CME
#Thanks, <UNK>.
And as <UNK> said, we want to thank you all for joining us this morning.
We appreciate your interest in CME Group.
I hope you got a chance to read through the Q1 earnings commentary document we provided earlier this morning.
As you can see, the strength of the quarter was broad-based across products and geographies as a significant number of customers actually turned to CME's markets to manage their risk.
Many of the themes that we have spoken about in the past few years were clearly on display this quarter.
Those include our focus on driving trading volume 24 hours a day, delivering additional innovative futures and options products to meet client needs and drive additional revenue, and remaining efficient on the expense side.
The combination of those efforts led to over 50% adjusted net income and diluted earnings per share growth in Q1.
At the end of the first quarter, we were pleased to announce the transaction with the NEX Group.
We are working diligently on the time line we outlined on the analyst call.
The NEX shareholder vote has now been set for May 18.
We have begun the process of seeking regulatory approvals, and we continue to expect the transaction to close in the second half of this year.
With that short introduction, we'd like to open the call for your questions, and we'll start now.
<UNK>.
Thank you, Dan.
Good morning.
Market data came in at $95 million this quarter.
We had a $1 million reclass from market data to other revenue.
So including that reclass, we are running at similar levels as the first 3 quarters of last year.
In Q4, we saw some benefits of bringing the audit function in-house with approximately $6 million of settlements.
And as we mentioned previously, we expect there to be fluctuations up and down in this line quarter-to-quarter depending on the realization of those settlements.
We've been building a pipeline that is being worked so we do expect those fluctuations to continue.
Before I turn it over to <UNK> to talk a little bit about what he is seeing in the market data business, as you indicated, the big change coming is the real-time market data price increase, which is going from $85 to $105 per screen, which went into effect in April.
Real-time market data accounts for the majority of the market data revenue and since the announcement of the price increases, we've seen a stable level of subscribers.
So <UNK>.
I would just point out that with respect to the audits, the resolution in settlements can be quite protracted.
There is a number that are in the hopper right now that we look forward to and hope to resolve in the next quarter.
You saw what happened last quarter with the amount of settlements that took place.
What's even more imperative to us is the correction of behavior.
So what we are seeing is a stabilization in the context of what you may have seen in past decline of screen counts.
What we are seeing is an improvement in terms of the reporting of real-time screens.
That in combination with the $20 adjustment in terms of going from $85 to $105, which took effect April 1, is something that we'll be watching closely.
Also, with respect to the derived data, you need to keep in mind that some of those contractual arrangements can be quite chunky themselves and can take some time to be able to negotiate those agreements.
So I would just kind of temper that a little bit in the context of quarter-by-quarter and how those 2 areas hit.
Sure.
Thanks, Chris.
Yes, we've been very pleased with the performance of the S&P Dow Jones joint venture.
As you know, the S&P JV's revenue consists of assets under management, which is the majority of the revenue, but a significant portion is also based on derivatives trading, specifically here and in ---+ at CBOE.
So you've seen our performance in equities this quarter up 47%.
So that is ---+ that gets paid through a license fee from us to them and then we then get back 27% of it through the earnings in the JV.
CBOE also has had very good activity as well.
So again, it's a lot of the dynamics that are positively impacting our business is positively impacting their business, and it's just been a tremendous business model to have and one that we're very happy to participate in.
I think it's ---+ they're reporting their earnings right now so I don't have the most recent breakdown for you there.
But again, like I said, it's been a positive with regard to our equity activity really positive in terms of both the S&P, and also NASDAQ Futures has performed also very well.
Yes, Rich, I'll take part of that.
So there's really no new update to the time line other than what Terry mentioned, we do expect the shareholder vote on May 18 has been scheduled, we still plan on closing on the second half this year.
Also, as Terry mentioned, we're working through the regulatory approval process now.
So no real update on the time line.
In terms of leverage and paying down the debt, really nothing more to update you on than what we put in the 2.7 announcement.
And really what we did is we approached our structure to the transaction and our approach over the next couple of years to be balanced in terms of investing in the business, returning capital to shareholders and paying down the debt.
And as you saw, we ---+ in the 2.7 agreement ---+ or announcement, I should say, we expect to delever over the next couple of years down to levels that are similar to where we stand today.
So that's our objective.
<UNK>.
Well, we want to thank you all very much for joining us this morning, and we look forward to talking to you at the next quarter.
Thank you very much.
