Welcome to the afternoon session of the 2025 Global Exchange and Trading Conference. I'm Patrick Moley, Senior Research Analyst covering the exchanges, brokers, and trading companies. It's a pleasure to welcome my next guest, CME Group Chairman and CEO Terry Duffy. CME is the largest futures exchange in the world. We always love having Terry here. Terry, thanks for joining us. Pat, thank you very much, buddy. Volumes at the CME have been off to a great start this year. The interest rate complex has been strong. Open interest is up significantly. I always love to get your thoughts on the macro picture. How are you feeling about the momentum you're seeing across the business? What are your broad market expectations as we head into the back half of the year? I think that when you look at the volumes over the last several years, they've been continuing to escalate. Again, we saw another record year in 2024, and then a huge first quarter. Again, we just announced in May another record month in May. The question is, macro, what does that mean as far as managing risk and what do people need to do? I hear from some folks that maybe the Trump tariff chasing is going to slow down to some degree. What does that mean for you? I hear other things that would maybe counter that. I meet with members of Congress, and I had one as a very senior member of the Senate in CME a couple of weeks ago. There is still a tremendous amount of concern about what is going on between Iran and what they are going to do or not do and what is going to happen with Israel. I do not think that that has anything to do with a tariff. That has a lot to do with human life and what the future is going to look like and how people are looking at managing those risks from a financial perspective, yet alone the God-forsaken risk of human life, which is the most important. There is also the aftermath of what it means to marketplaces. I think that is going to continue to be a part of it. Whether people are following the trade up and downs or not, I think is almost irrelevant because the world is a very dangerous place. You look at what's going on in Eastern Europe, and you had Zelensky doing some things offensively that people didn't think he could do. OK, what does that mean for that part of the world? You have Putin then sending some stuff over. He killed a few people yesterday, including a baby. What does that mean to the world? How do the people, how do they look at that? What does that mean from a risk perspective associated with that for markets as well? Again, human life is the most important thing. The reality is there's a cost to all this, too. How do you manage that? I think when you look at the macro events, I think it's a very frightening place. I think that the one that scares me just as much as anywhere else is in China, in China associated with Taiwan. I would hope that our country would figure out a way to get the semiconductor business back into the U.S., the pharmaceutical business back into the U.S. The U.S. consumer should pay for that. The taxpayer should pay for that and protect us. I do not think anybody on either side of the aisle after the pandemic or what they are seeing with the future of artificial intelligence and technology would argue that the United States of America should not have those facilities in here. The rest of the stuff on tariffs, I do not know. I do think there is a tremendous amount of risk out there, and people are getting very itchy. The thing that scares me the most right now, besides that, is also when you look at where Iran is at with their nuclear capabilities and what they're going to do. I'm very concerned about the Middle East right now, Patrick. I think there's a tremendous amount of risk out there. I don't see that changing. I think that the Trump tariff trade chasing is almost irrelevant to some part of it. I think the macro events are going to come on the roost. $37 trillion of debt in the United States going to a $2 trillion deficit. I don't know one Republican that wants to get in front of that freight train to stop it, where every single one of those people should be willing to stop it. If you sit down and talk with them, they're not going to, and they can't. What does that mean for the rest of us? How does that look for our debt? People say that the Chinese are liquidating their U.S. foreign sovereign debt. How to China? Yeah, how much are they buying out of their European entities coming out of Europe back into the U.S.? They haven't liquidated anything. They probably added to their positions and not liquidated their positions. It is kind of a strange phenomenon how things are working right now in the marketplaces. They are just different than they were six months ago. They are definitely different than they were six and 16 years ago. I think it is a fascinating place right now. You better be able to manage that risk. That is on the institutional side. I think retail is another big area of focus for you recently. When I have heard you speak, we have seen this resurgence in trading activity. Really, since COVID, you had retail go from cash equities. They moved on to options. It seems like now the next big frontier for retail is