that we're seeing interest in professional subscribers and access to our real-time data. And that is contributing to the growth of the business, as well as that non-professional component that I talked about earlier, as well as the drive data business. Because we haven't talked about the drive data business, just the detail there is that we continue to see increased use of our data by institutional clients as they look to create more of their own financial products and things like indices and benchmarks for their end customers. So, we're looking at some new things in terms of enterprise drive data licenses that really give clients more flexibility in that regard, and then we're also continuing to evaluate what additional analytic offerings that we can provide. So, a lot of good innovation there across the entire suite that I think really bodes well for a strong outlook there as well. And as Lynne mentioned, we have another 3.5% of pricing increases that took effect on January 1 for the core business.

Great. That's really useful. Thank you. And just as a follow-up, maybe this is more of a housekeeping question for you, Lynne. Could you give us the latest update on the Google Cloud spend for 2025, and what spend was in the fourth quarter '24? And also just give us a sense of the priorities for that investment. You've already talked about the marketing element of going after new retail customers, et cetera, but I just wonder if you could flesh that out a little bit more for us.

Sure. So, in the fourth quarter, Simon, the total spend was about $22 million on the migration. It was about $18 million within technology and about $4 million within professional services, bringing the total for the year to about $85 million. Within our guidance for 2025, it's including $115 million related to the migration. That will skew a bit more towards the technology side versus the professional services just given where we are in our migration timeline. So, the focus for this year is continuing to migrate some of the non-latency sensitive applications. So we have a number of our clearing systems moved, our data systems. We're continuing that progression as we move through 2025, and continuing to work with our partner on the opportunities for building out additional capabilities and services for the client base to use that data in a more effective way.

Okay, great. Thank you very much.

Thanks, Simon.

And that was our final question for today. I will now turn the call back over to management for closing remarks.

We want to thank you all for joining us today. We appreciate very much. Look forward to any follow-up questions you may have and look forward to talking to you next quarter. Thank you very kindly. All stay safe.

Thank you all for your participation on today's conference call. At this time, all parties may disconnect.