CME Group Inc Class A CME
Q4 2011 Earnings Call Transcript

Transcript Call Date 02/02/2012

Operator: Good day, everyone, and welcome to the CME Group Fourth Quarter and Full Year 2011 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 Mr. John Peschier. Please go ahead, sir.

John C. Peschier - Managing Director, IR: Thanks and good morning everyone and thank you for joining us. Craig Donohue and Jamie Parisi will spend a few minutes outlining the highlights of the 2011 and the fourth quarter and then we'll open up the call for your questions. In addition, Terry Duffy, Phupinder Gill, Bryan Durkin and Kim Taylor are also here joining us.

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 you can find on our website.

With that, I'd like to turn the call over to Craig.

Craig S. Donohue - CEO: Thanks John. Good morning and thank you for joining us. I am going to highlight CME Group's 2011 accomplishments and then share some thoughts about 2012. Afterwards, Jamie will review our fourth quarter financial results.

Overall, 2011 results were strong, despite a challenging backdrop. 2011 volume averaged a record 13.4 million contracts per day, up 10% from 2010. Highlights for the year included record annual average daily volume for our FX, commodity, energy and metals product lines, as well as double-digit average daily volume growth in our interest rate, equity index, commodity and metals product lines.

Fourth quarter volume averaged 11.7 million contracts per day, down 2% from Q4 2010, but included 24% average daily volume growth in equity index products, and 8% growth in energy contracts.

During the year, we increased global market share relative to our top three competitors. On the short end of the interest rate curve despite the continued zero interest rate policy, our euro-dollar volumes increased by 9%, while Euribor volumes were essentially flat.

On the long end of the curve, our treasury product volumes grew by 13%, outpacing Eurex's interest rate volumes, which grew at only 10%.

Our commodity product volumes were also quite strong during the year. After an extremely robust third quarter, we saw decreased volumes and open interest in November and December due to the Eurozone crisis, the failure of MF Global and normal seasonal pattern. Nevertheless, we have seen a strong rebound in open interest since the beginning of this year. You may recall that open interest peaked on September 14 at 103 million contracts, and that open interest declined by 14% from 91 million contracts to 78 million contracts between Q3 and Q4 of last year. However, open interest has now increased by 11% to 87 million contracts since the beginning of the year with growth in all six product areas.

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