futures. Robinhood launched CME Futures recently. What role do you see retail playing in CME's growth going forward? How many of these partnerships do you think are out there from a retail brokerage perspective to where you can really cross-sell or sell those products into that channel? I think retail is going to change a lot of industries, not just the financial services. Retail has got something they have never had before. That is the technology. I mentioned it a moment ago, technology. If, in fact, artificial intelligence is becoming available to all of us, all you got to do is Google something on your phone. The first thing you're going to get is an artificial intelligence answer, whether it's right or not, pretty close to being right, most of them. We all have that information. The technology that the average retail participant has today is so much different than what they used to have before. The ebbs and flows of retail, where your retail comes in, you blow them out, then they're gone, then they got to replenish and come back. I think you're going to start to see more of a static line of retail because there's just more people participating in retail. Why do I say that? If you look at the proliferation of gaming or gambling online today, it's probably most of the people in this room have some kind of an app where they're doing something as it relates to some type of activity on a gaming app. A lot of people younger than the people in this room all have them. They're all learning the markets. The original market gaming apps were historically who wins, who loses. Now nobody even cares about who wins, who loses. They care about how many downs, how many rushes, how many passes, how many kicks, how many timeouts. Those are all called prop bets. If you look at prop bets and you look at trading, prop bets and trading are the same exact thing. People trading, they trade in, they trade out, they trade in, they trade out. That is exactly what they are doing in gaming today. These people, these younger people today are so sophisticated on the retail side, I think that you are going to start to see the divergence and collision of institutional and retail come together. You are not going to know it because they are going to have information that they never had before. I am going to give you an example. I traded on the trading floor back in 1981 until I took over in 2002. All the information came from trading floors and proliferated out to the public. The reason why trading floors went away, everybody thinks it was just because of electronic trading. It was because technology took the information from the outside. They got it first. Then the people on the trading floors were the last one to get the information. They got destroyed. That is really how the trading floors technically went away, the proliferation of information. Now the retail has that. They may not have the same capital as Citadel. I will tell you what, they are going to have the same type of information. I think the growth of retail is really exciting globally. I do not think you are going to see as many ebbs and flows in retail as you have historically. You are going to start to see more of a constant. They are going to be a participant for many, many years to come and grow. Yeah, they've been pretty resilient this year, which I think has surprised a lot of people with the volatility. I think it goes to the information they have. Another thing, retail, or at least in the CFTC regulated contract space, event contracts are starting to grow in popularity. You have a smaller event contract offering. What do you think of event contracts? What role could they potentially play in CME's future growth and exposure to retail? I'll go back to what I said. I'm going to go. I think we have event contracts that we are offering to the wrong constituency of clients today. You might think, did he just say something derogatory about his own business? No, I'm just saying something very honest. I think that when you look at the event contracts, the way they're structured, they're structured not for the most sophisticated users of markets, such as what you referenced earlier, I'll call Robinhood plus 500s, some of these other big retail firms, or the institutional participants. They do not want those contracts. They could trade other things. Event contracts are truly a retail-based contract. When I talk about retail, I'm talking about the everyday retail participant, the gamers, and things of that nature. I think you need to offer them up to that type of a constituency for those contracts to be successful. I think it's an interesting concept. I think you have to make sure you have the right audience in place in order to make them successful. Otherwise, they're just going to go to trade margin products that do the same exact thing on their terms, not on the event terms. Moving on, international growth, your AV overseas has been pretty outstanding, 19% year over year in the first quarter, 8.8 million contracts. You're seeing strong growth there. Is it mostly just the macro backdrop driving this and the need for these international players to hedge? What other sorts of things have you been doing to drive growth