CME Group 10-Q 2024-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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(Mark One)

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

For the quarterly period ended September 30, 2024

- 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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol			Name of each exchange on which registered
Class A Common Stock			CME			The Nasdaq Stock Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 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			☒						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
									Emerging growth company			☐

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. ☐

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

Yes ☐ No ☒

The number of shares outstanding of each of the registrant’s classes of common stock as of October 9, 2024 was as follows: 360,359,063 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.

CME GROUP INC.

FORM 10-Q

INDEX

						Page
PART I. FINANCIAL INFORMATION						3
Item 1.			Financial Statements			5
			Consolidated Balance Sheets at September 30, 2024 and December 31, 2023			5
			Consolidated Statements of Income for the Quarters and Nine Months Ended September 30, 2024 and 2023			6
			Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 30, 2024 and 2023			7
			Consolidated Statements of Equity for the Quarters and Nine Months Ended September 30, 2024 and 2023			8
			Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023			10
			Notes to Unaudited Consolidated Financial Statements			12
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			31
Item 4.			Controls and Procedures			31
PART II. OTHER INFORMATION						32
Item 1.			Legal Proceedings			32
Item 1A.			Risk Factors			32
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 6.			Exhibits			33
SIGNATURES						34

PART I. FINANCIAL INFORMATION

Certain Terms

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 are for CME Group’s listed futures and options on futures contracts unless otherwise noted.

Trademark Information

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago 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. BrokerTec is a trademark of BrokerTec Americas LLC and EBS is a trademark of EBS Group Limited. OSTTRA is a trademark of MarkitSERV Limited. 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. (CME). 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;

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

• our ability to maintain existing customers at substantially similar trading levels, develop strategic relationships and attract new customers;

• our ability to expand and globally offer our products and services;

• changes in regulations, including the impact of any changes in laws or government policies with respect to our products or services or 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 or changes to regulations in various jurisdictions;

• 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 credit and liquidity risk management practices to adequately protect us from the credit risks of clearing members and other counterparties, and to satisfy the margin and liquidity requirements associated with the BrokerTec matched principal business;

• the ability of our compliance and risk management programs 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;

• our dependence on third-party providers and exposure to risk through third parties, including risks related to the performance, reliability and security of technology used by our third-party providers and third-party providers that our clients rely on;

• volatility in commodity, equity and fixed income prices, and price volatility of financial benchmarks and instruments such as interest rates, equity indices, fixed income instruments and foreign exchange rates;

• economic, social, 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 messaging 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, control the costs and achieve the synergies associated with our strategy for acquisitions, investments and alliances, including those associated with the performance of our joint ventures with S&P Dow Jones (S&P Dow Jones Indices LLC) in index services and in trade processing/post trade services (OSTTRA), our primary business and distribution partners’ actions and our partnership with Google Cloud;

• variances in earnings on cash accounts and collateral that our clearing house holds for its clients;

• impact of CME Group pricing and incentive changes;

• impact of aggregation services and internalization on trade flow and volumes;

• any negative financial impacts from changes to the terms of intellectual property and index rights;

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

• industry, channel partner and customer consolidation and/or concentration;

• decreases in trading and clearing activity;

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

• increases in effective tax rates, borrowing costs or changes in tax policy;

• our ability to maintain our brand and reputation; 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 for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 28, 2024 and Item 1A. in Part II of this Quarterly Report on Form 10-Q.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

