CME (2025 - Q3)

Welcome to the CME Group Third Quarter 2025 Earnings. [Operator Instructions] I would now like to turn the call over to Adam Minick. Please go ahead. Adam Min

Good morning, and I hope you're all doing well today. We released our executive commentary earlier this morning, which provides extensive details on the third quarter 2025, which we will be discussing on this call. I'll start with the safe harbor language, and then I'll turn it over to Terry. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They 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 statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements. With that, I'll turn the call over to Terry.

Thanks, Adam, and thank you all for joining us this morning. I'm going to make a few brief comments about the quarter and the overall environment. Following that, Lynne will provide an overview of our third quarter results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks. The third quarter average daily volume of 25.3 million contracts represented the second highest third quarter average daily volume in our history, following the record quarter a year ago. Customers continue to turn to our markets to manage their risk exposures as demonstrated by quarter and year-end open interest of 126 million contracts, the highest open interest at the end of September in the last 5 years and continuing to grow in October. We also set records in large open interest holders and interest rates, equity indices and cryptocurrencies in September despite a general pullback in volatility across asset classes during the quarter. Our team remains focused on future growth and innovation, including the extension of our product offerings. Our crypto complex traded a record 340,000 contracts per day in the third quarter and was up over 225% relative to a year ago. This growth was aided by the early success of Solana and XRP futures, which were launched earlier this year. Other new products with record volume in the third quarter include credit futures, 1-ounce gold futures and agricultural weekly options. We also introduced trading opportunities that facilitate stronger links between cash and futures markets. FX Spot+, which was launched earlier this year and provides the benefits of futures capital efficiencies to spot market participants, set new volume records in every month in the third quarter. BrokerTec Chicago, launched just 2 weeks ago, is also off to a strong start and enables participants to trade futures and cash products side-by-side at our facility here in Chicago. Going forward, innovation will continue to be a key driver of our performance and our ability to serve clients in an increasingly complex and volatile global market. During the quarter, we announced the upcoming extension of our cross-margin agreement with DTCC to enable increased margin savings to end user clients. We are also pleased to announce the extension of our FTSE Russell Index derivatives license through 2037. This announcement will ensure the continuity, efficiency and value to our clients along with our other suite of equity products. Additionally, we announced our intention to offer 24/7 trading of cryptocurrency futures and options beginning early next year. Finally, we announced a partnership with FanDuel to develop and distribute event-based contracts beginning later this year, which we look forward to talking to you about today. While we are proud of our record results we have delivered the last several years, our focus will always be on the future needs of our customers and how we can continue to evolve to meet those needs. With that, I'll now turn the call over to Lynne to review our financial results in more detail.

Thanks, Terry, and thank you all for joining us this morning. During the third quarter, CME Group generated revenue of $1.5 billion, down 3% from the very strong third quarter in 2024. The average rate per contract for the quarter was $0.702, resulting in clearing and transaction fees of $1.2 billion. Market data reached a record level, delivering over $200 million in quarterly revenue for the first time, up 14% to $203 million. Continued strong cost discipline led to an adjusted expenses of $487 million for the quarter and $405 million, excluding license fees. Our adjusted operating income was $1.1 billion or 68.4% operating margin for the quarter. CME Group had an adjusted effective tax rate of 22.6%. Adjusted net income and adjusted diluted earnings per share came in at $978 million and $2.68 per share, both slightly above the extraordinarily strong third quarter last year and represented the third highest quarter of any in our history. Capital expenditures for the third quarter were approximately $19 million, and cash at the end of the quarter was approximately $2.6 billion. CME Group paid dividends of $455 million in the third quarter and approximately $3.5 billion over the first 9 months of the year. Turning to guidance. We expect total adjusted operating expenses for the year, excluding license fees, to be approximately $1.625 billion. That's $10 million below our prior guidance and a total of $25 million below our expectation to start the year. All other guidance remains unchanged. We're proud of the continued strong results the firm has delivered during the quarter. During the first 3 quarters of 2025, CME Group reported the 3 highest quarterly adjusted net income and adjusted diluted earnings per share in our history. Year-to-date 2025, we have grown adjusted earnings per share by 9% over a record 2024. We continue to see strong customer demand for our products as demonstrated by growing open interest and new records in large open interest holders. Our focus remains on driving earnings growth for our shareholders by expanding our customer base, serving the needs of our clients through innovative products and providing unmatched capital efficiencies. We'd now like to open up the call for your questions.

[Operator Instructions] Our first question comes from the line of Dan Fannon with Jefferies.

Terry, can you talk about your long-term retail strategy? This quarter, you announced the partnership with FanDuel. You obviously have your micro complex. As you think about your offering today, do you think you can scale this offering organically to where you want it to be? Or is this an area where we could see potential M&A?

