芝加哥商業交易所 (CME) 2003 Q1 法說會逐字稿

Please stand by. Good day and welcome to the CME first quarter financial update. This call is being recorded. At this time, for opening remarks and introductions I would like to turn the call over to Mr. John Peschier.

Thank you for joining us this morning. Jim McNulty, our President and CEO, and Dave Gomach, our CFO will spend a few minutes outlining the highlights of the first quarter and then we'll open up the call for your questions. Terry Duffy, our Chairman of the Board and Craig Donohue, Executive Vice President and Chief Administrative Officer are also with us today and will be participating in the Q&A session.

Before we begin, I'll read the Safe Harbor language. Statements made on this call 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 forward-looking statements. More details and information about factors that may affect our performance maybe found in our filings with the SEC, including our most recent annual report of form 10-K which is available on our website. Now, I'd like to turn the call over to Jim.

Thank you John, and good morning everyone. We had an outstanding quarter bolstered by the highest average daily volume month in our history during March. We had record quarterly revenue of 126 million dollars, operating margin approaching 35 percent, and our net income of $26 million was up 40 percent from the same period last year. Our EPS came in at 77 cents. CME products and trading platforms have demonstrated their ability to meet customer demand in a violable global climate. In March, when war with Iraq started, we saw a volume serge in our interest rates equity and foreign exchange products.

We continue to see that institutions and individuals are more actively managing their financial risks. CME Products are designed to hedge against financial risks and provide instantaneous 23 hour a day investment and asset allocation opportunities. There's been a shift in the global directive's landscape, as users should become more focused on credit quality. Users are increasingly seeking central party clearing from exchanges like CME, rather than by lateral agreement. This is evidence by the growth in our open interest during the first quarter from 19 million open positions to 21 million open positions. On this conference call, I'll provide an overview of the results for the quarter and then give you an update on recent initiatives. Following my remarks, David Gomach will elaborate in more detail on our first quarter financial results. We processed 2.4 million contracts and averaged daily volume for the quarter. This grew 20 percent compared to the same quarter last year.

We executed transactions with a notional value of $73 trillion, about $1.2 trillion pre trading day. Let me quickly review our major product areas. There are 3 significant stories during the quarter. First, within our interest rate quadrant, we have seen a strong resurgence from lower volume levels in December. Volume grew from around 700,000 per day in December to over 1.3 million per day in March. Activity picked up significantly with announcements regarding the war in Iraq, and we were also positively impacted by continuing the mortgage refinancing activity, which it often has with our Euro dollar futures and options contract. In April, we were tracking below March volume levels and interest rates, but above January and February levels. Our equity in any average daily volume surged 113 percent to 958,000 contracts in the first quarter, compared to the prior year.

So while volumes and equity exchanges were relatively light, our equity products continued to set records. Our efforts to extend the distribution of our products and to make technology enhancements to continued to the continued success of our . In April, volumes has come down from March peak so it's volatility measured by the index has declined from 35 percent to 29 percent. In addition, we're very encouraged by the strength that we've found in our foreign exchange products, which now make up about 14 percent of our transaction revenue. For the entire quarter, we averaged 127,000 foreign exchange contracts per day, up 36 percent from 93,000 in the fourth quarter of 2002. In March, we traded the highest number of foreign exchange futures in our history, breaking a 9 year old record. This growth is primarily due to improvements in our Globex trading system and central common party clearing, which makes this product line increasingly important to large banks and investment banks. We continue to see a pick up in electronic FX trading, which averaged about 45,000 per day during the first quarter.

Foreign exchange continues to be a strong area of focus for our new European distribution team and FX trading volume is tracking well. I'm sure the many of you saw our announcement last week regarding with the Chicago board of trade to provide clearing services. During our IPO Road Show and in our last meeting, we've discussed our growth strategy in detail. One of our primary objectives was to provide transaction processing and other business services to third parties. This agreement delivers upon that strategy. Our agreement with Chicago Board of Trade will result in our clearing house providing clearing services for all TBO products, beginning in January of 2004. This agreement will give our clearing firms and customers significant operational margin and capital efficiencies. We're delighted to unite with the CBO customers with our exchanges exactly what they've told us they wanted. By clearing CME and TBO products through our clearing house, we can offer portfolio margining, in other words, we will recognize the position's held at both exchanges and reduce their performance bonds as appropriate. We will also provide operational efficiencies by reducing the number of clearing houses that our clients interface with. We will announce additional details regarding our progress as we get closer to the launch. Now, I'll provide an update on recent initiatives underway of CME. As we continue to plant the seeds for our future results, and as we've talked about in the past, our time and effort is best focused on enhancing the relevance and use of our existing products, innovating with new product, improving our technology infrastructure and expanding our distribution and user bays. During the quarter, we made several modifications to existing products, and announced 2 new products. First, the CME Dollar Index which began trading on March 3rd, and the Russell 1000 contract, which will be begin trading next week on April 28th. We had a busy quarter from a technology standpoint. We rolled out widely anticipated the end of January, we upgraded our galaxy wireless hand-held units and began introducing them into our equity complex, and we made headway in the migration of users to our more efficient I-Link interface into Globex which now accounts for 90 percent of Globex orders, compared with only 20 percent in July of 2002.