						September 30, 2024						December 31, 2023
						(unaudited)
Assets
Current Assets:
Cash and cash equivalents						$	2,322.1					$	2,912.0
Marketable securities						112.3						111.7
Accounts receivable, net of allowance of $8.6 and $7.1						629.4						535.6
Other current assets (includes $6.5 and $5.2 in restricted cash)						622.0						1,138.4
Performance bonds and guaranty fund contributions						99,457.0						90,192.5
Total current assets						103,142.8						94,890.2
Property, net of accumulated depreciation and amortization of $1,012.4 and $931.1						386.2						409.5
Intangible assets—trading products						17,175.3						17,175.3
Intangible assets—other, net						2,892.2						3,050.2
Goodwill						10,514.1						10,495.3
Other assets						3,684.5						3,685.6
Total Assets						$	137,795.1					$	129,706.1
Liabilities and Equity
Current Liabilities:
Accounts payable						$	129.9					$	90.6
Short-term debt						749.7						—
Other current liabilities						485.2						3,133.8
Performance bonds and guaranty fund contributions						99,457.0						90,192.5
Total current liabilities						100,821.8						93,416.9
Long-term debt						2,677.7						3,425.4
Deferred income tax liabilities, net						5,310.0						5,327.7
Other liabilities						769.4						798.2
Total Liabilities						109,578.9						102,968.2
Shareholders’ Equity:
Preferred stock, $0.01 par value, 10,000 shares authorized as of September 30, 2024 and December 31, 2023; 4,584 issued and outstanding as of September 30, 2024 and December 31, 2023						—						—
Class A common stock, $0.01 par value, 1,000,000 shares authorized at September 30, 2024 and December 31, 2023; 359,559 and 359,231 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively						3.6						3.6
Class B common stock, $0.01 par value, 3 shares authorized, issued and outstanding as of September 30, 2024 and December 31, 2023						—						—
Additional paid-in capital						22,375.3						22,334.7
Retained earnings						5,848.2						4,455.2
Accumulated other comprehensive income (loss)						(10.9)						(55.6)
Total CME Group Shareholders’ Equity						28,216.2						26,737.9
Total Liabilities and Equity						$	137,795.1					$	129,706.1

See accompanying notes to unaudited consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

(unaudited)

						Quarter Ended												Nine Months Ended
						September 30,												September 30,
						2024						2023						2024						2023
Revenues
Clearing and transaction fees						$	1,297.1					$	1,085.5					$	3,755.9					$	3,404.0
Market data and information services						178.2						167.6						528.6						496.5
Other						109.1						84.7						320.3						239.1
Total Revenues						1,584.4						1,337.8						4,604.8						4,139.6
Expenses
Compensation and benefits						218.8						205.5						629.5						615.7
Technology						66.6						55.6						190.1						160.2
Professional fees and outside services						31.0						32.2						98.8						108.3
Amortization of purchased intangibles						55.7						57.2						166.4						171.0
Depreciation and amortization						28.2						31.1						87.0						95.3
Licensing and other fee agreements						97.6						79.5						271.4						242.4
Other						62.3						56.5						177.2						174.2
Total Expenses						560.2						517.6						1,620.4						1,567.1
Operating Income						1,024.2						820.2						2,984.4						2,572.5
Non-Operating Income (Expense)
Investment income						1,026.8						1,272.5						3,142.6						4,198.4
Interest and other borrowing costs						(40.2)						(39.6)						(120.2)						(119.7)
Equity in net earnings of unconsolidated subsidiaries						86.1						76.8						259.7						230.1
Other non-operating income (expense)						(920.0)						(1,155.6)						(2,821.7)						(3,733.7)
Total Non-Operating Income (Expense)						152.7						154.1						460.4						575.1
Income before Income Taxes						1,176.9						974.3						3,444.8						3,147.6
Income tax provision						264.1						224.1						793.6						736.0

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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, 2023, filed with the SEC on February 28, 2024.

References in this discussion and analysis to “we” and “our” are to CME Group Inc. (CME Group) and its consolidated subsidiaries, collectively. References to “exchange” are to Chicago Mercantile Exchange Inc. (CME), the Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX), and Commodity Exchange, Inc. (COMEX), collectively, unless otherwise noted.

