http://www.morningstar.com/earnings/32000392-cme-group-inc-class-a-cme-q3-2011.aspx

CME Group Inc Class A CME
Q3 2011 Earnings Call Transcript

Transcript Call Date 11/01/2011

Operator: Good day, everyone, and welcome to the CME Group Third Quarter 2011 Earnings Conference Call. As a reminder, today's conference 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: Thank you and thank you all for joining us this morning. Craig Donohue and Jamie Parisi will spend a few minutes outlining the highlights of the third quarter and then we'll open up the call for your questions. Terry Duffy and Bryan Durkin are on the call as well.

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 can be found in our filings with the SEC, including our most recent forms 10-K and 10-Q, which are available on the Investor Relations portion of our website.

Now I'd like to turn the call over to Craig.

Craig S. Donohue - CEO: Thank you, John, and thank you for joining us this morning. I will discuss our record performance in the third quarter and provide updates on a few of our strategic initiatives before turning things over to Jamie to review the financials. During the third quarter we delivered record top line results with revenue of $874 million driven primarily by strong trading volume. Average daily volume was 14.7 million contracts, up 27% compared to the prior year.

In addition, we delivered another highly profitable quarter with earnings per share of $4.74, our highest quarter ever excluding quarters with extraordinary items. Heightened expense focus contributed to our success and is reflected in today's results along with our commitment to maintain expense growth below 5% in 2012 and into the future. Interest rate volume was strong in the third quarter, up 30% compared with third quarter 2010. This includes growth of 40% in euro-dollars and growth of 21% in treasuries. Interest rate traders have moved more of their trading activity (out the curve) to the three to five-year area as the front-end has been less active since the zero interest rate policy began nearly three years ago.

In addition we had record quarterly metals volume up 77% along with record quarterly equity index volume up 44%. Overall, commodities volume remained impressive during the third quarter.

Turning to other company initiatives, we continued to position ourselves for future growth through technology and product innovation. Examples include the initial rollout of the derivative component of our multi-asset class platform through partner in Brazil, our recent speed enhancements in our interest rate match engines which reduced average response times by 50% to 75%, and the expected launch of our Co-Location Services early next year. These serve as great catalysts to meet the growing demand from our customers.

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