It's a good question, Dan. And I will tell you that the strategy evolves. I don't think that a lot of people would have seen what we saw happen over the last 5 to 7 weeks as it relates to prediction market in the NFL with retail, and they had that penciled into their analysis a year ago. So my point being is this market is ebbing and flowing every single day. Our strategy is one, and I've talked a lot about it, is distribution and efficiencies. I think that the announcement with FanDuel is very important for CME. We're looking at 13 million potential accounts that will have access to CME's products, but more importantly, have access to have a view of CME and our distribution of our product lines for the future. As we work with our retail brokers today who have continued to grow and if they didn't, you'd have to wonder why certain people's valuations are going up dramatically. So you look at the sale of like a NinjaTrader to Kraken for a very large sum that goes to show you that the retail business seems to be doing quite well in our industry with the valuations being put on them. We are in a very strong position. I will say this, and I'll say it again, I haven't said it in a while. But in 2017, when we went forward with Bitcoin, a lot of people thought, well, what are we doing? I think that our credibility of our institution, which we protect very mightily, is very important to the institutional participant who wants to also participate with retail in some of these newer asset classes. And that's something I think that we can work with and partner with some of the new retail entrants coming in, whether they're in the prediction market side, whether they're in the gaming side with our partner of FanDuel or whether they're Robinhood or others that are opening up futures accounts by the second. So our future -- our retail strategy is vast, it's global, and it's going to -- I think it's going to continue to grow. It doesn't necessarily mean that you have to do an acquisition to grow that strategy. I think with the -- what we have in place and we've put in place over the years is what others are looking to utilize in order to grow their business. I will say credibility is absolutely paramount in markets. And CME is a very credible institution that's looking at different asset classes with the retail participants, and I'm excited about the future. So I don't think there's anything off the table, Dan, I don't want to say, but I think we're in a strong position to grow our retail business with or without having to do M&A. And I would suggest right now, we would probably be more inclined to do it without M&A.

Our next question comes from Patrick Moley with Piper Sandler.

So we have, like you said, seen pretty explosive growth in event contracts. A lot of that growth has come from sports-related event contracts. I think in the initial press release that you put out with FanDuel, there was no mention of sports contracts, but there's maybe been some media reports that suggest that you're looking at sports. So to the extent you could comment on whether that's in the cards would be much appreciated.

Thanks, Patrick. Yes. And I will comment on that because I think sometimes, unfortunately, headlines can be very deceiving and you need to read the entire article to understand what was being said. I think you're referring to the Bloomberg article that came out recently that CME is going to list sports events in their headline. And then if you go on to read it, you will see that I have said numerous times on podcast publicly, on television, to you, to others that my partner of FanDuel when they are prepared to move forward with events on sports, I would be prepared on day 1 in order to offer that to them on my DCM. As long as the United States government is not going to object to the self-certification of these and consider these swaps and not gaming, well, it doesn't matter what my opinion or anybody else is, that's the government's opinion, and we will proceed accordingly. So that is yet to be decided, Patrick. That will be a big decision for my partners in the JV at FanDuel to decide how they want to proceed. But I think it's undeniable, as I stated earlier, that no one saw this coming. And now this might be a football phenomenon because there's a lot of eyes on football. So we'll have to wait and see how the sports prediction markets play out post football. There are certain event contracts that I'm not very enamored with. When you look at some of these predictions on political events, I think those can be very dangerous to participate in. I do understand the size of a presidential election that maybe you can say that's okay. But some of these smaller elections, I get concerned about. And some of these other events that are out there that to me, just are nothing more than readily manipulable markets, which is against the Commodity Exchange Act. And so I think you have to really be eyes wide open when you're looking at this. But you're correct, Patrick, most of these are sports events contracts. And for us, to say that we're going to list them or not is a decision yet to be made, and I'll make it in connection with my partner at FanDuel, which that has not been resolved just yet.

And Patrick, just to add one thing. As you noted in our release, and we just put out some more information to our clients about the product set focused on markets. As Terry mentioned before, for us, this is really about distribution and getting our products in front of that retail community. So that has been and continues to be our focus.

Okay. That's great color. And then if I could just squeeze a quick follow-up in. Given that a significant amount of the user volume on some of these traditional sports books is being done in parlays, do you think it's feasible to offer parlays on a large scale in prediction markets considering that the venue doesn't act as the house? And then what are some of the considerations that would be necessary to facilitate parlays?

