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CME Group

From Wikipedia, the free encyclopedia

CME Group Inc.
FormerlyChicago Mercantile Exchange Holdings Inc.
Company typePublic
IndustryFinancial Services
FoundedOldest exchange 1848; 176 years ago (1848);
Merger 2007; 17 years ago (2007)
HeadquartersChicago, Illinois, United States
Key people
Terrence A. Duffy
(chairman & CEO)
Lynne Fitzpatrick
(CFO)[1]
RevenueIncrease US$5.589 billion (2023)
Increase US$3.436 billion (2023)
Increase US$3.226 billion (2023)
Total assetsDecrease US$129.7 billion (2023)
Total equityDecrease US$26.74 billion (2023)
Number of employees
c. 3,565 (2023)
Subsidiaries
Websitecmegroup.com
Footnotes / references
[2]
President George W. Bush at the CME on March 6, 2001

CME Group Inc. is a financial services company. Headquartered in Chicago, the company operates financial derivatives exchanges including the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, and The Commodity Exchange. The company also owns 27% of S&P Dow Jones Indices.[2][3][4][5] It is the world's largest operator of financial derivatives exchanges. Its exchanges are platforms for trading in agricultural products, currencies, energy, interest rates, metals, futures contracts, options, stock indexes, and cryptocurrencies futures.

In addition to its headquarters in Chicago,[6][7] the company also has offices in New York, Houston, and Washington D.C., in the U.S., as well as abroad in Bangalore, Beijing, Belfast, Calgary, Hong Kong, London, Seoul, Singapore, and Tokyo.[8]

History

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The Chicago Mercantile Exchange (CME), was founded in 1898 as a nonprofit corporation.[2] In 1919, it established its clearing house.[2] In 2000, CME demutualized (became a joint stock company).[2] In 2002, CME Group, the parent company of CME, became a public company via an initial public offering.[2]

On July 12, 2007, CME Group completed a merger with the CME's historical rival, the holding company for the Chicago Board of Trade, founded in 1848, in an $8 billion deal that created the world's largest financial market.[9][10][11] The company then launched as CME Group Inc., a CME/Chicago Board of Trade Company.[12][13]

In 2012, Phupinder Gill, then CME Group's president and COO, became the company's CEO.

In November 2016, Gill retired from his role and Terrence A. Duffy, then executive chairman and president of the company, took on an expanded role as its CEO.[14]

In 2021, the firm struck a partnership with Google to build its cloud strategy, which saw the tech giant investing $1 billion in CME Group.[15]

In 2022, CME Group futures and options reached a record average daily volume of 23.3 million contracts.[16]

Mergers and acquisitions

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On August 22, 2008, CME Group acquired New York Mercantile Exchange (NYMEX), owner of both the NYMEX exchange and the Commodity Exchange (COMEX), for $8.9 billion in cash and CME Group stock.[17][18][19][20][21]

On February 10, 2010, CME Group agreed to purchase 90% of Dow Jones & Company's financial-indexes business, including the Dow Jones Industrial Average.[22][23] CME Group and Dow Jones & Company subsequently contributed the Dow Jones Indexes to the formation of S&P Dow Jones Indices joint venture, with CME Group receiving a 24.4% ownership interest and Dow Jones & Company receiving a 2.6% ownership interest in the joint venture.[24][25] In April 2013, CME Group purchased the remaining Dow Jones & Company interest for $80.0 million, increasing CME Group's interest in S&P Dow Jones Indices from 24.4% to 27.0%.[26]

On December 3, 2012, CME Group acquired the Kansas City Board of Trade, the dominant venue for the sale of hard red winter wheat, for $126 million in cash.[27][28]

On March 15, 2016, the firm announced the sale of its suburban Chicago data center in Aurora, IL to CyrusOne for $130 million, in a leaseback transaction.[29]

On November 2, 2018, CME Group acquired the London-based NEX Group for $5.5 billion.[30][31]

