CME 10-Q Quarterly Report June 30, 2017

CME GROUP INC.

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10-Q 1 cme-201763010q.htm FORM 10-Q Document

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

- OR -



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-31553

CME GROUP INC.

(Exact name of registrant as specified in its charter)



Delaware		36-4459170
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

20 South Wacker Drive, Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

(312) 930-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer x			Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)			Smaller reporting company o

			Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No ý

The number of shares outstanding of each of the registrant’s classes of common stock as of July 12, 2017 was as follows: 339,909,019 shares of Class A common stock, $0.01 par value; 625 shares of Class B-1 common stock, $0.01 par value; 813 shares of Class B-2 common stock, $0.01 par value; 1,287 shares of Class B-3 common stock, $0.01 par value; and 413 shares of Class B-4 common stock, $0.01 par value.

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CME GROUP INC.

FORM 10-Q

INDEX




		Page

PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements	5

	Consolidated Balance Sheets at June 30, 2017 and December 31, 2016	5

	Consolidated Statements of Income for the Quarters and Six Months Ended June 30, 2017 and 2016	6

	Consolidated Statements of Comprehensive Income for the Quarters and Six Months Ended June 30, 2017 and 2016	7

	Consolidated Statements of Equity for the Six Months Ended June 30, 2017 and 2016	8

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016	10

	Notes to Unaudited Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

PART II. OTHER INFORMATION		29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 4.	Mine Safety Disclosures	29

Item 6.	Exhibits	30

SIGNATURES		31

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PART I. FINANCIAL INFORMATION

Certain Terms

Unless otherwise indicated, references to CME Group Inc. (CME Group or the company) products include references to products listed on one of its regulated U.S. exchanges: Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX). Products listed on these exchanges are subject to the rules and regulations of the particular exchange and the applicable rulebook should be consulted. Unless otherwise indicated, references to NYMEX include its subsidiary, COMEX.

All references to “options” or “options contracts” in the text of this document refer to options on futures contracts.

Further information about CME Group and its products can be found at http://www.cmegroup.com. Information made available on our website does not constitute a part of this Quarterly Report on Form 10-Q.

Information about Contract Volume and Average Rate per Contract

All amounts regarding contract volume and average rate per contract exclude our interest rate swaps and credit default swaps contracts.

Trademark Information

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT, Chicago Board of Trade, KCBT and Kansas City Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.

Forward-Looking Statements

From time to time, in this Quarterly Report on Form 10-Q as well as in other written reports and verbal statements, we discuss our expectations regarding future performance. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipate,” “could,” “estimate,” “intend,” “may,” “plan,” “expect” and similar expressions, including references to assumptions. These forward-looking statements are based on currently available competitive, financial and economic data, current expectations, estimates, forecasts and projections about the industries in which we operate and management's beliefs and assumptions. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. We want to caution you not to place undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that might affect our performance are:


•	increasing competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities;


•	our ability to keep pace with rapid technological developments, including our ability to complete the development, implementation and maintenance of the enhanced functionality required by our customers while maintaining reliability and ensuring that such technology is not vulnerable to security risks;


•	our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services, including our ability to provide effective services to the swaps market;


•	our ability to adjust our fixed costs and expenses if our revenues decline;


•	our ability to maintain existing customers, develop strategic relationships and attract new customers;


•	our ability to expand and offer our products outside the United States;


•	changes in regulations, including the impact of any changes in laws or government policy with respect to our industry, such as any changes to regulations and policies that require increased financial and operational resources from us or our customers;


•	the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others;


•	decreases in revenue from our market data as a result of decreased demand;

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•	changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure;


•	the ability of our financial safeguards package to adequately protect us from the credit risks of clearing members;


•	the ability of our compliance and risk management methods to effectively monitor and manage our risks, including our ability to prevent errors and misconduct and protect our infrastructure against security breaches and misappropriation of our intellectual property assets;


•	changes in price levels and volatility in the derivatives markets and in underlying equity, foreign exchange, interest rate and commodities markets;


•	economic, political and market conditions, including the volatility of the capital and credit markets and the impact of economic conditions on the trading activity of our current and potential customers;


•	our ability to accommodate increases in contract volume and order transaction traffic and to implement enhancements without failure or degradation of the performance of our trading and clearing systems;


•	our ability to execute our growth strategy and maintain our growth effectively;


•	our ability to manage the risks and control the costs associated with our strategy for acquisitions, investments and alliances;


•	our ability to continue to generate funds and/or manage our indebtedness to allow us to continue to invest in our business;


•	industry and customer consolidation;


•	decreases in trading and clearing activity;


•	the imposition of a transaction tax or user fee on futures and options on futures transactions and/or repeal of the 60/40 tax treatment of such transactions; and


•	the unfavorable resolution of material legal proceedings.

For a detailed discussion of these and other factors that might affect our performance, see Item 1A. of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2017 and Item 1A. of this Quarterly Report on Form 10-Q.

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ITEM 1.	FINANCIAL STATEMENTS

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions, except par value data; shares in thousands)

(unaudited)



	June 30, 2017		December 31, 2016
Assets
Current Assets:
Cash and cash equivalents	$	1,362.3	$	1,868.6
Marketable securities	84.3		83.3
Accounts receivable, net of allowance of $2.1 and $3.5	416.4		364.4
Other current assets (includes $30.0 in restricted cash)	228.9		171.7
Performance bonds and guaranty fund contributions	47,405.0		37,543.5
Total current assets	49,496.9		40,031.5
Property, net of accumulated depreciation and amortization of $631.8 and $597.2	399.5		425.2
Intangible assets—trading products	17,175.3		17,175.3
Intangible assets—other, net	2,393.8		2,441.8
Goodwill	7,569.0		7,569.0
Other assets (includes $22.1 and $61.7 in restricted cash)	1,509.3		1,726.6
Total Assets	$	78,543.8	$	69,369.4

Liabilities and Equity
Current Liabilities:
Accounts payable	$	25.5	$	26.2
Other current liabilities	239.1		1,376.7
Performance bonds and guaranty fund contributions	47,405.0		37,542.7
Total current liabilities	47,669.6		38,945.6
Long-term debt	2,232.1		2,231.2
Deferred income tax liabilities, net	7,318.8		7,291.0
Other liabilities	546.5		560.9
Total Liabilities	57,767.0		49,028.7

Shareholders’ Equity:
Preferred stock, $0.01 par value, 10,000 shares authorized at June 30, 2017 and December 31, 2016; none issued	—		—
Class A common stock, $0.01 par value, 1,000,000 shares authorized at June 30, 2017 and December 31, 2016; 338,673 and 338,240 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively	3.4		3.4
Class B common stock, $0.01 par value, 3 shares authorized, issued and outstanding as of June 30, 2017 and December 31, 2016	—		—
Additional paid-in capital	17,870.4		17,826.9
Retained earnings	2,889.7		2,524.5
Accumulated other comprehensive income (loss)	13.3		(14.1		)
Total shareholders’ equity	20,776.8		20,340.7
Total Liabilities and Equity	$	78,543.8	$	69,369.4

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in millions, except per share data; shares in thousands)

(unaudited)



	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenues
Clearing and transaction fees	$	792.0		$	767.6		$	1,584.0		$	1,563.7
Market data and information services	96.1			102.9			192.9			205.3
Access and communication fees	24.9			22.3			49.2			43.9
Other	11.6			13.6			27.8			27.7
Total Revenues	924.6			906.4			1,853.9			1,840.6
Expenses
Compensation and benefits	139.3			131.7			281.6			263.6
Communications	6.0			6.3			12.3			13.0
Technology support services	18.2			17.7			36.9			35.1
Professional fees and outside services	28.6			39.0			57.2			70.7
Amortization of purchased intangibles	24.0			24.0			48.0			48.0
Depreciation and amortization	28.8			30.4			58.2			64.3
Occupancy and building operations	19.2			24.4			39.3			45.7
Licensing and other fee agreements	32.9			32.8			66.7			71.8
Other	22.0			36.8			46.9			91.2
Total Expenses	319.0			343.1			647.1			703.4
Operating Income	605.6			563.3			1,206.8			1,137.2

Non-Operating Income (Expense)
Investment income	112.4			17.2			251.3			34.8
Interest and other borrowing costs	(29.0		)	(31.0		)	(58.8		)	(60.8		)
Equity in net earnings (losses) of unconsolidated subsidiaries	31.8			27.0			62.6			53.8
Other non-operating income (expense)	(83.5		)	(10.4		)	(117.6		)	(20.4		)
Total Non-Operating Income (Expense)	31.7			2.8			137.5			7.4
Income before Income Taxes	637.3			566.1			1,344.3			1,144.6
Income tax provision	221.5			246.0			528.7			456.7
Net Income	$	415.8		$	320.1		$	815.6		$	687.9

Earnings per Common Share:
Basic	$	1.23		$	0.95		$	2.41		$	2.04
Diluted	1.22			0.95			2.40			2.03
Weighted Average Number of Common Shares:
Basic	338,556			337,289			338,448			337,152
Diluted	340,020			338,706			339,974			338,599

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(unaudited)



	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Net income	$	415.8		$	320.1		$	815.6		$	687.9
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized holding gains (losses) arising during the period	1.7			85.8			31.1			195.4
Reclassification of net (gains) losses on sales included in investment income	—			—			(87.1		)	—
Income tax benefit (expense)	(0.5		)	0.2			76.1			(0.6		)
Investment securities, net	1.2			86.0			20.1			194.8
Defined benefit plans:
Net change in defined benefit plans arising during the period	—			—			0.4			3.1
Amortization of net actuarial (gains) losses included in compensation and benefits expense	0.7			0.8			1.4			1.6
Income tax benefit (expense)	(0.3		)	(0.3		)	(0.7		)	(1.8		)
Defined benefit plans, net	0.4			0.5			1.1			2.9
Derivative investments:
Amortization of effective portion of net (gains) losses on cash flow hedges included in interest expense	(0.3		)	(0.3		)	(0.6		)	(0.6		)
Income tax benefit (expense)	0.1			0.1			0.2			0.2
Derivative investments, net	(0.2		)	(0.2		)	(0.4		)	(0.4		)
Foreign currency translation:
Foreign currency translation adjustments	1.1			(1.7		)	9.5			(5.0		)
Income tax benefit (expense)	—			0.6			(2.9		)	1.8
Foreign currency translation, net	1.1			(1.1		)	6.6			(3.2		)
Other comprehensive income (loss), net of tax	2.5			85.2			27.4			194.1
Comprehensive Income	$	418.3		$	405.3		$	843.0		$	882.0

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(dollars in millions, except per share data; shares in thousands)

(unaudited)



	Class A Common Stock (Shares)	Class B Common Stock (Shares)	Common Stock and Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2016	338,240	3	$	17,830.3		$	2,524.5		$	(14.1	)	$	20,340.7
Net income						815.6						815.6
Other comprehensive income (loss)									27.4			27.4
Dividends on common stock of $1.32 per share						(448.2		)				(448.2		)
Impact of adoption of standards update on employee share-based payments, net of tax			1.4			(2.2		)				(0.8		)
Exercise of stock options	242		22.9									22.9
Vesting of issued restricted Class A common stock	162		(12.1		)							(12.1		)
Shares issued to Board of Directors	20		2.4									2.4
Shares issued under Employee Stock Purchase Plan	9		1.2									1.2
Stock-based compensation			27.7									27.7
Balance at June 30, 2017	338,673	3	$	17,873.8		$	2,889.7		$	13.3		$	20,776.8

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(dollars in millions, except per share data; shares in thousands)

(unaudited)



	Class A Common Stock (Shares)	Class B Common Stock (Shares)	Common Stock and Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2015	336,938	3	$	17,725.0		$	2,907.6		$	(80.8	)	$	20,551.8
Net income						687.9						687.9
Other comprehensive income (loss)									194.1			194.1
Dividends on common stock of $1.20 per share						(406.2		)				(406.2		)
Exercise of stock options	292		20.0									20.0
Excess tax benefits from option exercises and restricted stock vesting			3.4									3.4
Vesting of issued restricted Class A common stock	181		(10.5		)							(10.5		)
Shares issued to Board of Directors	27		2.5									2.5
Shares issued under Employee Stock Purchase Plan	10		0.9									0.9
Stock-based compensation			30.0									30.0
Balance at June 30, 2016	337,448	3	$	17,771.3		$	3,189.3		$	113.3		$	21,073.9

