ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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36-4459170
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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20 South Wacker Drive, Chicago, Illinois
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60606
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 4.
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Item 6.
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•
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increasing competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities;
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•
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our ability to keep pace with rapid technological developments, including our ability to complete the development, implementation and maintenance of the enhanced functionality required by our customers while maintaining reliability and ensuring that such technology is not vulnerable to security risks;
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•
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our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services, including our ability to provide effective services to the swaps market;
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•
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our ability to adjust our fixed costs and expenses if our revenues decline;
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•
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our ability to maintain existing customers, develop strategic relationships and attract new customers;
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•
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our ability to retain key employees;
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•
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our ability to expand and offer our products outside the United States;
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•
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changes in regulations, including the impact of any changes in laws or government policy with respect to our industry, such as any changes to regulations and policies that require increased financial and operational resources from us or our customers;
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•
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the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others;
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•
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decreases in revenue from our market data as a result of decreased demand;
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•
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changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure;
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•
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the ability of our financial safeguards package to adequately protect us from the credit risks of clearing members;
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•
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the ability of our compliance and risk management methods to effectively monitor and manage our risks, including our ability to prevent errors and misconduct and protect our infrastructure against security breaches and misappropriation of our intellectual property assets;
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•
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changes in price levels and volatility in the derivatives markets and in underlying equity, foreign exchange, interest rate and commodities markets;
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•
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economic, political and market conditions, including the volatility of the capital and credit markets and the impact of economic conditions on the trading activity of our current and potential customers;
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our ability to accommodate increases in contract volume and order transaction traffic and to implement enhancements without failure or degradation of the performance of our trading and clearing systems;
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•
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our ability to execute our growth strategy and maintain our growth effectively;
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•
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our ability to manage the risks and control the costs associated with our strategy for acquisitions, investments and alliances;
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our ability to continue to generate funds and/or manage our indebtedness to allow us to continue to invest in our business;
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•
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industry and customer consolidation;
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•
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decreases in trading and clearing activity;
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•
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the imposition of a transaction tax or user fee on futures and options on futures transactions and/or repeal of the 60/40 tax treatment of such transactions;
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•
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failure to maintain our brand's reputation;
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•
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the unfavorable resolution of material legal proceedings; and
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•
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the uncertainties of the ultimate impact of the Tax Cuts and Jobs Acts (2017 Tax Act).
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ITEM 1.
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FINANCIAL STATEMENTS
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March 31, 2018
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December 31, 2017
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(unaudited)
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Assets
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Current Assets:
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Cash and cash equivalents
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$
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784.6
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$
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1,903.6
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Marketable securities
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90.4
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90.1
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Accounts receivable, net of allowance of $2.7 and $2.2
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444.1
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359.7
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Other current assets (includes $492.3 and $0 in restricted cash)
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646.8
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367.8
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Performance bonds and guaranty fund contributions
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39,088.9
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44,185.3
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Total current assets
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41,054.8
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46,906.5
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Property, net of accumulated depreciation and amortization of $704.8 and $676.6
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387.2
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399.7
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Intangible assets—trading products
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17,175.3
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17,175.3
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Intangible assets—other, net
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2,322.6
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2,346.3
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Goodwill
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7,569.0
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7,569.0
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Other assets (includes $1.4 and $2.4 in restricted cash)
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1,410.4
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1,394.4
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Total Assets
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$
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69,919.3
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$
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75,791.2
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Liabilities and Equity
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Current Liabilities:
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Accounts payable
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$
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25.0
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$
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31.3
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Other current liabilities
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331.4
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1,456.3
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Performance bonds and guaranty fund contributions
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39,088.9
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44,185.3
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Total current liabilities
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39,445.3
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45,672.9
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Long-term debt
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2,233.5
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2,233.1
