CME Group (CME) Q4 2025 Earnings Call Transcript

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DATE

Feb. 4, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Terrence Duffy
• Chief Financial Officer — Lynne Fitzpatrick
• Global Head of Commodities and Options Products — Derek Sammann
• Global Head of Equity and FX Products — Tim McCourt
• Chief Commercial Officer — Julie Winkler
• President, CME Clearing and Global Head of Clearing & Post-Trade Services — Sunil Cutinho

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TAKEAWAYS

• Average Daily Volume -- 28.1 million contracts for the year, representing 6% growth, with all-time records across interest rate, energy, metals, agricultural, and crypto product lines.
• International Volume -- 8.4 million contracts per day, up 8%, establishing a new record for the global business.
• Margin Savings -- Customers realized average daily margin savings of $80 billion during the quarter, an increase of approximately $20 billion compared to the previous year.
• Revenue -- $6.5 billion for the year, delivering 6% growth, with five of six asset classes reaching annual revenue records.
• Market Data Revenue -- Surpassed $800 million for the first time, increasing 13%, and Q4 market data revenue rose 15% to $208 million.
• Adjusted Operating Margin -- 69.4% for the year, up 110 basis points, with Q4 margin at 67%.
• Adjusted Net Income -- $4.1 billion full year and $1 billion in Q4, supporting 9% annual and 10% Q4 earnings per share growth to $2.77 per share in the quarter.
• Micro Products Growth -- Q4 micro contract volume increased 59% to a record 4.4 million contracts per day.
• Cryptocurrency Complex -- Q4 average daily volume reached 379,000 contracts, rising 92% and exceeding $13 billion notional per day; new futures offerings and 24/7 trading capability announced.
• Retail Event Contracts Launch -- More than 68 million event contracts traded in the first six weeks post-launch, including over 7 million contracts tied to markets.
• Transaction and Market Data Fee Adjustments -- Effective April 1 and January 1, respectively; combined revenue impact estimated at 1%-1.5% growth on comparable activity.
• Share Repurchases and Dividends -- $256 million in Q4 share buybacks, $276 million additional in early 2026, and $3.9 billion in annual dividends paid.
• Cloud Migration Spend -- $29 million incurred in Q4, $100 million for the full year, with tech-related expenses integrated into 2026 guidance.
• 2026 Expense and Capex Guidance -- Adjusted operating expenses (excluding license fees) projected at $1.695 billion; capital expenditures expected at $85 million.
• Clearing Initiatives -- SEC approval obtained for CME Securities Clearing, with launch planned before new US treasury clearing mandates; extension of CME fixed income cross-margining to end-users targeted for early 2026.
• Capital Return Strategy -- Austria proceeds allocated toward ongoing share repurchases as approved by the board.

SUMMARY

CME Group (NASDAQ:CME) set all-time annual records in average daily volume and revenue while expanding its trading leadership in major asset classes, notably in interest rates, energy, metals, agricultural commodities, and cryptocurrencies. The company launched new products, including retail-focused micro and event contracts, and advanced its digital asset suite with upcoming 24/7 trading. Management implemented fee changes across select markets and data services, forecasting total revenue to increase by approximately 1% to 1.5% on similar activity to 2025. Guidance for 2026 incorporates increased investment in product development, technology migration, and planned capital expenditures. The board approved repurposing Austria sale proceeds for share buybacks, and dividend policy alignment was confirmed. Recent regulatory approvals enable expansion into securities clearing and further cross-margining programs, deepening client capital efficiencies and supporting growth in collateral offset initiatives. The migration to Google Cloud is progressing on schedule, with major non-ultra-low latency transitions completing soon and testing for ultra-low latency solutions planned for 2027.

• The executive team cited expanding engagement and new institutional participation in the event/prediction market ecosystem. According to Tim McCourt, "We are working with our other 120 to 130 retail distribution partners to understand what it will take for them to be ready to offer this contract. We did turn these contracts on back in December, so we still are early days in working with those partners and making sure they have the technological capabilities to connect, offer, and the front end they need to offer these types of swap-based and futures-based event contracts to their participants. I would characterize that pipeline as robust, and we are actively engaged with continuing to onboard those participants."
• The company confirmed transaction fee changes will no longer cluster annually in December, instead moving to a real-time, client- and value-driven approach.
• Julie Winkler stated, "Our nonrecurring revenue items like the audit and the cash payments were actually lower than the previous quarters, which demonstrates that our core subscription revenue is accelerating. Our growth drivers are balanced across three main pillars. We saw 50% of this revenue growth coming from new user expansion. We have been successful in monetizing both the retail growth as well as institutional participation in our data products. The second pillar is around 25% of our growth being driven by product innovation. Our ability to deliver new datasets and new cloud-based delivery models is helping us create more sticky recurring revenue. Lastly, pricing integrity is the remaining 25% of our growth in revenue, where we are able to capture the value of CME data, particularly given our strong benchmark products and liquid products. These have become the golden source for futures and options and are a huge contributor to that record revenue this year."
• Management stated that savings from the FICC cross-margining program reached $1.5 billion for participating firms, with total interest rate margin offsets equaling $25 billion daily including cross-margining and portfolio offsets.
• Expansion into securities clearing was enabled by SEC approval, timed to precede new US treasury clearing mandates coming later in the year.