RESULTS OF OPERATIONS

Financial Highlights

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

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions, except per share data)						2024						2023						Change						2024						2023						Change
Total revenues						$	1,584.4					$	1,337.8					18		%				$	4,604.8					$	4,139.6					11		%
Total expenses						560.2						517.6						8						1,620.4						1,567.1						3
Operating margin						64.6		%				61.3		%										64.8		%				62.1		%
Non-operating income (expense)						$	152.7					$	154.1					(1)						$	460.4					$	575.1					(20)
Effective tax rate						22.4		%				23.0		%										23.0		%				23.4		%
Net income						$	912.8					$	750.2					22						$	2,651.2					$	2,411.6					10
Diluted earnings per common share						2.50						2.06						21						7.27						6.62						10
Cash flows from operating activities																								2,672.6						2,409.5						11

Revenues

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions)						2024						2023						Change						2024						2023						Change
Clearing and transaction fees						$	1,297.1					$	1,085.5					20		%				$	3,755.9					$	3,404.0					10		%
Market data and information services						178.2						167.6						6						528.6						496.5						6
Other						109.1						84.7						29						320.3						239.1						34
Total Revenues						$	1,584.4					$	1,337.8					18						$	4,604.8					$	4,139.6					11

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 house 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 trading volume for the cash markets business and interest rate swaps volume.

						Quarter Ended September 30,																		Nine Months Ended September 30,
						2024						2023						Change						2024						2023						Change
Total contract volume (in millions)						1,810.5						1,408.2						29		%				5,052.8						4,492.0						12		%
Clearing and transaction fees (in millions)						$	1,205.3					$	994.8					21						$	3,479.3					$	3,125.6					11
Average rate per contract						$	0.666					$	0.707					(6)						$	0.689					$	0.696					(1)

We estimate the following net changes in clearing and transaction fees based on the changes in total contract volumes and the changes in average rate per contract for futures and options during the third quarter and first nine months of 2024 when compared with the same periods in 2023.

(in millions)						Quarter Ended						Nine Months Ended
Increases due to a changes in total contract volume						$	267.9					$	386.8
Decreases due to a changes in average rate per contract						(57.4)						(33.1)
Net increases in clearing and transaction fees						$	210.5					$	353.7

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.

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 September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2024						2023						Change						2024						2023						Change
Average Daily Volume by Product Line:
Interest rates						14,881						10,967						36		%				13,877						12,236						13		%
Equity indexes						7,407						6,353						17						7,018						6,623						6
Foreign exchange						1,088						942						16						1,050						937						12
Agricultural commodities						1,614						1,433						13						1,696						1,521						12
Energy						2,571						2,126						21						2,478						2,104						18
Metals						728						528						38						758						596						27
Aggregate average daily volume						28,289						22,349						27						26,877						24,017						12
Average Daily Volume by Venue:
CME Globex						26,199						20,839						26						24,792						21,966						13
Open outcry						1,096						713						54						1,082						1,151						(6)
Privately negotiated						994						797						25						1,003						900						11
Aggregate average daily volume						28,289						22,349						27						26,877						24,017						12
Electronic Volume as a Percentage of Total Volume						93		%				93		%										92		%				91		%

Market uncertainty remained high through the first nine months of 2024. Interest rate, equity and foreign exchange markets experienced significant uncertainty surrounding the United States' Federal Reserve’s (Federal Reserve) interest rate policy. The Federal Open Markets Committee (FOMC) had initially signaled the potential for several future rate cuts throughout 2024, but has since only cut interest rates once as a result of continued inflation. Energy, metals and agricultural commodities markets were more uncertain in the first nine months of 2024 mainly as a result of geopolitical events as well as uncertain weather conditions, which led to higher volumes within those markets. We believe these factors contributed to the increase in total volumes in the third quarter and first nine months of 2024 when compared with the same periods in 2023.

