Oct 26, 2017
Executives
John Peschier - MD Terrence Duffy - Chairman & CEO John Pietrowicz - CFO Sean Tully - Senior MD, Global Head Financial & OTC Products Kim Taylor - President, Clearing & Post-Trade Services Bryan Durkin - President Derek Sammann - Senior MD, Global Head of Commodities & Options Products
Analysts
Dan Fannon - Jefferies Chris Allen - Rosenblatt Rich Repetto - Sandler O'Neill Brian Bedell - Deutsche Bank Michael Carrier - Bank of America Merrill Lynch Ken Worthington - JPMorgan Kyle Voigt - KBW Jeremy Campbell - Barclays Ben Herbert - Citi Patrick O'Shaughnessy - Raymond James
Operator
Please standby. Good day everyone and welcome to the CME Group Third Quarter 2017 Earnings Conference Call.
At this time, I'd like to turn the call over to Mr. John Peschier.
Please go ahead.
John Peschier
Good morning and thank you all for joining us. I'm going to start with the Safe Harbor language and then I'll turn it over to Terry for a few remarks and then we will open it up for your questions.
Other members of our team are here as well and will participate during the Q&A session. Statements made on this call and in the slides on our website that are not historical facts are forward-looking statements.
These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statements.
More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are on our website. Also, on the last page of the earnings release, you will find a reconciliation between GAAP and non-GAAP measures.
With that, I would like to turn the call over to Terry.
Terrence Duffy
Thanks, John. I want to thank you all for joining us this morning.
We appreciate your interest in CME Group. We made great progress during Q3 broad-based volume growth coupled with expense discipline drove double-digit net adjusted EPS growth.
We also have several new initiatives in the works. We know many of you are incredibly busy during the earnings season and also often are juggling multiple calls.
We are coming up on our 15th anniversary of becoming a public company and we decided to assess our earnings delivery process. We decided to create a quarterly highlight document that we made available 90 minutes ago with the press release.
This will replace the normal scripted remarks. Hopefully you had a chance to look at it.
One of the notable financial metrics I would like to mention is when comparing year-to-date this year versus 2014, our revenue was up $473 million, our total expenses remained flat, and non-operating income is up $80 million. These results reflect a lot of hard work across the whole company as we focus on acquiring new global customers and being efficient.
We intend to continue with this mindset. With that we would like to open up the call for your questions.
Given the number of analysts who cover us, we ask that you start off with one question, so we can get to everyone. If you have another question feel free to jump back into the queue.
Thank you and we look forward to your questions.
Operator
Thank you. [Operator Instructions].
Our first question today is from Dan Fannon from Jefferies.
Dan Fannon
Thanks, good morning. Terry and John I guess my first question is on M&A.
There has been some activity within the industry, seems that remains ongoing, so want to get an update on your kind of outlook for that and your participation if at all. Then also you’ve been exiting kind of non-core businesses, so curious are all investment securities if there is anything else that you're looking or that's continuing kind of a valuation process.
Terrence Duffy
So I'll take the latter part of that question first, Dan, and when you look at what we've done over the last year especially taken down our investment in Europe getting out of the credit market -- credit business and getting out of the investment we had in Brazil just to name a few. I think that we're pretty much just where we need to be right now by taking down those investments.
I'm a big believer and they don't work after while you eventually have to call the question and it wasn't where Europe wasn't completely working, it’s just we built the liquidity here in U.S. here and Chicago round the clock which made it much more efficient for the company to run.
So that's really the reasons behind that. And the other investments especially Brazil, I'm a big believer if shareholders want us to invest their money, they can do it themselves, they don't need us to do it for them and as it relates to credit that was just a losing proposition for us and eventually needed to call the question.
So those are a couple of the main ones that I think you're referring to and I think that's pretty much where we want to be right now. We're analyzing some smaller incentive plans things of that nature but nothing that would move the radar.
As far as other M&A activity, John, I would like you to comment on.
John Pietrowicz
Sure. Our view on M&A really Dan hasn't changed.
We still believe that large scale cross-border exchange M&A is very difficult to get done especially in this current environment. But we do keep our options open as it relates to mergers and acquisitions, if we find something that we think can create shareholder value and advance our strategy, we'll certainly execute on it but we're right now sitting at a really strong position.
So we can be -- we can approach things from a position of strength. So that's our view on mergers and acquisitions.