INDUSTRY GLOSSARY

• Event Contracts: Short-duration derivatives based on the outcome of specific market or non-market events, including financial indices, economic indicators, or sports results.
• Cross-Margining: A process allowing clearing participants to offset margin requirements across different product classes or clearinghouses, reducing collateral needs and increasing capital efficiency.
• Rack Rate: The standard published fee for a service, such as market data, before the application of discounts or incentive program adjustments.
• FICC: Fixed Income Clearing Corporation — provides clearing and settlement for fixed income products and is a key participant in cross-margining initiatives with CME Group.
• Notional Value: The total underlying value of a derivatives contract, used to describe the scale of trading activity in contracts such as futures or options.

Full Conference Call Transcript

Terrence Duffy: Thanks, Adam, and thank you all for joining us this morning. I will keep my opening remarks brief to highlight what was quite simply the most successful year in CME Group's history. Following that, Lynne will provide an overview of our financial results and our 2026 guidance. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks. 2025 marked our fifth consecutive year of record volume with average daily volume increasing 6% to 28.1 million contracts. This growth was broad-based, including all-time records in our interest rate, energy, metals, agricultural, and crypto complexes.

It was also a record year for our international business, which averaged 8.4 million contracts per day, up 8% from the previous record set in 2024. Global participants continue to choose the deep and liquid markets at CME Group to manage their risk. In addition to our record volume results, we continue to deliver unmatched capital efficiencies for our customers. In the most recent quarter, our customers' average daily margin savings reached $80 billion across all six asset classes, representing an increase of approximately $20 billion over the past year. The ability to offset margin across asset classes is not just a nice benefit; it is a necessity for our clients.

Due to the diversity of our asset classes, this offering is a unique benefit for our market participants. In December, we received approval from the US Securities and Exchange Commission for CME Securities Clearing. We are on track to launch this new clearinghouse later this year in advance of the SEC's US treasury clearing mandate. This, combined with our work to extend CME fixed cross-margining to end-user clients early in 2026, will unlock even more capital efficiencies for the industry. Innovation continues to accelerate our growth, and in Q4, we expanded our retail footprint through the launch of event contracts on financial and commodity products, economic indicators, and sports.

This initiative represents the next step in our multi-year strategy to expand our customer base by providing greater access to markets for the next generation of traders. While still early days, these products are delivering promising initial results and generated traction with a previously untapped customer segment. Over 68 million of these event contracts have traded in the six weeks since launch, including over 7 million markets-related contracts. Our retail-focused products also drove strong performance in 2025, with micro products up 59% in Q4 to a record 4.4 million contracts per day. The one-ounce gold contract that we launched last year has been successful, with Q4 volume of 66,000 per day.

Next week, we will be launching a 100-ounce silver contract, which will help the retail community manage exposure or invest in that commodity at a time when the precious metals markets are very active. Finally, in 2025, it was a record-breaking year for CME cryptocurrency trading at CME Group. In the fourth quarter, average daily volume across the complex of 379,000 was up 92% and represented over $13 billion in notional value traded per day. This strength has continued into 2026, and next week, we will be expanding our cryptocurrency offering with the launch of Cardano, Chainlink, and Stellar Futures on February 9.

We will begin offering 24/7 trading for our entire crypto suite next quarter to enable our customers to hedge exposure to the underlying cash markets for these products, which currently trade throughout the weekend. As markets continue to evolve, we will strategically evaluate whether other asset classes would also benefit from 24/7 trading. We have carried the momentum from a record-setting year into 2026 with new volume records in January. While the macro landscape grows increasingly complex, we remain focused on providing the premier risk management tools our clients need to navigate market shifts. With that, I will turn the call over to Lynne to review the financial results in more detail.