Interest Rate Products

The following table summarizes average daily contract volume for our key interest rate products. We no longer offer Eurodollar contract trading as of June 2023.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2024						2023						Change						2024						2023						Change
Eurodollar futures and options:
Futures expiring within two years						—						—						—		%				—						117						(100)		%
Options						—						—						—						—						54						(100)
Futures expiring beyond two years						—						—						—						—						28						(100)
SOFR futures and options:
Futures expiring within two years						3,044						2,217						37						2,676						2,539						5
Options						1,790						1,178						52						1,661						1,738						(4)
Futures expiring beyond two years						1,069						819						31						954						804						19
U.S. Treasury futures and options:
10-Year						3,376						2,505						35						3,279						2,595						26
5-Year						2,088						1,742						20						2,014						1,788						13
2-Year						1,142						770						48						1,045						793						32
Treasury Bond						699						594						18						701						538						30
Federal Funds futures and options						529						324						63						414						470						(12)

In the third quarter and first nine months of 2024, overall interest rate contract volumes increased when compared with the same periods in 2023. Volumes increased in the third quarter and first nine months of 2024 due to volatility as a result of mixed inflation results that occurred during 2024 as well as continued market uncertainty regarding the Federal Reserve's interest rate policy.

Equity Index Products

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

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2024						2023						Change						2024						2023						Change
E-mini S&P 500 futures and options						4,320						3,865						12		%				4,136						4,099						1		%
E-mini Nasdaq 100 futures and options						2,277						1,862						22						2,127						1,811						17
E-mini Russell 2000 futures and options						337						270						25						319						304						5

Equity index contract volumes increased in the third quarter and first nine months of 2024 when compared with the same periods in 2023 due to periods of higher equity market volatility. We believe the higher volatility was a result of continued uncertainty surrounding the Federal Reserve's interest rate policy decision.

Foreign Exchange Products

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

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2024						2023						Change						2024						2023						Change
Euro						257						245						5		%				257						251						2		%
Japanese Yen						227						184						23						201						180						12
British Pound						126						114						11						123						112						10
Australian dollar						125						108						16						119						102						16

In the third quarter and first nine months of 2024, overall foreign exchange volumes increased when compared with the same periods in 2023. Despite a broad decline in foreign exchange market volatility, there was an increase in price volatility with the Japanese yen due to uncertainty surrounding the Japanese monetary policy and rate cuts from the Federal Reserve. The overall increases in volumes were also due to growing client adoption of our foreign currency products.

Agricultural Commodity Products

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

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2024						2023						Change						2024						2023						Change
Corn						481						427						13		%				509						468						9		%
Soybean						329						286						15						352						312						13
Wheat						196						203						(4)						234						211						11

Overall commodity contract volumes increased in the third quarter and first nine months of 2024 when compared with the same periods in 2023. We believe these increases were due to higher overall market volatility as a result of a change in market expectations regarding grain supplies as well as uncertain weather conditions in 2024. In addition, the first nine months of 2023 saw lower overall volatility within the commodities markets due to risk aversion by market participants following price increases and global trade uncertainty resulting from the conflict between Russia and Ukraine. We believe these factors contributed to higher overall commodity volumes in the third quarter and first nine months of 2024 compared with the same periods in 2023.

Energy Products

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

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2024						2023						Change						2024						2023						Change
WTI crude oil						1,290						1,129						14		%				1,185						1,091						9		%
Natural gas						723						533						36						780						577						35
Refined products						388						368						5						383						345						11

Energy contract volumes increased in the third quarter and first nine months of 2024 when compared with the same periods in 2023, which we believe were due to higher overall market volatility. Natural gas volatility was higher as a result of uncertain weather conditions in the United States, which impacted prices throughout the quarter. In addition, crude oil volatility was slightly higher as a result of ongoing geopolitical issues in the Middle East as well economic uncertainty between the United States and China.

Metal Products

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

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2024						2023						Change						2024						2023						Change
Gold						447						300						49		%				436						354						23		%
Copper						113						104						8						145						115						27
Silver						119						88						35						127						93						36

In the third quarter and first nine months of 2024, overall metal contract volumes increased when compared with the same periods in 2023. We believe gold and silver volumes increased as a result of continued uncertainty surrounding the Federal Reserve's monetary policy decision, which resulted in higher overall volatility.