Operator
Moving on, our next question comes from Chris Allen from Rosenblatt.
Chris Allen
Good morning guys. I just wanted to touch quickly on the expense guidance for the full-year and how to think about the sequential movement on -- in terms of 4Q.
I know you should expect the big bump up in marketing spend, but when we get some of the other lines professional services, you have done a good job of managing down this year. So I'm just wondering how to think about the sequential growth there.
And then moving forward your CapEx has continued to decline every single year for us like three or four years, you brought it down again. How you're able to maintain the continuous decline and how to think about that from the longer-term perspective?
John Pietrowicz
Sure Chris, this is John. Yes, you're correct; when you take a look at kind of the sequential growth in our expenses it's a pattern that be consistent over the years.
Our fourth quarter tend to be significantly heavier than our third quarter. We do get a bump up in marketing and other because we got some customer-facing events that occur in the fourth quarter.
Also when you take a look at the increase from Q3 to Q4 this year, we do have some catch-up on projects, so we do expect our pro services fees to go up a little higher. When you look at Q4 of last year versus Q4 of this year, it's really about a $4 million increase.
When you look at our average compensation cost over the first three quarters it's up about $6 million a quarter. So our non-compensation related expenses are actually going to go down a little bit, we're anticipating going into Q4.
In terms of our expense guidance this has been an entire CME wide effort and the team has done a fantastic job of really managing our expenses well. As Terry kind of alluded to in his remarks to start, our expense level is below what it was in 2014, with regard to our total expenses excluding license fees.
So the team is really has a really strong mindset around managing cost. When looking at our CapEx on a year-by-year basis, the capital -- our CapEx spend is actually over the last several years has decreased -- I'm sorry has actually been in the range of between $70 million and $85 million.
So our capital on tech only in 2015 was about $72 million, in 2016 is about $86 million, the guidance we've given is between $80 million and $85 million. So it's roughly been in that range in 2016.
What’s really important is that we've been the tech team has done a tremendous job in terms of managing and engineering our systems and utilizing new technologies like cloud-based services which has allowed to scale our business and handle significant market events with high availability around the clock, while being very efficient in our spending. We can handle two to three times our current volume levels as needed.
And that was really demonstrated when you took a look at the U.S. Elections and Brexit as examples.
So we've got a very robust system. The team is leveraging new technologies and is really done a lot great work in terms of engineering our systems.
Operator
Our next question today will come from Rich Repetto from Sandler O'Neill.
Rich Repetto
Good morning guys and thanks for the new process here. So I guess the question -- one of the question is $150 million in capital from Europe, I believe that's the number and I’m not sure whether that's completely freed up and it is, is that earmarked where would you -- is that likely to go to the annual variable dividend at year-end?
John Pietrowicz
Thanks Rich, this is John. We're very pleased with the amount of cash we've been able to build.
We've got about $1.63 billion in cash and cash equivalents coming into the fourth quarter. Our typical Q4 build is between $175 million to $250 million excluding one-time items like Brazil and building sales.
So we're very pleased with our -- with the way we've been able to generate cash, our expense controls and organic growth are really driving those balances higher. I think when we take a look at the level of the annual variable dividend that's a board decision.
Certainly the point of discussion will be around the capital freed up from our operations out of Europe. So that $150 million will be point of discussion we talk with the board in the fourth quarter about the annual variable dividend.
Rich Repetto
Okay, thank you. I will get back in the queue.
John Pietrowicz
All right. Thank you, Rich.
Terrence Duffy
Thank you, Rich.
Operator
And Brian Bedell from Deutsche Bank has our next question.
Brian Bedell
Great, thanks. Thanks very much.
I also appreciate the new format. You guys talked a little bit about in the presentation on the uncleared margin rules for FX futures and how you're working with swap participants.
Can you talk a little bit maybe you about your sort of growth outlook on FX futures? We're seeing a little bit of better volumes certainly on the roll months.
But I was just trying to get a sense of whether you think that will create a pretty big step function in FX futures volumes from that activity alone over the next few quarters?
Terrence Duffy
Sean?
Sean Tully
Sure, this is Sean jumping in. We are excited about the FX business and we are working very closely with the marketplace in order to solve the markets problems much in the same way that we did rates market over the last several years.