Lynne Fitzpatrick: Thanks, Terry, and thank you all for joining us this morning. In addition to the volume records Terry discussed, we delivered our fourth consecutive year of record revenues and adjusted net income in 2025. Our revenue of $6.5 billion grew 6% compared to 2024 and included annual revenue records in five out of our six asset classes. Our market data revenue surpassed $800 million for the first time, up 13% from 2024. Adjusted annual expenses, excluding license fees, were approximately $1.625 billion, and our adjusted operating margin for the year was 69.4%, up 110 basis points from 2024. We delivered $4.1 billion in adjusted net income, resulting in 9% adjusted earnings per share growth for the year.

During the fourth quarter, CME Group generated revenue of $1.65 billion, an 8% increase from Q4 2024. The average rate per contract for the quarter was $0.707, driving clearing and transaction fees of $1.3 billion, up 8% from last year. Market data reached a new record level, up 15% to $208 million. Adjusted expenses were $543 million for the quarter and $447 million excluding license fees. Our adjusted operating income was $1.1 billion, or a 67% operating margin for the quarter. CME Group had an adjusted effective tax rate of 23.7%. Adjusted net income and adjusted diluted earnings per share came in at $1 billion, or $2.77 per share, 10% higher than Q4 2024.

Cash at the end of the quarter was approximately $4.6 billion, including $1.3 billion in remaining Austria proceeds. Our board has approved the use of these proceeds towards share repurchases over time. We repurchased $256 million in shares during the fourth quarter and an additional $276 million in shares thus far in 2026. CME Group paid dividends of $455 million in the fourth quarter and approximately $3.9 billion in 2025. As announced last year, the annual variable dividend declaration and payment dates have been aligned with our Q1 regular dividend and will be declared next week. Earlier this week, we published transaction fee changes, which will be effective April 1.

Taken in aggregate with the market data fee change, which took effect January 1, and incentive program revisions, the fee adjustments would increase total revenue by approximately 1% to 1.5% on similar activity to 2025. We will be evaluating transaction fees on a regular basis going forward and may make changes as conditions warrant versus aggregating in December as in past years. For 2026 guidance, we expect total adjusted operating expenses, excluding license fees, to be approximately $1.695 billion. This includes our typical core expense growth, as well as reinvestment related to the new initiatives ramping up this year, including 24/7 crypto trading, securities clearing, and event contracts.

We are dedicated to continuously evolving our product set and offering, a commitment that requires strategic investment for growth. Total capital expenditures are expected to be approximately $85 million, and the adjusted effective tax rate should come in between 23.5% and 24.5%. We are proud of the record-breaking results the firm has delivered this year, driving 6% revenue growth and 9% adjusted earnings growth on top of the record set in 2024. We are encouraged by the strong activity to date in 2026 and remain focused on helping our clients navigate this complex environment. We would now like to open up the call for your questions.

Operator: Thank you. At this time, we will now begin the question and answer session. If you would like to ask a question, please first unmute your phone and then press star 1. At any time, if you wish to remove your question, you can press star 2 to remove yourself from the question queue. One moment, please, for our first question. The first question will come from Dan Fannon of Jefferies. Your line is open.

Dan Fannon: Thanks. Good morning. I wanted to talk about just the current environment and activity, the health of your customer base in aggregate as well. Just given some of the volatility, you guys have raised margin requirements, I think, in the metals complex a few times. We have seen really large swings in the underlying. So hoping just to get a little bit more context around how you think the customer base is performing through these kind of elevated periods of volatility.

Terrence Duffy: Yeah. That is Terry Duffy. Thank you for your question. And I think there are a couple of interesting examples of how the customer is looking at it. One can be a reflection of open positions, as we talk about constantly with the analysts, investors, and others. I think we are sitting around 125 million open positions today, but let's specifically talk about one product which you mentioned, which is silver. Now I will let Derek chime in. But when we change the margins on silver, some thought that the market would sell off. We went to a notional margin regime because of the activity related to silver and just on that particular product.

That did not affect the customer base or the product at all because it went and made a new historic high, not went down the other way. So I would say the customer is healthy because of the market direction at which it went, which would tell you that some of the retail participants, which are traditionally long people, and others set new highs in lieu of the way the margins were going forward. So I would say, overall, the customer is very healthy throughout all the different asset classes, but I wanted to call out your example of silver. Do you want to add to that, Derek?

