CME Group at Global Exchange: Strategic Growth and Challenges

On Thursday, 05 June 2025, CME Group (NASDAQ:CME) presented at the Global Exchange and Trading Conference, highlighting its record-breaking performance and strategic initiatives. While celebrating growth in trading volumes and international expansion, CEO Terry Duffy also addressed challenges such as geopolitical tensions and the evolving competitive landscape.

Key Takeaways

• CME Group reported a record year in 2024 and a record month in May, with significant volume growth.
• The company is focusing on retail participation in futures trading, partnering with brokers like Robinhood.
• International growth remains strong, with a 19% year-over-year increase in Q1 2025.
• CME Group is exploring crypto derivatives and tokenization through a Google Cloud pilot program.
• CEO Terry Duffy emphasized strategic M&A and succession planning, with no immediate plans for retirement.

Financial Results

• Record Volumes: CME Group achieved record trading volumes in 2024 and May 2025.
• Open Interest: There has been a significant increase in open interest.
• International Growth: International average daily volume (ADV) rose by 19% year-over-year in Q1, reaching 8.8 million contracts.

Operational Updates

• Retail Growth: A resurgence in retail trading activity in futures contracts, especially post-COVID, has been noted.
• Event Contracts: The company is targeting event contracts towards retail participants and gamers.
• International Expansion: CME Group expanded its international sales team from 10 in 2008 to hundreds today, fueling international growth.
• Crypto Derivatives: Leading in crypto derivatives, CME Group sees stablecoins as key to adoption.
• Tokenization: A pilot program on Google Cloud is exploring solutions for wholesale payments and tokenization.
• Efficiencies: The company saved $25 billion daily for major participants in the rate complex, totaling $60 billion across all asset classes.

Future Outlook

• Retail’s Role: Retail participation is expected to become more stable with better access to technology and information.
• Crypto’s Future: CME Group is cautiously optimistic about crypto’s future, focusing on stablecoins.
• M&A Strategy: The company remains open to mergers and acquisitions that benefit users and shareholders.
• Succession Planning: With Duffy’s contract ending in 2025, succession planning is underway to ensure leadership continuity.
• Technology: CME Group is partnering with Google to advance its technological capabilities.

Q&A Highlights

• Macroeconomic Risks: Duffy discussed global risks like geopolitical tensions and high US debt levels.
• Competition: CME Group aims to maintain its competitive edge through efficiencies, especially against FMX.
• Stablecoins: The importance of regulating stablecoins was emphasized.
• Event Contracts: These are seen as more suitable for retail than institutional traders.
• M&A: Duffy prefers deals that benefit shareholders, noting the challenges of cross-border mergers.

In conclusion, for a detailed understanding of CME Group’s strategic direction, refer to the full transcript below.

Full transcript - Global Exchange and Trading Conference:

Patrick Molley, Senior Research Analyst: Welcome to the afternoon session of the twenty twenty five Global Exchange and Trading Conference. I’m Patrick Molley, senior research analyst covering the exchanges, brokers, and trading companies. It’s a pleasure to welcome my next guest, CME Group Chairman and CEO, Terry Duffy. CME is the largest futures exchange in the world. We always love having Terry here.

Terry, thanks for joining us.

Terry Duffy, Chairman and CEO, CME Group: Pat, thank you very much, buddy.

Patrick Molley, Senior Research Analyst: So, volumes at the CME have been off to a great start this year. The interest rate complex has been strong. Open interest is up significantly. I always love to get your thoughts on the macro picture. How are you feeling about the momentum you’re seeing across the business, and what are your broad market expectations as we head into the back half of the year?

Terry Duffy, Chairman and CEO, CME Group: Well, I think that, you know, when you look at the volumes over the last, you know, several years, they’ve been continuing to escalate, and then we saw another record year in 2024, and then a huge first quarter, And then again, we just announced in May another record month in May. So the question is macro, what does that mean as far as managing risk and what do people need to do? You know, I I hear from some folks that maybe that the Trump tariff chasing is going to slow down to some degree and what does that mean for you? So then I’ll hear other things that would maybe counter that. So, you know, I I’ll meet with members of congress, and I had one as a very senior member of the senate in CME a couple weeks ago, and and there’s still a tremendous amount of concern what’s going on between Iran and what they are going to do or not do and what it’s gonna happen with Israel.