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)



	Six Months Ended June 30,
	2017			2016
Cash Flows from Operating Activities
Net income	$	815.6		$	687.9
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	27.7			30.0
Amortization of purchased intangibles	48.0			48.0
Depreciation and amortization	58.2			64.3
Gain on sale of BM&FBOVESPA shares	(86.5		)	—
Income tax expense reclassified from accumulated other comprehensive income upon final sale of BM&FBOVESPA shares	87.8			—
Loss on datacenter	—			27.1
Undistributed earnings, net of losses, of unconsolidated subsidiaries	(12.4		)	(3.3		)
Deferred income taxes	11.8			22.0
Change in:
Accounts receivable	(50.6		)	(71.1		)
Other current assets	(2.6		)	6.0
Other assets	48.6			(20.3		)
Accounts payable	(0.7		)	6.8
Income taxes payable	(98.6		)	(12.8		)
Other current liabilities	(25.5		)	(30.8		)
Other liabilities	2.6			(5.3		)
Other	(0.4		)	5.2
Net Cash Provided by Operating Activities	823.0			753.7

Cash Flows from Investing Activities
Proceeds from maturities of available-for-sale marketable securities	1.2			36.4
Purchases of available-for-sale marketable securities	(0.5		)	(40.3		)
Purchases of property, net	(37.6		)	(39.6		)
Investments in business ventures	(2.3		)	(3.8		)
Proceeds from sale of BM&FBOVESPA shares	244.0			—
Net Cash Provided by (Used in) Investing Activities	204.8			(47.3		)

Cash Flows from Financing Activities
Cash dividends	(1,546.1		)	(1,381.7		)
Proceeds from finance lease obligation	—			130.0
Proceeds from exercise of stock options	22.9			20.0
Excess tax benefits related to employee option exercises and restricted stock vesting	—			3.4
Employee taxes paid on restricted stock vesting	(12.1		)	(10.5		)
Other	1.2			0.9
Net Cash Used in Financing Activities	(1,534.1		)	(1,237.9		)

Net change in cash and cash equivalents	(506.3		)	(531.5		)
Cash and cash equivalents, beginning of period	1,868.6			1,692.6
Cash and Cash Equivalents, End of Period	$	1,362.3		$	1,161.1

Supplemental Disclosure of Cash Flow Information
Income taxes paid	$	476.2		$	410.3
Interest paid	42.4			42.4

See accompanying notes to unaudited consolidated financial statements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements consist of CME Group Inc. (CME Group) and its subsidiaries (collectively, the company), including Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX), Commodity Exchange, Inc. (COMEX), CME Clearing Europe Limited (CMECE) and CME Europe Limited (CME Europe). CME, CBOT, NYMEX, COMEX, CMECE and CME Europe and their subsidiaries are referred to collectively as “the exchange” in the notes to the consolidated financial statements. The clearing houses include CME Clearing, which is the U.S. clearing house and a division of CME, and CMECE.

The accompanying interim consolidated financial statements have been prepared by CME Group without audit. Certain notes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. In the opinion of management, the accompanying consolidated financial statements include all normal recurring adjustments considered necessary to present fairly the financial position of the company at June 30, 2017 and December 31, 2016 and the results of operations and cash flows for the periods indicated. Quarterly results are not necessarily indicative of results for any subsequent period.

The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in CME Group’s Annual Report on Form 10-K for the year ended December 31, 2016 , filed with the Securities and Exchange Commission (SEC) on February 27, 2017.

2. Accounting Policies

Newly Adopted Accounting Policies. In March 2016, the Financial Accounting Standards Board (FASB) issued a standards update that changes certain aspects of accounting for share-based payments to employees. The guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The company implemented this standards update as of January 1, 2017 on a prospective basis. Starting in the first quarter of 2017, all income tax effects of awards are recognized in the income statement as part of income tax expense when the awards vest or are settled. During the first six months of 2017, the company recognized a net tax benefit of $3.7 million related to the income tax effects of awards as part of income tax expense. The company also adopted a policy to recognize forfeitures as compensation expense as the forfeitures occur. Previously, the company estimated the number of awards that would be forfeited and recognized the estimate as part of compensation expense. This policy change was adopted on a modified retrospective basis with a cumulative-effect adjustment to additional paid in capital and retained earnings as of January 1, 2017. The excess tax benefits are now reported as an operating activity within the change in income taxes payable instead of a financing activity on the statements of cash flows. Prior periods have not been adjusted for this change. The employee taxes paid by the company when the company withholds shares for tax-withholding purposes when restricted stock awards vest are now classified as a financing activity on the statements of cash flows. Prior periods have been adjusted for this change.

Recently Issued Accounting Pronouncements. In May 2014, the FASB issued a new standard on revenue recognition that replaces numerous, industry-specific requirements and converges U.S. accounting standards with International Financial Reporting Standards. The new standard introduces a framework for recognizing revenue that focuses on the transfer of control rather than risks and rewards. The new standard also requires significant additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The application of the new standard becomes effective in the first annual period beginning after December 15, 2017, with early adoption permitted. This guidance may be adopted using one of two transition methods: retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial adoption (the modified retrospective approach). Management is on course to comply with the guidance by the effective date. The project team has completed the contract review phase. Based on their initial assessment, management expects the financial statement impact related to clearing and transaction fees to be immaterial based on current customer trading patterns. Management expects to adopt the guidance based on the modified retrospective approach. The impact related to the remaining revenue streams and the impact the guidance will have on policies, processes, controls and disclosures will be finalized by the third quarter of 2017.

In January 2016, the FASB issued a standards update that will change how entities measure certain equity investments. It does not change the guidance for classifying and measuring investments in debt securities and loans. Under the new guidance, entities will have to measure many equity investments at fair value and recognize any changes in fair value in net income, unless the investments qualify for a practicability exception. Entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified today as available for sale in other comprehensive income. The update is

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effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The company is still in the process of evaluating the impact of this update on the consolidated financial statements.

In February 2016, the FASB issued a standards update that requires lessees to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases. The guidance for lessors is largely unchanged from current U.S. GAAP. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with terms of more than 12 months. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The company is in the process of evaluating the impact of this update on the consolidated financial statements.

In June 2016, the FASB issued guidance that changes how credit losses are measured for most financial assets measured at amortized cost and certain other instruments. The standard requires an entity to estimate its lifetime expected credit loss and record an allowance, that when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. This forward-looking expected loss model generally will result in the earlier recognition of allowances for losses. The standard also amends the impairment model for available for sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available for sale debt security is a credit loss. Severity and duration of the unrealized loss are no longer permissible factors in concluding whether a credit loss exists. Entities will recognize improvements to estimated credit losses on available for sale debt securities immediately in earnings rather than as interest income over time. The standard is effective for reporting periods beginning after December 15, 2019. The standard’s provisions must be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption is permitted for reporting periods beginning in 2019. The company is in the process of evaluating the impact of this standard on the consolidated financial statements.

In November 2016, the FASB issued a standards update aimed at promoting consistency in the classification and presentation of changes in restricted cash on the statement of cash flows. Previously, there was diversity in practice as to whether the change in restricted cash was included in the reconciliation of beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, as well as amounts described as restricted cash on the balance sheet. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. The amendments must be applied using a retrospective transition method to each period presented. The company is in the process of evaluating the impact of this update on our consolidated financial statements.

In March 2017, the FASB issued a standards update that will change certain presentation and disclosure requirements for employers that sponsor defined benefit pension as well as other postretirement benefit plans. Under current accounting rules, defined benefit pension cost and postretirement benefit cost (net benefit cost) comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to the employees. Those components are aggregated for reporting in the financial statements within compensation and benefits on the income statement. The amendments in the update require that the service cost component is reported in the same line as other compensation costs, whereas the other components of net benefit cost are required to be presented in the income statement separately from the service cost component. The amendments are effective for reporting periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. The company is in the process of evaluating the impact of this update on the consolidated financial statements.

3. Performance Bonds and Guaranty Fund Contributions

Performance Bonds and Guaranty Fund Contributions. CME has been designated as a systemically important financial market utility by the Financial Stability Oversight Council and is authorized to establish and maintain a cash account at the Federal Reserve Bank of Chicago. CME has received approval to establish this account at the Federal Reserve Bank of Chicago for clearing members' cash balances and the account is now operational. At June 30, 2017 , CME maintained $38.6 billion within the cash account at the Federal Reserve Bank of Chicago.

Clearing House Contract Settlement. CME Clearing and CMECE mark-to-market open positions for all futures and options contracts twice a day (once a day for CME's cleared-only credit default swap and interest rate swap contracts). Based on values derived from the mark-to-market process, CME Clearing and CMECE require payments from clearing firms whose positions have lost value and make payments to clearing firms whose positions have gained value. Under the extremely unlikely scenario of simultaneous default by every clearing firm who has open positions with unrealized losses, the maximum exposure related to positions other than cleared-only credit default and interest rate swap contracts would be one half day of changes in fair value of all open positions, before considering the clearing houses' ability to access defaulting clearing firms' collateral deposits. For CME's cleared-only credit default swap and interest rate swap contracts, the maximum exposure related to CME Clearing's guarantee would be one full day of changes in fair value of all open positions, before considering CME Clearing's ability to access defaulting clearing firms' collateral. During the first six months of 2017, CME Clearing and CMECE transferred an

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average of approximately $2.4 billion a day through their clearing systems for settlement from clearing firms whose positions had lost value to clearing firms whose positions had gained value. CME Clearing and CMECE reduce their guarantee exposure through initial and maintenance performance bond requirements and mandatory guaranty fund contributions. The company believes that its guarantee liability is immaterial and therefore has not recorded any liability at June 30, 2017 .

4. Intangible Assets

Intangible assets consisted of the following at June 30, 2017 and December 31, 2016 :



	June 30, 2017							December 31, 2016
(in millions)	Assigned Value		Accumulated Amortization			Net Book Value		Assigned Value		Accumulated Amortization			Net Book Value
Amortizable Intangible Assets:
Clearing firm, market data and other customer relationships	$	2,838.8	$	(896.4	)	$	1,942.4	$	2,838.8	$	(849.2	)	$	1,989.6
Technology-related intellectual property	29.4		(29.3		)	0.1		29.4		(28.6		)	0.8
Other	2.4		(1.1		)	1.3		2.4		(1.0		)	1.4
Total amortizable intangible assets	$	2,870.6	$	(926.8	)	1,943.8		$	2,870.6	$	(878.8	)	1,991.8

Indefinite-Lived Intangible Assets:
Trade names						450.0							450.0
Total intangible assets – other, net						$	2,393.8						$	2,441.8
Trading products ⁽¹⁾						$	17,175.3						$	17,175.3

(1)

Trading products represent futures and options products acquired in our business combinations with CBOT Holdings, Inc., NYMEX Holdings, Inc. and The Board of Trade of Kansas City, Missouri, Inc. Clearing and transaction fees are generated through the trading of these products. These trading products, most of which have traded for decades, require authorization from the Commodity Futures Trading Commission (CFTC). Product authorizations from the CFTC have no term limits.

Total amortization expense for intangible assets was $24.0 million for the quarters ended June 30, 2017 and 2016 , respectively. Total amortization expense for intangible assets was $48.0 million for the six months ended June 30, 2017 and 2016 , As of June 30, 2017 , the future estimated amortization expense related to amortizable intangible assets is expected to be as follows:



(in millions)	Amortization Expense
Remainder of 2017	$	47.5
2018	94.7
2019	94.7
2020	94.7
2021	94.7
2022	94.7
Thereafter	1,422.8

5. Long-Term Investments

In January 2017, the company sold its remaining 43.4 million shares of BM&FBOVESPA S.A. and recognized a net gain of $86.5 million , net of transaction costs, within investment income on the consolidated statements of income. In conjunction with the final sale of shares, the company reclassified income tax expense of $87.8 million from accumulated other comprehensive income to the income tax provision.