So before I get into the operational issues of how you would run a parlay, I guess we'd have to say our -- these have not been out very long. They've been out what, a couple of weeks, I think, right now on these parlays. I don't know how much uptake they're getting. I haven't followed that market on the prediction markets. But I will say this, a swap is categorized or defined as something that's commercially or economically benefit. So when you start getting into parlays on prediction on sports, I think sometimes you might be crossing that line, is this legitimate or not? Is this a sports gambling contract? Or is this an economically beneficial and has the -- has exposure for the client that is commercially concerning, which is the definition of a swap contract today. It has to have an economic benefit to it. So I'm not sure how they're looking at these parlays at the agency. I have not spoken to them. The government has been closed. The government has been closed for 3 out of the 4 weeks, I believe, since these parlays have come out. So I don't know if they've had an opportunity to opine, not to my knowledge. So Patrick, to be honest with you, I don't know from an operational standpoint. I'm not going to even ask my team to speculate because this is something that we are not taking a big look at on the parlay side.

Our next question comes from Ben Budish with Barclays.

Maybe just one more follow-up on the prediction market side. Just as you think about the range of contracts you might offer over the next several years, it does seem like there's some differences to your traditional product suite, more frequent events that might require different kinds of data feeds. Is there anything structurally different about this market that might necessitate like a higher or lower operating margin, higher spend? Does it require more advertising to reach retail customers? Does it require more frequent listing of new contracts that aren't as long tenured as like things like your WTI contract and SOFR contracts. Just curious how you're thinking about those other sort of operational aspects.

Thanks, Ben. And you're only strictly speaking about events on markets, not on sports, correct?

Yes. Really, any event contract, I mean, I think sports are the obvious example because there's so many different events like the frequency is much higher. But more generally about event contracts and -- so I guess...

So I'm going to -- yes, I get your question, but I want to be cautious about making sure that when we answer the questions from you and others that we are defining a market -- a prediction market on markets and a prediction market on sports because those are 2 different things that are -- obviously, some are in the courts. There's some objections to others. Prediction markets on markets is allowed in all states and is not being contested in any states or opposed, I should say. So Tim, I'll let you talk about that on the operational side. And on the sales side and the promotion of, I'll ask Julie Winkler to comment as well.

Great. Thanks, Terry, and thanks, Ben, for the question. So I think even when we look at the product announcement we put out the last few days with respect to the event contract offering at CME Group on our traditional benchmark products, we are introducing things such as hourly event contracts. We're introducing multiple event contracts throughout the day across our traditional markets as well as Bitcoin and Ether. So when we look at what makes CME Group a very useful tool for our clients across all customer segments is we have a tremendous amount of scale, both on the operational and technological front that we have the capabilities to list these event contracts intraday. We scale very well in terms of whether you look at it our existing option complex where we have options in every asset class on every day of the week. The ability to meet the customer demand for where they want to trade these events throughout the day is something that we're well established in doing at CME Group. And I think, frankly, differentiates us in the marketplace and why customers come to us. And then when you look at the scale that we have, both from the operational aspect, the clearing aspect as well as the distribution we have with over 130 retail partners, this is something we tap into with every new product launch that we do, whether it's an event contract or an institutional grade new equity index contract. So the way we approach building markets is to leverage the scale we've built over the last several decades, and this would be no exception with respect to event contracts.

Julie, do you want to comment about how the cost of going forward of promoting these products in those asset classes.

Yes. Thanks for the question, Ben. What -- how we think about this, I mean, we have 130 of these critical distribution partners that Terry referenced earlier. And when you think about that customer journey, those partners are the ones that are responsible for opening the accounts for those retail accounts, onboarding them, doing the KYC. And so for us, we certainly have cooperative marketing agreements with them to help, particularly with what Tim was referring to, new product launches. But in general, those firms are going to continue to spend money well above that in order to attract new clients to their platform. So we don't see a demonstrable change in that spend going forward to be able to offer these products.

Thanks, Julie. Thanks, Ben -- also to Dan and Patrick, I want to be perfectly clear when it comes to sports events. CME Group is not opposed, not opposed to listing sports events on our contracts on our DCM. What is critically important is the federal government has to make certain that they approve these contracts I won't sit on the sidelines. It doesn't matter what my opinion is what these are or not they are. If they are allowed, CME will participate in some way if we think it's the right thing to do for our clients and our ecosystem as it goes into what Dan was referring to earlier, our total retail strategy. So I just don't want you to think I'm dancing around the question. I'm not. We will be prepared. We are operationally ready to do this stuff. The question is we want to make sure that our partners are good to go, and this is the right thing for us. So we don't have an opinion to a point where we're not going to do it because we think they're gambling or we're not going to do it because certain people didn't ask us. If the federal government allows it, we will be taking a strong look at listing these markets. I just want to make sure everybody's clear on that, that we're not shying away from that.

Our next question comes from Brian Bedell with Deutsche Bank.