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Deferred income tax liabilities, net
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4,846.6
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4,857.7
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Other liabilities
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621.1
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615.7
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Total Liabilities
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47,146.5
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53,379.4
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Shareholders’ Equity:
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Preferred stock, $0.01 par value, 10,000 shares authorized at March 31, 2018 and December 31, 2017; none issued
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—
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—
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Class A common stock, $0.01 par value, 1,000,000 shares authorized at March 31, 2018 and December 31, 2017; 339,435 and 339,235 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively
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3.4
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3.4
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Class B common stock, $0.01 par value, 3 shares authorized, issued and outstanding as of March 31, 2018 and December 31, 2017
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—
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—
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Additional paid-in capital
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17,904.1
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17,896.9
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Retained earnings
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4,845.4
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4,497.2
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Accumulated other comprehensive income (loss)
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19.9
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14.3
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Total shareholders’ equity
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22,772.8
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22,411.8
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Total Liabilities and Equity
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$
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69,919.3
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$
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75,791.2
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Quarter Ended
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||||||
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March 31,
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2018
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2017
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Revenues
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Clearing and transaction fees
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$
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973.6
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$
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792.0
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Market data and information services
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94.9
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96.8
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Access and communication fees
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26.0
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24.3
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Other
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14.5
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16.2
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Total Revenues
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1,109.0
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929.3
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Expenses
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Compensation and benefits
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152.7
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142.6
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Communications
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5.9
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6.3
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Technology support services
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19.6
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18.7
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Professional fees and outside services
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42.6
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28.6
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Amortization of purchased intangibles
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23.7
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24.0
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Depreciation and amortization
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28.1
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29.4
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Occupancy and building operations
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20.0
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20.1
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Licensing and other fee agreements
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49.5
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33.8
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Other
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26.0
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|
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24.9
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Total Expenses
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368.1
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328.4
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Operating Income
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740.9
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600.9
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Non-Operating Income (Expense)
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Investment income
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156.4
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138.9
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Interest and other borrowing costs
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(30.1
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)
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(29.8
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)
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Equity in net earnings of unconsolidated subsidiaries
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40.1
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30.8
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Other non-operating income (expense)
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(118.6
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)
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(33.8
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)
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Total Non-Operating Income (Expense)
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47.8
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106.1
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Income before Income Taxes
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788.7
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707.0
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Income tax provision
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189.9
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|
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307.2
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|
||
Net Income
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$
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598.8
|
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$
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399.8
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|
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|
||||
Earnings per Common Share:
|
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|
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|
||||
Basic
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$
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1.76
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$
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1.18
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Diluted
|
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1.76
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1.18
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|
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Weighted Average Number of Common Shares:
|
|
|
|
|
||||
Basic
|
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339,305
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338,339
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Diluted
|
|
340,747
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339,946
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Quarter Ended
|
||||||
|
|
March 31,
|
||||||
|
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2018
|
|
2017
|
||||
Net income
|
|
$
|
598.8
|
|
|
$
|
399.8
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Investment securities:
|
|
|
|
|
||||
Net unrealized holding gains (losses) arising during the period
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(0.9
|
)
|
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29.4
|
|
||
Reclassification of net (gains) losses on sales included in investment income
|
|
—
|
|
|
(87.1
|
)
|
||
Income tax benefit (expense)
|
|
0.2
|
|
|
76.6
|
|
||
Investment securities, net
|
|
(0.7
|
)
|
|
18.9
|
|
||
Defined benefit plans:
|
|
|
|
|
||||
Net change in defined benefit plans arising during the period
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1.7
|
|
|
0.4
|
|
||
Amortization of net actuarial (gains) losses included in compensation and benefits expense