Average Rate per Contract

The average rate per contract decreased in the third quarter and first nine months of 2024 when compared with the same periods in 2023. The decreases in the average rate per contract were primarily due to higher member trading as a percentage of total volume as well as our tiered volume pricing structure. The overall decrease was partially offset by an increase in our fee structure, which went into effect on February 1, 2024.

The decrease in the third quarter of 2024 when compared with the same period in 2023 is also do to a change in product mix. In the third quarter of 2024, interest rate contract volume increased by 4 percentage points as a percent of total volume, while all other products collectively decreased by 4 percentage points. In general, interest rate products have a lower rate per contract compared with the remaining contracts.

Cash Markets Business

Total clearing and transaction fees revenues in the third quarter and first nine months of 2024 include $68.5 million and $207.9 million of transaction fees attributable to the cash markets business, compared with $69.5 million and $214.3 million, respectively, in the third quarter and first nine months of 2023. This revenue includes BrokerTec Americas LLC's fixed income volume and EBS's foreign exchange volume.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in millions)						2024						2023						Change						2024						2023						Change
BrokerTec fixed income transaction fees						$	33.3					$	37.3					(11)		%				$	108.9					$	114.3					(5)		%
EBS foreign exchange transaction fees						35.2						32.2						9		%				99.0						100.0						(1)		%

The related average daily notional value for the third quarter and first nine months of 2024 and 2023 were as follows:

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in billions)						2024						2023						Change						2024						2023						Change
European Repo (in euros)						$	285.9					$	313.9					(9)		%				$	289.5					$	340.1					(15)		%
U.S. Treasury						109.3						98.3						11		%				102.1						106.9						(4)
Spot FX						67.0						54.4						23		%				58.9						57.9						2

Overall average daily notional values for the cash markets business were slightly lower in the third quarter and first nine months of 2024 when compared with the same periods in 2023.

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 individual firm represented at least approximately 10% of our clearing and transaction fees in the first nine months of 2024. 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

Market data and information services. During the third quarter and first nine months of 2024, overall market data and information services revenues increased when compared with the same periods in 2023, largely due to price increases for certain products.

The two largest resellers of our market data represented approximately 30% of our market data and information services revenue in the first nine months of 2024. 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 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.

Other revenues. In the third quarter and first nine months of 2024, the increases in other revenues when compared with the same periods in 2023 were largely attributable to higher custody fees due to an increase in non-cash collateral as well as a fee increase. Other revenues also increased mainly due to higher co-location fees.

Expenses

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions)						2024						2023						Change						2024						2023						Change
Compensation and benefits						$	218.8					$	205.5					6		%				$	629.5					$	615.7					2		%
Technology						66.6						55.6						20						190.1						160.2						19
Professional fees and outside services						31.0						32.2						(4)						98.8						108.3						(9)
Amortization of purchased intangibles						55.7						57.2						(2)						166.4						171.0						(3)
Depreciation and amortization						28.2						31.1						(9)						87.0						95.3						(9)
Licensing and other fee agreements						97.6						79.5						23						271.4						242.4						12
Other						62.3						56.5						10						177.2						174.2						2
Total Expenses						$	560.2					$	517.6					8		%				$	1,620.4					$	1,567.1					3		%

Operating expenses increased by $42.6 million and $53.3 million in the third quarter and first nine months of 2024 when compared with the same periods in 2023. The following table shows the estimated impacts of key factors resulting in the changes in operating expenses:

						Quarter Ended September 30, 2024												Nine Months Ended September 30, 2024
						Amount of Change						Change as a Percentage of Total Expenses						Amount of Change						Change as a Percentage of Total Expenses
(dollars in millions)
Technology support services						$	11.1					2		%				$	29.7					2		%
License fees						18.1						4						29.0						2
Salaries, benefits and employer taxes						12.6						2						16.5						1
Depreciation and amortization						(3.0)						(1)						(8.3)						—
Occupancy and building operations						(3.9)						(1)						(9.2)						(1)
Professional fees and outside services						(1.2)						—						(9.5)						(1)
Other expenses, net						8.9						2						5.1						—
Total increase						$	42.6					8		%				$	53.3					3		%

Increases in operating expenses in the third quarter and first nine months of 2024 when compared with the same periods in 2023 were as follows:

• The increases in expenses related to technology support services were primarily driven by higher software license fees and third party services to support the ongoing Google Cloud transformation project.