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6. Debt

Long-term debt consisted of the following at June 30, 2017 and December 31, 2016 :



(in millions)	June 30, 2017		December 31, 2016
$750.0 million fixed rate notes due September 2022, stated rate of 3.00% ⁽¹⁾	$	745.6	$	745.2
$750.0 million fixed rate notes due March 2025, stated rate of 3.00% ⁽²⁾	744.5		744.2
$750.0 million fixed rate notes due September 2043, stated rate of 5.30% ⁽³⁾	742.0		741.8
Total long-term debt	$	2,232.1	$	2,231.2


(1)	In August 2012, the company entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of 3.32% .


(2)	In December 2014, the company entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of 3.11% .


(3)	In August 2012, the company entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of 4.73% .

Long-term debt maturities, at par value, were as follows at June 30, 2017 :



(in millions)	Par Value
2018	$	—
2019	—
2020	—
2021	—
2022	750.0
Thereafter	1,500.0

7. Contingencies

Legal and Regulatory Matters. In 2013, the CFTC filed suit against NYMEX and two former employees alleging disclosure of confidential customer information in violation of the Commodity Exchange Act. NYMEX’s motion to dismiss was denied in 2014. Based on its investigation to date and advice from legal counsel, the company believes that it has strong factual and legal defenses to the claim.

In 2003, the U.S. Futures Exchange, L.L.C. (Eurex U.S.) and U.S. Exchange Holdings, Inc. filed suit in federal court alleging that CBOT and CME violated the antitrust laws and tortuously interfered with the business relationship and contract between Eurex U.S. and The Clearing Corporation. While the complaint requests treble damages, the plaintiffs have not specified the amount of damages sought. After years of relative inactivity, the case was recently reassigned to a new judge and a trial date was set for April 9, 2018. Based on its investigation to date and advice from legal counsel, the company believes that it has strong factual and legal defenses to the claim. Given the uncertainty of factors which may potentially impact the resolution of the matter, at this time the company is unable to estimate the reasonably possible loss or range of reasonably possible losses in the unlikely event it were found to be liable at trial in the matter.

In the normal course of business, the company discusses matters with its regulators raised during regulatory examinations or otherwise subject to their inquiry and oversight. These matters could result in censures, fines, penalties or other sanctions. Management believes the outcome of any resulting actions will not have a material impact on its consolidated financial position or results of operations. However, the company is unable to predict the outcome or the timing of the ultimate resolution of these matters, or the potential fines, penalties or injunctive or other equitable relief, if any, that may result from these matters.

In addition, the company is a defendant in, and has potential for, various other legal proceedings arising from its regular business activities. While the ultimate results of such proceedings against the company cannot be predicted with certainty, the company believes that the resolution of any of these matters on an individual or aggregate basis will not have a material impact on its consolidated financial position or results of operations.

No accrual was required for legal and regulatory matters that were probable and estimable as of June 30, 2017 and December 31, 2016 .

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Intellectual Property Indemnifications. Certain agreements with customers and other third parties related to accessing the CME Group platforms, utilizing market data services and licensing CME SPAN software may contain indemnifications from intellectual property claims that may be made against them as a result of their use of the applicable products and/or services. The potential future claims relating to these indemnifications cannot be estimated and therefore no liability has been recorded.

8. Guarantees

Mutual Offset Agreement. CME and Singapore Exchange Limited (SGX) have a mutual offset agreement with a current term through October 2017. This agreement enables market participants to open a futures position on one exchange and liquidate it on the other. The term of the agreement will automatically renew for a one -year period unless either party provides advance notice of their intent to terminate. CME must maintain U.S. Treasury securities or irrevocable, standby letters of credit as collateral for this agreement. At June 30, 2017 , CME was contingently liable to SGX on letters of credit totaling $285.0 million . Regardless of the collateral, CME guarantees all cleared transactions submitted through SGX and would initiate procedures designed to satisfy these financial obligations in the event of a default, such as the use of performance bonds and guaranty fund contributions of the defaulting clearing firm. The company believes that its guarantee liability is immaterial and therefore has not recorded any liability at June 30, 2017 .

Family Farmer and Rancher Protection Fund. In 2012, the company established the Family Farmer and Rancher Protection Fund (the Fund). The Fund is designed to provide payments, up to certain maximum levels, to family farmers, ranchers and other agricultural industry participants who use the company's agricultural commodity products and who suffer losses to their segregated account balances due to their CME clearing member becoming insolvent. Under the terms of the Fund, farmers and ranchers are eligible for up to $25,000 per participant. Farming and ranching cooperatives are eligible for up to $100,000 per cooperative. The Fund was established with a maximum of $100.0 million available for distribution to participants. Since its establishment, the Fund has made payments of approximately $2.0 million , which leaves $98.0 million available for future claims. If, at any time, payments due to participants were to exceed the amount remaining in the fund, payments would be pro-rated. Clearing members and customers must register with the company in advance and provide certain documentation in order to substantiate their eligibility. The company believes that its guarantee liability is immaterial and therefore has not recorded any liability at June 30, 2017 .

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9. Accumulated Other Comprehensive Income (Loss)

The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss):



(in millions)	Investment Securities			Defined Benefit Plans			Derivative Investments			Foreign Currency Translation			Total
Balance at December 31, 2016	$	(19.5	)	$	(37.8	)	$	58.9		$	(15.7	)	$	(14.1	)
Other comprehensive income (loss) before reclassifications and income tax benefit (expense)	31.1			0.4			—			9.5			41.0
Amounts reclassified from accumulated other comprehensive income (loss)	(87.1		)	1.4			(0.6		)	—			(86.3		)
Income tax benefit (expense)	76.1			(0.7		)	0.2			(2.9		)	72.7
Net current period other comprehensive income (loss)	20.1			1.1			(0.4		)	6.6			27.4
Balance at June 30, 2017	$	0.6		$	(36.7	)	$	58.5		$	(9.1	)	$	13.3



(in millions)	Investment Securities			Defined Benefit Plans			Derivative Investments			Foreign Currency Translation			Total
Balance at December 31, 2015	$	(95.0	)	$	(36.6	)	$	59.6		$	(8.8	)	$	(80.8	)
Other comprehensive income (loss) before reclassifications and income tax benefit (expense)	195.4			3.1			—			(5.0		)	193.5
Amounts reclassified from accumulated other comprehensive income (loss)	—			1.6			(0.6		)	—			1.0
Income tax benefit (expense)	(0.6		)	(1.8		)	0.2			1.8			(0.4		)
Net current period other comprehensive income (loss)	194.8			2.9			(0.4		)	(3.2		)	194.1
Balance at June 30, 2016	$	99.8		$	(33.7	)	$	59.2		$	(12.0	)	$	113.3

10. Fair Value Measurements

The company uses a three-level classification hierarchy of fair value measurements for disclosure purposes.


•	Level 1 inputs, which are considered the most reliable evidence of fair value, consist of quoted prices (unadjusted) for identical assets or liabilities in active markets.


•	Level 2 inputs consist of observable market data, such as quoted prices for similar assets and liabilities in active markets, or inputs other than quoted prices that are directly observable.


•	Level 3 inputs consist of unobservable inputs which are derived and cannot be corroborated by market data or other entity-specific inputs.

Level 1 assets generally include investments in publicly traded mutual funds, equity securities and corporate debt securities with quoted market prices. In general, the company uses quoted prices in active markets for identical assets to determine the fair value of marketable securities and equity investments. If quoted prices are not available to determine fair value, the company uses other inputs that are directly observable.

Assets included in level 2 generally consist of asset-backed securities. Asset-backed securities were measured at fair value based on matrix pricing using prices of similar securities with similar inputs such as maturity dates, interest rates and credit ratings.

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Financial assets recorded in the consolidated balance sheet as of June 30, 2017 were classified in their entirety based on the lowest level of input that was significant to each asset's fair value measurement. There were no liabilities that were measured at fair value as of June 30, 2017 . The following tables present financial instruments measured at fair value on a recurring basis:



	June 30, 2017
(in millions)	Level 1		Level 2		Level 3		Total
Assets at Fair Value:
Marketable securities:
Corporate debt securities	$	20.0	$	—	$	—	$	20.0
Mutual funds	63.9		—		—		63.9
Equity securities	0.1		—		—		0.1
Asset-backed securities	—		0.3		—		0.3
Total Marketable Securities	84.0		0.3		—		84.3
Equity investments	20.7		—		—		20.7
Total Assets at Fair Value	$	104.7	$	0.3	$	—	$	105.0

There were no transfers of assets or liabilities between level 1, level 2 and level 3 during the first six months of 2017 . There were no level 3 assets or liabilities valued at fair value on a recurring or non-recurring basis during the first six months of 2017.

The following presents the estimated fair values of long-term debt notes, which are carried at amortized cost on the consolidated balance sheets. The fair values, which are classified as level 2 under the fair value hierarchy, were estimated using quoted market prices. At June 30, 2017 , the fair values were as follows:



(in millions)	Fair Value
$750.0 million fixed rate notes due September 2022, stated rate of 3.00%	$	774.0
$750.0 million fixed rate notes due March 2025, stated rate of 3.00%	763.1
$750.0 million fixed rates notes due September 2043, stated rate of 5.30%	933.0

11. Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to the company by the weighted average number of shares of all classes of CME Group common stock outstanding for each reporting period. Diluted earnings per share reflects the increase in shares using the treasury stock method to reflect the impact of an equivalent number of shares of common stock if stock options were exercised and restricted stock awards were converted into common stock. Anti-dilutive stock options, restricted stock and performance share awards were as follows for the periods presented:



	Quarter Ended June 30,		Six Months Ended June 30,
(in thousands)	2017	2016	2017	2016
Stock options	—	320	—	320
Restricted stock and performance shares	70	—	71	—
Total	70	320	71	320

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The following table presents the earnings per share calculation for the periods presented:



	Quarter Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net Income (in millions)	$	415.8	$	320.1	$	815.6	$	687.9
Weighted Average Number of Common Shares (in thousands):
Basic	338,556		337,289		338,448		337,152
Effect of stock options, restricted stock and performance shares	1,464		1,417		1,526		1,447
Diluted	340,020		338,706		339,974		338,599
Earnings per Common Share:
Basic	$	1.23	$	0.95	$	2.41	$	2.04
Diluted	1.22		0.95		2.40		2.03

12. Subsequent Events

The company has evaluated subsequent events through the date the financial statements were issued and has determined that there are no subsequent events that require disclosure.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is provided as a supplement to, and should be read in conjunction with, the accompanying unaudited consolidated financial statements and notes in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2016.

References in this discussion and analysis to “we,” “us” and “our” are to CME Group Inc. (CME Group) and its consolidated subsidiaries, collectively. References to “exchange” are to Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX), Commodity Exchange, Inc. (COMEX), CME Clearing Europe Limited (CMECE) and CME Europe Limited (CME Europe), collectively, unless otherwise noted. The clearing houses include CME Clearing, which is the U.S. clearing house and a division of CME, and CMECE.

RESULTS OF OPERATIONS

Financial Highlights

The following summarizes significant changes in our financial performance for the periods presented.



	Quarter Ended June 30,								Six Months Ended June 30,
(dollars in millions, except per share data)	2017			2016			Change		2017			2016			Change
Total revenues	$	924.6		$	906.4		2	%	$	1,853.9		$	1,840.6		1	%
Total expenses	319.0			343.1			(7	)	647.1			703.4			(8	)
Operating margin	65.5		%	62.1		%			65.1		%	61.8		%
Non-operating income (expense)	$	31.7		$	2.8		n.m.		$	137.5		$	7.4		n.m.
Effective tax rate	34.7		%	43.5		%			39.3		%	39.9		%
Net income	$	415.8		$	320.1		30		$	815.6		$	687.9		19
Diluted earnings per common share	1.22			0.95			28		2.40			2.03			18
Cash flows from operating activities									823.0			753.7			9

n.m. not meaningful

Revenues



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2017		2016		Change		2017		2016		Change
Clearing and transaction fees	$	792.0	$	767.6	3	%	$	1,584.0	$	1,563.7	1	%
Market data and information services	96.1		102.9		(7	)	192.9		205.3		(6	)
Access and communication fees	24.9		22.3		11		49.2		43.9		12
Other	11.6		13.6		(16	)	27.8		27.7		—
Total Revenues	$	924.6	$	906.4	2		$	1,853.9	$	1,840.6	1

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Clearing and Transaction Fees

Futures and Options Contracts

The following table summarizes our total contract volume, revenue and average rate per contract for futures and options. Total contract volume includes contracts that are traded on our exchange and cleared through our clearing houses and certain cleared-only contracts. Volume is measured in round turns, which is considered a completed transaction that involves a purchase and an offsetting sale of a contract. Average rate per contract is determined by dividing total clearing and transaction fees by total contract volume. Contract volume and average rate per contract disclosures exclude interest rate swaps and credit default swaps.