The rates market over the last several years' right we facilitated recurring interest rate swaps and then the movement of a lot of folks from OTC space into future space, as the rules hit market participants and we've shown that futures grow with the best way to lowest-cost way to represent risk. So working with participants again in the FX market, we're very excited about that, we do offer non-billable forward hearing in the OTC space and we are looking to launch in the near future OTC FX options hearing as well.
In addition to that we recently launched a monthly FX futures, which we're really excited about. The monthly FX futures gives the marketplace an alternative and kicks on the FX forward market as well as the FX swaps market and we actually had a day about a week-and-a-half ago, where we did more than 21,000 contracts in our new monthly contract -- in our new monthly.
That's an important number. If you think about our FX contracts does 900,000 contracts a day, 21,000 day in a new product is a significant portion that day was almost 3% of our FX volumes.
So we are seeing additional participants come in and we are seeing the uptick of these products. We also announced recently the launch of CME FX link which we expect to launch actually January of next year.
With CME FX link you're going to be able to trade on Globex, the spread between an OTC spot transaction and our futures contract. So this will be against our start from three contracts, the monthlies as well as from quarterly.
So we're very excited about that, for the first time we will have a listed standardized equivalent for FX swaps and FX forwards. Why is it so exciting?
Relative to the margin rules, the GSIT rules, and even under MITHID 2 the impact on market adjustments that will have to post margin on these products, the standardized futures will be a lower cost alternative. And if you look at the FX forwards market and the FX swaps market combined according to the most recent study from the BIS between the two of them it's about $2.1 trillion available volume.
So we're offering a standardized equivalent and we're excited about working with market participant on that.
Brian Bedell
And just from the pace of that momentum did you see that building more sort of now, I guess in the fourth quarter and for next year or is that do you view this as much more of a longer-term project?
Sean Tully
Probably longer-term. I mean really not going to -- obviously longer-term not going to put our predictions very hard to predict, how much transfer will be, but we want to be there to offer the lowest cost, most efficient alternative for the market.
Terrence Duffy
Brian one of the things I will say it's Terry Duffy is when you have a mandatory law such as Dodd-Frank that implements on the certain particular day people care for that. When you have what’s under the uncleared margin rules as it relates to FX it's economics that dictates the behavior of the participant, when the economics come under actually almost much more powerful than a mandatory date.
So without us trying to give any timeline of when we think that’s going to have an uptick one way or another I think that you have to look at the differences and economics around these particular rules always seem to live up.
Operator
Our next question today comes from Michael Carrier, Bank of America Merrill Lynch.
Michael Carrier
Thanks guys. Maybe just one on the regulatory outlook, the treasury put out the capital markets report there are a ton of recommendation in air cost it’s pretty much all areas, it seems like a lot of the comments on either the futures market declaring the CFPC in the industry is already been working on lot of that stuff but just wanted to get your take on any new launches that you saw in the report and how you see that progressing over the next few years?
Terrence Duffy
Mike, I'll take -- I will make comment on that. I had the opportunity to meet several times the treasury along with Kim Taylor and other people in the organization and got a chance to go through the report and got a good summary as if you've seen the report it's rather lengthy but there is a couple of things in that that I will point out that the supplemental leverage ratio that the stance of the treasury is taking in that report is very positive, we think that they're spot on with the way of looking at that.
As it relates to some of the other things in the report, I think for the most part it doesn't have any adverse impact on CME Group or the businesses that we run but from that standpoint we're going to -- we're fine with the report. So the one thing that is in there again even though it’s that supplemental leverage ratio and Kim if you want to comment any further on that report but we --
Kim Taylor
The capital implication for our customers is the most important.
Terrence Duffy
Right. So that's kind of how we look at that report, Mike.
Operator
And moving on our next question comes from Ken Worthington from JPMorgan.
Ken Worthington
I'm going to sneak in two half questions. One on data, data seems to have turned the quarter so much on some modest sequential growth, any comments there and then clearing revenues teams to be going the other way continuing to decline modestly; can you give us an update there?
Thank you.
Terrence Duffy
So Bryan why don't you go ahead and start off the data?
Bryan Durkin
With respect to data, we’ve been working hard to add new resources to support our core market data efforts in business mainly focusing on new resources in international commercialization of our data products and also audits and derived data. With respect to our progress and in-sourcing the audit function, we completed our resourcing efforts and we're overseeing this function now internally and we have commenced a numerous market data audits couple of which are in the completion stage.