• License fees were higher primarily due to increases in volume for certain equity products and improved revenue performance related to certain arrangements.

• Salaries, benefits and employer taxes were higher due to increases in headcount during the year, which were primarily attributable to additional headcount in the company's international locations, as well as an increase in compensation expenses due to a law change for vacation carryover.

Decreases in operating expenses in the third quarter and first nine months of 2024 when compared with the same periods in 2023 were as follows:

• Depreciation and amortization expense decreased as a result of a decline in fixed asset purchases over the last few years and certain assets becoming fully depreciated.

• Occupancy and building operations expenses decreased due to lower rent expenses and real estate taxes.

• The decreases in professional fees and outside services are largely due to decreases in consulting costs associated with the Google Cloud Migration, which began in late 2021, as well as lower legal fees during the periods.

Non-Operating Income (Expense)

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions)						2024						2023						Change						2024						2023						Change
Investment income						$	1,026.8					$	1,272.5					(19)		%				$	3,142.6					$	4,198.4					(25)		%
Interest and other borrowing costs						(40.2)						(39.6)						2						(120.2)						(119.7)						—		%
Equity in net earnings of unconsolidated subsidiaries						86.1						76.8						12						259.7						230.1						13
Other non-operating income (expense)						(920.0)						(1,155.6)						(20)						(2,821.7)						(3,733.7)						(24)
Total Non-Operating						$	152.7					$	154.1					(1)						$	460.4					$	575.1					(20)

Investment income. Earnings from cash performance bond and guaranty fund contributions that are reinvested decreased in the third quarter and first nine months of 2024 when compared with the same periods in 2023 due to lower average reinvestment balances. In the third quarter and first nine months of 2024, earnings from cash performance bond and guaranty fund contributions were $991.3 million and $3,035.6 million, compared with $1,246.5 million and $4,042.9 million, respectively, in the third quarter and first nine months of 2023. We also recognized lower net realized and unrealized gains on investments in the first nine months of 2024.

Equity in net earnings (losses) of unconsolidated subsidiaries. Higher income generated from our S&P/Dow Jones Indices LLC (S&P/DJI) business venture contributed to an increase in equity in net earnings of unconsolidated subsidiaries in the third quarter and first nine months of quarter of 2024 when compared with the same periods in 2023.

Other non-operating income (expense)**. We recognized lower expenses related to the distribution of interest earned on performance bond collateral reinvestments to the clearing firms in conjunction with lower interest income earned on our reinvestment during the third quarter and first nine months of 2024 when compared with the same periods in 2023. In the third quarter and first nine months of 2024, expenses related to the distribution of interest earned on collateral reinvestments were $922.6 million and $2,829.4 million, compared with $1,160.5 million and $3,756.8 million in the third quarter and first nine months of 2023.

Income Tax Provision

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

						2024						2023
Quarter ended September 30						22.4		%				23.0		%
Nine months ended September 30						23.0						23.4

The overall effective tax rate remained relatively consistent in the third quarter and first nine months of 2024 when compared with the same periods in 2023.

Liquidity and Capital Resources

Sources and Uses of Cash*.* Net cash provided by operating activities increased in the first nine months of 2024 when compared with the same period in 2023 was largely due to an increase in revenues. Cash used in investing activities increased in the first nine months of 2024 when compared with the same period in 2023 due to a decrease in proceeds from sales of investments. Cash provided by financing activities was higher during the first nine months of 2024 when compared with the same period in 2023 due to an increase in cash performance bonds and guaranty fund contributions.