I don’t think that that has anything to do with a tariff that has a lot to do with human life and what the future is going to look like and how are people looking at managing those risks from a financial perspective, yet alone, you know, the godforsaken risk of human life, which is the most important, but there’s also the aftermath of what does it mean to marketplaces. So I think that’s gonna continue to be a part of it. So whether people are following the the the trade up and downs or not, I I think is almost irrelevant because the world is a very dangerous place. So you look at what’s going on in in Eastern Europe and you had, you know, Zelensky doing some things that offensively that people didn’t think he could do. So, okay, what does that mean for that part of the world?

Then you have Putin then sending some stuff over. He killed a few people yesterday including a baby. What does that mean to the world and how does the people how do they look at that and what does that mean from a risk perspective associated with that for markets as well? Again, human life is the most important thing, but the reality is there there’s a cost to all this too and how do you manage that. So I think when you look at the macro events, I think it’s a very frightening place.

I think that the the one that scares me just as much as anywhere else is in China, and China associated with Taiwan. So I would hope that our country would figure out a way to get the semiconductor business back into The US, the pharmaceutical business back into The US, The US consumers should pay for that, the taxpayers should pay for that and protect us because I don’t think anybody on either side of the aisle after the pandemic or what they’re seeing with the future of artificial intelligence and technology would argue that The United States Of America should not have those facilities in here. The rest of the stuff on tariffs, I don’t know, but I do think there’s a tremendous amount of risk out there and people are getting very itchy. So what the the thing that scares me the most right now besides that is also when you look at where Iran is at, what their nuclear capabilities, and what they’re going to do, and and I’m very concerned about the Middle East right now, Patrick. So I think there’s a tremendous amount of risk out there.

So I I don’t see that changing, and then so I I think that the Trump tariff trade chasing is almost irrelevant to some part of it, and I think the macro events are gonna come on the roost. $37,000,000,000,000 of debt in The United States going to a $2,000,000,000,000 deficit, and I don’t know one republican that wants to get in front of that freight train to stop it, where every single one of those people should be willing to stop it. And if you sit down and talk with them, they can’t they’re not going to, and they can’t. So what does that mean for the rest of us and how does that look for our debt? People say that the Chinese are liquidating their US foreign sovereign debt out of China.

Yeah. Well, how much are they buying out of their European entities coming out of Europe back into The US? They haven’t liquidated anything. They probably added to their positions and not let, you know, liquidated their position. So it’s kind of a strange phenomenon how things are working right now in the marketplaces, and they’re just different than they were six months ago, and they’re definitely different than they were six and sixteen years ago.

So I think it’s a fascinating place right now, and you better be able

Patrick Molley, Senior Research Analyst: to manage that risk. So that that’s on the institutional side. I think retail is another big area of focus for for you recently. When I’ve heard you speak, we’ve seen this resurgence in trading activity. Really, since COVID, you had retail go from cash equities.

They moved on to options, and it seems like now the next, big frontier for retail is futures. Robinhood launched CME futures recently. What role do you see retail playing in CME’s growth going forward, and how many of these partnerships do you think are out there from like a retail brokerage perspective to where you can really cross sell or sell those products into that channel?

Terry Duffy, Chairman and CEO, CME Group: I think retail is gonna change a lot of industries, not just the financial services. Retail has got something they have never had before and that is the technology. I mentioned it a moment ago, technology. So if in fact artificial intelligence is becoming to available to all of us, all you gotta do is Google something on your phone, the first thing you’re gonna get is an artificial intelligence answer whether it’s right or not, pretty close to being right, most of them. We all have that information and the technology that the average retail participant that they have today is so much different than what they used to have before.

So the ebbs and flows of retail where your retail comes in, you blow them out, then they’re gone, then they go to replenish and come back. I think you’re gonna start to see more of a static line in retail because there’s just more people participating in retail. Why do I say that? If you look at the proliferation of gaming or gambling online today, it’s probably most of the people in this room have some kind of an app where they’re doing something as it relates to some type of activity on a gaming app. So a lot of people younger than the people in this room all have them and they’re all learning the markets and so the original market gaming apps were historically who wins, who loses.