Sorry to stick with prediction markets here, but maybe just to focus on the financial contracts only that are core to CME. Can you talk about just the structure of this arrangement? First of all, is this -- is this cleared in a club fashion? And in the -- with the FCM that you're cooperating here with FanDuel, just to clarify, would this then be open to all other retail platforms to connect into. So I guess, would you be listing these prediction contracts on CME and therefore, your 130 retail partners can also link into these and trade them? And is that the financial arrangement around that, is that -- would that flow directly to CME for those other retail partners? Or is that part of the joint venture with FanDuel?

So the answer to your latter part of your question is absolutely, everybody will have access to our contracts regardless of the relationship that we have with FanDuel. As it relates to the economics with FanDuel, we've I don't know how much we've disclosed. But Lynne, if you want to comment any further on that. But we have a relationship with them in the ownership of the FCM, our nonclearing FCM, I should say. And that's -- you talk about that.

Yes. So thanks, Brian. As Terry mentioned, our FCM would be one of many potential participants, just like any other contract on CME, this is open to any of our FCMs that choose to offer that product once they meet the requirements. So this is not an exclusive relationship. Our FCM will provide access to clients that want to come through that entity, but there could be several others that provide that service to clients as well.

And Brian, as far as if you're asking how we're looking at the economics going forward, I think that is something that's still a work in progress. And we have to see, as always, how new markets, how they grow, what they look like, how we structure them and then how we price them. But we have many different models, as you can imagine, depending on how this goes forward on the market side and potentially on the sports side, there's the entertainment side, there's the political side. These things -- it may not be a size-fits-all type of pricing model either, but we don't have the answer to that question yet.

And maybe just to clarify, so the -- if the clients are coming through FanDuel, like if they're FanDuel clients or they're coming through that FCM, I would imagine, obviously, then that's going -- the economics of that are consistent with the joint venture arrangement. But if it's coming through a different online broker coming directly to your markets, would that still be part of this JV or that would be just going right to CME?

You summarized it yourself properly, Brian, but I'll let Lynne finalize it.

Yes. So I think the thing you need to think about is our DCM and DCO fees are consistent, just like they are for all of our products. That's something that's available to all participants. The FCM would be no different than any of our other FCM participants. There then would be just like the current market, the FCMs will have a fee, a commission that they charge the clients that come through their entity. So that piece will flow through the FCM. But what ends up being charged to the clients and the FCM is going to be consistent across the board because it's a requirement that's just part of how we need to operate. So nothing is different about this arrangement that changes how those clearing and trading fees will be charged to the market.

Our next question comes from Ken Worthington with JPMorgan.

I'm not going to ask on predictive markets...

Come on, Ken, you know you got one.

Energy volumes were down this quarter after a long run of really strong growth, like more than a year. With geopolitical risk stabilizing or moderating, I guess, what is the outlook for growth, for energy, particularly in the context of particularly strong volumes you had earlier this year? And then what are the factors that might be driving share shifts in oil and gas markets because we've seen share move around more recently?

Yes. Ken, it's Derek. Thank you. We are certainly seeing a market that over -- let's be honest, over the last 2.5, 3 years, we've seen WTI trade in effectively $10 range. I think we have done a lot to develop and grow and expand participation in our energy markets overall, particularly in crude. You've seen us push out growth in our options contracts, shorter-dated options in low volatility environments. Those have proven to be very successful tools for adapting to a different volatility environment. We actually set some new records in volume and short-dated options over the course of WTI early this year. You've also seen us push out very successfully our record growth in our crude grades contracts, which actually put a moat around our physical WTI business as WTI continues to globalize, where you see growth in our complex year-to-date in crude oil specifically, we're seeing that most effectively in Europe and Asia, where we continue to see double-digit growth there as U.S. crude and refined hits both hit the shores of Europe and APAC and more customers in those are trading our products. When you look at the share shifts this quarter, we've actually seen WTI futures shift back to CME. I think we're at 76% for Q3. That's up from 74% last quarter. We are maintaining our roughly 91% share in our WTI options markets and continue to innovate there. When you step back and look at the broader drivers, yes, there were very much some -- the geopolitical tensions earlier this year that drove activity. When you look at the year-to-date business in both crude and refined as well as natural gas, both those complexes are up about 10%, 11%. When we look at Q3 specifically, while WTI drifted a little bit lower, that sequentially saw some decrease in growth, lower volumes across the board for everybody, we saw share shifts back into CME. Where we're really focused right now is the natural gas business. Even in Q3, we saw our natural gas complex grow 2%, led by nat gas options up 12%. When you look at the continued record amount of liquefaction and export of U.S. LNG today at 15 or 16 Bcf, that will go to almost 25 in the next 3 years. That means more U.S. gas priced and indexed directly to Henry Hub, the market that we've got 79% share of continuing to globalize. So we see very much energy a part of the overall picture. Natural gas is not just a transition fuel. It's a fuel for the future. So when you look at the strong growth in our OI this year, continued growth in the innovative part of the curve that we built and developed on crude and the continued push into natural gas, we think we're answering customer need and growing globally. I'm confident we can continue to do that as the world consumes more U.S. energy product.