	Quarter Ended June 30,						Six Months Ended June 30,
	2017		2016		Change		2017		2016		Change
Total contract volume (in millions)	1,036.5		965.2		7	%	2,096.6		1,998.8		5	%
Clearing and transaction fees (in millions)	$	776.1	$	754.6	3		$	1,550.8	$	1,535.7	1
Average rate per contract	$	0.749	$	0.782	(4	)	$	0.740	$	0.768	(4	)

We estimate the following increases in clearing and transaction fees based on changes in total contract volumes and changes in average rate per contract for futures and options during the second quarter and first six months of 2017 when compared with the same period in 2016 .



(in millions)	Quarter Ended			Six Months Ended
Increases due to changes in total contract volume	$	53.4		$	72.3
Decreases due to changes in average rate per contract	(31.9		)	(57.2		)
Net increases in clearing and transaction fees	$	21.5		$	15.1

Average rate per contract is impacted by our rate structure, including volume-based incentives; product mix; trading venue, and the percentage of volume executed by customers who are members compared with non-member customers. Due to the relationship between average rate per contract and contract volume, the change in clearing and transaction fees attributable to changes in each is only an approximation.

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Contract Volume

The following table summarizes average daily contract volume. Contract volume can be influenced by many factors, including political and economic conditions, the regulatory environment and market competition.



	Quarter Ended June 30,						Six Months Ended June 30,
(amounts in thousands)	2017		2016		Change		2017		2016		Change
Average Daily Volume by Product Line:
Interest rate	8,210		6,776		21	%	8,686		7,493		16	%
Equity	2,707		2,957		(8	)	2,736		3,250		(16	)
Foreign exchange	879		838		5		887		890		—
Agricultural commodity	1,492		1,722		(13	)	1,377		1,470		(6	)
Energy	2,632		2,322		13		2,565		2,426		6
Metal	533		467		14		522		461		13
Aggregate average daily volume	16,453		15,082		9		16,773		15,990		5
Average Daily Volume by Venue:
Electronic	14,582		13,355		9		14,763		14,018		5
Open outcry	1,115		1,076		4		1,238		1,245		(1	)
Privately negotiated	756		651		16		772		727		6
Aggregate average daily volume	16,453		15,082		9		16,773		15,990		5
Electronic Volume as a Percentage of Total Volume	89	%	89	%			88	%	88	%

Overall interest rate volatility continued to remain high throughout the first half of 2017 due to considerable market uncertainty surrounding the Federal Reserve's interest rate policy. In June 2017, the Federal Open Markets Committee raised the federal funds rate, which led to additional interest rate volatility in the second quarter of 2017. These factors resulted in strong volumes for our interest rate contracts throughout the first half of 2017. During the second quarter, there was a shift in crude oil supplies caused by an increase in United States crude oil production following the Organization of Petroleum Exporting Countries' decision to cut oil supplies in the fourth quarter of 2016, which contributed to stronger energy volumes in the first half of 2017. Volatility within the equity markets continued to remain low throughout the first half of 2017 due to fewer market-moving geopolitical events, which resulted in lower equity contract volumes during the first half of 2017.

Interest Rate Products

The following table summarizes average daily contract volume for our key interest rate products. Eurodollar Front 8 futures include contracts expiring in two years or less. Eurodollar Back 32 futures include contracts with expirations after two years through ten years.



	Quarter Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2017	2016	Change		2017	2016	Change
Eurodollar futures and options:
Front 8 futures	1,761	1,630	8	%	1,946	1,828	6	%
Back 32 futures	738	594	24		837	660	27
Options	1,464	1,043	40		1,537	1,276	20
U.S. Treasury futures and options:
10-Year	1,883	1,616	17		1,931	1,727	12
5-Year	994	842	18		1,044	889	17
2-Year	381	312	22		382	328	17
Treasury bond	382	318	20		376	351	7
Federal Funds futures and options	217	142	53		235	132	77

In the second quarter and first six months of 2017 when compared with the same periods in 2016, overall interest rate contract volumes increased largely due to volatility caused by continued uncertainty surrounding the Federal Reserve's interest rate policy, including volatility caused by the federal funds rate increase by the Federal Open Markets Committee in June 2017. In addition, we believe the increases in short-term interest rate contract volumes were also due to the uncertainty surrounding other global events, including 2017 elections throughout Europe. We believe the increases in long-term interest rate contract

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volumes were also due to the volatility resulting from the uncertainty surrounding the policies of the new political administration in the United States, uncertainty regarding future rates of inflation and the potential for additional government spending.

Equity Products

The following table summarizes average daily contract volume for our key equity products.



	Quarter Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2017	2016	Change		2017	2016	Change
E-mini S&P 500 futures and options	2,116	2,360	(10	)%	2,182	2,566	(15	)%
E-mini NASDAQ 100 futures and options	304	258	18		259	305	(15	)

In the second quarter and first six months of 2017 when compared with the same periods in 2016, overall equity contract volumes decreased due to overall lower equity market volatility, as measured by the CBOE Volatility Index and CBOE Nasdaq-100 Volatility Index. The comparatively low volatility is believed to be caused by fewer market-moving geopolitical and macro-level events that impacted these indexes in the first half of 2017. In the first half of 2016, there were periods of higher volatility within the equity markets resulting from uncertainty regarding whether the Federal Open Markets Committee would begin to raise the federal funds rate in 2016, the deceleration of the Chinese economy and declining global crude oil prices.

Foreign Exchange Products

The following table summarizes average daily contract volume for our key foreign exchange products.



	Quarter Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2017	2016	Change		2017	2016	Change
Euro	214	219	(2	)%	224	246	(9	)%
Japanese yen	165	147	12		172	169	2
British pound	123	134	(9	)	124	126	(2	)
Australian dollar	91	112	(19	)	92	113	(18	)
Canadian dollar	83	78	7		78	85	(8	)

Overall contract volumes increased slightly in the second quarter of 2017 and remained relatively flat in the first six months of 2017, when compared with the same periods in 2016. The Japanese yen contract volumes increased as market participants turned to the yen as a safe-haven currency as yen currency rates steadied. Declines in Euro contract volumes were largely driven by overall low volatility, which is believed to be caused by a lack of global macroeconomic drivers affecting the Euro. In the first quarter of 2016, Euro contract volumes were higher due to volatility caused by uncertainty surrounding the European Central Bank's quantitative easing program. We believe the decreases in Australian dollar contract volumes were driven by lower volatility within those markets due to lower interest rate volatility in Australia.

Agricultural Commodity Products

The following table summarizes average daily contract volume for our key agricultural commodity products.



	Quarter Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2017	2016	Change		2017	2016	Change
Corn	532	587	(9	)%	471	492	(4	)%
Soybean	279	454	(39	)	274	374	(27	)
Wheat	260	232	12		232	208	12

In the second quarter and first six months of 2017 when compared with the same periods in 2016, overall agricultural commodity contract volumes decreased due to lower corn and soybean contract volumes, which we believe resulted from lower price volatility in the second quarter of 2017. In the second quarter of 2016, price volatility was higher due to greater uncertainty related to weather conditions and the crop production for the 2016 growing season. In addition, we believe the increases in wheat contract volumes in the first half of 2017 were caused by greater uncertainty surrounding the wheat production for the 2017 growing season.

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Energy Products

The following table summarizes average daily contract volume for our key energy products.



	Quarter Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2017	2016	Change		2017	2016	Change
WTI crude oil	1,483	1,231	20	%	1,406	1,312	7	%
Natural gas	580	531	9		590	527	12
Refined products	387	369	5		388	371	5
Brent crude oil	106	92	15		104	104	—

Overall energy contract volumes increased in the second quarter and first six months of 2017 when compared with the same periods in 2016 largely due to increases in crude oil contract volumes caused by higher volatility in the second quarter of 2017. We believe the increased volatility in the second quarter of 2017 was caused by a shift in crude oil supplies as United States crude oil production rose following the Organization of Petroleum Exporting Countries' decision to cut oil supplies in the fourth quarter of 2016. We believe the increases in natural gas contract volumes were caused by volatility driven by higher supply levels in the first half of 2017.

Metal Products

The following table summarizes average daily volume for our key metal products.



	Quarter Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2017	2016	Change		2017	2016	Change
Gold	296	273	8	%	302	278	9	%
Copper	102	89	15		99	83	19
Silver	108	84	28		95	77	24

We believe the increases in metal contract volumes in the second quarter and first six months of 2017 when compared with the same periods in 2016 were due to investors using gold and other precious metals as safe-haven alternative investments to other markets that remain uncertain in the first half of 2017.

Average Rate per Contract

The average rate per contract decreased in the second quarter and first six months of 2017 when compared with the same periods in 2016 largely due to increases in trades executed by members, as a percentage of total trading volumes, as well as a shift in relative mix of product volumes. In the second quarter of 2017 when compared with the same period in 2016, interest rate contract volume, when measured as a percentage of total volume, increased by 5 percentage points, while agricultural commodity and equity contract volumes collectively decreased by 6 percentage points. In the first six months of 2017 when compared with the same period in 2016, interest rate contract volume increased by 5 percentage points, while agricultural commodity and equity contract volumes collectively decreased by 5 percentage points. Agricultural commodity and equity contracts have a higher average rate per contract compared with interest rate contracts.The overall decreases in average rates per contract were partially offset by a rate increase that was effective in the first quarter of 2017.

Concentration of Revenue

We bill a substantial portion of our clearing and transaction fees directly to our clearing firms. The majority of clearing and transaction fees received from clearing firms represent charges for trades executed and cleared on behalf of their customers. One firm represented 13% and another firm represented 12% of our clearing and transaction fees in the first six months of 2017 . Should a clearing firm withdraw, we believe that the customer portion of the firm’s trading activity would likely transfer to another clearing firm of the exchange. Therefore, we do not believe we are exposed to significant risk from the ongoing loss of revenue received from or through a particular clearing firm.

Other Sources of Revenue

In the second quarter and first six months of 2017 when compared with the same periods in 2016, market data and information services revenues decreased. The decreases in revenues were attributable to declines in screen counts due to cost-cutting initiatives at member firms and some rationalization as customer firms transitioned into full-priced offerings.

The two largest resellers of our market data represented approximately 40% of our market data and information services revenue in the first six months of 2017. Despite this concentration, we consider exposure to significant risk of revenue loss to be minimal. In the event that one of these vendors no longer subscribes to our market data, we believe the majority of that

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vendor’s customers would likely subscribe to our market data through another reseller. Additionally, several of our largest institutional customers that utilize services from our two largest resellers report usage and remit payment of their fees directly to us.