Many of you have been following the Eagle initiative closely. We rolled out the Eagle interest rate software at the end of January. We have seen an encouraging pick-up in electronic interest rate volume. Last year, we averaged about 31,000 interest rate contracts per day electronically, and we averaged over 42,000 per day in March. We had one day above 90,000 contracts. In April, we were again, averaging approximately 40,000 contracts.

While it's still early, we're encouraged by the performance so far. Our marketing team is now actively talking about this enhanced functionality, especially with European users. In terms of distribution, we added 8 network connections to our telecom hub in London since our last earnings call at the end of January, and now have 30 network connections set up there. We continue to build relationships in Asia as we announced a memorandum of understanding with the Shanghai Futures Exchange to pursue joint business development initiative and derivative products. Now, let me turn to the one in Chicago.

As many of you know, One Chicago began trading single stock futures in November. During the first quarter, One Chicago averaged approximately 4,700 contracts per day, compared to 5,100 per day in the fourth quarter. Trading volume was relatively slow in underlying equities during Q1, and we have not seen the surge as of yet with One Chicago products. We remain optimistic about the future of our joint venture and are encouraged that One Chicago has taken an early lead in volume and open interest compared to it's primary competitor. As of April 17th, open interest had grown to about 51,000 contracts, up from 35,000 at the end of 2002.

Since inception last November, One Chicago has traded over 500,000 total contracts. To summarize, our performance in the first quarter was strong from both the volume and revenue standpoint. We made several product enhancements and now 2 new products, completed a major technology role-out with the first phase of Eagle and continued improving our distribution in Global Reach. We're very excited about the historic agreement we made to provide clearing services to the CBOT, the second largest future's exchange in the United States. We remain focused on maximizing the opportunities at hand, as our customers around the world turn to our markets to manage risks. With that, I'd like to turn the call over to David Gomach, our CFO who will provide more detail on the financial results. David?

Thank you Jim. As I mentioned last quarter, we will be directing GAP results and will no longer provide comparison that excludes stock base compensation. I would like to start by focusing first on volume, which averaged 2.4 million contracts per day in Q1. Our average daily volume was up 20 percent, compared to the first quarter of last year, and up 6 percent from the fourth quarter of 2002. Our equity volume was 958,000 contracts per day. An increase of over 100 percent, compared to Q1 last year, and up 13 percent sequentially. Volume in our equity standard products was 142,000 contracts per day, up 4 percent compared to last year, and up 3 percent from last quarter.

As Jim mentioned, our interest rate volume fell off during the month of December, but has picked up in the first quarter. Our average for the quarter was 1.12 contract, million contracts per day, down 13 percent versus a strong Q1 last year and up 9 percent compared to the prior quarter. Turning to currency, FX was 127,000 contracts per day. That is up 32 percent compared to last year, and up 36 percent compared to the fourth quarter. Our Q1 FX volume was the highest volume quarter in the last 5 years. Commodity products averaged 35 contracts per day, up 9 percent compared to the first quarter last year, and up 19 percent sequentially.

By venue, volume of Globex averaged over 1 million per day for the second consecutive quarter and rolls 109 percent from the first quarter last year. For the quarter, volume trading on Globex represented 44 percent of total volumes, versus 25 percent in the first quarter last year, and 46 in the fourth quarter of 2002. The 2 percent shift from Q4, was driven by the rebound in Euro dollar volume. volume was 1.3 million contracts per day in the first quarter, compared to 1.47 million per day a year ago, and 1.19 million per day in the fourth quarter. Privately negotiated transactions, which include block trades and ESPs totally 39,000 contracts per day, up 18 percent compared to last year, and up 21 percent sequentially, driven primarily by FX.