|
|
0.7
|
|
|
0.7
|
|
||
Income tax benefit (expense)
|
|
(0.6
|
)
|
|
(0.4
|
)
|
||
Defined benefit plans, net
|
|
1.8
|
|
|
0.7
|
|
||
Derivative investments:
|
|
|
|
|
||||
Amortization of effective portion of net (gains) losses on cash flow hedges included in interest expense
|
|
(0.3
|
)
|
|
(0.3
|
)
|
||
Income tax benefit (expense)
|
|
0.1
|
|
|
0.1
|
|
||
Derivative investments, net
|
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(0.2
|
)
|
|
(0.2
|
)
|
||
Foreign currency translation:
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
0.9
|
|
|
8.4
|
|
||
Income tax benefit (expense)
|
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—
|
|
|
(2.9
|
)
|
||
Foreign currency translation, net
|
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0.9
|
|
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5.5
|
|
||
Other comprehensive income (loss), net of tax
|
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1.8
|
|
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24.9
|
|
||
Comprehensive Income
|
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$
|
600.6
|
|
|
$
|
424.7
|
|
|
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Class A
Common
Stock
(Shares)
|
|
Class B
Common
Stock
(Shares)
|
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Common
Stock and
Additional
Paid-in
Capital
|
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Retained
Earnings
|
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Accumulated
Other
Comprehensive
Income (Loss)
|
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Total
Shareholders’
Equity
|
||||||||||
Balance at December 31, 2017
|
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339,235
|
|
|
3
|
|
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$
|
17,900.3
|
|
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$
|
4,497.2
|
|
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$
|
14.3
|
|
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$
|
22,411.8
|
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Net income
|
|
|
|
|
|
|
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598.8
|
|
|
|
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598.8
|
|
||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
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1.8
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1.8
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||||||||
Dividends on common stock of $0.70 per share
|
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|
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|
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|
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(238.1
|
)
|
|
|
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(238.1
|
)
|
||||||||
Impact of adoption of standards update on tax effects related to accumulated other comprehensive income and revenue recognition, net of tax
|
|
|
|
|
|
|
|
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(12.5
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)
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3.8
|
|
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(8.7
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)
|
||||||
Exercise of stock options
|
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59
|
|
|
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4.2
|
|
|
|
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|
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4.2
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|||||||
Vesting of issued restricted Class A common stock
|
|
141
|
|
|
|
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(14.7
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)
|
|
|
|
|
|
(14.7
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)
|
|||||||
Stock-based compensation
|
|
|
|
|
|
17.7
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|
|
|
|
|
|
17.7
|
|
||||||||
Balance at March 31, 2018
|
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339,435
|
|
|
3
|
|
|
$
|
17,907.5
|
|
|
$
|
4,845.4
|
|
|
$
|
19.9
|
|
|
$
|
22,772.8
|
|
|
Class A
Common
Stock
(Shares)
|
|
Class B
Common
Stock
(Shares)
|
|
Common
Stock and
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Shareholders’ Equity |
||||||||||
Balance at December 31, 2016
|
338,240
|
|
|
3
|
|
|
$
|
17,830.3
|
|
|
$
|
2,524.5
|
|
|
$
|
(14.1
|
)
|
|
$
|
20,340.7
|
|
Net income
|
|
|
|
|
|
|
399.8
|
|
|
|
|
399.8
|
|
||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
24.9
|
|
|
24.9
|
|
||||||||
Dividends on common stock of $0.66 per share
|
|
|
|
|
|
|
(224.2
|
)
|
|
|
|
(224.2
|
)
|
||||||||
Impact of adoption of standards update on employee share-based payments
|
|
|
|
|
1.4
|
|
|
(2.2
|
)
|
|
|
|
(0.8
|
)
|
|||||||
Exercise of stock options
|
113
|
|
|
|
|
10.5
|
|
|
|
|
|
|
10.5
|
|
|||||||
Vesting of issued restricted Class A common stock
|
153
|
|
|
|
|
(11.6
|
)
|
|
|
|
|
|
(11.6
|
)
|
|||||||
Stock-based compensation
|
|
|
|
|
14.9
|
|
|
|
|
|
|
14.9
|
|
||||||||
Balance at March 31, 2017
|
338,506
|
|
|
3
|
|
|
$
|
17,845.5
|
|
|
$
|
2,697.9
|
|
|
$
|
10.8
|
|
|
$
|
20,554.2
|
|
|
|
Quarter Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities
|
|
|
|
|
||||
Net income
|
|
$
|
598.8
|
|
|
$
|
399.8
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Stock-based compensation
|
|
17.7
|
|
|
14.9
|
|
||
Amortization of purchased intangibles
|
|
23.7
|
|
|
24.0
|
|
||
Depreciation and amortization
|
|
28.1
|
|
|
29.4
|
|
||
Gain on sale of BM&FBOVESPA shares
|
|
—
|
|
|
(86.5
|
)
|
||
Income tax expense reclassified from accumulated other comprehensive income upon final sale of BM&FBOVESPA shares
|
|
—
|
|
|
87.8
|
|
||
Undistributed earnings, net of losses, of unconsolidated subsidiaries
|
|
10.9
|
|
|
(4.3
|
)
|
||
Deferred income taxes
|
|
(11.7
|
)
|
|
2.2
|
|
||
Change in:
|
|
|
|
|
||||
Accounts receivable
|
|
(85.0
|
)
|
|
(61.5
|
)
|
||
Other current assets
|
|
(12.9
|
)
|
|
(9.3
|
)
|
||
Other assets
|
|
(3.8
|
)
|
|
7.7
|
|
||
Accounts payable
|
|
(6.4
|
)
|
|
12.2
|
|
||
Income taxes payable
|
|
264.8
|
|
|
168.1
|
|
||
Other current liabilities
|
|
0.3
|
|
|
(67.8
|
)
|
||
Other liabilities
|
|
(0.3
|
)
|
|
2.6
|
|
||
Other
|
|
0.8
|
|
|
0.1
|
|
||
Net Cash Provided by Operating Activities
|
|
825.0
|
|
|
519.4
|
|
||
|
|
|
|
|
||||
Cash Flows from Investing Activities
|
|
|
|
|
||||
Proceeds from maturities of available-for-sale marketable securities
|
|
1.6
|
|
|
0.5
|
|
||
Purchases of available-for-sale marketable securities
|
|
(0.8
|
)
|
|
—
|
|
||
Purchases of property, net
|
|
(18.2
|
)
|
|
(20.0
|
)
|
||
Investments in business ventures
|
|
—
|
|
|
(0.3
|
)
|
||
Proceeds from sale of BM&FBOVESPA shares
|
|
—
|
|
|
244.0
|
|
||
Net Cash Provided by (Used in) Investing Activities
|
|
(17.4
|
)
|
|
224.2
|
|
||
|
|
|
|
|
||||
Cash Flows from Financing Activities
|
|
|
|
|
||||
Cash dividends
|
|
(1,424.8
|
)
|
|
(1,322.6
|
)
|
||
Proceeds from exercise of stock options
|
|
4.2
|
|
|
10.5
|
|
||
Employee taxes paid on restricted stock vesting
|
|
(14.7
|
)
|
|
(11.6
|
)
|
||
Net Cash Used in Financing Activities
|
|
(1,435.3
|
)
|
|
(1,323.7
|
)
|
||
|
|
|
|
|
||||
Net change in cash, cash equivalents and restricted cash
|
|
(627.7
|
)
|
|
(580.1
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
1,906.0
|
|
|
1,960.3
|
|
||
Cash, Cash Equivalents and Restricted Cash, End of Period
|
|
$
|
1,278.3
|
|
|
$
|
1,380.2
|
|
|
|
|
|
|
||||
Reconciliation of cash, cash equivalents and restricted cash:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
784.6
|
|
|
1,287.8
|
|
||
Short-term restricted cash
|
|
492.3
|
|
|
30.0
|
|
||
Long-term restricted cash
|
|
1.4
|
|
|
62.4
|
|
||
Total
|
|
$
|
1,278.3
|
|
|
$
|
1,380.2
|
|
|
|
|
|
|
||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
||||
Income taxes paid
|
|
$
|
8.8
|
|
|
$
|
10.1
|
|
Interest paid
|
|
42.4
|
|
|
42.4
|
|
|
|
Quarter Ended
March 31,
|
||||||
(in millions)
|
|
2018
|
|
2017
|
||||
Interest rate
|
|
$
|
338.4
|
|
|
$
|
279.6
|
|
Equity
|
|
195.0
|
|
|
123.1
|
|
||
Foreign exchange
|
|
51.1
|
|
|
45.6
|
|
||
Agricultural commodity
|
|
121.1
|
|
|
104.4
|
|
||
Energy
|
|
191.5
|
|
|
174.6
|
|
||
Metal
|
|
59.4
|
|
|
47.4
|
|
||
Interest rate swap and credit default swap
|
|
17.1
|
|
|
17.3
|
|
||
Total clearing and transaction fees
|
|
973.6
|
|
|
792.0
|
|
||
Market data and information services
|
|
94.9
|
|
|
96.8
|
|
||
Access and communication fees
|
|
26.0
|
|
|
24.3
|
|
||
Other
|
|
14.5
|
|
|
16.2
|
|
||
Total revenues
|
|
$
|
1,109.0
|
|
|
$
|
929.3
|
|
|
|
|
|
|
||||
Timing of Revenue Recognition
|
|
|
|
|
||||
Services transferred at a point in time
|
|
957.7
|
|
|
777.1
|
|
||
Services transferred over time
|
|
148.8
|
|
|
148.6
|
|
||
One-time charges and miscellaneous revenues
|
|
2.5
|
|
|
3.6
|
|
||
Total revenues
|
|
$
|
1,109.0
|
|
|
$
|
929.3
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(in millions)
|
|
Assigned Value
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Assigned Value
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
Amortizable Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Clearing firm, market data and other customer relationships
|
|
$
|
2,838.8
|
|
|
$
|
(967.4
|
)
|
|
$
|
1,871.4
|
|
|
$
|
2,838.8
|
|
|
$
|
(943.7
|
)
|
|
$
|
1,895.1
|
|
Technology-related intellectual property
|
|
29.4
|
|
|
(29.4
|
)
|
|
—
|
|
|
29.4
|
|
|
(29.4
|
)
|
|
—
|
|
||||||
Other
|
|
2.4
|
|
|
(1.2
|
)
|
|
1.2
|
|
|
2.4
|
|
|
(1.2
|
)
|
|
1.2
|
|
||||||
Total amortizable intangible assets
|
|
$
|
2,870.6
|
|
|
$
|
(998.0
|
)
|
|
1,872.6
|
|
|
$
|
2,870.6
|
|
|
$
|
(974.3
|
)
|
|
1,896.3
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Indefinite-Lived Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
|
|
|
|
|
450.0
|
|
|
|
|
|
|
450.0
|
|
||||||||||
Total intangible assets – other, net
|
|
|
|
|
|
$
|
2,322.6
|
|
|
|
|
|
|
$
|
2,346.3
|
|
||||||||
Trading products
(1)
|
|
|
|
|
|
$
|
17,175.3
|
|
|
|
|
|
|
$
|
17,175.3
|
|
(1)
|
Trading products represent futures and options products acquired in our business combinations with CBOT Holdings, Inc., NYMEX Holdings, Inc. and The Board of Trade of Kansas City, Missouri, Inc. Clearing and transaction fees are generated through the trading of these products. These trading products, most of which have traded for decades, require authorization from the Commodity Futures Trading Commission (CFTC). Product authorizations from the CFTC have no term limits.