Derek Sammann: Yeah. I think Terry made some good points there. I mean, the important part about the health of that market right now is we are seeing all our client segments grow. Yes, retail is growing, but our institutional base is growing double digits right now. I think, Dan, you also look at the quality of the market in terms of open interest. Open interest is steady to increasing. We are seeing volume increases across all regions as well as futures and options. So these are indicators of a risk-on environment. I think price up and price down, but we are seeing a healthy ecosystem.

I think risk management is one of the reasons why customers choose an institutional customer specifically to do their business at CME Group.

Dan Fannon: Great. Appreciate the comments.

Operator: Thanks, Dan. The next question will come from Patrick Molley of Piper Sandler. Your line is open, sir.

Patrick Molley: Yes, good morning. Thanks for taking the question. And congrats on the launch of the prediction market offering and the JV with FanDuel. I was hoping you could talk about what you have seen to date in terms of engagement and inbounds from market makers and institutions looking at the prediction market space, both in sports and non-sport contracts. As a second part to that, Terry, I would love to get your updated thoughts just on the legal and regulatory landscape around prediction markets and some of the comments that have come out of the CFTC recently kind of pledging to create clear rules of the road and defend their jurisdiction there.

Terrence Duffy: Thanks, Patrick. I am going to ask Tim to touch a little bit on the market makers as it relates to the prediction markets in sports and the other things you referenced. I will touch on the legal and the regulatory. I just met with the new chairman of the CFTC, which I will update you on, but I will let Tim go first.

Tim McCourt: Thanks, Terry, and thanks, Patrick, for the question. I think what has been interesting as we have launched the prediction markets at CME Group, we have not only seen new individual participants come to our market as we look to attract that next generation of traders and get more people to trade all products at CME Group across the traditional markets, futures-based event contracts, or sports, we are also seeing new institutional and market makers reach out to CME Group that are new to CME Group. So I think when we look at the innovation of the product design, we are pulling market participants from other parts of the ecosystem.

They may be more traditionally sports-based, and they are also coming to our market to reach out how they could market make the event contracts at CME Group. How they can take advantage of the liquidity that is existing at CME Group. Early days here since we launched in December. We have been pleased with not only the market maker performance that we have seen on screen in providing liquidity to the marketplace, but the number of clients and new clients reaching out, asking how they can get involved.

That is a great thing to see for a new market, but also great to see new participants being attracted to our long-standing benchmark products and market at CME Group as well.

Terrence Duffy: So, Patrick, on the regulatory and legal side of this, first, I will touch on the legal side. The last thing I am going to have CME Group do is get tied up in a bunch of legal battles and court over sports. That is not traditionally our business. We are very focused on the market side of this. We have a great relationship with FanDuel. They are in the sports business. They are an online gaming company, as you know. So we thought it was a good marriage.

We still believe it is a massively good marriage to distribute our product through FanDuel and touch a whole new customer base to trade our products, which I outlined in my opening remarks about the number of contracts that are being traded on markets, not sports. So I think that is a very healthy sign for that particular marketplace. So I really do not want to get involved in the legal battles in court between the states, the tribes, the casinos, and others about whether it is gaming or not. I think that is not our fight.

So on the regulatory side, I will tell you that I believe that the CFTC looks at these contracts as swaps, as you know, and they are very much wanting to regulate that. I did meet with Chairman Selig. He felt very passionate about that. I will not say passionate; it is my word, not his. I would say that he is committed to overseeing this product. And I do believe he thinks that they are legal swaps under the CFTC's regulation. So that is what I can tell you today. But, again, let me emphasize this. We are not going to get bogged down in a bunch of litigation over whether this is sports gambling or swaps markets.

Today, they are called swaps markets, which we participate in, and we will do so. If, in fact, there is some litigation that we do not like, we will not pursue that particular asset class and tie up our shareholders and others in court cases over this because I think there are enough people in that fight. But we will remain in the business as long as it is overseen by the Commodity Futures Trading Commission and they deem it to be a legal swap.

Patrick Molley: Great. Thank you both.

Operator: Thank you. The next question will come from Benjamin Budish of Barclays. Your line is open, sir.

Benjamin Budish: Hi. Good morning, thank you for taking the question. I was wondering if you could address the pricing changes made. I think there was an announcement quite recently. I know market data pricing went into effect earlier in the year. Just curious if there are any other puts and takes by asset class. Obviously, your release, we saw that the rates asset class is not seeing any other changes, but just curious if there is any other context, anything else you could share around the thought process for this year. Thank you.

Terrence Duffy: Yeah. Ben, thank you. I am going to ask Julie Winkler, chief commercial officer, to comment on the market data, not only the pricing but the business itself, which gives her an opportunity to talk about the exciting aspects. It is a really important component to CME, and then Lynne can address the other part of your question.