On derived data we continue to be pleased with demand for that pipeline that we have to-date. We closed a number of licensing arrangements and are in track to deliver more agreements over the course of the next several months.
And I want to note that well a number of agreements for renewals of existing licenses, we're really pleased to see the strong pipeline of new request that are under review and are in the process of being executed. We also recently announced an increase to the annual redistribution license from 12,000 per annum to 24,000 per annum.
The real time data in 12 to 18,000 for delayed data. With respect to the non-display market data registrants, we have also announced an introduction of a new category and requiring all of our licensees to provide information on these categories to identify more specifically the field of use, so whether the trading is principal facilitating clients business using for order routing management systems et cetera.
Getting this business intelligence will enable us to optimize our pricing structures and will provide our customers I believe with more future products and services aligned to their consumption and usage needs. So these reporting requirements will take effect in January.
To note as with other data providers while we continue to see some attrition with respect to our professional data terminal usage base, we have also observed an increase in the non-display, non-professional retail, and Asia categories. So we're currently reviewing those user profiles to confirm the appropriate pricing structures going forward.
Terrence Duffy
Thanks, Bryan. So Sean you want to deal with the clearing revenue question he was talking about?
Sean Tully
Sure. In terms of clearing revenue on the interest rate side, we expect to be flattish this year, so revenues to be fairly flat.
As we mentioned earlier right we have decided to close our CBS Clearing activity. And while the revenues were small, the net income was negative.
So that also would have an impact on those numbers. But if you look at the interest rate swaps flattish but slightly higher.
We are -- I’m excited about the new offerings that we have, we had very good traction over the last 12 months particularly in Mexico Peso and Brazilian Real. In those two currencies we’re running over $20 billion a day and we have now over 170 participants and in fact to get an additional 50 participants in our Latin American interest rate swaps, so far this year.
We’re also excited to say that we launched the Indian Rupee and KRW, so the Korean Won interest rate swap clearing. We’ve already done and those currencies are around 30 trades with 16 participants, which is very good traction for the very beginning.
If you look at the Brazilian Real, the Mexican Peso, the Korean Won and the Indian Rupee these are where we had a unique value proposition especially with the Mexican Peso when we first launched it and the traction we got. So in these currencies we expect to be the value proposition relative to addressing the margin rules and earning that efficiency to the marketplace that we will do much better than we have in the past.
To add to that, actually, we recently had more than 30 trades executed in our Swaptions clearing. While we had relatively small business, we are getting traction in new product.
Terrence Duffy
Thanks, Sean. Ken does that give you some color on your questions.
Ken Worthington
A lot of color. Thank you very much.
Terrence Duffy
Thanks, Ken.
Operator
We will hear next from Kyle Voigt from KBW.
Kyle Voigt
Hi good morning. Maybe one for John.
Just wondering if we get some updated thoughts around transaction pricing, you’ve seen really strong growth in the number of product complexes this year and typically you have the ability to adjust the pricing volume tiers in the growing volume environment as you’ve done over the past few years and I think we’ve gotten prior pricing announcements on or before that -- after the quarter earnings calls, just wondering if you could read into that CME doesn’t file making new pricing changes for 2018 or is there still time left here? Thanks.
John Pietrowicz
Thanks, Kyle. We are -- we take a look at pricing continuously and we are going through our budgeting process right now.
So pricing is something that we do, we do take a look at relative to creation of the budget. We did have some pricing announcements recently in our Euro dollar options area that you might have seen in the report and we think this is going to be important in terms of attracting more customers into that marketplace.
Sean, do you want to comment on that?
Sean Tully
Sure. Over the last few years everyone, we thought this number of times work very hard in terms of investments in our technology and investments in the ability to have very fast responses to strategies and our options marketplace in order to facilitate the electronification.
So the Euro dollar options as John mentioned we leveled the playing field between the different venues in particular for members we did increase the fees from $0.09 to $0.15 if you're trading in the fifth. And then we lowered them on Globex in terms of the fees with CME it gets $24 to $22.
So you can see there we have reduced the differential leveling the playing field in order to get more particularly international participants and to continue our growth of our electronic market. If it is the success we’ve had there over last two years, we’re currently running at 40% electronic in our Euro dollar option last year we’re about 25% electronic a year before that about 15% electronic, so very significant growth in our electronic market.
In addition to that actually around the treasury side, we're currently running at around 80% electronic versus closer to 70% last year. So we're excited about the increasing electronification and the increasing volumes.