Operations

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CME Group operates a global derivatives marketplace that allows institutions and individuals to trade futures and options based on interest rates, equity indexes, foreign exchange, energy, metals, and agricultural commodities.[32][6][7] The company runs an electronic trading platform, CME Globex, which allows customers in approximately 150 countries to trade futures and options contracts.[33][34][35]

The company also operates two cash market businesses: BrokerTec, which facilitates dealer-to-dealer trading for fixed-income markets,[36][37] and EBS, which provides foreign exchange spot trading.[38]

In addition, CME Group operates CME Clearing, which serves as a counterparty to every cleared transaction, including both listed and OTC derivatives, within the company's marketplace. CME Group is a member of CCP Global, a trade group of central counterparty clearinghouses from around the globe.[39][40]

Board governance

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CME Group's history of member-owned exchanges and mergers and acquisition of rivals have led to an unconventionally large board size for a publicly traded company. In 2018, six of its 20 sitting board directors were elected by holders of Class B shares, representing owners of exchange seats, as opposed to that of publicly traded Class A shares. In comparison, the average company in the S&P 500 had no more than 11 board directors.[41]

On August 23, 2018, the company offered holders of Class B shares about $10 million to relinquish control of their six board seats.[42] The move was subsequently rejected.

Notable events

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2010 flash crash

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CME Group was at the center of the 2010 flash crash, which took place on May 6, 2010. According to a Commodity Futures Trading Commission (CFTC) 2014 report, a significant cause of the event was the use of spoofing algorithms by Navinder Singh Sarao, a British financial trader; just prior to the flash crash, he placed orders for thousands of E-mini S&P 500 stock index futures contracts — which traded on CME Group's Globex platform — and later replaced or modified those orders at least 19,000 times before they were cancelled.[43][44] The event led to the modern day implementation of coordinated cross-market circuit breakers, as the CME's Globex platform halted trading in an automated response to the activity, while the New York Stock Exchange did not.[45][46]