Julie Winkler: Sure. Yeah. Thanks for your question, Benjamin. We did, on January 1, institute a 3.5% rack rate increase across most of our market data products. And, you know, this was really a continuation of our price-to-value adjustments, you know, in ensuring that our data business certainly remains resilient, and we have proven given the record, $800 million in annual revenue that was referenced earlier in our call. This marks the thirty-first consecutive quarter of growth for our data business. So Q4, we saw revenue up 15% to $208 million. And just to dig into that a little bit more, talking about the quality of that growth.

So our nonrecurring revenue items like the audit and the cash payments were actually lower than the previous quarters, which really just demonstrates that our core subscription revenue is accelerating. And our growth drivers are really kind of balanced across three main pillars. We saw 50% of this revenue growth coming from new user expansion. And we have been successful in really monetizing both the retail growth that you heard us reference as well as institutional participation in our data products. The second pillar is really around 25% of our growth being driven by product innovation. So our ability to deliver new datasets, our new cloud-based delivery models, are really helping us to create more sticky recurring revenue.

And lastly is that pricing integrity that I referenced earlier, the remaining 25% of our growth in revenue, where we are able to really capture the value of CME data, particularly given our strong benchmark products and liquid products. These really have become the golden source for futures and options and are a huge contributor to that record revenue that we saw this year.

Lynne Fitzpatrick: Yes. So, Ben, when it comes to the transaction fee changes that we announced, the most impacted for those fee changes would be in the metals complex, particularly around precious metals and the micro complex as well. We also had some changes on the crude oil side. And finally, in the grains complex, I would say those are the three areas you will see the most meaningful impact. You did mention rates, though. One thing to keep in mind, those changes that you saw in that announcement were related to the rack rate fee schedule changes. We also are always looking at our incentive programs.

We did make some changes in various programs, including some incentive programs related to the rates complex. We felt those were more appropriate than needing to change the fee schedule rates at this point. So overall, this increase is similar to what we have seen in the past years. One other last note, I did mention this in the opening remarks, but we are going to move away from consolidating these types of transaction fee changes in the December time frame. With the number of new initiatives we have launching and the like, we want to make sure that we are being thoughtful in when we are making these changes.

So we may do them at different times during the year versus that consolidated change in the December time frame going forward.

Benjamin Budish: Okay. Very helpful. Thank you both.

Operator: Thank you. The next question will come from Craig Siegenthaler of Bank of America. Your line is open.

Craig Siegenthaler: Thanks. Good morning, everyone. So we have a follow-up question to Ben's last question on your pricing strategy. We are all programmed to look for an announcement in Q4 and see the changes in Q1. But going forward, it looks like we are not going to get that same pattern from the CME. So curious what drove the change, and does this mean that increases will be smaller in the future? Because I thought the old method worked pretty well, and it provided transparency into CME's long-term revenue growth rate.

Terrence Duffy: Yeah. Craig, it is Terry Duffy. Listen. We think that we need to do pricing changes as we continue to deliver value, and we do not necessarily need to do that in December every year. And so we make changes based on how we are running the business and how we think we can continue to grow that business and where the value is added. So that comes in different parts of the year. Some increases may be smaller. Some increases may be larger. Some may not be there at all. I think what you are hearing us say is we are running this business on a real-time basis.

And we are going to continue to do what is in the best interest of our clients and our shareholders going forward to grow the business. So I do not think there is a pattern that we need to follow in order to facilitate pricing moves one way or another. Thank you.

Operator: You are welcome. The next question will come from Brian Bedell of Deutsche Bank. Great. Thanks. Good morning, folks. Thanks for taking the question. Maybe just back to prediction markets. Can you talk about conversations that you are having with other distribution partners? I think you have got a total of about 130 retail partners all in. Maybe just characterize the interest from other potential partners to engage with prediction markets, other retail partners to engage with prediction markets on the CME platform? And then also, how you are thinking about future product rollout, the potential to really broaden the range of the types of contracts.

I know you do not want to get into, obviously, political or culture, but more deeply into, say, financial and company-specific KPIs, something along the lines of fundamental investing, whether you are seeing any demand for that or there is any interest in launching those types of contracts?

Terrence Duffy: Thanks, Brian. Touch on a couple of things. You did say something. I am going to turn it to Tim McCourt in a second, but you touched on political. We are not suggesting that we would not list political contracts. We are suggesting that we would not list certain political contracts, and I think there is a big difference there. When you have a presidential election or who is going to potentially win the house or the senate, those are large contracts that are very diverse in nature that multiple participants can take an opinion on versus maybe a small congressional race in a district or a state race or something like that.