If you look at those marketplaces while our overall rates business is up about 15% year-over-year, our options business is growing much, much faster. Our Euro dollar options in particular are running up 19% year-over-year and our treasury options in fact are up 41% year-over-year.
So we see increasing participation, increased participants, increasing volume, I think John and I have spoken many times in the past about as we electronify we typically see much higher velocity of trading and that's definitely coming to fruition here.
Operator
The next question comes from Jeremy Campbell from Barclays.
Jeremy Campbell
Hi thanks. Just as we kind of look ahead here in potentially for getting another kind of rate hike at the December Fed meeting, can you just remind us about what do you guys might have looked to kind of pass-through to clients as far as kind of rate increases and what you might be able to keep with yields?
John Pietrowicz
Thanks Jeremy, this is John. We haven’t announced how we’re going to handle another Fed move but to give you some color about how we’re thinking about it, we want to be competitive with the returns our customers can get with other investments versus what they can get at the Fed.
And we want to do this in order to attract the cash balances to the Fed. So we haven't announced that but the way we’re thinking about it really is the company though is our returns that we can offer by putting money in the Fed versus alternative investment vehicles, so more to come on that once the Fed moves.
Jeremy Campbell
But I think is it safe to say that you’re going to get a little bit of an effect pass-through 100% on that?
John Pietrowicz
We’re not going to comment on it, it’s too early and it’s unknown exactly when the Fed is going to move. So we don’t want to -- we will comment on that once the Fed makes the rate change.
Operator
And Ben Herbert from Citi has our next question.
Ben Herbert
Could you just provide some color on market share gains in metals kind of competitive dynamic there and then what you’re doing to protect recent gains?
Derek Sammann
Sure it's Derek here. We're very excited about the growth in metals; we have been able to put forward.
What we have developed over the last specifically three years was the diversification story to ensure that our COMEX metals franchise extends beyond the precious metals business where we have a global 95% market share which has actually increased year-on-year primarily due to our Gold and silver business but Platinum, Palladium as well. What we have done primarily in the metals side on precious is to continue to electronify our options business extend liquidity out of the curve and we’re seeing significant participation outside the U.S.
between WTI and gold are the two most popular products with the retail population particularly in Asia. That's help us through I think Q3 metals non-U.S.
volumes up 45% year-on-year Q3 2017 versus 2016. So global participation in our market of electronifying our options market we actually had a record level of electronification in metals options, I think we went from 39% to 46% of electronics there so we are continuing to see extensive gains on the electronics side.
On the other side of the franchise, we put a specific focus in place in 2014 to build the industrial metal side of the business. So the market share gains you see us make primarily in copper, take that business from about a 12%, 15% market share in 2014 to close to 27% year-to-date this year.
So the way it has gone about that is really talking to our customers and making sure that we’re building not just participation globalized use in our copper business but ensuring that we have the balance of the portfolio for the other industrial metals product they need primarily around aluminum, lead and zinc. So these are very different client bases, precious metals tend to trade more like a financial products we see growth trends that are on the lines of FX and fixed income is really financial products, the industrial metals side of the business came at a point in time when we are saying infrastructure conversations in the U.S.
which is a direct correlation to growth in bonds and participation in our copper contract and globalize the participation. So we’ve seen strong market share gains there.
We have been able to do that without any pricing cuts, we’re competing with better products, better liquidity, and electronic access in the European Nation market. So we’re pleased with the progress we’ve made, we will continue to build on those market share gains and certainly the industrial metals portion of that business as and when we see global recovery we believe we will continue to see growth we have developed and built the base for and we think we will continue to grow participation globally there.
Operator
We will go next to Patrick O'Shaughnessy from Raymond James.
Patrick O'Shaughnessy
Hey good morning. So we have seen the nice reacceleration of your international volume growth and it looks like a lot of that is European customers trading your energy products, what is it specifically that is really catching on, is a focus on WTI is it broad-based and why a lot greater European growth and U.S.
growth in that product group right now?
Terrence Duffy
So Patrick we’re going to have Bryan comment a little bit about the growth and then Derek talk about the products. So Bryan?