Now, nobody even cares about who wins, who loses. They care about what’s gonna how many downs, how many rushes, how many passes, how many kicks, how many timeouts. Those are all called prop bets and if you look at prop bets and you look at trading, prop bets and trading are the same exact thing. So people trading, they trade in, they trade out, they trade in, they trade out. That’s exactly what they’re doing in gaming today.

So these people, these younger people today are so sophisticated on the retail side. I think that you’re gonna start to see the divergence and collision of institutional and retail come together and you’re not gonna know it because they’re gonna have information that they never had before and I’m gonna give you an example. I traded on the trading floor back in 1981 till I took over in 02/2002. All the information came from trading floors and proliferated out to the public. The reason why trading floors went away everybody thinks it was just because electronic trading was because technology took the information from the outside, they got it first, and then the people on the trading floors were the last one to get the information and they got destroyed.

So that’s really how the trading floors technically went away, the proliferation of information. And now the retail has that. Now they may not have the same capital as Citadel, but I will tell you what, they’re gonna have the same type of information. So I think the growth of retail is really exciting globally and I don’t think you’re gonna see as many ebbs and flows in retail as you have historically. You’re gonna start to see more of a constant and they’re gonna be a participant for many, many years to come and grow.

Patrick Molley, Senior Research Analyst: Yeah. They’ve been pretty resilient this year, which I think has surprised a lot of people with the volatility.

Terry Duffy, Chairman and CEO, CME Group: I think it goes to the

Patrick Molley, Senior Research Analyst: information they So another thing retail is, or at least in the CFTC regulated contract space, event contracts are starting to grow in popularity. You have a smaller event contract offering. What do you think of event contracts, and what role could they potentially play in CME’s future growth and exposure to retail?

Terry Duffy, Chairman and CEO, CME Group: I’ll go back to what I said a moment ago. I think we have event contracts that we are offering to the wrong constituency of clients today. And you might think, did he just say something derogatory about his own business? No. I’m just saying something very honest.

I think that when you look at the event contracts, the way they’re structured, they’re structured not for the most sophisticated users of markets such as what you referenced earlier, I’ll call Robinhood plus five hundreds. Some of these other big retail firms or the institutional participants, they don’t want those contracts, they can trade other things. Event contracts are truly a retail based contract. When I talk about retail, I’m talking about the everyday retail participant, the gamers and things of that nature. So, I think you need to offer them up to that type of a constituency for those contracts to be successful.

So, I think it it’s an interesting concept, but I think you have to have to make sure you have the right audience in place in order to make them successful. Because otherwise, we’re just gonna go to to trade margin products that do the same exact thing on their terms and not on the event terms.

Patrick Molley, Senior Research Analyst: So moving on, international growth, your ADV overseas has been pretty outstanding, 19% year over year in the first quarter, ’8 point ’8 million contracts. You’re seeing strong growth there. Is it mostly just the macro backdrop driving this and the need for these international players to hedge? What other sorts of things have you been doing to drive growth internationally?

Terry Duffy, Chairman and CEO, CME Group: I think both. I think we’ve always had a decent business internationally and it has grown. It’s grown with the overall growth of the company too. So you could just say the market’s gotten bigger international has benefited from that or you could say some of the things that you have done internally have helped spark that growth. It’s a combination of both.

There’s there’s no question when the tide goes up, all boats can rise, so the markets have gotten bigger, the volumes have gotten bigger, international volumes have gone along coincided and gone along with it. We’ve also done a lot of other things. Historically, we never had much of a sales force. I think we had 10 people selling our products back in 02/2008, now we have hundreds. And we have people educating people all over the world about what we can do to help manage and mitigate risk and we don’t just do that in New York, Chicago, Los Angeles, we do it globally and I think that sparked a lot of our user base to understand what our products are for.

You mentioned it in your comments at the outset, where you said to hit retail was at this level, then they went to Cboe, now they’re finding futures. Well, we’ve been doing that with our international business, you know, historically over the last several years, but we’ve really pushed on the sales effort, the the efficiency effort, the the data efforts that we have done here in The States globally, and it’s paying dividends for us, Patrick. So crypto is a pretty hot topic right now.