Those are ones we want to stay away from. But the larger ones, we are not suggesting that we would not take a look at them. I just want to make sure you understand that we are looking at some of the political contracts on the larger scale, not the smaller scale. On the culture ones, those are a little bit different depending on how you define what the culture of the prediction is. So I would have to see what is being referred to as.

If it is around some of the award shows and things like that, entertainment, you know, some of those are a little I do not know if I want to get too much involved in those, but the political contracts on the larger scale are fine. There are some unique business contracts that we talk about PPI, CPI, things like that where we are already doing. Tim?

Tim McCourt: Thanks, Terry. And Brian, thanks for the question. You know, we do have a few current distribution partners also live where Terry had mentioned The FanDuel Predict app is up and running. We also have DraftKings predictions that are connected. We have a handful of other distribution platforms also offering our event contracts across all the types of products that we have. The traditional futures-based markets, economic indicators, cryptocurrency, as well as the sports-based event contracts. We are working with our other 120 to 130 retail distribution partners to understand what it will take for them to be ready to offer this contract.

We did turn these contracts on back in December, so we still are early days in working with those partners and making sure they have the technological capabilities to connect, offer, and the front end they need to offer these types of swap-based and futures-based event contracts to their participants. I would characterize that pipeline as robust, and we are actively engaged with continuing to onboard those participants. Just to further Terry's comments about the future product pipeline at CME Group, this is something that we approach in a similar way to all of our product development.

We will continue to listen to the marketplace, our clients, our distribution partners, and our market makers and liquidity providers to figure out what does make sense in terms of rounding out the event contract offering. But it is important to us that this is more than just the trade of the day or what might be happening in the marketplace. We are really focused on getting these new users to our markets and into the known risk-based contracts of events as a way they could enter markets.

We want to make sure they are also having access to things like event contracts on gold, event contracts on Nasdaq, S&P, economic indicators, as well as some of the stuff that we are seeing in the sports and cultural side of the offering. We will continue to work with them to make sure it makes sense. I think, Brian, about your question around some of the other financial aspects or KPIs, I think those are things that we are hearing from folks, but we have no commitment to look at those products at this time. We will continue to engage with them.

But I think as Terry's comments also suggested, we do need to make sure and make sure everyone is aware that these meet the standards at CME and are also part of the CFTC regulatory framework. Those are the things that we look at to make sure that the contracts we do bring to market we have the comfort and confidence to make sure that the clients trade them. At the consistent experience of trading at CME Group that they have been accustomed to over the years.

Terrence Duffy: So, Brian, let me just finish the prediction comment with one other thing that I said earlier. We are committed to listing these contracts that are deemed swaps. And if there are sports event-related swaps, we will list them. When I said that we do not want to get tied up in legal battles, it does not mean that we are going to run away. As long as the federal government calls these swaps, we will participate in them. That is our regulator. And if the states and others have issues with it, they should take it up with the federal government, not the entities that they approve for these contracts to be traded under DCMs.

So that is what I meant about the legal battles.

Brian Bedell: Yep. Yep. No. That is fantastic color. Thank you.

Operator: Thank you. The next question will come from Bill Katz of TD Cowen. Your line is open.

Bill Katz: Great. Thank you for taking the question. Maybe if I could sneak in two questions somewhat disparate, so I apologize in advance. But first, it is great to see you buy back some stock in the fourth quarter and early here into the New Year. How do we think about maybe the prospective approach to capital? And how much is related to the proceeds so forth as we should think about maybe the go-forward payout dynamic? And then within your market data and information services, it was nice to see the rise quarter on quarter. I would posit that is probably more of the activity levels.

But could you speak to the durability of that given what seems to be a very frenetic change in the expectation around sort of subscription and data packages given AI disintermediation risk? Thank you.

Terrence Duffy: Thanks, Bill. Yeah. We will talk about that in a second. The AI disintermediation risk is an interesting question. We will get to that in a second because I think that was your last one. So let's talk about the capital. I will let Lynne discuss that. And on the market data, was that tied to the AI part of your question? Is that a fair way to assess it?

Bill Katz: Yes. Correct. Thank you.

Lynne Fitzpatrick: Hi, Bill. This is Lynne. So your question on the buyback, we have discussed with our board, and we will be using the Austria proceeds towards repurchases. So you have seen us start along that path, and we will continue to be deploying that capital towards repurchases over time. And then, Julie, if you maybe want to address some of the market data questions.