Awards and honors

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See also

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References

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  1. ^ "CME Group CFO Pietrowicz to retire next year". Reuters. February 17, 2022. Retrieved June 22, 2023.
  2. ^ a b c d e f "US SEC: Form 10-K CME Group Inc". U.S. Securities and Exchange Commission. February 28, 2024.
  3. ^ Stafford, Phillip (May 9, 2019). "CME gains boost with new 'micro' futures contracts". The Financial Times.
  4. ^ "CME looks to the futures in Europe". Futures & Options World. June 3, 2014.
  5. ^ "CME Group: The futures of capitalism". The Economist. May 11, 2013.
  6. ^ a b "CME Group Inc.: CME Stands to Benefit From Rising Interest Rates as Volatility Returns to Its Markets". Yahoo! Finance. Yahoo!. Retrieved September 11, 2022.
  7. ^ a b "CME Group Inc. CI A". Wall Street Journal. Dow Jones & Company, Inc. Retrieved September 11, 2022.
  8. ^ "Advancing A Sustainable Future: 2021 Environmental, Social & Governance Report" (PDF). CME Group. 2021. p. 5. Retrieved September 11, 2022.
  9. ^ Barrionuevo, Alexei (October 18, 2006). "2 Exchanges in Chicago Will Merge". The New York Times. Retrieved November 9, 2022.
  10. ^ Lucchetti, Aaron; MacDonald, Alistair; Taylor, Edward (October 18, 2006). "Chicago Merc to Buy Board of Trade". The Wall Street Journal. Dow Jones & Company, Inc. Retrieved November 9, 2022.
  11. ^ Krasny, Ros (July 9, 2007). "CME buy of CBOT easily approved by shareholders". Reuters. Retrieved November 9, 2022.
  12. ^ Krasny, Ros (July 12, 2007). "CBOT shares to be delisted at close of trade". Reuters. Retrieved November 9, 2022.
  13. ^ "CME and CBOT Complete Merger Creating the Leading Global Financial Exchange". CME Group. July 12, 2007. Retrieved November 9, 2022.
  14. ^ Basar, Shanny. "Exchanges Oppose FTX Clearing Proposal Before Congress". Traders Magazine. Markets Media Holdings LLC. Retrieved September 11, 2022.
  15. ^ "Google Invests $1 Billion in Exchange Giant CME, Strikes Cloud Deal".
  16. ^ ""CME Group Reports Record Average Daily Volume of 23.3 Million Contracts Traded in 2022, an Increase of 19%"" (Press release).
  17. ^ Michael Molina; Xiaobing Li, eds. (2014). Oil: A Cultural and Geographic Encyclopedia of Black Gold. ABC-CLIO. p. 203. ISBN 9781610692724. Retrieved November 9, 2022.
  18. ^ "CME Group Inc. Completes Acquisition of NYMEX Holdings, Inc., Expands its Diversified Product Offerings to Include Energy and Metals and Also Announces Preliminary Election Results". CME Group. August 22, 2008. Retrieved November 9, 2022 – via U.S. Securities and Exchange Commission.
  19. ^ de la Merced, Michael (January 29, 2008). "Commodities Markets in New York and Chicago Discuss Merger". The New York Times. Retrieved November 9, 2022.
  20. ^ Leising, Matthew (March 18, 2008). "Largest futures market to acquire Nymex Holdings". Bloomberg News. Retrieved November 9, 2022 – via The Philadelphia Inquirer.
  21. ^ "CME Group Inc. to Acquire NYMEX Holdings, Inc. on Terms Previously Announced". CME Group. March 17, 2008. Retrieved November 9, 2022.
  22. ^ Berman, Dennis K.; Mccracken, Jeffrey (February 11, 2010). "CME Buys 90% of Dow Jones Indexes". The Wall Street Journal.
  23. ^ Spicer, Jonathan (February 10, 2010). "CME buys 90 percent of Dow indexes in joint venture". Reuters. Retrieved November 9, 2022.
  24. ^ Leising, Matthew (July 2, 2012). "McGraw-Hill, CME Group Start S&P Dow Jones Indices Venture". Bloomberg. Retrieved December 6, 2013.
  25. ^ Smith, Simon (July 3, 2012). "S&P Dow Jones Indices formed from merger of S&P Indices and Dow Jones Indexes". ETF Strategy. Retrieved November 9, 2022.
  26. ^ "Item 1. | Business | General Development of Business". Form 10-K for the Fiscal Year Ended December 31, 2014 (Report). CME Group Inc. February 26, 2015. Retrieved June 8, 2018. In April 2013, we purchased the [remaining] non-controlling interest ... from Dow Jones & Company ... increase in our ownership to 27% of the S&P/Dow Jones Indices LLC ...