Our next question comes from Chris Allen with Citi.

I wanted to ask about the OSTTRA sale. What are the proceeds after tax? And then how are you thinking about capital deployment here given your buyback flexibility, current stock price and balancing that with the dividend?

Thanks, Chris. I'll let Lynne comment to start, and then I'll join in when she's finished.

Yes. So Chris, the proceeds from the sale were about $1.5 billion. The net proceeds are going to be very similar. We were able to bring back some cash from the [ FCM ] as well. So I would use that as your starting point. In terms of the use of those proceeds, we are bringing a recommendation to our Board in the coming weeks. We certainly have a number of valves in place that we can use, but we want to -- given the current environment, make sure we've done a full review with our Board on the potential uses of that capital.

Chris, I think it's really important that I think everybody understands our debt-to-EBITDA is the lowest in the sector. We have been very disciplined, making sure that we don't have a lot of debt. We've been able to grow organically. We've been able to do things, whether it's through JVs, whether it's through partnerships that are not multibillion-dollar investments. So we've been very blessed to grow our business with that respect, the examples being one with, obviously, Google, the other with FanDuel and some of the other things that we're continuing to focus on. So we understand that we don't need to be sitting on mountains of cash like this. So I don't want to front-run my Board by any stretch of the imagination. So we will be looking forward to bringing a proposal that -- how we return that capital very shortly to you and the rest of the team.

Our next question comes from Michael Cyprys with Morgan Stanley.

I wanted to focus on 24/7 trading. Understand in crypto markets, you're going to be enabling that early next year. I was hoping you could elaborate on some of the hurdles you've had to overcome? And what could be the scope to enable 24/7 trading for other products? What could make sense next, the time frame around that? And then just more broadly, how do you think about the role of tokenization as a catalyst to support 24/7 trading over time? How are you experimenting with that today or may over the next year or so?

Michael, thank you. All 3 of those are very good questions. And I'm going to take them in reverse order because in order to get to 24/7 and here are some of the things that you referenced you need to have potentially a tokenization of tokenized cash in order to facilitate. So I will ask Ms. Sprague to give you a little update as our project with Google on tokenized cash is looking, how we're going with that. And then she can even go into the 24/7 from a risk management standpoint. We'll save the other products for myself, and I'll talk about that at the end, but maybe Suzanne and Sunil can comment on the operational and then the tokenized cash.

Yes, sure. Thanks for the question. So as Terry mentioned, we do know that tokenization is a hot topic, and we've been fortunate to be partnering with Google over the past few years towards that initiative. So we do continue to progress our efforts with them, starting with tokenizing cash to begin with. The technology that they bring to the table through the Google Cloud Universal Ledger does enable tokenization of other types of assets, both on the product side and the collateral side. So we plan to continue progressing with our initial phase tokenizing cash through the end of this year and enabling that for go live in 2026. That will allow the value outside traditional banking hours starting with cash and then potentially other assets in the future. That is an important element to risk management, as Terry mentioned. On the general risk management side, we also think it's prudent to make sure that the collateralization in the system supports those exposures that can accumulate, especially over the weekend. And so our approach will be to make sure that collateralization in the system is consistent with the risk that participants can bring over the weekend and just how we monitor that activity today, knowing the markets open on Sundays, for example. So we look forward to the offering building in many phases and think that the tokenization efforts we have underway with Google are timely and being able to roll that out for 2026 as well.

Sunil, do you have anything to add?

On the operational side, I think the -- we were the first exchange to operate 23 hours every day of the week. Here, we are just adding additional sessions over the weekend. We are well positioned to do so, especially because of our investment in our Google transformation. This gives us the ability to actually give our clients access to our markets and our clearing services, while also continuing to do maintenance and upgrades. So that's the challenge that not just us, but our industry has to overcome to provide 24/7 services across markets and clearing.