Julie Winkler: Yeah. I think the importance of, you know, certainly all of 2025 performance was really speaking to the recurring subscription revenue that this business generates. So the uptick in both retail participation and institutional demand for our clients serves as good momentum going into 2026. And that is something that we have seen with the historic growth of the business, you know, up thirty-one consecutive quarters. In terms of AI, we have been on top of that from the beginning.

And I think a key part of thinking about data versus how our clients use data is this is a critical input for them as they backtest their trading strategies and deploy those within our marketplace to both provide, you know, proper hedging as well as liquidity into our market space. And so, you know, while AI is and the use of data is important there, you know, it does not change how that data is being used by our trading entities. We are very much talking with our customers about how they are using AI to enhance a lot of their trading algorithms. But they still need that core source data.

And we do and have been adjusting our policies accordingly as the AI has continued to develop.

Terrence Duffy: So, Bill, I assume your question was related to around some of our competitors as it relates to mortgage businesses and some of their surveillance businesses that could be potentially disruptive by artificial intelligence. We are not in that situation today, as Julie described. This is proprietary data that people need for risk management protocols and everything else that they do. So we are not in some of those other ancillary businesses that could be potentially disrupted by AI. I actually believe we are in a situation where AI could enhance our customer, enhance our business going forward, not disintermediate or disrupt it. Does that make sense?

I think that is where your question was going, even though you did not ask it that way.

Bill Katz: Well, I was trying to be a little bit more neutral on it, but thank you. Yes. Appreciate it.

Terrence Duffy: Help you very much. Thank you. You know me. I kinda get to the point. Thank you so much.

Operator: Thank you. The next question will come from Ashish Sabadra of RBC Capital Markets. Your line is open.

Ashish Sabadra: Thanks for taking my question. I just wanted to ask a question on the progress on the Google Cloud migration and if you can quantify the expense in the fourth quarter and expected for 2026.

Terrence Duffy: So why do not we talk for a second on the migration, which Sunil, and then we will talk real quick on the expenses with Lynne. So Sunil, give a quick update on the migration.

Sunil Cutinho: Migration is going very well to plan. We will complete our non-ultra-low latency migration early this year. As far as our ultra-low latency markets are concerned, the purpose-built Chicago region by Google is coming up to plan. It is low latency technology in Google Cloud. It is very novel. So we will be making that available to clients for testing in 2027. I will pass it on to Lynne.

Lynne Fitzpatrick: Yes. So in the fourth quarter, we had about $29 million in spending related to the cloud environment. The majority of that was in our tech line related to the consumption charges. So our total for the year was right around $100 million related to Google. It is getting harder and harder as we go forward to disaggregate the Google-related charges and our base charges because we have seen so many of the on-premises expenses start to roll off. So I would say going forward, that expense is built into our overall guidance. But it is becoming, I think, less meaningful to separate it out just because you have taken out a lot of those on-premises expenses.

Sunil Cutinho: I will just start counting that in the overall expense growth, Ashish, that we guided to, the $1.695 billion. That is inclusive of all the tech-related spend, both Google and the remaining on-premises.

Ashish Sabadra: Very helpful color. Thank you.

Operator: Thank you. The next question will come from Michael Cyprus of Morgan Stanley. Your line is open.

Michael Cyprus: Hey, good morning. Just curious how you see the role of tokenized collateral and potential benefits there. And more specifically, how do you think about some of the advantages or even disadvantages of stablecoin as collateral versus tokenized deposits versus, say, a tokenized money fund? I guess, would you accept all three? Would you treat any of them differently? Curious how you think about that, and if you could elaborate more broadly on the steps that you are taking this year to tokenize collateral.

Terrence Duffy: Michael, thank you, and it is a great question. I do not know if we have enough time to answer all of it because it is pretty deep, but I will try to summarize it for you. As it relates to the tokenized cash, you know, we have an initiative that we are rolling out with Google that will be coming out this year on tokenized cash, and that will be with another depository bank that will help facilitate those transactions. On the tokens and what we would accept going forward, that all depends on who is issuing the token and giving it to us, and it would depend also based on the risk associated with that token.

Would we haircut it to a point where it is even worth taking or not? And what is the entity that is issuing the token to give us the margin? So right now, we are looking at different forms of margin, but we are not going to put the enterprise at risk by taking something that we cannot get our arms around on a token. So if you were to give me a token from a systemically important financial institution, I would probably be more comfortable than maybe a third or fourth-tier bank trying to issue a token for margin. That is probably something I would not accept.