Expenses



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2017		2016		Change		2017		2016		Change
Compensation and benefits	$	139.3	$	131.7	6	%	$	281.6	$	263.6	7	%
Communications	6.0		6.3		(4	)	12.3		13.0		(5	)
Technology support services	18.2		17.7		2		36.9		35.1		5
Professional fees and outside services	28.6		39.0		(27	)	57.2		70.7		(19	)
Amortization of purchased intangibles	24.0		24.0		—		48.0		48.0		—
Depreciation and amortization	28.8		30.4		(5	)	58.2		64.3		(9	)
Occupancy and building operations	19.2		24.4		(21	)	39.3		45.7		(14	)
Licensing and other fee agreements	32.9		32.8		—		66.7		71.8		(7	)
Other	22.0		36.8		(40	)	46.9		91.2		(49	)
Total Expenses	$	319.0	$	343.1	(7	)	$	647.1	$	703.4	(8	)

Operating expenses decreased by $24.1 million and $56.3 million in the second quarter and first six months of 2017, respectively, when compared with the same periods in 2016. The following table shows the estimated impacts of key factors resulting in the changes in operating expenses:



	Quarter Ended, June 30, 2017					Six Months Ended, June 30, 2017
	Amount of Change			Change as a Percentage of Total Expenses		Amount of Change			Change as a Percentage of Total Expenses
(dollars in millions)	Amount of Change			Change as a Percentage of Total Expenses		Amount of Change			Change as a Percentage of Total Expenses
Loss on datacenter and related legal fees	$	—		—	%	$	(28.6	)	(4	)%
Foreign currency exchange rate fluctuation	(16.2		)	(5	)	(22.6		)	(3	)
Professional fees and outside services	(10.4		)	(3	)	(12.0		)	(2	)
Rent expense	(5.0		)	(1	)	(5.7		)	(1	)
Licensing and other fee agreements	0.1			—		(5.1		)	(1	)
Bonus expense	3.6			1		4.2			1
Salaries, benefits and employer taxes	2.8			1		9.0			1
Other expenses, net	1.0			—		4.5			1
Total decrease	$	(24.1	)	(7	)%	$	(56.3	)	(8	)%

Decreases in operating expenses in the second quarter and first six months of 2017 when compared with the same periods in 2016 were as follows:

•

In the first quarter of 2016, we sold and leased back our datacenter in the Chicago area. The transaction was recognized under the financing method under generally accepted accounting principles. In the first quarter of 2016, we recognized total losses and expenses of $28.6 million, representing a net loss on write-down to fair value of the assets and certain other transaction fees of $27.1 million within other expenses and $1.5 million of legal and other fees.

•

In the second quarter of 2017, we recognized a net gain of $4.6 million due to a favorable change in exchange rates on foreign cash balances, compared with a net loss of $11.6 million in the second quarter of 2016. In the first six months of 2017, we recognized a net gain of $7.1 million due to a favorable change in exchange rates on foreign cash balances, compared with a net loss of $15.5 million in the first six months of 2016. Gains and losses from exchange rate fluctuations result when subsidiaries with a U.S. dollar functional currency hold cash as well as certain other monetary assets and liabilities denominated in foreign currencies.


•	In 2016, we recognized higher professional fees and outside services expenses largely due to non-recurring legal efforts in 2016 related to our business activities and product offerings as well as higher professional fees related to a greater reliance on consultants for security and systems enhancement work in 2016.


•	Rent expense decreased largely due to a reduction in office and data center space throughout 2016.

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•	A decrease in licensing and other fee sharing agreements expense in the first six months of 2017 resulted from lower expense related to revenue sharing agreements for certain equity and energy contracts due to lower volume for these products in the first six months of 2017.

Increases in operating expenses in the second quarter and first six months of 2017 when compared with the same periods in 2016 were as follows:


•	Bonus expense increased due to performance relative to our 2017 cash earnings target when compared with 2016 performance relative to our 2016 cash earnings target.


•	Compensation and benefits expenses also increased as a result of increases in average headcount primarily in our international locations.

Non-Operating Income (Expense)



	Quarter Ended June 30,								Six Months Ended June 30,
(dollars in millions)	2017			2016			Change		2017			2016			Change
Investment income	$	112.4		$	17.2		n.m.		$	251.3		$	34.8		n.m.
Interest and other borrowing costs	(29.0		)	(31.0		)	(6	)	(58.8		)	(60.8		)	(3	)
Equity in net earnings (losses) of unconsolidated subsidiaries	31.8			27.0			17		62.6			53.8			16
Other non-operating income (expense)	(83.5		)	(10.4		)	n.m.		(117.6		)	(20.4		)	n.m.
Total Non-Operating	$	31.7		$	2.8		n.m.		$	137.5		$	7.4		n.m.

n.m. not meaningful

Investment income increased in the second quarter and first six months of 2017, when compared with the same periods in 2016, largely due to higher average reinvestment balances and rates of interest earned from cash performance bond and guaranty fund contributions that are reinvested. In addition, we sold our remaining ownership interest in BM&FBOVESPA, S.A. (BM&FBOVESPA) and recognized a net gain of $86.5 million, net of transaction costs, in the first quarter of 2017.

Higher income generated from our S&P/Dow Jones Indices LLC business venture contributed to increases in equity in net earnings (losses) of unconsolidated subsidiaries in the second quarter and first six months of 2017 when compared with the same periods in 2016.

In the second quarter and first six months of 2017 when compared with the same periods in 2016, we recognized higher expenses related to the distribution of interest earned on performance bond collateral reinvestment to the clearing firms. These expenses are included in other non-operating income (expense).

Income Tax Provision

The following table summarizes the effective tax rates for the periods presented:



	2017		2016
Quarter ended June 30	34.7	%	43.5	%
Six months ended June 30	39.3	%	39.9	%

The overall decrease in the effective tax rate in the second quarter of 2017 when compared with the same period in 2016 was due to benefits recognized in the second quarter of 2017 related to the settlement of various federal and state audit issues. In addition, we recognized tax expense in the second quarter of 2016 related to the remeasurement of tax positions resulting from a state and local income tax law change.

The overall effective tax rate in the first six months of 2017 was relatively flat compared with the same period in 2016. Additional income tax expense recognized in the first quarter of 2017 related to the final sale of BM&FBOVESPA shares that was reclassified from accumulated other comprehensive income was partially offset by the benefits recognized in the second quarter of 2017 related to the settlement of various federal and state audit issues.

Effective July 1, 2017, the state of Illinois raised its corporate state income tax rate. As a result of this state tax rate change, we expect to recognize additional non-cash state income tax expense of approximately $85 million to $90 million in the third quarter of 2017 largely related to the remeasurement of our deferred income tax positions.

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Liquidity and Capital Resources

Sources and Uses of Cash . Net cash provided by operating activities increased in the first six months of 2017 when compared with the same period in 2016 . The increase in net cash provided by operating activities was largely attributable to higher investment income related to our reinvestment of cash performance bonds and guaranty fund collateral, net of the distribution of interest earned to the clearing firms, as well as an increase in trading volumes and the reduction of restricted cash related to the CMECE guaranty fund. Net cash provided by investing activities increased in the first six months of 2017 when compared with the same period of 2016 due to proceeds received from our sale of BM&FBOVESPA shares in the first quarter of 2017. Cash used in financing activities was higher in the first six months of 2017 when compared with the same period in 2016 . The increase was attributable to higher cash dividends paid in the first six months of 2017 when compared with the same period in 2016. The increase was also attributable to proceeds from a finance lease obligation related to the sale-leaseback of the datacenter in the first quarter of 2016.

Debt Instruments . The following table summarizes our debt outstanding at June 30, 2017 :



(in millions)	Par Value
Fixed rate notes due September 2022, stated rate of 3.00% ⁽¹⁾	$	750.0
Fixed rate notes due March 2025, stated rate of 3.00% ⁽²⁾	750.0
Fixed rate notes due September 2043, stated rate of 5.30% ⁽³⁾	750.0


(1)	In August 2012, we entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable effectively became fixed at a rate of 3.32%.


(2)	In December 2014, we entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable effectively became fixed at a rate of 3.11%.


(3)	In August 2012, we entered into a forward starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable effectively became fixed at a rate of 4.73%.

We maintain a $2.3 billion multi-currency revolving senior credit facility with various financial institutions, which matures in March 2020. The proceeds from this facility can be used for general corporate purposes, which includes providing liquidity for our clearing houses in certain circumstances at CME Group's discretion and, if necessary, for maturities of commercial paper. As long as we are not in default under this facility, we have the option to increase it up to $3.0 billion with the consent of the agent and lenders providing the additional funds. This facility is voluntarily pre-payable from time to time without premium or penalty. Under this facility, we are required to remain in compliance with a consolidated net worth test, which is defined as our consolidated shareholders' equity at December 31, 2014, giving effect to share repurchases made and special dividends paid during the term of the agreements (and in no event greater than $2.0 billion in aggregate), multiplied by 0.65. We currently do not have any borrowings outstanding under this facility.

We maintain a 364-day multi-currency revolving secured credit facility with a consortium of domestic and international banks to be used in certain situations by CME Clearing. The facility provides for borrowings of up to $7.0 billion. We may use the proceeds to provide temporary liquidity in the unlikely event of a clearing firm default, in the event of a liquidity constraint or default by a depositary (custodian for our collateral), or in the event of a temporary disruption with the domestic payments system that would delay payment of settlement variation between us and our clearing firms. CME clearing firm guaranty fund contributions received in the form of cash or U.S. Treasury securities as well as the performance bond assets of a defaulting firm can be used to collateralize the facility. At June 30, 2017 , guaranty funds available to collateralize the facility totaled $6.9 billion . We have the option to request an increase in the line from $7.0 billion to $10.0 billion. Our 364-day facility contains a requirement that CME remain in compliance with a consolidated tangible net worth test, defined as CME consolidated shareholder's equity less intangible assets (as defined in the agreement), of not less than $800.0 million. We currently do not have any borrowings outstanding under this facility.

The indentures governing our fixed rate notes, our $2.3 billion multi-currency revolving senior credit facility and our 364-day multi-currency revolving secured credit facility for $7.0 billion do not contain specific covenants that restrict the ability to pay dividends. These documents, however, do contain other customary financial and operating covenants that place restrictions on the operations of the company that could indirectly affect the ability to pay dividends.

At June 30, 2017 , we have excess borrowing capacity for general corporate purposes of approximately $2.3 billion under our multi-currency revolving senior credit facility.

At June 30, 2017 , we were in compliance with the various covenant requirements of all our debt facilities.

CME Group, as a holding company, has no operations of its own. Instead, it relies on dividends declared and paid to it by its subsidiaries in order to provide the funds which it uses to pay dividends to its shareholders.

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To satisfy our performance bond obligation with Singapore Exchange Limited, we may pledge CME-owned U.S. Treasury securities in lieu of, or in combination with, irrevocable standby letters of credit. At June 30, 2017 , the letters of credit totaled $285.0 million .

The following table summarizes our credit ratings at June 30, 2017 :



	Short-Term	Long-Term
Rating Agency	Debt Rating	Debt Rating	Outlook
Standard & Poor’s	A1+	AA-	Stable
Moody’s Investors Service	P1	Aa3	Stable

Given our cash flow generation, our ability to pay down debt levels and our ability to refinance existing debt facilities if necessary, we expect to maintain an investment grade rating. If our ratings are downgraded below investment grade due to a change of control, we are required to make an offer to repurchase our fixed rate notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest.

Liquidity and Cash Management . Cash and cash equivalents totaled $1.4 billion and $1.9 billion at June 30, 2017 and December 31, 2016 , respectively. The balance retained in cash and cash equivalents is a function of anticipated or possible short-term cash needs, prevailing interest rates, our investment policy and alternative investment choices. A majority of our cash and cash equivalents balance is invested in money market mutual funds that invest only in U.S. Treasury securities, U.S. government agency securities and U.S. Treasury security reverse repurchase agreements. Our exposure to credit and liquidity risk is minimal given the nature of the investments. Cash that is not available for general corporate purposes because of regulatory requirements or other restrictions is classified as restricted cash and is included in other current assets or other assets in the consolidated balance sheets.

Regulatory Requirements . CME and CMECE are regulated by the CFTC as U.S. Derivatives Clearing Organizations (DCO). DCOs are required to maintain capital, as defined by the CFTC, in an amount at least equal to one year of projected operating expenses as well as cash, liquid securities, or a line of credit at least equal to six months of projected operating expenses. CME was designated by the Financial Stability Oversight Council as a systemically important financial market utility under Title VIII of Dodd-Frank. As a result, CME must comply with CFTC regulations applicable to a systemically important DCO for financial resources and liquidity resources. CME and CMECE are in compliance with all DCO financial requirements.

CME, CBOT, NYMEX and COMEX are regulated by the CFTC as Designated Contract Markets (DCM). DCMs are required to maintain capital, as defined by the CFTC, in an amount at least equal to one year of projected operating expenses as well as cash, liquid securities or a line of credit at least equal to six months of projected operating expenses. Our DCMs are in compliance with all DCM financial requirements.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard on revenue recognition that replaces numerous, industry-specific requirements and converges U.S. accounting standards with International Financial Reporting Standards. The new standard introduces a framework for recognizing revenue that focuses on the transfer of control rather than risks and rewards. The new standard also requires significant additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The application of the new standard becomes effective in the first annual period beginning after December 15, 2017, with early adoption permitted. This guidance may be adopted using one of two transition methods: retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial adoption (the modified retrospective approach). We are on course to comply with the guidance by the effective date and have completed the contract review phase. Based on our initial assessment, we expect the financial statement impact related to clearing and transaction fees to be immaterial based on current customer trading patterns. We expect to adopt the guidance based on the modified retrospective approach. The impact related to the remaining revenue streams and the impact the guidance will have on policies, processes, controls and disclosures will be finalized by the third quarter of 2017.

