CME Group, Inc. (CME)
Q4 2009 Earnings Call Transcript
February 4, 2010 8:30 a.m. ET

Executives

John Peschier – Managing Director, Investor Relations
Craig S. Donohue – Chief Executive Officer
James E. Parisi – Managing Director and Chief Financial Officer
Terrence A. Duffy –Executive Chairman
Rick Redding – Managing Director, Products and Services
Phupinder S. Gill – President
Kimberly S. Taylor – Managing Director and President, Clearing House Division

Analysts

Roger Freeman – Barclays Capital
Michael Vinciquerra – BMO Capital Markets
Howard Chen – Credit Suisse
Richard Repetto – Sandler O''Neill and Partners
Niamh Alexander – Keefe, Bruyette & Woods
Daniel Fannon – Jefferies & Company
Michael Carrier – Deutsche Bank Securities
Kenneth Worthington – JPMorgan Chase & Company
Jonathan Casteleyn – Susquehanna Financial Group

Presentation

Operator

Good day, everyone and welcome to the CME Group Fourth Quarter 2009 Earnings Conference Call. As a reminder, today''s 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 Peschier

Thanks. Thank you all for joining us today. Craig Donohue, our CEO and Jamie Parisi, our CFO will spend a few minutes outlining the highlights of the fourth quarter. Then we will open up the call for your questions. Also joining us for participation in Q&A today are Terry Duffy, our Executive Chairman, Rick Redding, our Head of Products and Service, Phupinder Gill, our President and Kim Taylor, our Head of Clearing.

Before they begin, I''ll read the Safe Harbor language. Statements made on this call and the accompanying slides on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance that 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 on the CME website. During this call, we refer to GAAP and non-GAAP pro forma results. A reconciliation is available in the press release and there is an accompanying file on the Investor Relations portion of the site that provides detailed quarterly information on a GAAP and pro forma basis.

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

Craig S. Donohue

Thanks, John and thank you for joining us this morning. There has been much said about the challenges of 2009 and CME Group certainly wasn''t exempt from those challenges. However, looking back at the year, we are pleased with the progress CME Group has made and the platform we built for the future. From the start of the year through the end, we sought opportunities amongst the challenges and we were steadfast in pursuing and executing on those opportunities. I''m tremendously excited about how CME is currently positioned to pursue future growth.

To highlight a few of our key accomplishments over the past year, we''ve successfully integrated NYMEX and COMEX into CME Group. In addition to the strong recent growth trends in energy and metals volumes, which I''ll discuss in greater detail in a moment, we''ve been working on several strategic fronts to leverage these businesses.

We''ve implemented global sales and marketing plans that include increased education and sales outreach to energy and metals customers, cross selling across asset classes and extending our international incentive programs to these customers. We''ve completed the clearing and technology integration of NYMEX and COMEX and achieved the full $60 million in run rate synergies. We''ve built on the success of the CME ClearPort platform by launching 332 new products in 2009 and we have plans under development to continue adding new asset classes.

We''ve also scaled our technology for future growth. While exercising great expense discipline, we continued our ongoing focus on providing best-in-class technology by bringing online a new state of the art data center. As part of this effort, we migrated the FX and equity complexes to new match engines and customers have benefited from significant performance improvement. We will migrate other asset classes over the next year. The flexibility of the new data center positions us well for future volume growth, ongoing performance improvements and enhanced customer services. We see technology as helping us deliver better performance to our existing customers as well as helping to attract new customers.

As we have identified in the past, we are actively pursuing a broader global customer base. Over 2009, we made progress on several fronts in moving toward this goal. We worked on extending our global relevance by increasing the breadth of products we offer on Globex and developing key relationships with local regulators and market participants in several emerging geographies around the world.

We continue to strengthen our BM&FBOVESPA partnership, launched the KOSPI 200 on Globex during non-Korean hours and signed an agreement with Bursa Malaysia to provide global order routing and matching services for their derivatives business, which will also provide with us a license to use their crude palm oil settlement prices for future product development.