So that is kinda how we are looking at what we would accept and how we distribute. So not only are we looking at tokenized cash, obviously, we are looking at different initiatives with our own coin that we could potentially put on a decentralized network for other of our industry participants to use. So there are multiple different ways that we are approaching this to create efficiencies for our clients going forward without introducing any additional risk to the system.

Michael Cyprus: Great. Thank you.

Terrence Duffy: Thanks, Michael.

Operator: And we will take the last question from Ken Worthington of JPMorgan. Your line is open, sir.

Ken Worthington: Hi. Thank you so much for squeezing me in. You mentioned that the CFTC approved cross-margining for client accounts. You would be launching shortly. What sort of cross-marketing programs are you launching, and what sort of adoptions do you anticipate? And along the same lines, you also got approval to launch treasury and repo clearing. How would you expect these two initiatives to impact collateral balances over time?

Terrence Duffy: Great question, Ken. So I will ask Sunil to comment on the first part of it, maybe, Mike, you can touch on the second.

Sunil Cutinho: So the CME FICC cross-margining program for clients is operationally ready. That program has been running since 2024. We have 18 firms participating. We generated record savings for those firms of about $1.5 billion. In terms of expanding to clients, while we are operationally ready, we are dependent on the approval from the SEC, which is expected sometime this year. In terms of, you know, generally, our portfolio margin savings, we are generating about $25 billion in the interest rate complex. That includes the $1.5 billion, which includes future swaps and cash products.

Terrence Duffy: So, again, just to be clear, you were referring to our treasury clearing offering and what it could do to deliver value, what we have today with others. Is that just so I am clear so we can answer it correctly?

Ken Worthington: Yeah. There was two parts to it. One is I thought you just got approval for client accounts from CFTC. I know you were waiting for that for a while. I thought that was just approved and that you will be sort of launching those programs sort of imminently. And then the second part was just on the treasury and repo side.

Terrence Duffy: Yeah. That is the one that Sunil just referenced. We are still waiting for the SEC to approve. The CFTC has, the SEC has not yet. We are hoping that comes shortly.

Ken Worthington: Got it. Okay. Okay. Awesome. Thank you.

Terrence Duffy: And then the other part of your question was around the benefits of CME treasury clearing. Is that right?

Ken Worthington: Yeah. Like, just on your collateral balances, you know, what are you kind of anticipating there?

Lynne Fitzpatrick: Yeah. So it is a little hard to forecast at this point, Ken, but certainly with things like the mandates potentially coming for broader inclusion in need for clearing of some of these securities going forward. So some of the new types of clients that might need to clear going forward. That could be additive to that amount of collateral. But I think what is unique and what is important to remember is Sunil talked about these offsets we had within our complex, so the $25 billion a day. That is inclusive of all of our futures and options, the swaps that we are clearing here at CME as well as the offsets with FICC.

When we have our treasury clearing offering added to that and potentially the ability to offer additional cross-margining, we are bringing more into that pool of capital and the efficiencies that can be created for clients by using these different pieces of the stool. So it is just further reinforcing the value proposition for clients and freeing up their capital for potentially other uses. So we think it is important that we are addressing all these different pieces.

Terrence Duffy: The interesting part about all this, Ken, is our arrangement with FIC, which is critically important to the growth of this company. Especially when it comes to clearing and giving offsets. Going forward in the rates business to make sure that we are the dominant participant to bring your business to. That is uptick at FIC in recent months with new participants coming into it. So we were around a billion dollars, I believe, a day with just the FIC offsets. That is uptick several hundred million over the last, mark. 500 million or so in the last couple of months, and we see that continuing to grow. So the agreement we have with FIC is growing by the day.

That is really the important part of this. Our treasury clearing offering is a nice to have. We will continue to roll it out in a methodical way. But the true value that we see right now and today is what DTCC and the FICC Clearing Organization. That is where the value is at, and that is what we are keeping our minds focused on.

Ken Worthington: Okay. Great. Thank you.

Terrence Duffy: Thank you. And at this time, I will turn the call over to Terry Duffy for closing remarks.

Terrence Duffy: Thank you. And while 2025 was a landmark year for CME Group, our record performance in January provides a solid foundation as we move into 2026. We are delivering on our strategic roadmap, launching CME securities clearing, expanding our event contracts, and introducing 24/7 trading to meet the evolving needs of our clients. These investments reinforce our leadership as the world's premier risk management destination and will drive substantial growth for years to come. Once again, thank you for joining us on our call today.

Operator: Thank you. This concludes today's conference call. You may all disconnect at this time.

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