http://www.morningstar.com/earnings/18919429-cme-group-inc-class-a-cme-q3-2010.aspx

CME Group, Inc. Class A CME
Q3 2010 Earnings Call Transcript

Transcript Call Date 10/28/2010

Operator: Good day, everyone, and welcome to the CME Group Third Quarter 2010 Earnings Call. As a reminder, this call is being recorded.

At this time for opening remarks and introductions, I would like to turn the conference over to John Peschier. Please go ahead, sir.

John C. Peschier - Managing Director, IR: Thanks, and thanks all of you for joining us this morning. Craig Donohue, our CEO; and Jamie Parisi, our CFO, will spend a few minutes outlining the highlights of the third quarter, and then we will open up the call for your questions. Before they begin, I'll read the safe harbor language.

Statements made on this call and in the accompanying slides on our website that are not historical facts are forward-looking statements. 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. More detailed information about factors that may affect our performance may be found in our filings with the SEC, including our most recent forms 10-K and 10-Q, which are available in the IR section of our website.

Now, I would like to turn the call over to Craig.

Craig S. Donohue - CEO: Thank you, John, and thank you for joining us this morning. I’ll be discussing our performance in the third quarter and providing updates on a few of our strategic initiatives before turning things over to Jamie to review the financials.

CME posted solid third quarter results with average daily volume up 14% from the same period last year. Net income up 21% to $244 million, and earnings per share of $3.66, up 20%. The foundation of our performance lies in our product diversity, energy and metals contribute 32% of transaction fee revenues, interest rates 27%, equities 21%, and foreign exchange and commodity products contribute the remainder.

The breadth and diversity of our product lines is beneficial when we face macroeconomic headwinds in particular market segments. Importantly, I’ll note that though we’ve seen volume performance within the individual asset classes vary throughout the year, we have continued to see open interest build from quarter to quarter in every one of our product lines.

Open interest currently sits at 92.4 million contracts, up 12% compared to the same period last year, and just below the all-time record of 95 million.

To review some of our volume statistics – third quarter average daily volume was up 14% versus the same period last year, and was down 15% versus the second quarter of this year, due to extraordinary performance in Q2 and the typical impacts of seasonality during July and August.

Turning to interest rates, diminished activity in short-term rates was significantly offset by strong growth in our Treasury products as I will describe in a moment. Average daily Eurodollar volume was down 7%. However, longer-dated Eurodollar contracts with expirations beyond September 2012 saw record average daily volume of 320,000 contracts, up 32% from the prior year, as there continues to be more volatility at the long end of the curve.

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