|
(in millions)
|
Amortization Expense
|
||
Remainder of 2018
|
$
|
71.0
|
|
2019
|
94.7
|
|
|
2020
|
94.7
|
|
|
2021
|
94.7
|
|
|
2022
|
94.7
|
|
|
2023
|
94.7
|
|
|
Thereafter
|
1,328.1
|
|
(in millions)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
$750.0 million fixed rate notes due September 2022, stated rate of 3.00%
(1)
|
|
$
|
746.2
|
|
|
$
|
746.0
|
|
$750.0 million fixed rate notes due March 2025, stated rate of 3.00%
(2)
|
|
745.1
|
|
|
744.9
|
|
||
$750.0 million fixed rate notes due September 2043, stated rate of 5.30%
(3)
|
|
742.2
|
|
|
742.2
|
|
||
Total long-term debt
|
|
$
|
2,233.5
|
|
|
$
|
2,233.1
|
|
(1)
|
In August 2012, the company entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of
3.32%
.
|
(2)
|
In December 2014, the company entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of
3.11%
.
|
(3)
|
In August 2012, the company entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of
4.73%
.
|
(in millions)
|
Investment Securities
|
|
Defined Benefit Plans
|
|
Derivative Investments
|
|
Foreign Currency Translation
|
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
0.6
|
|
|
$
|
(36.1
|
)
|
|
$
|
58.0
|
|
|
$
|
(8.2
|
)
|
|
$
|
14.3
|
|
Other comprehensive income (loss) before reclassifications and income tax benefit (expense)
|
(0.9
|
)
|
|
1.7
|
|
|
—
|
|
|
0.9
|
|
|
1.7
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
0.7
|
|
|
(0.3
|
)
|
|
—
|
|
|
0.4
|
|
|||||
Income tax benefit (expense)
|
0.2
|
|
|
(0.6
|
)
|
|
0.1
|
|
|
—
|
|
|
(0.3
|
)
|
|||||
Net current period other comprehensive income (loss)
|
(0.7
|
)
|
|
1.8
|
|
|
(0.2
|
)
|
|
0.9
|
|
|
1.8
|
|
|||||
Impact of adoption of standards update on tax effects related to accumulated other comprehensive income
|
0.1
|
|
|
(8.2
|
)
|
|
11.9
|
|
|
—
|
|
|
3.8
|
|
|||||
Balance at March 31, 2018
|
$
|
—
|
|
|
$
|
(42.5
|
)
|
|
$
|
69.7
|
|
|
$
|
(7.3
|
)
|
|
$
|
19.9
|
|
(in millions)
|
Investment Securities
|
|
Defined Benefit Plans
|
|
Derivative Investments
|
|
Foreign Currency Translation
|
|
Total
|
||||||||||
Balance at December 31, 2016
|
$
|
(19.5
|
)
|
|
$
|
(37.8
|
)
|
|
$
|
58.9
|
|
|
$
|
(15.7
|
)
|
|
$
|
(14.1
|
)
|
Other comprehensive income (loss) before reclassifications and income tax benefit (expense)
|
29.4
|
|
|
0.4
|
|
|
—
|
|
|
8.4
|
|
|
38.2
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(87.1
|
)
|
|
0.7
|
|
|
(0.3
|
)
|
|
—
|
|
|
(86.7
|
)
|
|||||
Income tax benefit (expense)
|
76.6
|
|
|
(0.4
|
)
|
|
0.1
|
|
|
(2.9
|
)
|
|
73.4
|
|
|||||
Net current period other comprehensive income (loss)
|
18.9
|
|
|
0.7
|
|
|
(0.2
|
)
|
|
5.5
|
|
|
24.9
|
|
|||||
Balance at March 31, 2017
|
$
|
(0.6
|
)
|
|
$
|
(37.1
|
)
|
|
$
|
58.7
|
|
|
$
|
(10.2
|
)
|
|
$
|
10.8
|
|
•
|
Level 1 inputs, which are considered the most reliable evidence of fair value, consist of quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
•
|
Level 2 inputs consist of observable market data, such as quoted prices for similar assets and liabilities in active markets, or inputs other than quoted prices that are directly observable.
|
•
|
Level 3 inputs consist of unobservable inputs which are derived and cannot be corroborated by market data or other entity-specific inputs.