  27. ^ Dornbrook, James (December 3, 2012). "CME Group wraps up $126M acquisition of Kansas City Board of Trade". Kansas City Business Journal. American City Business Journals. Retrieved November 9, 2022.
  28. ^ "CME Group to Acquire Kansas City Board of Trade" (Press release). Chicago / Kansas City, Missouri. October 17, 2012. Retrieved April 8, 2016.
  29. ^ "CME group announces agreement to sell Aurora Data center to Cyrusone". Reuters.
  30. ^ Sozzi, Brian (March 29, 2018). "CME Group Agrees $5.5 Billion Merger With Britain's NEX". TheStreet. Retrieved November 9, 2022.
  31. ^ "CME Group acquires Nex". November 2, 2018.
  32. ^ Stowell, David (2012). Investment Banks, Hedge Funds, and Private Equity. US: Elsevier Science. ISBN 9780124158207. Retrieved September 11, 2022.
  33. ^ Jensen, Jones (2016). Investment: Analysis and Management. US: Wiley. p. 105. ISBN 9781118975589. Retrieved September 11, 2022.
  34. ^ Sterk, Ron (August 8, 2022). "From chalkboards to computers, futures evolve with the market". Milling & Baking News. Sosland Publishing. Retrieved September 11, 2022.
  35. ^ "The CME Group of exchanges". Business Line. Kasturi & Sons. September 16, 2018. Retrieved September 12, 2022.
  36. ^ McAughtry, Laurie (September 8, 2022). "CME Group continues SOFR conversions as demand grows". The Trade. Tungsten Publishing. Retrieved September 11, 2022.
  37. ^ Basar, Shanny (April 4, 2021). "BrokerTec Benefits From Migration To CME Globex". Markets Media. Markets Media Holdings LLC. Retrieved September 12, 2022.
  38. ^ Oladipupo, Solomon (February 8, 2022). "CME Group's EBS Spot FX ADNV Rises 12% YoY to $64.5 Billion in July". Finance Magnates. Finance Magnates CY Ltd. Retrieved September 11, 2022.
  39. ^ Soumaré, Issouf (2012). Commodity Exchanges: Concepts, Tools and Guidelines. US: Edward Elgar Publishing. p. 219. ISBN 978-1800887039. Retrieved September 11, 2022. CME Group provides clearing services for customers around the globe through its clearing house, CME Clearing, which allows them to significantly mitigate and manage their counterparty risk. CME Clearing is an intermediary between buyers and sellers in the derivatives market.
  40. ^ "Derivatives Clearing 2014" (PDF). FIA Europe. 2014. Retrieved September 11, 2022. In derivatives markets we now see fragmentation of clearing across the likes of CME Clearing, ICE Clear, LCH.Clearnet and Eurex, not to mention the Asian clearing houses, for both OTC and exchange centrally cleared products.
  41. ^ "Finally, CME honors its investors".
  42. ^ "CME aims to take another step away from its members-only past".
  43. ^ Vuorenmaa, Tommi; Wang, Liang (October 2013), "An Agent-Based Model of the Flash Crash of May 6, 2010, with Policy Implications", VALO Research and University of Helsinki, SSRN 2336772
  44. ^ Brush, Silla; Schoenberg, Tom; Ring, Suzi (April 22, 2015), ""How a Mystery Trader with an Algorithm May Have Caused the Flash Crash"", Bloomberg News, retrieved April 25, 2015
  45. ^ Subrahmanyam, Avanidhar (September 2013). ""Algorithmic trading, the Flash Crash, and coordinated circuit breakers"". Borsa Istanbul Review. 13 (3): 4–9. doi:10.1016/j.bir.2013.10.003.
  46. ^ "Investor Bulletin: Measures to Address Market Volatility".
  47. ^ "Corporate Equality Index 2019" (PDF). Human Rights Campaign Foundation. 2019. Retrieved November 14, 2022.
  48. ^ "Corporate Equality Index 2020" (PDF). Human Rights Campaign Foundation. 2020. Retrieved November 14, 2022.
  49. ^ "CEI 2021 - Appendix A: Employer Ratings" (PDF). Human Rights Campaign Foundation. 2021. Retrieved November 14, 2022.
  50. ^ "CEI 2022 - Appendix A: Employer Ratings" (PDF). Human Rights Campaign Foundation. 2022. Retrieved November 14, 2022.
  51. ^ "The Blockchain 50". Forbes. February 2, 2021. Retrieved November 14, 2022.
  52. ^ "The Blockchain 50". Forbes. February 8, 2022. Retrieved November 14, 2022.
  53. ^ "CME Group Awards". CME Group. Retrieved November 14, 2022.
  54. ^ "IMD & IRD Awards 2022: Best market data (exchange)—CME Group".
[edit]
  • Business data for CME Group Inc.:
  • The CME Group Collections at University of Illinois at Chicago
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