And Michael, as it relates to other asset classes, I have said this for a while now that I think 24/7 is coming across the world, whether we like it or not. And again, this is not something that we're leading. I think going forward with crypto makes a ton of sense for CME Group because they do have a market that goes 7 days a week today. We do have the reference rate pricing associated with it because there's cash markets that are facilitating 7 days a week. Some of these other asset classes, there's not been a huge conversation or demand coming from them to go 24/7. It doesn't mean that won't change. I think we'll have to do a wait and see how it comes out with crypto to begin with. Again, I don't know if we'll be a leader or a fast follower on other asset classes on 24/7. We'll analyze that as time goes on. But I will tell you, there has not been a big demand coming from my other asset classes to trade on 7 days a week. There's a cost associated to the FCMs. There's a cost associated to many different entities that they're not quite sure if the squeeze is worth the juice as they say. So we're waiting to see how all that plays out. So we're not saying that's not going to happen, but we're not leading with that, obviously, and we'll keep a close watch on that. But I will tell you what we will always be prepared if, in fact, that's where the market is going.

Got it. So it sounds like you're preparing for 24/7 to be in the position for that. Would that be for next year, but it seems like you're waiting maybe for client interest before you pull the trigger on. Is that...

We're prepared for 24/7 for crypto for 2026. I would say that internally, we've looked at other asset classes if, in fact, we needed to go there or wanted to go there or there's a demand to go there. I think operationally, Sunil said it right, where we're 23.5 hours a day, 5.5 days a week now, 6 days a week, I guess, with Sunday. So we are basically there if we wanted to go there, so we have to add in Saturday and it's just adding in a couple of sessions. The question is what's the cost associated with the client and what's the demand for the client. So I don't see a big hurdle with talking to my team if, in fact, we want to go to these other asset classes. But again, there's other factors that taking place. The U.S. treasury market might be different than -- the ag market and the ag market might be different than the equity market. You have to align with different associations, different cash markets, what they want to do, not do or the crypto market is pretty much a natural right now because of the structure it has in place.

Our next question comes from Alex Blostein with Goldman Sachs.

This is Anthony, on for Alex. I wanted to hit on collateral balances and to what extent maybe you're seeing the 30% cash minimum affecting client allocation decisions? And if you could give an update on what that looked like in the third quarter and what that stands at now?

Thanks, Anthony, and I'll let Lynne comment.

Sure. So our averages in the third quarter for cash, we averaged $135 billion, and we earned 33 basis points on that. On noncash collateral, we averaged $156 billion, earning 10 basis points. So far in the first half of October, the cash balance has been fairly steady. We're at $134 billion on average. And the noncash has ticked up a bit. We're at $164 billion on average. So if you look at the percentage, the 30% minimum, we are still seeing a bit more in cash. So this third quarter, we were at about 46% in cash. That's obviously a customer decision on how they want to allocate their collateral. We also have seen in past volatile times where we might see more cash upfront and it might kind of normalize over time. So I wouldn't be surprised if there's a little bit more optimization going forward, but it's held pretty steady at that mid-40s percent last quarter and this quarter.

Our next question comes from Kyle Voigt with KBW.

Maybe a follow-up on the Google partnership, but more related to the Google-related investment spend. Can you just give us an update on where you expect that to ultimately shake out in 2025? And then remind us how you expect that component [indiscernible] trend into 2026 as we're thinking about the building blocks for 2026 expense growth? And Lynne, outside of the Google spend, any other notable puts and takes on the expense side we should be aware of as we look out into 2026?

Thanks, Kyle. Lynne?

Yes. So expenses related to Google this quarter were about $27 million. The vast majority of that $26 million you'll see in the technology fees with about $1 million in professional fees. So year-to-date, we're running at about $71 million in total spend related to Google. Our guidance embeds within that about $100 million in total expense. That is down, and that's part of the reason why we did cut our guidance. At the beginning of the year, we were expecting more like $115 million. So we were able to identify a number of savings opportunities working closely between the technology and finance team. We've really been managing that spend in the cloud as we're getting more fast with some of the different tools we have. So we've generated a fair bit of savings there. And also, we've been really moving a lot more towards internal support. So those pro fee numbers last year were more in the $4 million to $5 million per quarter, and they're now down to about $1 million. So that is where you're seeing some of those savings come through on the expense side. In terms of 2026, we'll certainly provide detail on that. It will be part of our overall guidance. I would say with our changes to expenses this year, some of these savings we've been able to generate, not just on the pro fees and the cloud expenses, but also you've seen our depreciation and our occupancy expenses come down pretty meaningfully over the course of the year. So our cost growth this year is relatively low when you look at that versus our historical levels. I would view this as kind of the baseline that we will be building off, but just some of these opportunities are more ones that we were able to find and take advantage of, but these aren't necessarily annual type events where we'll have that level of cost offset. So we'll provide more guidance in February. But I would say this cost growth being lower is more the ability to take advantage of some of those opportunities that we had.

Our next question comes from Simon Clinch with ROTH & Co.