Patrick Molley, Senior Research Analyst: I I don’t think, you know, people fully understand that you’re one of the, you know, leading crypto firms, you know, globally when it comes to derivatives. It it does seem like competition is increasing as people started to dip a toe into the water in crypto. How do you feel about your digital asset presence today? Do you think there’s more you can be doing, and how do you see evolving over time?

Terry Duffy, Chairman and CEO, CME Group: You know, I I think crypto, like a lot of things in life, is all about timing. When I listed crypto in 2017, people came to me for years prior to that and said, we gotta list crypto, gotta list crypto, and I said, no, no, and no. And then I called some folks into my office one day in April of twenty seventeen, I said, we’re listing crypto, let’s do it tomorrow. It’s about timing and I think you have to be very conscious of that. Who’s ready, who’s not ready for it.

And I’m not saying 2017 was the year everybody was ready for it. I even had calls from some of my biggest FCM saying if you list this, the only way I can offer it is if people are long, I won’t be able to offer them a two sided market because they can destroy us. I said, that’s the stupidest thing I’ve heard in my life, but that’s some of the things that you heard. So you have to understand who your constituents, your FCMs are, futures commission merchants and see how they feel about certain products. I am a huge believer that crypto needs that ultimate use case that has not been seen yet for the masses.

And I’m also a huge believer that there’s, it’s not going away. I don’t get fixated on the price like everybody else, and I think that’s where people miss the boat. They get fixated on the value of the crypto versus what is the use case for the crypto, because that’s to me is the true value of a crypto. So I think that is continuing to be worked out and I think one of the the the PIN one of the things that could really accelerate that is the acceptance of non tradable USD pegged stable coins. And once these stable coins get more into circulation using the blockchain network and then they also associating some bitcoin or other cryptocurrencies with them, you’ll start to see more of an acceptance going along with it.

Because the friction that some of the fiat currencies have today, some of the friction in the marketplaces have today, we need to eliminate that and then create efficiencies. This is a way to do it. So, I am cautiously optimistic about the ultimate use case for crypto, but, you know, until we can walk outside and just literally seamlessly use it like we do credit cards, debit cards, and cash, even cash has become most non existent. I was going to the bathroom a minute ago, I think I dropped $5 out of my pocket and nobody picked it up.

Patrick Molley, Senior Research Analyst: I wish I would have

Terry Duffy, Chairman and CEO, CME Group: been there. Nobody knew what it was. What’s that? Doctor Kleenex, sir. Okay.

Thank you.

Patrick Molley, Senior Research Analyst: So in the in the past in the past, you’ve you’ve married derivatives markets and spot markets. Do you think it would ever make sense in the future where you marry spot crypto market with the derivatives market that you have?

Terry Duffy, Chairman and CEO, CME Group: I don’t know if it would make sense or not, and I don’t think you should ever draw a conclusion that you would or would not do something. I think you have to see how it evolves. So when you’re looking at the spot markets today, how they trade versus the derivatives and how they trade, I guess I would look at it the same way I do the United States Treasury market. The United States Treasury market does not have a forward market. It’s a cash market where you cannot manage future risk.

So, you have to use the futures market to do that. So, does crypto fall into that same realm where the spot becomes very very important for that given moment in time and then the forward market helps you manage and mitigate risk for your uses for that product down the line. The question is, what’s our uses for that product down the line other than the value of the coin? Mhmm. Right now, it’s only the value of the coin.

Yeah. So it’d be a difficult say, to give you a definite answer, yes or no.

Patrick Molley, Senior Research Analyst: Yeah. So sticking with the tokenization theme, you recently announced that you were piloting solutions for wholesale payments and tokenization on the Google Cloud universal ledger. Yep. You talk about your efforts there and what adoptions looked like, and what you think that’ll bring

Terry Duffy, Chairman and CEO, CME Group: Yeah. I’m excited by this. This is something I’ve been personally involved with. I I like it a lot. I think, again, I’m I’m all about how do I create efficiencies and eliminate friction and, you know, I I have a saying that I need to take a dollar, make it look like $5 and take the risk to 75¢.

And I actually think that we can do that through some of our efforts and like I always like to tell people, if we took a dollar, we passed it around this room by the time it got back to you and I, Pat, it could be worth about 3¢. Right? Because we all took something off it. We have to figure out ways to create to push a dollar around the room, everybody can benefit, but it still comes back to us at a dollar. And that’s how I look at some of these stable coins and some of the other tools that are out there to help manage risk and mitigate it and to make it more efficient.