|
|
|
March 31, 2018
|
||||||||||||||
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets at Fair Value:
|
|
|
|
|
|
|
|
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
|
$
|
19.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19.2
|
|
Mutual funds
|
|
70.8
|
|
|
—
|
|
|
—
|
|
|
70.8
|
|
||||
Equity securities
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Asset-backed securities
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
||||
Total Marketable Securities
|
|
90.1
|
|
|
0.3
|
|
|
—
|
|
|
90.4
|
|
||||
Performance bonds and guaranty fund contributions
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
547.9
|
|
|
—
|
|
|
—
|
|
|
547.9
|
|
||||
Foreign exchange option contract
|
|
—
|
|
|
30.0
|
|
|
—
|
|
|
30.0
|
|
||||
Total Assets at Fair Value
|
|
$
|
638.0
|
|
|
$
|
30.3
|
|
|
$
|
—
|
|
|
$
|
668.3
|
|
(in millions)
|
Fair Value
|
||
$750.0 million fixed rate notes due September 2022, stated rate of 3.00%
|
$
|
743.2
|
|
$750.0 million fixed rate notes due March 2025, stated rate of 3.00%
|
729.6
|
|
|
$750.0 million fixed rates notes due September 2043, stated rate of 5.30%
|
911.1
|
|
|
Quarter Ended
March 31, |
||||
(in thousands)
|
2018
|
|
2017
|
||
Stock options
|
—
|
|
|
—
|
|
Restricted stock and performance shares
|
49
|
|
|
80
|
|
Total
|
49
|
|
|
80
|
|
|
Quarter Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Net Income (in millions)
|
$
|
598.8
|
|
|
$
|
399.8
|
|
Weighted Average Number of Common Shares (in thousands):
|
|
|
|
||||
Basic
|
339,305
|
|
|
338,339
|
|
||
Effect of stock options, restricted stock and performance shares
|
1,442
|
|
|
1,607
|
|
||
Diluted
|
340,747
|
|
|
339,946
|
|
||
Earnings per Common Share:
|
|
|
|
||||
Basic
|
$
|
1.76
|
|
|
$
|
1.18
|
|
Diluted
|
1.76
|
|
|
1.18
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
Quarter Ended
March 31, |
|
|
|||||||
(dollars in millions, except per share data)
|
|
2018
|
|
2017
|
|
Change
|
|||||
Total revenues
|
|
$
|
1,109.0
|
|
|
$
|
929.3
|
|
|
19
|
%
|
Total expenses
|
|
368.1
|
|
|
328.4
|
|
|
12
|
|
||
Operating margin
|
|
66.8
|
%
|
|
64.7
|
%
|
|
|
|||
Non-operating income (expense)
|
|
$
|
47.8
|
|
|
$
|
106.1
|
|
|
(55
|
)
|
Effective tax rate
|
|
24.1
|
%
|
|
43.5
|
%
|
|
|
|||
Net income
|
|
$
|
598.8
|
|
|
$
|
399.8
|
|
|
50
|
|
Diluted earnings per common share
|
|
1.76
|
|
|
1.18
|
|
|
49
|
|
||
Cash flows from operating activities
|
|
825.0
|
|
|
519.4
|
|
|
59
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||||
(dollars in millions)
|
|
2018
|
|
2017
|
|
Change
|
|||||
Clearing and transaction fees
|
|
$
|
973.6
|
|
|
$
|
792.0
|
|
|
23
|
%
|
Market data and information services
|
|
94.9
|
|
|
96.8
|
|
|
(2
|
)
|
||
Access and communication fees
|
|
26.0
|
|
|
24.3
|
|
|
7
|
|
||
Other
|
|
14.5
|
|
|
16.2
|
|
|
(11
|
)
|
||
Total Revenues
|
|
$
|
1,109.0
|
|
|
$
|
929.3
|
|
|
19
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||||
|
|
2018
|
|
2017
|
|
Change
|
|||||
Total contract volume (in millions)
|
|
1,354.4
|
|
|
1,060.1
|
|
|
28
|
%
|
||
Clearing and transaction fees (in millions)
|
|
$
|
956.4
|
|
|
$
|
774.7
|
|
|
23
|
|
Average rate per contract
|
|
$
|
0.706
|
|
|
$
|
0.731
|
|
|
(3
|
)
|
(in millions)
|
|
Quarter Ended
|
||
Increase due to a change in total contract volume
|
|
$
|
215.1
|
|
Decrease due to a change in average rate per contract
|
|
(33.4
|
)
|
|
Net increase in clearing and transaction fees
|
|
$
|
181.7
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||
(amounts in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|||
Average Daily Volume by Product Line:
|
|
|
|
|
|
|
|||
Interest rate
|
|
11,948
|
|
|
9,169
|
|
|
30
|
%
|
Equity
|
|
4,096
|
|
|
2,766
|
|
|
48
|
|
Foreign exchange
|
|
1,100
|
|
|
894
|
|
|
23
|
|
Agricultural commodity
|
|
1,593
|
|
|
1,261
|
|
|
26
|
|
Energy
|
|
2,754
|
|
|
2,496
|
|
|
10
|
|
Metal
|
|
713
|
|
|
512
|
|
|
39
|
|
Aggregate average daily volume
|
|
22,204
|
|
|
17,098
|
|
|
30
|
|
Average Daily Volume by Venue:
|
|
|
|
|
|
|
|||
Electronic
|
|
19,797
|
|
|
14,947
|
|
|
32
|
|
Open outcry
|
|
1,556
|
|
|
1,362
|
|
|
14
|
|
Privately negotiated
|
|
851
|
|
|
789
|
|
|
8
|
|
Aggregate average daily volume
|
|
22,204
|
|
|
17,098
|
|
|
30
|
|
Electronic Volume as a Percentage of Total Volume
|
|
89
|
%
|
|
87
|
%
|
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||
(amounts in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|||
Eurodollar futures and options:
|
|
|
|
|
|
|
|||
Front 8 futures
|
|
2,802
|
|
|
2,134
|
|
|
31
|
%
|
Back 32 futures
|
|
1,171
|
|
|
938
|
|
|
25
|
|
Options
|
|
1,988
|
|
|
1,611
|
|
|
23
|
|
U.S. Treasury futures and options:
|
|
|
|
|
|
|
|||
10-Year
|
|
2,537
|
|
|
1,980
|
|
|
28
|
|
5-Year
|
|
1,370
|
|
|
1,095
|
|
|
25
|
|
2-Year
|
|
632
|
|
|
384
|
|
|
65
|
|
Treasury bond
|
|
503
|
|
|
371
|
|
|
36
|
|
Federal Funds futures and options
|
|
283
|
|
|
252
|
|
|
12
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||
(amounts in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|||
E-mini S&P 500 futures and options
|
|
2,957
|
|
|
2,250
|
|
|
31
|
%
|
