CME Group (CME) Q1 FY26 earnings call: guidance and Q&A

How does CME view perpetual futures as a potential retail-engagement driver, and what regulatory/market-structure hurdles exist, given exploding volumes in commodity perps on offshore platforms?

Terry stated perpetuals are illegal in the U.S. under the Commodity Exchange Act of 2000, whose centerpiece defines a futures contract as one for future delivery, not one that never ends. He argued convergence between cash and futures is essential for the commercial hedgers/producers CME's contracts are designed for, not speculators. He cautioned that offshore perpetual venues use auto-liquidation mechanics where winners fund losers (a hedger owed $1 might get $0.45), unsuitable for institutional hedgers, and noted the silver/oil volume surges coincided with extreme price moves whose sustainability is unproven.

“First of all, perpetuals are against the law in the United States of America. That's first and foremost.”

asked by Patrick Moley · answered by Terrence Duffy

How does growing U.S. Gulf oil and geopolitical change (Venezuela, Iran) affect the Cushing-settled WTI benchmark and CME's energy share?

Derek framed WTI as a global benchmark reinforced by supply disruption (~20% of crude from the Middle East), with U.S. WTI and Henry Hub exporting at record levels and crude-grade contracts (launched 2018-2019) enabling Cushing-to-Gulf export risk management. CME WTI share ran north of 79-80% as stressed markets retrench to home-exchange liquidity. On Venezuela, Terry declined to speculate on outcomes given degraded infrastructure and heavy crude, calling it a longer-term rebuild, and stressed oil is a global market where producers sell to the highest bidder.

“I think if you've seen record amounts of activity in global energy markets, we have seen share increases back in CME WTI north of 79%, 80%.”

asked by Kenneth Worthington · answered by Derek Sammann

How should RPC be modeled near-term given the energy RPC decline, and how durable is the underlying energy customer base amid extreme volatility?

Derek described broad-based, healthy activity across all products and client segments (double-digit growth led by commercials), with resilient energy open interest (+14% since Dec 31, +1% YoY) and no COVID-style spike-and-collapse pattern. Lynne attributed the energy RPC decline to three factors: heavier volume tiering from record volume, a mix shift toward lower-priced crude versus nat gas, and a surge in micro energy contracts to ~315,000/day (from ~80,000/day a year ago) at ~$0.52 each, plus more member trading.

“we saw about 315,000 micro energy contracts a day this quarter. That was up from about 80,000 contracts a day in the same quarter last year... Those are at about $0.52 a contract.”

asked by Alexander Blostein · answered by Lynne Fitzpatrick

What is the timeframe and milestones for the Google tokenized-cash partnership and CME's stablecoin, and the path for migrating contracts to the cloud?

Suzanne said CME is working with settlement banks and clearing members (Bank of Montreal disclosed) on tokenizing cash via Google Cloud Universal Ledger, targeting go-live by year-end to enable off-hours 24/7 value movement, and is seeking a license to issue a stablecoin with technology partners, advancing this year subject to regulatory timing. Lynne added the Dallas facility opens this summer toward operating markets in the cloud, and that Google's nonvoting preferred shares converted to common this quarter. Terry called cloud markets the future, starting with less latency-sensitive agricultural products.

“the goal there really is to be able to increase the testing capabilities within the settlement bank ecosystem... with the goal of being able to go live by the end of this year.”

asked by Michael Cyprys · answered by Suzanne Sprague

What drove the fastest recurring market-data revenue growth in years and how sustainable is it, and who is trading the market-based prediction contracts?

Julie cited a surge in simulated-trading-environment participation feeding new retail traders, data-feed licensing policy changes, and professional subscriber growth (+1% QoQ, +2.45% YoY), calling the revenue relatively sticky; Lynne emphasized broad-based growth. Tim said prediction markets have surpassed 220 million contracts since December, with market-based contracts exceeding 30% of volume after the mid-March FanDuel marketing push and over 150,000 new accounts trading — reinforcing the distribution-and-markets thesis over sports.

“the actual participation or the distribution of volume towards the market-based contracts across equity, crypto, energy and metals actually exceeded 30%.”

asked by Benjamin Budish · answered by Tim McCourt

How is CME thinking about capital allocation and M&A given industry growth vectors, and how should expense growth pace through the year?

Terry reaffirmed commitment to the dividend and buybacks but said he won't box the company out of M&A or de novo growth if the right opportunity arises within scope. Lynne confirmed Q1 adjusted expense ex-license grew ~7% (higher variable comp and technology on activity), said CME is comfortable with the affirmed $1.695B full-year guidance, and flagged occupancy (Dallas) and technology (cloud) costs continuing to grow.

“I don't want to be stuck in a situation where we're afraid to do something that we think can grow the business, whether it's through M&A or something else, if the opportunity presents itself.”

asked by William Katz · answered by Terrence Duffy

What are April collateral balances and are the cash/noncash spreads holding?

Lynne disclosed Q1 average cash collateral of ~$149 billion at ~33 bps, rising to ~$153 billion in April with the rate holding steady at ~33 bps; noncash averaged ~$171 billion in Q1 at 10 bps, rising to ~$174 billion in April. On prediction-market pricing, she declined to break out per-contract rate, framing the focus as gaining traction, eyeballs and distribution.

“in Q1, we did show an average of balances for cash of about $149 billion. That is up a bit so far here in April at $153 billion. In Q1, we averaged about 33 basis points on the cash.”

asked by Brian Bedell · answered by Lynne Fitzpatrick

How is BrokerTec Chicago progressing and what behavioral changes are appearing in the treasury complex?

Mike Dennis said adoption is expanding on the value proposition of smaller tick sizes and co-location alongside futures/options in Aurora, with 35+ connected clients including several derivatives participants trading only cash treasuries there. ADV grew 93% MoM in March with a record $1.2 billion day on April 8. He positioned it as a foundation for bringing cash and futures markets closer together.

“ADV grew 93% month-over-month in March, and we saw a record day of $1.2 billion on April 8.”

asked by Simon Alistair Clinch · answered by Michael Dennis

Can management quantify the margin/collateral efficiency of the expanded treasury cross-margining to end clients?

Suzanne said the expanded FICC cross-margining could deliver savings upward of 80% for the client book, mirroring the House program. The House program currently has ~22 clearing members signed; one clearing member has already signed the customer program launching end of April, with others engaged. She noted max House savings have been ~$1.5 billion with average daily just over $1 billion. Lynne added the CME-FICC offsets reinforce the value proposition.

“Max savings have been about $1.5 billion. Average daily is closer to just over $1 billion.”

asked by Michael Cyprys · answered by Suzanne Sprague