So I am excited by this, but at the same time, like Bitcoin, I will not rush into it. I will do it properly. I I had the pleasure of sitting with French Hill, who is the chairman of the House Financial Services Committee in my house there a day and we were talking about stablecoins, you know, there’s legislation coming out in Washington and just thinking about that and one of the things he said to me, and I don’t think he said it where I can’t repeat it, he says, this has to be done right the first time and I said, you are absolutely correct because if this is not done right the first time, it’ll be one step forward, 40 steps backwards. And, with anything new like this, that’s what could potentially happen. So, I told him that I thought that maybe, you know, systemically important banks should be able to issue stable coins, systemically important institutions.

I I told them, I mean, I’m a stiff move myself. So, would that benefit us? Maybe, maybe not. I don’t know. But, I think that you have to be careful how you go forward with these stable coins and how they are overseen because they have a potential to do a lot of good.

So switching gears, last year, one of

Patrick Molley, Senior Research Analyst: the big topics of conversation was the competitive landscape in in the interest rate complex. Mhmm. FMX is a challenger emerged. Mhmm. They launched treasury futures for the first time a few weeks ago.

You know, haven’t seen much in terms of volume. I personally don’t get as many questions as I as I did a year ago, and it’s been on the decline. How do you feel about just the overall competitive landscape in rates, and and, you know, this competitor specifically, you know, do you feel better about it? Do you feel worse about it? How do you how do you think

Terry Duffy, Chairman and CEO, CME Group: about I feel the same, Patrick, to be honest with you. I I take every competitor very seriously, and I’ll go back to the theme, what I’ve answered almost every one of your questions with is I look to figure out ways to create efficiencies, understanding that we live in a very competitive dynamic world. People are gonna constantly look to compete with whatever you have. I I believe in innovation and looking at that, and I think when you look at what we’ve been able to accomplish just over the last several years, my rate complex alone, I save $25,000,000,000 a day to the largest participants every single day in efficiencies for that treasury and sulfur market. When you look at the rest of CME’s asset classes, we’re up to $60,000,000,000 a day in efficiencies for our clients.

It’s a very difficult proposition to replicate and I’m not saying you can’t try, but it takes a lot of work and you can’t do it overnight. So, this is something that we’ve been working on creating efficiencies between portfolio margin, cross margining with FIC and, you know, margining against our own products. This is a very big benefit to the end users. So I know that some have said historically that LCH’s swap book is bigger than CME’s, which falls under the NS no shit category. I understand that.

I know that. But at the same time, when you look at futures, and you look at the offsets against futures, our swap book offers the same amount if that anybody around the world can offer today as far as the offsets go. So, you can’t the only way you can use LCH’s swap book to make it bigger than what we have today is to grow your futures book, not your swap book. So our swap book’s big enough today to give the offsets to the clients because of our futures portfolio. Meaning, if you’re gonna compete with me on offsets, you can’t just tell me that because they got 90% of the of the swaps book and I have 10% of USD swap book, they’re gonna do better.

Wrong. That 10% is already given the efficiencies against the futures market. So, the futures market would have to grow in order to make that philosophy or they make that math work, and it it is what it is right now. So, we’ve been able to grow it, and when we grow it, we get more swaps business. So, that’s that’s the way it looks.

It’s a very dynamic marketplace. We’re excited by it. And listen, when there’s $37,000,000,000,000 of outstanding debt today in The United States, Twenty Eight Seven, Twenty Eight Trillion in US treasuries going to a $2,000,000,000,000 a year deficit spend. Interest rates are going to bounce around no matter what, and we think it’s a marketplace that we want to be able to manage and mitigate risk. Futures, as we all know, they settle into cash treasuries.

They don’t settle into a synthetic of another product like a swap does. A swap is a cash settled product and it’s a fixed versus floating US treasury futures settle into US treasury cash. And I think that’s very important. I think our government understands that. So we’re gonna make need to make sure we run a very efficient marketplace and we also understand that people want to compete with that.