internationally? I think both. I think we've always had a decent business internationally. And it has grown. It's grown with the overall growth of the company, too. You could just say the market's gotten bigger, and the international has benefited from that. Or you could say some of the things that you have done internally have helped spark that growth. It's a combination of both. There's no question when the tide goes up, all boats can rise. The markets have gotten bigger. The volumes have gotten bigger. International volumes have coincided and gone along with it. We've also done a lot of other things. Historically, we never had much of a sales force. I think we had 10 people selling our products back in 2008. Now we have hundreds. We have people educating people all over the world about what we can do to help manage and mitigate risk. We do not just do that in New York, Chicago, Los Angeles. We do it globally. I think that has sparked a lot of our user base to understand what our products are for. You mentioned it in your comments at the outset where you said retail was at this level, then they went to Cboe, now they are finding futures. We have been doing that with our international business historically over the last several years. We have really pushed on the sales effort, the efficiency effort, the data efforts that we have done here in the States globally. It is paying dividends for us, Patrick. Crypto is a pretty hot topic right now. I don't think people fully understand that you're one of the leading Crypto firms globally when it comes to derivatives. It does seem like competition is increasing as people started to dip a toe into the water in crypto. How do you feel about your digital asset presence today? Do you think there's more you can be doing? How do you see it evolving over time? You know. I think Crypto, like a lot of things in life, is all about timing. When I listed Crypto in 2017, people came to me for years prior to that and said, we got to list Crypto. We got to list Crypto. I said, no, no, and no. I called some folks into my office one day in April of 2017. I said, we're listing Crypto. Let's do it tomorrow. It's about timing. I think you have to be very conscious of that, who's ready, who's not ready for it. I'm not saying 2017 was the year everybody was ready for it. I even had calls from some of my biggest FCMs saying, if you list this, the only way I can offer it is if people are long. I won't be able to offer them a two-sided market because they could destroy us. That is the stupidest thing I have ever heard in my life. That is some of the things that you heard. You have to understand who your constituents, your FCMs, are, Futures Commission Merchants, and see how they feel about certain products. I am a huge believer that Crypto needs that ultimate use case that has not been seen yet for the masses. I am also a huge believer that it is not going away. I do not get fixated on the price like everybody else. I think that is where people miss the boat. They get fixated on the value of the Crypto versus what is the use case for the Crypto. That, to me, is the true value of a Crypto. I think that is continuing to be worked out. I think one of the things that could really accelerate that is the acceptance of non-tradable USD pegged stablecoins. Once these stablecoins get more into circulation using the blockchain network and then also associating some Bitcoin or other cryptocurrencies with them, you'll start to see more of an acceptance going along with it. The friction that some of the fiat currencies have today, some of the friction in the marketplaces have today, we need to eliminate that and create efficiencies. This is a way to do it. I am cautiously optimistic about the ultimate use case for Crypto. Until we can walk outside and just literally seamlessly use it like we do credit cards, debit cards, and cash, even cash has become almost nonexistent. I was going to the bathroom a minute ago. I think I dropped $5,000 out of my pocket. Nobody picked it up. I wish I would have been there. Nobody knew what it was. What's that? Dr. Kleineck, sir. OK, thank you. In the past, you've married derivatives markets and spot markets. Do you think it would ever make sense in the future where you marry spot Crypto market with the derivatives market that you have? I don't know if it would make sense or not. I don't think you should ever draw a conclusion that you would or would not do something. I think you have to see how it evolves. When you're looking at the spot markets today, how they trade versus the derivatives and how they trade, I guess I would look at it the same way I do the United States Treasury market. The United States Treasury market does not have a forward market. It's a cash market where you cannot manage future risk. You have to use the futures market to do that. Has Crypto fallen into that same realm where the spot becomes very important for that given moment in time? The forward market helps you manage and mitigate risk for your uses for that product down the line. The question is, what's our use for that product down the line other than the value of the coin? Right now, it's only the value of the coin. Yeah, so it'd be