Bryan Durkin
So this just underscores the efforts that we've undertaken in the last few years in terms of our sales efforts and outreach and it’s showing its impact across these asset classes. Energy in particular and Derek can get into the mechanics more so but in terms of the activity, the volatility, the recognition of that product as the benchmark has definitely taken major traction within EMEA across I would say all of our clients segments by the way huge uptake on the commercial side particularly driven out of EMEA, solid commercial participation continuing out of Asia which is a new dynamic that we’ve seen in the last year-and-a-half and it’s continuing to build that we’re just there a couple of weeks ago and the reviews in terms of our energy suite and robustness of energy suite have resonated loud and clear with that community.
So you can expect more efforts in that regard because I really don't even believe we have scratched this surface in terms of opportunity, asset managers, hedge fund banks all are very aggressively trading these products. Multiple asset classes, biggest drivers in terms of cross product is asset managers, hedge funds, and corporates and commercials.
Derek Sammann
Patrick a little color from the product side. If you look at the top of Page 2 in the document that we circulated for the earnings call particularly you will see we call the asset class growth or we see the energy non-U.S.
business is 65%. We attribute that largely to the continued growth and globalization of the U.S.
Crude benchmark and WTI now that it's a waterboard and benchmark. We are seeing participation in our markets skyrocket.
You’re absolutely right pointed the European and particularly the Asian participation growth there as well. What we’re excited about there is not only the fact that we’re seeing volumes growth but in Appendix material we sent you on Page 20, you will see the large open interest holders we set records over the course of this year and we're setting just below a new large open interest holder record there as well.
So the point Bryan made we are seeing broad-based participation, accelerated growth in Europe and Asia that's on the crude side. What we are really excited about is actually we are starting to see a natural gas market that is beginning to follow a similar path in globalizing that we’ve seen in WTI over the last couple of years.
So we’re starting to see Henry Hub which has always been the U.S. benchmark rise to be global benchmark status, as you are seeing Henry Hub continue to expand, that's a market we've taken from 68% market share to 80% market share in the last 24 months.
As you’re starting to see liquefaction facilities come online in the U.S. which is actually a transportable version of U.S.
natural gas connects natural gas markets that places Henry Hub as the center of the global gas market. So we’re starting to see a early uptake and we are seeing broader participation and increase in action to -- from European participants particularly in light of some of the regulatory changes they are facing locally, being a path that we’ve been able to develop for the growth in WTI.
We see a similar path unfold over time relative to the NAT gas development. We see this as multi-year process; we don’t see this happen in overnight, there is one liquefaction facility online now the Sabine Pass, but three more facilities come online in the next two to three years.
So you will see they take growing building the participation base, you will see this follow a similar path of globalizing use of WTI and we thought this 80% market share in the Henry Hub futures market, we think we are well positioned to serve that global use and make sure that our energy business as a core of the global NAT gas business going forward.
Operator
And we will take a follow-up question from Rich Repetto from Sandler O’Neill.
Rich Repetto
Yes. I got a real time question here would the CME be interested in the Deutsche Borse now that Carsten Kengeter is stepping down by year-end.
I'm kidding Terry, but definitely I’m not going to ask you that question but that is a news that just broke. But I do have a question around M&A you’ve been focusing generally on CFPC regulated entities, futures your large acquisitions have been with CBOT and NYMEX.
As you look forward Terry would you necessarily need the state within those boundary, would you look at some of the entities out there now have -- are regulated by both, are you more open to stuff like that going forward given the majority of the markets et cetera.
Terrence Duffy
Rich, the only thing I will say and I'll kind of follow-up with John said earlier and that is we’re going to look and continue to look and because we put ourselves in a position to analyze so many different transactions of what's going to add value to the client, I said a year ago when I took over as CEO my major focus was building the end user clients and that's what we’re continuing to do. So we freed up a lot of capital, we’re continuing to do new client acquisition and if there is a potential transaction that makes sense that will add to the bottom-line for our clients, I truly believe that's the formula that we will in return to deliver value for our shareholders.
So that’s the path that I’m going down and as far as the regulation goes and who regulates that particular product that we go after it, we will take that under consideration but I will not shy away from something that I think will deliver value from the company just because of who regulates it.
Operator
And that does conclude today's question-and-answer session today. At this time, I will turn the conference back to management for additional or closing remarks.
Terrence Duffy
Well we want to thank you as I said at the outset for your participation in CME and your interest and we hope you have a good day and thank you very much.
Operator
And that does conclude our conference today. Thank you for your participation.
You may now disconnect.