E-mini NASDAQ 100 futures and options
|
|
495
|
|
|
214
|
|
|
131
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||
(amounts in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|||
Euro
|
|
330
|
|
|
233
|
|
|
41
|
%
|
Japanese yen
|
|
187
|
|
|
179
|
|
|
4
|
|
British pound
|
|
156
|
|
|
126
|
|
|
24
|
|
Australian dollar
|
|
133
|
|
|
93
|
|
|
42
|
|
Canadian dollar
|
|
98
|
|
|
72
|
|
|
36
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||
(amounts in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|||
Corn
|
|
515
|
|
|
409
|
|
|
26
|
%
|
Soybean
|
|
341
|
|
|
268
|
|
|
27
|
|
Wheat
|
|
274
|
|
|
203
|
|
|
35
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||
(amounts in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|||
WTI crude oil
|
|
1,542
|
|
|
1,328
|
|
|
16
|
%
|
Natural gas
|
|
665
|
|
|
601
|
|
|
11
|
|
Refined products
|
|
419
|
|
|
389
|
|
|
8
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||
(amounts in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|||
Gold
|
|
437
|
|
|
309
|
|
|
41
|
%
|
Copper
|
|
137
|
|
|
95
|
|
|
44
|
|
Silver
|
|
109
|
|
|
81
|
|
|
34
|
|
|
|
Quarter Ended
March 31, |
|
|
|||||||
(dollars in millions)
|
|
2018
|
|
2017
|
|
Change
|
|||||
Compensation and benefits
|
|
$
|
152.7
|
|
|
$
|
142.6
|
|
|
7
|
%
|
Communications
|
|
5.9
|
|
|
6.3
|
|
|
(7
|
)
|
||
Technology support services
|
|
19.6
|
|
|
18.7
|
|
|
5
|
|
||
Professional fees and outside services
|
|
42.6
|
|
|
28.6
|
|
|
49
|
|
||
Amortization of purchased intangibles
|
|
23.7
|
|
|
24.0
|
|
|
(1
|
)
|
||
Depreciation and amortization
|
|
28.1
|
|
|
29.4
|
|
|
(4
|
)
|
||
Occupancy and building operations
|
|
20.0
|
|
|
20.1
|
|
|
—
|
|
||
Licensing and other fee agreements
|
|
49.5
|
|
|
33.8
|
|
|
47
|
|
||
Other
|
|
26.0
|
|
|
24.9
|
|
|
4
|
|
||
Total Expenses
|
|
$
|
368.1
|
|
|
$
|
328.4
|
|
|
12
|
|
|
|
|
Quarter Ended,
March 31, 2018 |
|||||
|
|
|
Amount of
Change
|
|
Change as a
Percentage of Total Expenses |
|||
(dollars in millions)
|
|
|||||||
Licensing and other fee agreements
|
|
|
$
|
15.7
|
|
|
5
|
%
|
Professional fees and outside services
|
|
|
14.0
|
|
|
4
|
|
|
Bonus expense
|
|
|
6.8
|
|
|
2
|
|
|
Salaries, benefits and employer taxes
|
|
|
4.6
|
|
|
1
|
|
|
Foreign currency exchange rate fluctuation
|
|
|
4.1
|
|
|
1
|
|
|
Non-qualified deferred compensation plans
|
|
|
(3.4
|
)
|
|
(1
|
)
|
|
Other expenses, net
|
|
|
(2.1
|
)
|
|
—
|
|
|
Total increase (decrease)
|
|
|
$
|
39.7
|
|
|
12
|
%
|
•
|
Licensing and other fee sharing agreements expense increased due to higher expense related to revenue sharing agreements for certain equity and energy contracts due to both an increase in volume and an increase in license rates for certain equity products.
|
•
|
Professional fees and outside services expense increased compared to the same period in 2017, largely due to higher legal fees in 2018 incurred as a result of the Eurex litigation and our proposed transaction with NEX Group plc (NEX).
|
•
|
Bonus expense increased due to performance relative to our 2018 cash earnings target when compared with 2017 performance relative to our 2017 cash earnings target.
|
•
|
Compensation and benefits expense increased as a result of higher average headcount primarily in our international locations as well as normal cost of living adjustments.
|
•
|
In the first quarter of 2018, we recognized a net loss of $1.6 million due to an unfavorable change in exchange rates on foreign cash balances, compared with a net gain of $2.5 million in the first quarter of 2017. Gains and losses from exchange rate fluctuations result when subsidiaries with a U.S. dollar functional currency hold cash as well as certain other monetary assets and liabilities denominated in foreign currencies.
|
•
|
A decrease in our non-qualified deferred compensation liability, the impact of which does not affect net income because of an equal and offsetting change in investment income, contributed to a decrease in compensation and benefits expense.
|
|
|
Quarter Ended
March 31, |
|
|
|||||||
(dollars in millions)
|
|
2018
|
|
2017
|
|
Change
|
|||||
Investment income
|
|
$
|
156.4
|
|
|
$
|
138.9
|
|
|
13
|
%
|
Interest and other borrowing costs
|
|
(30.1
|
)
|
|
(29.8
|
)
|
|
1
|
|
||
Equity in net earnings (losses) of unconsolidated subsidiaries
|
|
40.1
|
|
|
30.8
|
|
|
30
|
|
||
Other non-operating income (expense)
|
|
(118.6
|
)
|
|
(33.8
|
)
|
|
n.m.
|
|
||
Total Non-Operating
|
|
$
|
47.8
|
|
|
$
|
106.1
|
|
|
(55
|
)
|
|
|
2018
|
|
2017
|
||
Quarter ended March 31
|
|
24.1
|
%
|
|
43.5
|
%
|
(in millions)
|
Par Value
|
||
Fixed rate notes due September 2022, stated rate of 3.00%
(1)
|
$
|
750.0
|
|
Fixed rate notes due March 2025, stated rate of 3.00%
(2)
|
750.0
|
|
|
Fixed rate notes due September 2043, stated rate of 5.30%
(3)
|
750.0
|
|
(1)
|
In August 2012, we entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable effectively became fixed at a rate of 3.32%.
|
(2)
|
In December 2014, we entered into a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable effectively became fixed at a rate of 3.11%.