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In February 2016, the FASB issued a standards update that requires lessees to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases. The guidance for lessors is largely unchanged from current U.S. GAAP. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current U.S. GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The update is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. We are in the process of evaluating the impact of this update on our consolidated financial statements.

In June 2016, the FASB issued guidance that changes how credit losses are measured for most financial assets measured at amortized cost and certain other instruments. The standard requires an entity to estimate its lifetime expected credit loss and record an allowance, that when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. This forward-looking expected loss model generally will result in the earlier recognition of allowances for losses. The standard also amends the impairment model for available for sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available for sale debt security is a credit loss. Severity and duration of the unrealized loss are no longer permissible factors in concluding whether a credit loss exists. Entities will recognize improvements to estimated credit losses on available for sale debt securities immediately in earnings rather than as interest income over time. The standard is effective for reporting periods beginning after December 15, 2019. The standard’s provisions must be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption is permitted for reporting periods beginning in 2019. We are in the process of evaluating the impact of this standard on our consolidated financial statements.

In November 2016, the FASB issued a standards update aimed at promoting consistency in the classification and presentation of changes in restricted cash on the statement of cash flows. Previously, there was diversity in practice as to whether the change in restricted cash was included in the reconciliation of beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, as well as amounts described as restricted cash on the balance sheet. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. The amendments must be applied using a retrospective transition method to each period presented. We are in the process of evaluating the impact of this update on our consolidated financial statements.

In March 2017, the FASB issued a standards update that will change certain presentation and disclosure requirements for employers that sponsor defined benefit pension as well as other postretirement benefit plans. Under current accounting rules, defined benefit pension cost and postretirement benefit cost (net benefit cost) comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to the employees. Those components are aggregated for reporting in the financial statements within compensation and benefits on the income statement. The amendments in the update require that the service cost component is reported in the same line as other compensation costs, whereas the other components of net benefit cost are required to be presented in the income statement separately from the service cost component. The amendments are effective for reporting periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. We are in the process of evaluating the impact of this update on our consolidated financial statements.



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to various market risks, including those caused by changes in interest rates, credit, foreign currency exchange rates and equity prices. There have not been material changes in our exposure to market risk since December 31, 2016 . Refer to Item 7A. of CME Group’s Annual Report on Form 10-K for the year ended December 31, 2016 for additional information.



ITEM 4.	CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b) Changes in Internal Control Over Financial Reporting. As required by Rule 13a-15(d) under the Exchange Act, the company’s management, including the company’s Chief Executive Officer and Chief Financial Officer, have evaluated the company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to determine whether any changes occurred during the quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting. There

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were no changes in the company’s internal control over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

PART II. OTHER INFORMATION



ITEM 1.	LEGAL PROCEEDINGS

See “Legal and Regulatory Matters” in Note 7. Contingencies to the Consolidated Financial Statements for updates to CME Group’s existing legal proceedings disclosure which is incorporated herein by reference. Note 7. Contingencies includes updates to the legal proceedings disclosed in the company’s Annual Report on Form 10-K, filed with the SEC on February 27, 2017.



ITEM 1A.	RISK FACTORS

There have been no material updates to the Risk Factors disclosure included in the company’s Annual Report on Form 10-K, filed with the SEC on February 27, 2017. In addition to the other information contained in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in our Annual Report on Form 10-K, which are the risks that we believe are material at this time. These risks could materially and adversely affect our business, financial condition and results of operations. These risks and uncertainties are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business in the future.



ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



Period	(a) Total Number of Class A Shares Purchased (1)	(b) Average Price Paid Per Share		(c) Total Number of Class A Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Value) that May Yet Be Purchased Under the Plans or Programs (in millions)
April 1 to April 30	2,305	$	117.41	—	$	—
May 1 to May 31	314	117.13		—	—
June 1 to June 30	1,494	126.78		—	—
Total	4,113	$	120.79	—


(1)	Shares purchased consist of an aggregate of 4,113 shares of Class A common stock surrendered in the second quarter of 2017 to satisfy employees’ tax obligations upon the vesting of restricted stock.



ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

Table of Contents



ITEM 6.	EXHIBITS




10.1		Chicago Mercantile Exchange Inc. Senior Management Supplemental Deferred Savings Plan (As Amended and Restated Effective January 1, 2017). ⁽¹⁾

31.1		Section 302 Certification—Terrence A. Duffy

31.2		Section 302 Certification—John W. Pietrowicz

32.1		Section 906 Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

(1) Management compensatory plan. The plan was amended and restated to incorporate certain non-material amendments that inadvertently were not previously filed.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	CME Group Inc. (Registrant)

Dated: August 2, 2017	By:	/s/ John W. Pietrowicz
		Chief Financial Officer & Senior Managing Director Finance

TABLE OF CONTENTS

Part I. Financial Informationprint Item 1. Financial Statementsprint Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operationsprint Item 3. Quantitative and Qualitative Disclosures About Market Riskprint Item 4. Controls and Proceduresprint Part II. Other Informationprint Item 1. Legal Proceedingsprint Item 1A. Risk Factorsprint Item 2. Unregistered Sales Of Equity Securities and Use Of Proceedsprint Item 4. Mine Safety Disclosuresprint Item 6. Exhibitsprint

