CME GROUP INC.

CME Group Inc. operates in the global financial services industry, providing trading and clearing of futures, options, cash, and over-the-counter (OTC) products. The company's exchanges offer benchmark products across interest rates, equity indexes, foreign exchange, and agricultural, energy, and metal commodities. CME Group also operates one of the world's leading central counterparty clearing providers. The industry is highly competitive, with new entrants and alternative instruments such as cash, OTC, ETFs, and digital asset platforms creating structural forces that shape competition. The company sits within this landscape as a diversified financial exchange providing trading and clearing solutions across a wide range of asset classes.

CME Group faces competition from entities such as Intercontinental Exchange, Inc., Cboe Global Markets, Euronext N.V., Hong Kong Exchanges and Clearing Limited, and Deutsche Börse AG, as well as new entrants like FMX Futures Exchange and digital asset platforms. The company's stated competitive advantages include deep, liquid markets; diverse and complementary product offerings; frequency and quality of new product development; and efficient, secure clearing, settlement, and support services. In 2025, 85% ¹ of the company's contract volume was from trades by its members, and one clearing firm represented 12% ² of clearing and transaction fees revenue.

CME Group generates revenue primarily through clearing and transaction fees, which include electronic trading fees, surcharges for privately negotiated transactions, and other volume-related charges for exchange-traded and OTC contracts. Revenue is also derived from market data and information services, as well as other services such as access and communication fees. The majority of revenue is transactional, tied to contract volume and not recurring. Primary customer segments include professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers, governments, and central banks. The company operates a vertically-integrated model with its derivatives exchange, clearing house, and cash markets platforms (BrokerTec and EBS) on the CME Globex electronic trading system.

CME Group's derivatives exchange business offers futures and options across six major asset classes: interest rates (including SOFR, U.S. Treasury, and Federal Funds), equity indexes (including E-mini S&P 500, E-mini Nasdaq 100, and E-mini Russell 2000), foreign exchange (including Euro, Japanese yen, British pound, and Australian dollar), agricultural commodities (including corn, soybean, wheat, and livestock), energy (including WTI crude oil, natural gas, and refined products), and metals (including gold, copper, and silver), as well as cryptocurrencies (including Bitcoin, Ether, Solana, and XRP). In 2025, the company had record average daily volume (ADV) of 28.1 million ³ contracts for futures and options. The cash markets business, comprising BrokerTec and EBS, generated $283.7 million ⁴ of clearing and transaction fees in 2025. The data services business provides proprietary real-time and historical market data, and market data and information services represented 12% ⁵ of total revenues during the years ended December 31, 2025 and December 31, 2024.

The company's derivatives clearing business, operated by CME, provides clearing and settlement for exchange-traded futures and options, exchange-traded swaps, and OTC derivatives. The clearing house marks open positions to market at least twice each business day. In December 2025, CME Group's subsidiary, CME Securities Clearing Inc. (CMESC), received approval from the U.S. Securities and Exchange Commission to become a securities clearing agency, with a goal to help market participants comply with upcoming SEC clearing requirements for U.S. Treasury transactions (as of December 31, 2026) and repo transactions (as of June 30, 2027). The company also offers clearing services for event contracts, OTC interest rate swaps, FX forwards, and commodity swaps. In 2025, the average daily margin saving was approximately $72 billion ⁶.

In 2025, CME Group launched BrokerTec Chicago, a second central limit order book for cash U.S. Treasuries co-located with its U.S. Treasury futures and options markets. The company also launched FX Spot+, a trading platform connecting the OTC spot FX market with its FX futures complex. A joint venture with FanDuel launched in December 2025, introducing a new prediction markets application for retail customers. The company repurchased 963,000 ⁷ shares of Class A common stock for $266.1 million ⁸ during 2025. In March 2025, the company repaid $750.0 million ⁹ of fixed rate notes due March 2025 with a stated rate of 3.00% ¹⁰. The company also sold its OSTTRA joint venture in the fourth quarter of 2025, recognizing a $306.1 million ¹¹ gain on the sale.

Total revenues for 2025 were $6,520.6 million ¹², compared to $6,130.1 million ¹³ in 2024, representing a 6% ¹⁴ increase. Net income attributable to CME Group was $4,072.2 million ¹⁵ in 2025, compared to $3,525.8 million ¹⁶ in 2024, a 15% ¹⁷ increase. Diluted earnings per common share attributable to CME Group was $11.16 ¹⁸ in 2025, compared to $9.67 ¹⁹ in 2024. Operating margin was 64.9% ²⁰ in 2025, compared to 64.1% ²¹ in 2024. Cash flows from operating activities were $4,277.1 million ²² in 2025, compared to $3,690.5 million ²³ in 2024.

A key growth vector is the expansion of the company's futures and options business globally, with a focus on launching new products and increasing customer participation. In 2025, the company experienced significant year-over-year ADV growth in recently launched products, including 32% ²⁴ growth in micro products and 11% ²⁵ growth in OTC alternative products, with more new products in the pipeline for 2026. The company plans to begin offering 24/7 trading for its entire crypto suite in Q2 2026 ²⁶ to enable customers to hedge exposure to the underlying cash markets throughout the weekend. The company is also expanding into Credit, Treasury bills, and TBA (To-Be-Announced) Mortgage futures, and is establishing a leadership position in energy transition/environmental markets by expanding into bioenergy, water, battery metals, and carbon products.