Debt Instruments*.* The following table summarizes our debt outstanding at September 30, 2024:

(in millions)			Par Value
Fixed rate notes due March 2025, stated rate of 3.00% (1)			$	750.0
Fixed rate notes due June 2028, stated rate of 3.75%			500.0
Fixed rate notes due March 2032, stated rate of 2.65%			750.0
Fixed rate notes due September 2043, stated rate of 5.30% (2)			750.0
Fixed rate notes due June 2048, stated rate of 4.15%			700.0

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(1)We maintained 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%.

(2)We maintained 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 November 2026. The proceeds from this facility can be used for general corporate purposes, which includes providing liquidity for our clearing house 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 $3.3 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 September 30, 2021, 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, but any commercial paper balance if or when outstanding can be backstopped against 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 the clearing house. The facility provides for borrowings of up to $7.0 billion. We may use the proceeds to provide temporary liquidity in the unlikely event a clearing firm fails to promptly discharge an obligation to the clearing house operated by CME, in the event of a liquidity constraint or default by a depositary (custodian for our collateral), 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, or in other cases as provided by the CME rulebook. Clearing firm guaranty fund contributions received in the form of cash or U.S. Treasury securities as well as the performance bond assets (pursuant to the CME rulebook) can be used to collateralize the facility. At September 30, 2024, guaranty fund contributions available to collateralize the facility totaled $10.0 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's 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 September 30, 2024, we have excess borrowing capacity for general corporate purposes of approximately $2.3 billion under our multi-currency revolving senior credit facility.

At September 30, 2024, 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.

To satisfy our performance bond obligation with Singapore Exchange Limited, we may pledge irrevocable standby letters of credit. At September 30, 2024, the letters of credit totaled $400.0 million. We also maintain a $350.0 million line of credit to meet our obligations under this agreement.

The following table summarizes our credit ratings at September 30, 2024:

						Short-Term						Long-Term
Rating Agency						Debt Rating						Debt Rating						Outlook
Standard & Poor’s Global Ratings						A1+						AA-						Stable
Moody’s Investors Service, Inc.						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 within certain specified time periods 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. No report of any rating agency is incorporated by reference herein.

Liquidity and Cash Management. Cash and cash equivalents totaled $2.3 billion and $2.9 billion at September 30, 2024 and December 31, 2023, respectively. The balance retained in cash and cash equivalents is a function of anticipated or possible short-term cash needs, prevailing interest rates, our corporate 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 and short-term bank deposits. 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 cash performance bonds and guaranty fund contributions, other current assets or other assets in the consolidated balance sheets.

On November 7, 2024, the company declared a regular quarterly dividend of $1.15 per share for all outstanding common and preferred shares. The dividend will be payable on December 27, 2024 to shareholders of record on December 9, 2024. Assuming no changes in the number of shares outstanding, the fourth quarter dividend payment will total approximately $420 million.

Regulatory Requirements*.* CME is regulated by the CFTC as a Derivatives Clearing Organization (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 the Dodd-Frank Wall Street Reform and Consumer Protection Act. As a result, CME must comply with CFTC regulations applicable to a systemically important DCO for financial resources and liquidity resources. CME is 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.

BrokerTec Americas LLC is required to maintain sufficient net capital under Securities Exchange Act of 1934, as amended (Exchange Act), Rule 15c3-1 (the Net Capital Rule). The Net Capital Rule focuses on liquidity and is designed to protect securities customers, counterparties, and creditors by requiring that broker-dealers have sufficient liquid resources on hand at all times to satisfy claims promptly. Rule 15c3-3, or the customer protection rule, which complements Rule 15c3-1, is designed to ensure that customer property (securities and funds) in the custody of broker-dealers is adequately safeguarded. By law, both of these rules apply to the activities of registered broker-dealers, but not to unregistered affiliates. The firm began operating as a (k)(2)(i) broker dealer in November 2017 following notification to the Financial Industry Regulatory Authority and the SEC. A company operating under the (k)(2)(i) exemption is not required to lock up customer funds as would otherwise be required under Exchange Act Rule 15c3-3.