I was wondering, maybe, Terry, if you could talk about the BrokerTec Chicago. Just give us a sense of, I guess, what -- how this strategy might actually change the fortunes of BrokerTec within the context of U.S. treasuries. And actually, from a competitive standpoint, between all the different protocols, is this something that can actually provide the fortunes of say, club versus streaming, et cetera, et cetera?

Yes, that's a great question, Simon. I'm going to ask Mike Dennis to chime in, and then I'll make a comment when he's finished. But I'll let Mike chime in since he's been leading this initiative. Mike?

Thanks, Terry. Simon, I appreciate the question. BrokerTec Chicago went live on October 6. And it's very exciting is this is the first time in CME Group history that we have our cash fixed income markets sitting side by side with our core futures and options markets. We had a very successful market at open, and we experienced 2-sided markets in all 7 of our cash instruments. We had trades happen in the overnight session on Sunday and for the first day of trading. And over $1 billion of notional has traded since launch across all 7 tenors, and we launched about 2.5 weeks ago. The full curve is being quoted more than 90% of the trading day. What's also exciting is that over 25 firms have connected to the new central limit order book, including banks, props and brokers. To kind of answer a little bit of your question, 66% of the volume is traded at price points not available on the BrokerTec New York Club, which gives clients choice depending on their trading strategy and market conditions. And we've also seen some new to BrokerTec clients continue to -- we've also seen some new to BrokerTec clients connect to the new club and place trades already. But we're pretty excited about new client acquisition and also what we can do next with BrokerTec Chicago on different trading modalities, product enhancements, et cetera.

So just to add to that, I think what's really important and I don't want to gloss over it, Simon, is when you looked at our press release on BrokerTec Chicago and you had dealers in there being quoted about how important this offering was to them. They were a driver of that with Mike and his team about putting these side-by-side for the efficiencies thereof. As you know, you referenced it in your question, the treasury market can go to multiple different places. But when you have some of the largest participants in the world looking for this type of offering from CME Group, which we gave them, it does attract other participants, which Mike referenced from the props to the hedge fund. So we think this could continue to grow, and we're excited by the leadership of the dealers pushing this going forward. So we're excited by BrokerTec Chicago and what we think it can do for our cash franchise, which in return will help grow our futures franchise.

Our next question comes from Craig Siegenthaler with Bank of America.

So market data revenues were strong and up 14% in the quarter. Can you provide any context behind the good quarterly result? And also, can you talk about opportunities to raise pricing in data next year?

Thanks, Greg. Julie?

Yes. So it was our 30th consecutive quarter of revenue growth, a quarter of record. So we're very excited about that, up over 14%. Really, what we're seeing, Craig, is increased growth across nearly all of the segments of this business, both on the professional and the nonprofessional subscriber side. And I think it just speaks to the depth of our product offering. I particularly point out this quarter of just the growth overseas of subscribers. And so our market data business is significantly based on our international customer base. And so seeing really good signs in APAC and EMEA of demand for market data, which typically then leads us to see transaction-based revenue to come at a later point in time. So I think in terms of pricing, we have already announced and did so in August about the price increases for next year of 3.5%. And that will be across many of our data products across the rack rates. So that will -- that change will take effect on January 1, 2026.

And Craig, just to emphasize on what Julie said, not maybe directly to your question, but when you look at the value of market data, especially CME's market data, what it can do to help some of our clients grow through risk management, through other protocols that they use our data for, it's very exciting about the growth of that business along with our product lines that are tradable. So we're excited by the growth of this business. And you got to remember, just 10, 12 years ago, we were charging 0 for market data. So we've come a long way growing this business, 15 years ago now. But we've come a long way growing this business. And again, I think it's been a very prudent strategy for us.

We also had a follow-up on BrokerTec Chicago to Simon's question. I was curious, where do you expect the volume mix to end up balancing or normalizing between BrokerTec Chicago and BrokerTec Secaucus. And I know we're very early innings here. I think you launched on October 6. But roughly what percent of the volumes have been from new clients to BrokerTec? You just highlighted that in Simon's question.

No, are you referencing Secaucus or Chicago or both or combined?

So the kind of 2-parter there, but what is the -- where do you think the mix ends up between BrokerTec Chicago and BrokerTec Secaucus like 80 -- 20-80...

Yes, I got it, Craig. Yes. Yes. Mike, do you want to -- I mean it's a speculative answer, but...

No, I appreciate the question, Craig. It's hard to say. It's been about 2 weeks since we launched BrokerTec Chicago. I think forecasting how volumes are going to be split or how volumes are going to look is very difficult. I do think you saw in the press release, dealers that are excited about the launch. We mentioned Morgan Stanley. We mentioned Citi. We mentioned JPMorgan. I think it's going to be dependent on market conditions. There could be times when people point to the Chicago club just because they might be trading a relative value strategy where the market might be a little quieter and they can trade in 16. I think people will continue to trade on the New York club, especially in terms of heightened volatility where they want to move large stacks of liquidity. So early days, hard to speculate, but we're excited to see it live. We're excited to have these products sit side-by-side with our core futures and options product, and we're excited to attract new clients to the venue. Like I said earlier, we've seen some new clients, who have never traded on BrokerTec trade on BrokerTec already. So we're excited about new client acquisition as well.