Another growth vector is the expansion of the company's global customer base. The company has a presence in over 10 ²⁷ countries, including its most recent expansion into the Middle East with the opening of a Dubai office. In 2025, approximately 31% ²⁸ of the company's electronic futures and options volume was from transactions reported as outside the U.S., and approximately 53% ²⁹ of its market data revenue was derived from outside the U.S. The company achieved 6% ³⁰ growth in trading volume during European trading hours and 13% ³¹ growth during Asia Pacific trading hours in 2025 compared to 2024. The joint venture with FanDuel, launched in December 2025, is expected to expand the company's retail strategy by offering a new prediction markets application for retail customers.

The company's margin and cost outlook is influenced by its largely fixed cost structure. Operating expenses increased by $92.5 million ³² in 2025 compared to 2024, driven by increases in salaries, benefits, and employer taxes of $41.6 million ³³, technology support services of $27.5 million ³⁴, and professional fees related to the OSTTRA sale of $22.1 million ³⁵. These increases were partially offset by decreases in Google Cloud professional fees of $13.4 million ³⁶ and occupancy and building operations of $16.2 million ³⁷. The company anticipates completing the migration of applications supporting clearing to the Google Cloud by the end of the first quarter of 2026 ³⁸, followed by the decommissioning of legacy on-premises applications, which is expected to reduce duplicative costs.

The company's operational outlook includes significant progress in its 10-year strategic partnership with Google Cloud to move its core, non-latency sensitive applications to the cloud. The company anticipates completing the migration of applications supporting clearing by the end of the first quarter of 2026 ³⁹. Google Cloud is developing a new private cloud region and a co-location facility in Aurora, Illinois, to host Google Cloud's platform designed to support the global trading of CME Group's futures and options markets. The company also plans to launch its securities clearing business later in 2026 ⁴⁰, beginning with cash U.S. Treasury and repo transactions, to help market participants comply with SEC clearing requirements.

In 2026, the company expects capital expenditures to total approximately $85.0 million ⁴¹, net of any leasehold improvement allowances. The company intends to continue to pay a regular quarterly dividend to its shareholders, with a target of between 50% to 60% ⁴² of the prior year's cash earnings. On February 12, 2026, the company declared a regular quarterly dividend of $1.30 ⁴³ per share and an additional, annual variable dividend of $6.15 ⁴⁴ per share. As of December 31, 2025, the maximum remaining value of shares to be repurchased under the share repurchase program was $2.7 billion ⁴⁵. The company estimates that a $10.1 million ⁴⁶ additional contribution will be necessary in 2026 to meet its pension plan funding goal.

A structural headwind flagged by management is the potential for regulatory or policy actions that could result in changes to market structure for the clearing of derivative transactions, which may impact the company's business model or the competitive landscape. The company also faces headwinds from the potential implementation of a transaction tax or user fee in the U.S., UK, or EU, or in the States of Illinois or New Jersey, which could discourage institutions and individuals from using its markets or products. Additionally, legislation that proposes to eliminate the 60/40 tax treatment of certain futures and options contracts could impose a significant increase in tax rates applicable to certain market participants and could result in a decrease in their trading activity.

A key execution risk management explicitly flagged is the company's ability to complete the development, implementation, and maintenance of enhanced functionality required by its customers while maintaining reliability and ensuring that such technology is not vulnerable to security risks. The company also faces risks related to its ability to manage variable costs associated with the transition to the Google Cloud and minimizing the duplicative costs of maintaining both on-premise and Google Cloud environments during the transition. The company's ability to execute its growth strategy and maintain its growth effectively, including through acquisitions, investments, alliances, strategic partnerships, and joint ventures, is also identified as a risk.

The company's revenue is substantially derived from transaction fees, making it highly sensitive to trading volumes, which are directly affected by global market, economic, and political conditions beyond its control. A reduction in overall trading volume or in certain products could render its markets less attractive and result in further loss of volume and revenue. The company operates in a heavily regulated environment, and failure to maintain compliance could result in censure, fines, or revocation of its regulatory designations. The company faces intense competition from other exchanges, OTC markets, and new entrants, which may have greater resources or operate under less stringent regulatory regimes. The company's role in the global marketplace places it at significant risk for cyber attacks, and any security breach could result in system failures, loss of customers, and substantial liabilities. The company's clearing house operations expose it to substantial credit risk of its clearing firms; during 2025, the clearing house transferred an average of approximately $6.7 billion ⁴⁷ a day through the clearing system for settlement, and a default by a clearing firm could have a material adverse effect.

Management's message emphasizes the company's strategic focus on maximizing futures and options growth globally, diversifying its business and revenues, and delivering unparalleled customer efficiencies and operational excellence, including through its partnership with Google Cloud. Key themes include the record average daily volume of 28.1 million ⁴⁸ contracts in 2025, a third consecutive year of volume records in interest rates, and volume records for agricultural, energy, and metals products. Management highlights significant progress in moving core applications to the Google Cloud, with the migration of applications supporting clearing anticipated to be completed by the end of the first quarter of 2026 ⁴⁹. The company also emphasizes its commitment to expanding its global customer base, with a presence in over 10 ⁵⁰ countries and the opening of a Dubai office, and the launch of new initiatives such as the joint venture with FanDuel and the planned launch of securities clearing services later in 2026 ⁵¹.