|
(3)
|
In August 2012, we entered into a forward starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable effectively became fixed at a rate of 4.73%.
|
|
|
Short-Term
|
|
Long-Term
|
|
|
Rating Agency
|
|
Debt Rating
|
|
Debt Rating
|
|
Outlook
|
Standard & Poor’s
|
|
A1+
|
|
AA-
|
|
Stable
|
Moody’s Investors Service
|
|
P1
|
|
Aa3
|
|
Stable
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
(a) Total Number of
Class A
Shares Purchased (1)
|
|
(b) Average Price
Paid Per Share
|
|
(c) Total Number of Class A Shares Purchased as
Part of Publicly Announced Plans or Programs
|
|
(d) Maximum Number (or Approximate Value) that
May Yet Be Purchased
Under the Plans or Programs
(in millions)
|
||||||
January 1 to January 31
|
|
2,686
|
|
|
$
|
152.90
|
|
|
—
|
|
|
$
|
—
|
|
February 1 to February 28
|
|
53
|
|
|
159.11
|
|
|
—
|
|
|
—
|
|
||
March 1 to March 31
|
|
86,511
|
|
|
165.38
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
89,250
|
|
|
$
|
165.01
|
|
|
—
|
|
|
|
(1)
|
Shares purchased consist of an aggregate of
89,250
shares of Class A common stock surrendered in the first quarter of
2018
to satisfy employees’ tax obligations upon the vesting of restricted stock.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 6.
|
EXHIBITS
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group Inc.
(Registrant)
|
||
|
|
|
|
|||
Dated: May 3, 2018
|
|
|
|
By:
|
|
/s/ John W. Pietrowicz
|
|
|
|
|
|
|
Chief Financial Officer & Senior Managing
Director Finance
|
1.
|
During the term of the Post-Board Agreement, you will render consulting services to CME and CME Entities upon request with respect to the futures business and industry and related matters and other matters in which you have expertise. In providing such services, you shall comply with all applicable laws, statutes, regulations, orders, codes and other acts of any applicable governmental authority and the policies, standards and regulations of CME and the CME Entities. You will personally perform all of the consulting services required under the Post-Board Agreement. Any request for consulting services under the Post-Board Agreement will be made by the Chief Executive Officer of CME. The Chief Executive Officer insofar as reasonably practicable, shall consider your convenience in the timing of his requests, and your failure or inability, by reason of temporary illness or other cause beyond your control or because of your absence for reasonable periods, to respond to such requests during any such temporary period shall not be deemed to constitute a default on your part in the performance of your consulting services under the Post-Board Agreement.
|
2.
|
Section 3 of the Post-Board Agreement is hereby amended and restated in its entirety as follows:
|
3.
|
During the term of the Post-Board Agreement, you will not use the names “CME” or “Chicago Mercantile Exchange” or any related logo or trademark, or any other trademark or intellectual property owned or used by any CME Entity (“
CME IP
”), or otherwise use or make reference to your prior relationship, experience or role with any CME Entity, to (i) promote any product, service, business or enterprise, whether offered by you or by any other entity or (ii) otherwise further the interests of any entity, in each case regardless of whether such entity engages in a business that is competitive with any CME Entity. Notwithstanding the foregoing, you may use the name or CME IP of any CME Entity in a non-promotional manner in your resume, curriculum vitae or other description of your prior professional experience that is not inconsistent with the foregoing.
|
4.
|
Effective upon your retirement from the Board of Directors of CME on May 9, 2018, you resign from the Chicago Mercantile Exchange Trust and CME Group Foundation, and any other board or board committee of any CME Entity that you serve on.
|
5.
|
Each reference in the Post-Board Agreement to “this Agreement,” “hereof,” “herein,” “hereunder,” “hereby” or any other similar reference shall be deemed to refer to the Post-Board Agreement as amended hereby.
|
6.
|
This letter agreement shall be effective as of the date hereof. Except as expressly provided above, all terms, conditions and provisions contained in the Post-Board Agreement are hereby ratified and confirmed and shall remain in full force and effect without any further change or modification whatsoever. This letter agreement is made a part of, and is incorporated into, the Post-Board Agreement and is subject to all terms, conditions and provisions contained therein as amended hereby.
|
7.
|
The provisions of Sections 8 through 11 of the Post-Board Agreement are incorporated herein by reference on a mutatis mutandis basis.
|
Agreed and Accepted as of
April 27, 2018
|
Address for Notice Purposes:
|
|
|
/s/ Leo Melamed
Leo Melamed |
CME Group Inc.
20 South Wacker Drive Chicago, IL 60606 Attention: General Counsel |
Address for Notice Purposes:
|
|
|
|
Melamed & Associates
30 South Wacker Drive, Suite 1625
Chicago, IL 60606
|
|
1.
|
Term
. The term of this Agreement shall commence effective upon the actual date of your retirement from the Board and shall end on the second anniversary thereof, unless sooner terminated as provided herein (“
Term
”).
|
2.
|
Scope of Consulting Services
. During the Term, you will render consulting services to the CME Entities upon request with respect to the businesses of the CME Entities and other matters in which you have expertise. In providing such services, you shall comply with all applicable laws, statutes, regulations, orders, codes and other acts of any applicable governmental authority and the policies, standards and regulations of CME and the CME Entities. You will personally perform all of the consulting services required under this Agreement. Any request for consulting services under this Agreement will be made by the Chief Executive Officer of CME. The Chief Executive Officer insofar as reasonably practicable, shall consider your convenience in the timing of his requests, and your failure or inability, by reason of temporary illness or other cause beyond your control or because of your absence for reasonable periods, to respond to such requests during any such temporary period shall not be deemed to constitute a default on your part in the performance of your consulting services under this Agreement.
|
3.
|
Consulting Fee
. In consideration for your consulting services and the non-compete and confidentiality provisions of this Agreement, CME shall pay to you $1,000,000
|
4.