DIRECTORS	AGE	BIO	OTHER DIRECTOR MEMBERSHIPS
William W Hobert	61	Mr. Hobert founded WH Trading, LLC, a proprietary options and futures trading firm, in 1998. WH Trading serves as a market maker and liquidity provider in numerous asset classes at CME in both its open outcry and electronically traded markets. He is also a partner of Nirvana Brokerage Services LLC and Nirvana Technologies LLC and their companies. Nirvana Technology Solutions is a Chicago-based financial technology startup providing low-latency infrastructure for the trading community. Nirvana Brokerage Solutions is a CFTC registered introducing broker. From 1988 to 1994, Mr. Hobert worked for Cooper-Neff and Associates as an FX options market maker on the floor of CME and in over-the-counter markets. In 1994, he founded Hobert Trading Inc., which is currently a member of WH Trading, LLC. Mr. Hobert serves as a director of our political action committee. Mr. Hobert has over three decades of industry experience as an open outcry market maker, electronic options and futures trader, company founder and owner of WH Trading. He oversees the technology, risk management, operations and strategy development of the firm. Mr. Hobert led WH Trading's transition to a technology firm with the build of an electronic, automated trading operation. His career also includes government advocacy relating to the industry, including informal sessions with SEC and CFTC Commissioners, House and Senate Committees and Congressional Leadership.
William R Shepard	78	Mr. Shepard has been a member of CME for more than 45 years. Previously, he served as our Second Vice Chairman from 2002 to 2007. Mr. Shepard is founder and President of Shepard International, Inc., a futures commission merchant. Mr. Shepard brings to the board his experience as a long-time market participant. He is the founder of a futures commission merchant and was an investor in one of our largest clearing firms. It was this experience that led the board to appoint him to serve as the initial Chairperson of our clearing house oversight committee. This committee is designed to support the oversight of the risk management activities and the senior management of the Clearing House, including oversight with respect to the effectiveness of the risk management program, and plays an important role in supporting the board's oversight responsibilities. Mr. Shepard served as its Chair from its formation in 2016 to August 2021. He now serves as a Co-Chair of our clearing house risk committee and a member of our interest rate swaps risk committee.
Timothy S Bitsberger	65	Mr. Bitsberger served as Managing Director and Portfolio Specialist on the Account Management Team at The TCW Group from March 2017 to February 2021, where he was responsible for communicating investment strategies, performance and outlook to clients. Previously, he served as Managing Director, Official Institutions FIG Coverage Group of BNP PNA, a subsidiary of BNP Paribas, from December 2010 to November 2015, as a senior consultant with Booz Allen Hamilton from May 2010 to November 2010 and was with BancAccess Financial from December 2009 to April 2010. He also served as Senior Vice President and Treasurer of Freddie Mac from 2006 to 2008. Mr. Bitsberger also served with the U.S. Treasury Department from 2001 to 2005, serving first as their Deputy Assistant Secretary for federal finance and as the Assistant Secretary for financial markets. He was confirmed by the U.S. Senate as the Assistant Secretary in 2004. Mr. Bitsberger has an extensive career in the financial services industry. In his role at TCW Group, Mr. Bitsberger was responsible for communicating investment strategies, performance and outlook to clients. Through his service at TCW, BNP PNA and BancAccess Financial, he has gained valuable experience in business development, investment strategy and worked with foreign institutions and regulators. His career also includes his prior service in key roles with the government relating to the financial industry, including serving as Deputy Assistant Secretary for Federal Finance at the U.S. Treasury and more recently as the Assistant Secretary for financial markets at the U.S. Treasury. Mr. Bitsberger served in a leadership role as Treasurer of Freddie Mac, working extensively with the central banks and foreign regulators.
Terry L Savage	80	• We believe our ongoing board evolution will result in the strategic refreshment of our members, reduce our size, maintain our commitment to a range of perspectives and experiences and ensure the skill set of our board continues to align with our long-term strategy while avoiding disruption. • We are taking a phased approach to changes in board membership, considering the timing of new director onboarding relative to planned retirements and departures. At the 2025 annual meeting, Larry G. Gerdes, Daniel R. Glickman and Terry L. Savage will be retiring. The nominating and governance committee is recommending the election of Liam G. Smith as a new Class B-2 director. • New board members bring their fresh perspectives. We also recognize our obligations to educate them regarding the company's business and strategy in support of their ability to oversee management effectively.
Terrence A Duffy	66	Mr. Duffy previously served as our Executive Chairman from 2006 to 2016, and has served in the combined Chairman and Chief Executive Officer role since 2016. He has been a member of our board since 1998. Mr. Duffy brings to his current role strategic leadership and knowledge of our business and industry. His career includes steering CME to demutualize and become a publicly-traded corporation, leading multiple mergers and acquisitions and expressing the company’s knowledge and views before numerous Congressional committees with respect to issues of importance to Congress, the company and industry over many years.
Robert J Tierney Jr	49
Rahael Seifu	43	Ms. Seifu has served as Director, Legal at Google LLC since November 2022 where she manages a team of lawyers supporting products and systems that enable Google services, such as privacy and data protection, content and child safety, user experience, customer support, GenAI tools, and support of Google's internal business functions. She has been an attorney at Google since April 2014 and served as the first acting Chief of Staff for the Legal Department and lead counsel to Google's Chief Information Officer and their organization. Prior to joining Google, Ms. Seifu was a Corporate Associate at Morrison & Foerster LLP from 2013 to 2014, where she focused on mergers and acquisitions and provided corporate governance guidance for public company boards and special committees. Ms. Seifu worked from 2008 to 2013 as a Corporate Associate at Davis Polk & Wardwell LLP, where she focused on mergers and acquisitions, investments, and various other corporate transactions. She also advised clients on regulatory compliance, securities law reporting, and corporate governance matters. Immediately following graduation from Yale Law School, Ms. Seifu served as a law clerk to the Honorable George B. Daniels of the Southern District of New York. Ms. Seifu's responsibilities at Google have included counsel on privacy and security matters, including matters related to Google's systems, assessments of vendor systems and implementation of controls to minimize security and privacy risks. She has also advised a number of internal teams on technology matters relating to systems safeguards, including mitigating risk related to new system integrations, access controls and contractual and procedural requirements designed to ensure third party compliance with Google’s security standards. Additionally, in her previous role as the first Chief of Staff for the Google Legal Department, Ms. Seifu was responsible for implementing strategy for the global organization and establishing processes to effectively manage the legal team.
Phyllis M Lockett	59	Ms. Lockett is the Founder of LEAP Innovations. She has served as its Strategic Advisor since February 2024 and previously served as its CEO since its formation in 2014. Prior to her role at LEAP, Ms. Lockett served as President and CEO of New Schools for Chicago, a venture philanthropy organization that invests in the start-up of new public schools, from 2005 to 2014. Ms. Lockett served from 1999 to 2005 as Executive Director of the Civic Consulting Alliance, a pro-bono consulting firm sponsored by the Civic Committee of the Commercial Club of Chicago that leads strategic planning initiatives, process improvement, and program development projects for government agencies. She also held marketing, sales, and business development roles with Fortune 500 companies including IBM, Kraft Foods and General Mills. Ms. Lockett is an independent director of the Federal Home Loan Bank of Chicago. She is also a member of The Economic Club of Chicago, The Chicago Network, the Commercial Club of Chicago and a Henry Crown Fellow with the Aspen Institute. Recently, Ms. Lockett was named a contributor to Forbes, where she writes about education innovation and the future of learning. Ms. Lockett is a serial entrepreneur who has led transformation efforts in education, government and the civic arena. She founded LEAP Innovations, a national non-profit organization that works with educators and technology companies across the United States, to research, pilot and scale new instructional designs and technology solutions that advance student learning. Before starting LEAP, Ms. Lockett was a driving force behind Chicago's charter school movement. As founding president and CEO of New Schools for Chicago, she helped raise more than $70 million to support opening 80 new public schools, primarily charters. For nearly a decade, she focused on bringing quality public schools to communities of high need and advocating for school choice. Through her prior corporate experience she has gained experience in sales, marketing and business development.
Patrick W Maloney	63	Mr. Maloney has been a member of CME since 1985. Mr. Maloney has served as an independent floor broker in the Eurodollar (now SOFR) option pit from 2007 to present. Mr. Maloney has served on numerous CME functional committees: pit committee 1997-1999, nominating committee 1995-1996, arbitration committee 1994-1995, booth space committee 1992-1996 and floor practices committee 1995-1997. Mr. Maloney serves as a director of our political action committee. Mr. Maloney has served as a full-time floor trader and broker since 1985. Through this experience, he brings to the board his views as an active market participant and can convey the valuable perspective from the traders he interacts with on a daily basis. Over his career, he has served on numerous exchange-related committees.
Patrick J Mulchrone	67	Mr. Mulchrone has been a member of CME since 1980. He also served as a member of our board from 1991 to 2001, including holding the position of Vice Chairman. Mr. Mulchrone served as a filling order broker in the Eurodollar pit until 2004. Mr. Mulchrone has been an independent trader from 2004 to present. Mr. Mulchrone is a founder of Advantage Futures (2003). He served as a member of the board of directors of Standard Bank and Trust until its sale in 2017. Mr. Mulchrone serves on the Board of Advisors of Misericordia Home. He serves as a Co-Vice Chair of our political action committee and has served on the Class B-2 nominating committee. Mr. Mulchrone received a B.S. in Accounting from Western Illinois University. Mr. Mulchrone brings more than 40 years of experience in the futures industry. In 2003, he founded Advantage Futures LLC, one of our clearing firms. Mr. Mulchrone's career also included his service on the board of governors at CME during the time when we transitioned from a member-owned and -run exchange to our for-profit organization. His career also includes service on the board of directors of the Standard Bank and Trust (2001 to 2017) where he was part of team that grew the assets fourfold to $2.5 billion and that led the successful sale of the bank in 2017. As a Co-Vice Chair of our political action committee, Mr. Mulchrone has regular interaction with government officials.
Martin J Gepsman	72	Mr. Gepsman has served as a member of our board since 1994 and served as Secretary of the board from 1998 to 2007. He has been a member of CME for more than 35 years. Mr. Gepsman has also been an independent floor broker and trader since 1985. Mr. Gepsman currently serves as Chairman of our business conduct, membership and floor conduct committees and the CME Gratuity Fund. During his board tenure at CME, he served as a member on the compensation, strategic steering, executive, clearing house oversight, ethics and arbitration committees. Mr. Gepsman has also held board positions, including a Chairman's role, at the company’s former foreign exchange subsidiaries. Mr. Gepsman currently serves as Secretary and Treasurer of our political action committee. Mr. Gepsman also serves on the membership appeals committee with the National Futures Association. He was a member of the CBOE from 1982 to 1985. Mr. Gepsman brings to the board his long-term career as a participant in our markets. During his term on the board, he has served on numerous committees at the board level as well as those related to our exchange operations. His service has also included board roles on our regulated subsidiaries. Through these positions, Mr. Gepsman has acquired a deep understanding of our business operations, market regulatory functions and strategy. He also brings his valuable focus and understanding of options trading, which continues to be an area of focus in our corporate strategy. As Secretary and Treasurer of our political action committee, Mr. Gepsman regularly interacts with government officials. As Chairman of our business conduct, membership and floor conduct committees, Mr. Gepsman has extensive knowledge and experience in reviewing disciplinary charges and determining appropriate actions.
Liam G Smith	40	Mr. Smith started his career in the derivatives industry over 16 years ago with CME Group. Since December 2024, he has served as the Chief Strategy Officer for Optiver, a leading global market maker and CME clearing firm, overseeing the strategic direction of the firm in the United States and United Kingdom. In this role, he has a mandate to lead market structure initiatives, business development, regulatory affairs, external partnerships, clearing, strategic investments and execution services for U.S. markets. He previously served as the Head of Corporate Strategy from 2018 to December 2024. Additionally, he is the chair of Optiver’s political action committee and has co-authored a number of influential white papers on market structure issues across futures and securities markets. Mr. Smith joined Optiver in 2017. Previously, Mr. Smith spent over nine years (2008 to 2017) at CME Group as a director in both products and sales, with assignments in Chicago, London and Singapore. Mr. Smith holds a Bachelor of Arts in Political Science from Providence College. With his extensive experience across exchanges, clearing, financial technology, market structure, trading and regulatory policy, Mr. Smith offers a unique and comprehensive perspective on both futures and securities markets. Through his nine years at CME Group he gained a valuable understanding of our business. While at Optiver, Mr. Smith has played a pivotal role, often leading a number of business expansions. These include building a direct futures, equities and options block liquidity business for institutional counterparties, spearheading financial technology investments, actively managing Optiver’s portfolio of companies, and advocating for positive market structure change for the trading industry. This international experience contributes to his expertise in global financial markets.
Larry G Gerdes	76	• We believe our ongoing board evolution will result in the strategic refreshment of our members, reduce our size, maintain our commitment to a range of perspectives and experiences and ensure the skill set of our board continues to align with our long-term strategy while avoiding disruption. • We are taking a phased approach to changes in board membership, considering the timing of new director onboarding relative to planned retirements and departures. At the 2025 annual meeting, Larry G. Gerdes, Daniel R. Glickman and Terry L. Savage will be retiring. The nominating and governance committee is recommending the election of Liam G. Smith as a new Class B-2 director. • New board members bring their fresh perspectives. We also recognize our obligations to educate them regarding the company's business and strategy in support of their ability to oversee management effectively.
Kathryn Benesh	65	Ms. Benesh retired from Deloitte in 2021 with 40 years of providing audit, assurance and advisory services to public and private companies within the energy, public utility, renewables, construction, manufacturing, and financial services industries. She also served as secretary and a board member of Deloitte & Touche LLP from 2004 to 2017, the board which had purview over the professional aspects of the audit & assurance practice. Through her career at Deloitte, she has gained experience with sustainability matters and responses required for cyber incidents. Ms. Benesh is a CPA and current member of the AICPA. Ms. Benesh is active in the community in both Detroit and New York supporting multiple non-profit organizations, including serving on the Board of the Marygrove Conservancy. Ms. Benesh is an audit committee financial expert. Throughout her career, she has performed audit services to public companies as well as gained experience with audit committees in performing the required communications and procedures . She brings valuable global financial services and corporate governance experience from her years at Deloitte working with clients in the energy and financial services industries. As a member of the Executive Team and Chief Quality Officer for Advisory Services at Deloitte, Ms. Benesh gained significant leadership and risk oversight management experience.
Howard J Siegel	68	Mr. Siegel has been a member of CME since 1977. In 1978, Mr. Siegel began his trading career at Moccatta Metals in their Class B arbitrage operations and served as an order filler until 1980. From there, he went on to fill orders and trade cattle from 1980 until 1982. At that time, Mr. Siegel became a partner and an officer in a futures commission merchant that cleared at CME until selling his ownership interest in 1990. For more than 35 years, Mr. Siegel has been an independent trader on our CME exchange. He continues to actively trade electronically in our agricultural product suite. Mr. Siegel is the Secretary and Treasurer of the CME Group Foundation. Mr. Siegel chairs our clearing house oversight committee. In addition to his background as a market participant, Mr. Siegel brings to the board his valuable experience from his long-time service as a former co-chair of our clearing house risk committee. This committee, on which Mr. Siegel held a leadership position from 2004 to August 2021, includes key representation from our clearing firm community. Mr. Siegel's long-time involvement as co-chair has fostered important relationships with our trading community and our Clearing House management and has greatly expanded his knowledge of our financial safeguards resources. Mr. Siegel now serves as the Chair of our clearing house oversight committee.
Harold Ford Jr	54	For 2024, Charles P. Carey, Timothy S. Bitsberger, Elizabeth A. Cook, Harold Ford Jr., Daniel R. Glickman, Phyllis M. Lockett, Terry L Savage and Rahael Seifu served as members of the compensation committee. During 2024, none of the members of the compensation committee had served at any time as an officer or employee of CME Group. None of the members of the compensation committee has any relationship with us other than service as a director or member of one of our exchanges, except for (i) Mr. Carey serves as a member of our Agricultural Markets Advisory Council
Elizabeth A Cook	64	Ms. Cook has been a member of CME since 1983, starting her career in 1978 as a runner for Clayton Brokerage Inc. She is a member of the board's compensation and audit committees. Ms. Cook actively participates as co-chair of the CME arbitration and floor conduct committees and serves on the board of the CME Gratuity Fund. In addition, she serves on CME's membership and business conduct committees and continues her involvements with our political action committee. Ms. Cook is the founder and owner of MiCat Group LLC, a firm specializing in option execution services focusing on equities, FX and interest rates. She also serves as president of Lucky Star LLC, a commercial property management company. Ms. Cook serves as President of Women in Listed Derivatives Gives Back and on the board of trustees of Associated Colleges of Illinois. Her external activities include NACD Governance Fellow and completion of its Director Professionalism course, member of Business Executives for National Security, Ambassador of the Navy SEAL Foundation, Ambassador for The ALS United Greater Chicago and an active supporter of Honor Flight Chicago. Ms. Cook has participated in numerous risk and audit educational programs and as a long-time market participant has significant risk management experience. Ms. Cook brings her experience as a member since 1983 with a focus on our options complex, particularly FX and Eurodollar (now SOFR) options. Through her service on our disciplinary committees, Ms. Cook has gained insight into hearing and reviewing disciplinary charges and determining appropriate action. Ms. Cook, as a long-time user of our markets, has gained an understanding of our customer-facing systems and controls. Through her participation in the NACD's educational program, she has been recognized as a Governance Fellow gaining insight into best practices relating to corporate governance and board operations.
Dennis A Suskind	82	Mr. Suskind has served as our independent Lead Director since May 2023. Mr. Suskind is a retired General Partner of Goldman Sachs & Co. He was an Executive Vice President at J. Aron and Company prior to its acquisition by Goldman Sachs in 1980. He joined J. Aron in 1961. During his tenure in trading, Mr. Suskind served as Vice Chairman of NYMEX, Vice Chairman of COMEX, a member of the board of the Futures Industry Association, a member of the board of International Precious Metals Institute, and a member of the boards of the Gold and Silver Institutes in Washington, DC. Mr. Suskind previously served on the board of NYMEX Holdings, Inc. until our acquisition in 2008. He also served as a director of Liquid Holdings Group, Inc. from 2012 to 2016. As a retired General Partner of Goldman Sachs, Mr. Suskind brings invaluable experience as a leader in the international metals derivatives business. While he was at Goldman Sachs, he led a team responsible for educating producers and consumers on the benefits of using futures as their pricing medium. Under his leadership, Goldman Sachs worked closely with the CFTC on developing hedging exemptions and went on to build the industry's largest precious metal arbitrage business. He is a recipient of a distinguished achievement award from the International Precious Metals Institute and was inducted into the Futures Industry Association Hall of Fame in 2005. Mr. Suskind has served as Chair of our risk committee since its inception in 2014 and brings with him his risk management experience from his role at Goldman Sachs and from his service as Vice Chairman of the Board of Bridge Bancorp, Inc. (now Dime Community Bancshares, Inc. following its merger), where he chaired the risk, compensation and governance committees. Through his external public company directorships, he also has gained experience in corporate governance practices.	BRIDGE BANCORP, INC.
Deborah J Lucas	66	Ms. Lucas has served as the Sloan Distinguished Professor of Finance at the MIT Sloan School of Management since 2011 and as the Director of the MIT Golub Center for Finance and Policy from 2012. Her current research focuses on government financial institutions and financial policy, and she teaches on futures and options, and fixed income securities and derivatives. She serves on an advisory board for the Urban Institute. She is a trustee of the NBER pension plans, an associate editor for the Annual Review of Financial Economics and a member of the Shadow Open Market Committee. Ms. Lucas is currently a visiting scholar at the International Monetary Fund. Previous appointments include assistant and associate director at the Congressional Budget Office; professor at Northwestern University's Kellogg School; chief economist at the Congressional Budget Office; and senior staff economist at the Council of Economic Advisers. She serves on the board of P/E Investments, a privately held company, and of NatureServe, a non-profit company. She has been an independent director on several corporate and non-profit boards, including the Federal Home Loan Bank of Chicago. Ms. Lucas brings her tenured career as a leading business school academic and an innovative leader in the public sector. Her current research focuses on applying the principles of financial economics to evaluating the costs and risks of governments' financial investments and activities. Her academic publications cover a wide range of topics, including the effect of idiosyncratic risk on asset prices and portfolio choice, dynamic models of corporate finance, financial institutions, monetary economics and valuation of government guarantees. She held several top leadership roles at the Congressional Budget Office, and developed strategies for the analysis of the costs and risks of federal credit and guarantee activities. She has testified before the U.S. Congress on Fannie Mae and Freddie Mac, student loans, and strategically important financial institutions.
Daniel R Glickman	80	Ms. Seifu has served as Director, Legal at Google LLC since November 2022 where she manages a team of lawyers supporting products and systems that enable Google services, such as privacy and data protection, content and child safety, user experience, customer support, GenAI tools, and support of Google's internal business functions. She has been an attorney at Google since April 2014 and served as the first acting Chief of Staff for the Legal Department and lead counsel to Google's Chief Information Officer and their organization. Prior to joining Google, Ms. Seifu was a Corporate Associate at Morrison & Foerster LLP from 2013 to 2014, where she focused on mergers and acquisitions and provided corporate governance guidance for public company boards and special committees. Ms. Seifu worked from 2008 to 2013 as a Corporate Associate at Davis Polk & Wardwell LLP, where she focused on mergers and acquisitions, investments, and various other corporate transactions. She also advised clients on regulatory compliance, securities law reporting, and corporate governance matters. Immediately following graduation from Yale Law School, Ms. Seifu served as a law clerk to the Honorable George B. Daniels of the Southern District of New York. Ms. Seifu's responsibilities at Google have included counsel on privacy and security matters, including matters related to Google's systems, assessments of vendor systems and implementation of controls to minimize security and privacy risks. She has also advised a number of internal teams on technology matters relating to systems safeguards, including mitigating risk related to new system integrations, access controls and contractual and procedural requirements designed to ensure third party compliance with Google’s security standards. Additionally, in her previous role as the first Chief of Staff for the Google Legal Department, Ms. Seifu was responsible for implementing strategy for the global organization and establishing processes to effectively manage the legal team.
Daniel G Kaye	70	Mr. Kaye served as Interim CFO and Treasurer of HealthEast Care System from 2013 to 2014. Prior to joining HealthEast, Mr. Kaye spent 35 years with Ernst & Young LLP, from which he retired in 2012. Throughout his time at Ernst & Young, where he was an audit partner for 25 years, Mr. Kaye enjoyed a track record of increasing leadership and responsibilities, including serving as the New England Managing Partner and the Midwest Managing Partner of Assurance. Mr. Kaye serves on the compensation committee of Alliance Bernstein and on the audit (Chair) and nomination and governance committee (Chair) committees of Equitable Holdings, Inc. (formerly AXA Equitable Holdings). He served as a director of Ferrellgas Partners LP (2012 to 2015). Mr. Kaye is a CPA and NACD Board Leadership Fellow. Mr. Kaye is an audit committee financial expert with broad boardroom, financial services and operations experience. He has served on three other public company boards and several not-for-profit entities. His public company experience includes audit committee and nominating and corporate governance chairmanships, as well as audit, compensation, executive, finance and risk committee participation. Through his years at Ernst & Young (serving primarily as an audit partner in the financial services industry), he brings significant GAAP/SEC accounting and reporting, and regulatory risk management and compliance experience. This expertise includes technological controls and testing as they relate to internal controls over financial reporting. Mr. Kaye gained significant leadership and operations experience by heading various Ernst and Young business units over ten years, and acting as interim CFO and Treasurer for a hospital system.
Charles P Carey	71	Mr. Carey served as our Vice Chairman from 2007 to 2010 in connection with our merger with CBOT Holdings, Inc. Prior to our merger, Mr. Carey served as Chairman of CBOT since 2003, as Vice Chairman from 2000 to 2002, as First Vice Chairman during 1993 and 1994 and as a board member of CBOT from 1997 to 1999 and from 1990 to 1992. Mr. Carey was an owner of HC Technologies LLC until its sale in 2023. He has been a member of CBOT since 1978 and was a member of the MidAmerica Commodity Exchange from 1976 to 1978. Mr. Carey previously served on the board of CBOT Holdings, Inc. until our merger in 2007. Mr. Carey serves as Chairman of the CME Group Foundation and is a member of our Agricultural Markets Advisory Council. Mr. Carey brings to the board his long-time experience in the derivatives industry through his prior service as Chairman and Vice Chairman of CBOT and through his tenured trading career. Also, in his role as Chairman of CBOT, Mr. Carey served as an advocate for the company in the industry and with regulators and the government. Mr. Carey, through his trading activity, has familiarity with many of our customer-facing systems and controls. He also served as our board representative on BM&FBovespa (now B3), from 2012 to 2017, one of the main financial market infrastructure companies in the world and headquartered in Brazil, and has also provided valuable assistance with respect to the development of our soybean futures complex with a focus on the Latin American market.
Bryan T Durkin	64	Mr. Durkin has served as a member of our board since May 2020. Mr. Durkin served as an advisor to our CEO from May 2020 through September 2021. Formerly, Mr. Durkin served as President of CME Group from 2016, overseeing the company's Technology, Global Operations, International and Data Services businesses. Mr. Durkin previously served as our Chief Commercial Officer since 2014 and as Chief Operating Officer since 2007. As part of his responsibilities, he led the global integrations following CME's merger with CBOT in 2007 and CME Group's acquisition of NYMEX in 2008. Before joining CME Group, Mr. Durkin served as Executive Vice President and Chief Operating Officer of the CBOT. Prior to that role, he was in charge of CBOT's Office of Investigations and Audits. His career with both CME Group and CBOT has spanned more than 30 years. He previously served as a member of the COMEX Governors Committee and the CFTC's Technology Advisory Committee and Energy and Environmental Markets Advisory Committee. Mr. Durkin serves on the Board of Advisors for Misericordia and on the Board of Trustees for Lewis University. Mr. Durkin has been involved in our industry for more than 30 years. He served as CME Group’s President, and Chief Regulatory Officer and Administrator of Investigations at CBOT, overseeing all aspects of market regulation and surveillance as well as regulatory functions. During his tenure at CBOT, he was the primary liaison to U.S. and foreign regulators. Mr. Durkin's responsibilities also included oversight of CBOT’s outsourcing of clearing. In his career at CME Group, he oversaw our International, Planning and Execution, Data Services, Optimization Services, Cash Markets, Client Development & Research, Products & Services and Marketing functions. Through his oversight responsibility of our technology and trading operations, which functions are highly regulated by the CFTC and are subject to testing and system safeguards requirements, Mr. Durkin has gained experience with risk, compliance, monitoring and the reporting aspects of key control functions. Mr. Durkin also previously served as a member of the company's Crisis Management Team, which is the chief decision management body during a major disruption to our normal business operations. His career also included prior service on the boards of directors of Bursa Malaysia Derivatives Berhad and its clearing house, Bursa Malaysia Derivatives Clearing Berhad, in connection with one of our former strategic investments and commercial arrangements.