difficult to say, to give you a definite answer, yes or no. Yeah. Sticking with the tokenization theme, you recently announced that you were piloting solutions for wholesale payments and tokenization on the Google Cloud Universal Ledger. Can you talk about your efforts there and what adoption's looked like and what you think that'll bring? Yeah, I'm excited by this. This is something I've been personally involved with. I like it a lot. I think, again, I'm all about how do I create efficiencies and eliminate friction. I have a saying that I need to take a dollar, make it look like $5, and take the risk to $0.75. I actually think that we can do that through some of our efforts. Like I always tell people, if we took a dollar and we passed it around this room, by the time it got back to you and I, Patrick, it could be worth about $0.03, right? Because we all took something off it. We have to figure out ways to create the push dollar around the room. Everybody can benefit. It still comes back to us at a dollar. That is how I look at some of these stablecoins and some of the other tools that are out there to help manage risk and mitigate it and to make it more efficient. I am excited by this. At the same time, like Bitcoin, I will not rush into it. I will do it properly. I had the pleasure of sitting with French Hill, who is the Chairman of the House Financial Services Committee, in my office the other day. We were talking about stablecoins. You know, there is legislation coming out in Washington. Just thinking about that, and one of the things he said to me, and I do not think he said it where I cannot repeat it, he says, this has to be done right the first time. I said, you are absolutely correct. Because if this is not done right the first time, it'll be one step forward, 40 steps backwards. With anything new like this, that's what could potentially happen. I told him that I thought that maybe systemically important banks should be able to issue stablecoins, systemically important institutions. I told him, I mean, listen, I'm a stiff move myself. Would that benefit us? Maybe, maybe not. I don't know. I think that you have to be careful how you go forward with these stablecoins and how they are overseen. They have a potential to do a lot of good. Switching gears, last year, one of the big topics of conversation was the competitive landscape in the interest rate complex. FMX as a challenger emerged. They launched Treasury Futures for the first time a few weeks ago. I have not seen much in terms of volume. I personally do not get as many questions as I did a year ago. It has been on the decline. How do you feel about just the overall competitive landscape in rates and this competitor specifically? Do you feel better about it? Do you feel worse about it? How do you think? I feel the same, Patrick, to be honest with you. I take every competitor very seriously. I will go back to the theme that I have answered almost every one of your questions with, is I look to figure out ways to create efficiencies, understanding that we live in a very competitive, dynamic world. People are going to constantly look to compete with whatever you have. I believe in innovation and looking at that. I think when you look at what we have been able to accomplish just over the last several years, my rate complex alone, I save $25 billion a day to the largest participants every single day in efficiencies for that Treasury and SOFR market. When you look at the rest of CME's asset classes, we are up to $60 billion a day in efficiencies for our clients. It is a very difficult proposition to replicate. I'm not saying you can't try. It takes a lot of work. You can't do it overnight. This is something that we've been working on, creating efficiencies between portfolio margin, cross-margining with FICC, and margining against our own products. This is a very big benefit to the end user. I know that some have said historically that LCH's swap book is bigger than CME's, which falls under the NS no shit category. I understand that. I know that. At the same time, when you look at futures and you look at the offsets against futures, our swap book offers the same amount that anybody around the world can offer today as far as the offsets go. The only way you can use LCH's swap book to make it bigger than what we have today is to grow your futures book, not your swap book. Our swap book is big enough today to give the offsets to the clients because of our futures portfolio. Meaning, if you are going to compete with me on offsets, you cannot just tell me that because they have 90% of the swaps book and I have 10% of USD swap book, they are going to do better. Wrong. That 10% is already giving the efficiencies against the futures market. The futures market would have to grow in order to make that philosophy or make that math work. It is what it is right now. We have been able to grow it. When we grow it, we get more swaps business. That is the way it looks. It's a very dynamic marketplace. We're excited by it. Listen, when there's $37 trillion of outstanding debt today in the United States, $28 trillion in US Treasuries going to a $2 trillion a year deficit spend, interest rates are going to bounce around