|
Expense Reimbursement / Other Benefits
. During the Term, CME shall reimburse you for, or advance to you, all reasonable and necessary out-of-pocket travel and other expenses incurred by you at the specific request of a CME Entity and otherwise consistent with CME expense reimbursement policies from time to time in effect in connection with your performance of consulting services hereunder. Such expenses shall be reimbursed or advanced promptly after your submission to CME of expense statements, including copies of receipts and other documents verifying the amounts included therein, in such reasonable detail as CME may require.
|
5.
|
Nature of the Consulting Relationship
. You will perform the consulting services required under this Agreement as an independent contractor to, and not as an agent or employee of, any CME Entity. Except as and to the extent that a CME Entity, as the case may be, may otherwise prescribe in writing, you shall not have any authority to negotiate or to conclude any contracts on behalf of, or otherwise bind, CME or any other CME Entity. You shall be solely responsible for and shall pay all amounts of applicable federal and state income and self-employment taxes. You shall not be eligible to participate in any employee benefit, group insurance or compensation plans or programs maintained by any CME Entity. Neither CME nor any other CME Entity shall provide Social Security, unemployment compensation, disability insurance, workers’ compensation or similar coverage, or any other statutory employment benefit, to you.
|
6.
|
Restrictive Covenants
.
|
(a)
|
During the Term and for a period of one year thereafter, you will not, without the prior written consent of CME (i) render any services whether or not for compensation, to other individuals, firms, corporations or entities in connection with any matter that involves material interests adverse to any CME Entity, (ii) directly or indirectly compete with any CME Entity anywhere in the world or (iii) engage in any business or activity that you reasonably believe to be materially detrimental to the business or interests of any CME Entity.
|
(b)
|
You will not use the names “CME” or “Chicago Mercantile Exchange” or any related logo or trademark, or any other trademark or intellectual property owned or used by any CME Entity (“
CME IP
”), or otherwise use or make reference to your prior relationship, experience or role with any CME Entity, to (i) promote any product, service, business or enterprise, whether offered by you or by any other entity or (ii) otherwise further the interests of any entity, in each case regardless of whether such entity engages in a business that is competitive with any CME Entity. Notwithstanding the foregoing, you may use the name or CME IP of any CME Entity in a non-promotional manner in your resume, curriculum vitae or other description of your prior professional experience that is not inconsistent with the foregoing.
|
7.
|
Confidential Information
. In connection with your service to the CME Entities, and pursuant to this Agreement, you have acquired or may acquire confidential information with respect to the business, plans, strategies, finances, technology, markets, operations, customers, members, employees, suppliers and vendors and other matters of or related to the CME Entities (collectively, the “
Confidential Information
”). Unless disclosure is required by law, you shall not, without the prior written consent of CME, at any time, whether during or after the Term, communicate or divulge any Confidential Information to anyone other than a CME Entity or those other persons or entities designated by CME. All records, files, documents, notes, data and the like relating to the business or activities of any CME Entity which you shall prepare, develop, use, compile or receive shall be and remain the sole property of such CME Entity, as the case may be, and shall be returned upon CME’s request. “Confidential Information” shall exclude information (a) readily available in the public domain other than as a result of your act or omission or (b) obtained from third parties rightfully in possession of such information and having no direct or indirect confidentiality obligation to any CME Entity.
|
8.
|
Retirement
. Effective upon your retirement from the Board of Directors of CME on May 9, 2018, you resign from the Chicago Mercantile Exchange Trust, CME Group Foundation and any other board or committee of any CME Entity that you serve on.
|
9.
|
Non-Waiver
. The failure by either party to exercise any of its or his rights in the event of a breach of this Agreement by the other party shall not be construed as a waiver of such breach or any subsequent breach, or prevent either party from later enforcing strict compliance with this Agreement as to such breach or any subsequent breach.
|
10.
|
Severability
. If any provision of this Agreement is held by a court of competent jurisdiction to be void or unenforceable for any reason, such provision shall be modified or deleted in such manner so as to make this Agreement, as modified, legal and enforceable, and the remaining provisions hereof shall continue in full force and effect.
|
11.
|
Notices
. All notices and other required communications under this Agreement (“
Notices
”) shall be in writing, and shall be sent to a party at the address set forth below such party’s signature block below. A party may change its address by sending Notice to the other party of the new address. Notices shall be given: (a) by personal delivery to the other party; (b) by facsimile, with a confirmation sent by registered or certified mail, return receipt requested; (c) by registered or certified mail, return receipt requested; or (d) by express courier (e.g., FedEx). Notices shall be effective and shall be deemed delivered: (i) if by personal delivery, on the date of the personal delivery; (ii) if by facsimile, on the date stated in the electronic confirmation, delivered during normal business hours (8:00 a.m. to 5:00 p.m. at recipient’s location), and, if not delivered during normal business hours, on the next business day following delivery; (iii) if solely by mail, on the date of receipt as stated on the return receipt; or (iv) if by express courier, on the date signed for or rejected as reflected in the courier’s delivery log.
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12.
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Miscellaneous
. This Agreement is personal to you, and you shall not assign this Agreement, and any purported assignment is void. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. This Agreement contains the entire understanding between CME and yourself with respect to the subject matter hereof and supersedes and voids all prior negotiations, discussions, and agreements, whether written or oral. This Agreement may not be amended, modified or extended other than by a written agreement executed by the parties hereto.
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Agreed and Accepted as of
April , 2018
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Address for Notice Purposes:
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/s/ John F. Sandner
John F. Sandner |
CME Group Inc.
20 South Wacker Drive Chicago, IL 60606 Attention: General Counsel |
Address for Notice Purposes:
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John F. Sandner & Associates
30 S. Wacker #1912
Chicago, IL 60606
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Dated: May 3, 2018
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/s/ Terrence A. Duffy
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Name: Terrence A. Duffy
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Title: Chief Executive Officer
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Dated: May 3, 2018
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/s/ John W. Pietrowicz
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Name: John W. Pietrowicz
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Title: Chief Financial Officer
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/s/ Terrence A. Duffy
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Name: Terrence A. Duffy
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Title: Chief Executive Officer
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/s/ John W. Pietrowicz
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Name: John W. Pietrowicz
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Title: Chief Financial Officer
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