Patrick Molley, Senior Research Analyst: Alright. With the time we have left, I got two quick questions for you. The first is on M and A. Your stock’s trading at all time, near all time highs. You have very low leverage.

What’s the appetite for M and A like today? Is there anything out there that interests you? And, if you look across the business, where do you think M and A could be most impactful?

Terry Duffy, Chairman and CEO, CME Group: Again, I’ll cautious in what I say, but I think my my record speaks for itself. I’ve been very strategic on what we wanna do for m and a. When I did the Chicago Board of Trade and the New York Mercantile Exchange along with COMEX, I thought that critically important to the future of our industry and it has been. I tell people all the time if we didn’t do those transactions, we wouldn’t be sitting in this room today as a standalone company as the Chicago Mercantile Exchange. But because of that, we are the CME Group and it’s benefited us immensely.

I think that m and a is something that, first of all, cross border m and a is something very difficult to get done, so if you’re gonna stay in your vertical of an exchange m and a, that that pretty hard to do and what’s left here in The United States is pretty de minimis. So, you would have to look at things that you think can benefit your shareholders first and foremost, and I guess I should say first and foremost, you have to do things that will benefit your users. If your users can benefit, your shareholders will benefit. So that’s how I look at m and a, and right now when I did the deal with NEX, you know, I I still think that that transaction was a good one because we’ve taken a lot of that BrokerTec business and we’ve transacted it into futures, we’ve transitioned it into futures, I should say, and we futurized that business, which has helped grow our treasury complex immensely. The EBS business is doing better and we just announced the optimization business as you’ve all seen with our deal to spin that out to BRK.

So we’re excited by what we’ve been able to do. I think when you look at the transaction we did with Google, where they took a billion dollar stake in CME Group to help us develop the next leg of technology. I think if you look at proprietary technology, especially in exchanges, you’re going to try to keep up with what’s next is massively expensive, and if you don’t have a good strong partnership with one of these big cloud providers, I think you’re gonna be left out. So for us, I think it’s pretty exciting for that, but I’m not opposed to doing an m and a transaction, I just haven’t seen something that makes sense for my users, most importantly, which in return would benefit my shareholders. And when I find that, you know, I won’t be shy, but it’ll be well thought out.

Patrick Molley, Senior Research Analyst: Sure. Alright. So last question. Right now, Terry, your contract with CME extends through the end of twenty twenty

Terry Duffy, Chairman and CEO, CME Group: Yep.

Patrick Molley, Senior Research Analyst: Do you have any potential succession plans at the end of that contract or you think you’ll stick around?

Terry Duffy, Chairman and CEO, CME Group: I don’t know. As far as potential successors, I have a great team. I I really like my team a lot. I’ve made some changes over the years to my team, so I I think we we’re all rowing in the same direction and I think that’s important, especially on some of the topics I touched on today. I’m not a kid.

I’m 66. I’ve been doing this a long time. I still feel like I have a lot in the tank, but at the same time I wanna make sure that I have the pieces of CME in place for the next generation to take over and continue it to grow and I should just quietly walk away and say thank you very much and seeing me hopefully will say thank you to me and we’ll end that’s the way it should be. But I have to get to that point. I’m not there yet with my board.

I’m not there to see where we’re gonna be at as far as succession goes. Someone said to me the other day, they said, how do you feel about retirement? And I said, you know, it’s a strange question and I’ve given it some thought. I said, I know a lot of people that the day they retire, they walk out the door is the worst day of their life and I know that the same person, if you put them back in that office and say you’re gonna stay another two years, they’d say that’s the worst day of their life. So it’s a very very difficult situation that you’re in, especially with me being in this industry for forty two years now, coming in as a young kid, as a young trader back in 1980 and becoming a member in ’81.

It’s been an amazing place. So I want to make sure that I do the right things on behalf of the company. I think I owe that to the company, so the next year will be very important for the succession of CME. But it has to come to that point, I’ve got good strong people there and a good board that understands that.

Patrick Molley, Senior Research Analyst: Great. Alright, Terry. That’s all the time we have, but thank you so much. Thank you, Patrick. I felt

Terry Duffy, Chairman and CEO, CME Group: like I was in a lightning round there. Yeah. Thank you folks.

Patrick Molley, Senior Research Analyst: We squeezed a lot in.

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