no matter what. We think it's a marketplace that we want to be able to manage and mitigate risk. Futures, as we all know, settle into cash Treasuries. They don't settle into a synthetic of another product like a swap does. A swap is a cash-settled product, and it's a fixed versus floating. US Treasury futures settle into US Treasury cash. I think that's very important. I think our government understands that. We need to make sure we run a very efficient marketplace. We also understand that people want to compete with that. All right. With the time we have left, I got two quick questions for you. The first is on M&A. Your stock's trading at near all-time highs. You have very low leverage. What's the appetite for M&A like today? Is there anything out there that interests you? If you look across the business, where do you think M&A could be most impactful? Again, I'll be cautious in what I say. I think my record speaks for itself. I've been very strategic on what we want to do for M&A. When I did the Chicago Board of Trade and the New York Mercantile Exchange along with COMEX, I thought that was critically important to the future of our industry. It has been. I tell people all the time, if we didn't do those transactions, we wouldn't be sitting in this room today as a standalone company as the Chicago Mercantile Exchange. Because of that, we are the CME Group. It's benefited us immensely. I think that M&A is something that, first of all, cross-border M&A is something very difficult to get done. If you're going to stay in your vertical of an exchange, M&A, that's pretty hard to do. What's left here in the U.S. is pretty de minimis. You would have to look at things that you think can benefit your shareholders, first and foremost. I guess I should say, first and foremost, you have to do things that will benefit your users. If your users can benefit, your shareholders will benefit. That's how I look at M&A. Right now, when I did the deal with Nex, I still think that that transaction was a good one. We've taken a lot of that broker tech business and we've transacted it into futures. We've transitioned it into futures, I should say. We've futurized that business, which has helped grow our Treasury complex immensely. The EBS business is doing better. We just announced the optimization business, as you've all seen with our deal, to spin that out to BRK. We're excited by what we've been able to do. I think when you look at the transaction we did with Google, where they took a $1 billion stake in CME Group to help us develop the next leg of technology, I think if you look at proprietary technology, especially in exchanges, you're going to try to keep up with what's next is massively expensive. If you don't have a good, strong partnership with one of these big cloud providers, I think you're going to be left out. For us, I think it's pretty exciting for that. I'm not opposed to doing an M&A transaction. I just haven't seen something that makes sense for my users, most importantly, which in return would benefit my shareholders. When I find that, I won't be shy. It'll be well thought out. Sure. All right. So last question. Right now, Terry, your contract with CME extends through the end of 2026. Do you have any potential succession plans at the end of that contract? Or do you think you'll stick around? I don't know. As far as potential successors, I have a great team. I really like my team a lot. I've made some changes over the years to my team. I think we're all rowing in the same direction. I think that's important, especially on some of the topics I touched on today. I'm not a kid. I'm 66. I've been doing this a long time. I still feel like I have a lot in the tank. At the same time, I want to make sure that I have the pieces of CME in place for the next generation to take over and continue it to grow. I should just quietly walk away and say thank you very much. CME, hopefully, will say thank you to me. That's the way it should be. I have to get to that point. I'm not there yet with my board. I'm not there to see where we're going to be at as far as succession goes. Someone said to me the other day, they said, how do you feel about retirement? I said, you know, it's a strange question. I've given it some thought. I said, I know a lot of people that the day they retire, they walk out the door as the worst day of their life. I know the same person, if you put them back in that office and say, you're going to stay another two years, they say, that's the worst day of their life. It's a very, very difficult situation that you're in, especially with me being in this industry for 42 years now, coming in as a young kid, as a young trader back in 1980, and becoming a member in 1981. It's been an amazing place. I want to make sure that I do the right things on behalf of the company. I think I owe that to the company. The next year will be very important for the succession of CME. It has to come to that point. I've got good, strong people there and a good board that understands that. Great. All right, Terry. That's all the time we have. But thank you so much. Thank you, Patrick. I felt like I was in a lightning round there. Yeah. Thank you, folks. We squeezed a lot in.