Our next question comes from Ashish Sabadra with RBC Capital Markets.

This is Will Qi, on for Ashish Sabadra. Maybe if you could just provide a little bit of commentary on RPC. I know there's a lot of moving parts there. But I think in the summary, you guys mentioned that it was kind of a lower proportion of micros and decreased volume tiering. Could you give us a sense of maybe the impacts of those 2 effects? And does the shift in micros have any shifts in retail trading behavior?

Lynne?

Yes. So where you're going to see the largest impact on the shift in micros, that's really going to impact the equity portion of our RPC. We saw kind of a similar contribution in metals from micros. So it's about 36% of micros volume. In equities, it went from 47% last quarter down to about 43% this quarter. So you saw an uplift in our equity RPC largely due to that shift from micros to ports full size in the mix. So it's hard to disaggregate entirely these shifts and which were the pieces that impacted that rise in RPC because it's going to get into not just that shift, but also the customer mix between member and nonmember.

Our final question comes from Michael Cyprys with Morgan Stanley.

I just wanted to ask about credit futures. I was hoping you could elaborate on the progress there, how you see the use cases versus other alternatives in the marketplace? And if you could elaborate on some of the steps that you're taking to broaden out user engagement in credit futures. And then more broadly, as you facilitate a stronger link between cash and futures markets and rates and FX, I guess, to what extent might connectivity with cash credit markets make sense to enhance client value and support growth?

Thanks, Mike. Mike Dennis...

Yes, Michael, it's a great question. I'll talk a little bit about credit futures and kind of some things we're thinking about in the cash markets. We highlighted a cash market initiative, BrokerTec Chicago. I'll ask Tim McCourt to talk about another cash market initiative we had this year, FX Spot+. For credit futures, we saw strong growth this quarter in credit futures. OI hit a record in September. The outreach with Julie's team, the CD&S team has been very strong. There is a great mix of clients that are reaching out to the CME, who are reaching out to, to talk about credit futures, many asset managers, hedge funds, banks and props. What we're hearing from the customer base is that our central limit order book for credit futures is very liquid and there's tight bid-ask spreads. And credit futures are just an extremely valuable product for the fixed income markets place because it allows asset managers greater flexibility in managing credit exposure. And these products are unique. We have margin offsets for treasury futures as well as S&P 500 futures. So we're excited to see this product growing and feedback from our clients has been very positive. We have about 300 sales opportunities in the pipeline for credit futures. So those 300 opportunities are across all different client types. It takes time for folks to onboard often for products, but we're very happy about the trajectory. And Tim, I don't know if you want to share a little bit on FX Spot+.

Sure. Thanks, Mike. I think the consistent theme that you've heard in our opening remarks is around continued product innovation and meeting customers where they are to make sure they have the risk management tools they need to access our markets and manage the risk. And I think certainly, credit futures is a great example of that. And another one we mentioned where it's really about bringing these markets together and offering new transactional handshakes to allow clients to access our market is FX Spot+. That is something we launched back in April. And since its launch, over 70 entities have traded on FX Spot+, including 40 banks, the majority of which have not previously interacted with the FX futures market. And as Terry mentioned, off to a great start, where we had a single day record of over $5.6 billion on September 11, and we've had single day volumes exceeding $5 billion for Spot+ over 4 days throughout September and continue to grow from here. And when you look at the innovations we've rolled out over CME, we continue to introduce new products, new offerings and combining cash and futures markets to make sure our clients can access all the liquidity that they need during these continued uncertain times when they might need it the most.

And Mike, I think it's interesting is when you look at the U.S. corporate or U.S. debt today at $37.5 trillion, $38 trillion going, god knows what. And that market versus the corporate market, people are deciding where they want to participate. They feel more comfortable in a corporate bond versus the U.S. government, okay, I'm not so sure they do. But because there's such leverage in both right now or such debt in both, it's a very interesting dynamic the way I look at it. So I think both of these different markets between the cash U.S. treasury market and the corporate or the credit markets will be very active over the next several years as we continue to go through these cycles of high valuations of corporation on the stock market and then the demand for people needing to sell debt. So it will be quite fascinating to see how this all plays out.

Thank you. I would like to hand the call back to management for closing remarks.

Well, thank you all very much. We appreciate your interest in CME, and have a great holiday season. Be safe. Thank you.

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