Name and Principal Position 1	Year	Salary		Stock Awards 2		Non-Equity Incentive Plan Compensation 3		Change in Pension Value and Non-Qualified Deferred Compensation Earnings 4		All Other Compensation 5		Total
Terrence A. Duffy Chairman and Chief Executive Officer 6	2024	$	2,000,000	$	13,512,333	$	7,452,800	$	58,832	$	921,624	$	23,945,589
	2023	2,000,000		12,594,380		7,907,600		55,146		910,874		23,468,000
	2022	2,000,000		12,530,269		7,770,711		36,092		606,005		22,943,077
Lynne C. Fitzpatrick President and Chief Financial Officer 7	2024	559,615		1,773,691		1,014,369		8,718		86,872		3,443,265
	2023	400,000		1,259,417		786,959		48,547		64,817		2,559,740
Derek L. Sammann Global Head of Commodities Markets 8	2024	525,000		1,773,691		978,180		30,234		126,399		3,433,504
	2023	525,000		1,653,148		1,037,873		64,365		131,655		3,412,041
Julie M. Winkler Chief Commercial Officer 9	2024	525,000		1,773,691		978,180		24,015		114,220		3,415,106
Sunil K. Cutinho Chief Information Officer	2024	525,000		1,773,691		978,180		20,146		114,220		3,411,237
	2023	525,000		1,653,148		1,037,873		64,541		114,473		3,395,035
	2022	525,000		1,644,595		1,026,035		—		89,693		3,285,323

Customer name	Ticker
Comerica Incorporated	CMA
Fidelity National Financial, Inc.	FNF
Fifth Third Bancorp	FITB
First American Financial Corporation	FAF
First American Financial Corporation	FAF
Franklin Resources, Inc.	BEN
General Mills, Inc.	GIS
Hormel Foods Corporation	HRL
Old Republic International Corporation	ORI
Raymond James Financial, Inc.	RJF
Safeguard Scientifics, Inc.	SFE

Owner	Position	Direct Shares	Indirect Shares
DUFFY TERRENCE A	-	94,557	0
Hobert William W	-	85,719	40,000
Durkin Bryan T	-	55,142	0
DUFFY TERRENCE A	-	53,205	0
SIEGEL HOWARD J	-	46,912	21,873
Holzrichter Julie	-	40,437	0
GERDES LARRY G	-	36,651	0
Holzrichter Julie	-	31,990	0
Piell Hilda Harris	-	30,900	0
Piell Hilda Harris	-	27,046	0
Winkler Julie	-	25,373	0
GEPSMAN MARTIN J	-	25,067	0
Tobin Jack J	-	23,739	0
Cutinho Sunil	-	23,206	0
Winkler Julie	-	21,885	0
Vroman Ken	-	14,993	0
Fitzpatrick Lynne	-	14,015	0
GLICKMAN DANIEL R	-	14,008	2,100
Bitsberger Timothy S.	-	10,589	0
Sammann Derek	-	9,694	12,239
Sammann Derek	-	9,417	8,336
Sprague Suzanne	-	8,036	0
McCourt Timothy Francis	-	7,275	0
Sprague Suzanne	-	6,972	0
Marcus Jonathan L	-	6,708	0
Kaye Daniel G	-	3,668	0
Lucas Deborah J	-	3,356	0
Lockett Phyllis M	-	3,108	0
Suskind Dennis	-	2,915	0
Marcus Jonathan L	-	2,636	0
SHEPARD WILLIAM R	-	2,443	257,061
SAVAGE TERRY L	-	0	17,441
Cook Elizabeth A	-	0	20

CME 10-Q Quarter ended June 30, 2017