Excluding , the rate per trade was 70.4 cents compared to 64.6 cents during the first quarter of last year and up about a penny from 69.4 cents in the fourth quarter. The rate for trade was held by strong performance in the privately negotiated transaction, which averaged $3.96 per trade, and made up 9 percent of the clearing and transaction fees on just 2 percent of the volume. In addition, the rate for trade benefited from growth in the foreign exchange volume with an average rate for trade of $1.88. We also saw some impacts from the change in Euro dollar tiered pricing which took effect March 1st. Lastly, we had a favorable half on the average rate for trade since clearing the adjustment came in lower than anticipated this quarter.

As a reminder, both clearing firms have 90 days to submit claims for the adjustments, which are primarily due to miscoding of number versus customer accounts. Improvements in back office systems, and procedures at clearing firms, have resulted in a consistent reduction in the number of clearing fee rebate requests, and as a result, a reduction in the overall reserve. The increase in volume, coupled with the small increase in our average rate per trade, were the 2 primary drivers behind a record quota for net revenue, which was up 25 percent to a record 126 million, compared to 101 million in the first quarter of 2002. We talked about volume and pricing.

Now let me turn to some of the other revenue categories. Location fees totaled 11.8 million down from 12.5 million last year, and 12.2 million last quarter. We have seen a reduction in the market data screen since the beginning of the quarter because of contraction within the financial services community. At the end of the quarter, we had about 32,300 first locations, down from 32,900 at year-end. And 119,500 additional subscribers versus 124,600 at year-end. Offsetting that somewhat, our subscriptions for our non-pro product offering, which stood at 23,600 at the end of the Q1, versus 21,500 at year-end, and 15,600 in the first quarter of 2002. Investment income was down to 1.1 million in the quarter compared to 1.6 million last year and prior quarter.

The reduction is primarily due to low interest rate levels and the impact of the deferred compensation, which reduced the amount by 500,00 relative to Q4, with a corresponding reduction in compensation and benefits. I'll now take a few minutes to review expenses. Total operating expenses during the quarter were 82.3 million, including branding expense of 5.1 million. This compared to 69.9 million in the first quarter of last year and 76.4 million last quarter. Excluding a 7.5 million reduction in patent litigation expense based on our settlement with . Compensation and benefits came in at 33.2 million up from 30.8 million last year and 30.3 million last quarter. We normally see an increase in this category as we move from Q4 to Q1 due to salary increases which become effective during the month of March and two additional comp-related expenses that have a greater impact in the first quarter. FICA, or Social Security taxes, and our vacation expense accrual. In addition, we have the full impact of employees added in the fourth quarter. For your information, stock based compensation of 630 thousand for the fourth quarter is now included in the compensation and benefits line on the income statement.

During the first quarter, compensation and benefits were 26 percent of total revenue, compared to 30 percent in Q1 of last year, and at the end of the quarter, headcount stood at 1,165, compared to 1,152 at the end of last year, and 1,057 at the end of Q1 '02.

Occupancy expense increased to 6.3 million, compared to 5.8 million last year and 5.4 million in the fourth quarter. The primary reason for the increase vs. Q1 last year was the addition of space in our headquarters built to handle increased headcount, and increased expense related to our remote data center.

Marketing, advertising and PR increased to 5.6 million. During the first quarter, as you know, we incurred 5.1 million in branding costs, and our product-specific advertising came in much lower than anticipated. In the communications, computer and software programs, we booked an 800 thousand credit from a telecom vender following a review of billing.

Moving on to income before taxes. Operating income was 43.8 million in the first quarter compared to 31.2 for the same quarter last year. Our operating margin, again above 30 percent, was 34.7 vs. 30.8 in the first quarter last year. Net income for the quarter was up 40 percent to 26.1 million, from 18.7 million in the first quarter of 2002. Our diluted earnings per share was 77 cents, compared to 63 cents last year.

One point to clarify regarding our balance sheet. While CME continues to engage in securities lending activities, there were no balances invested at March 31st, 2003, as market conditions on that day, and the securities available to lending, would not have resulted in an acceptable rate of return. With respect to capital expenditure, cap ex, capitalized software development costs, were 11.2 million in the first quarter. In one last point related to Q1, CME made its first recurring quarterly dividend payment of 14 cents in March.

Now, let me provide an update on April Volume. Through the end of last week, we were averaging just over 2.3 million contracts per day, excluding trackers. Interest rates are averaging 1.15 million per day. equities are at 906 thousand contracts per day. Equity standard contracts: 100 thousand times per day. Foreign exchange 105 thousand, and commodity products are averaging 31,000 per day. As you know, volume is available on our Web site on a daily and monthly basis.

As Jim talked about, we are pleased with the clearing agreement with the board of trade. In the press release announcing the deal, we gave an estimate of 10-15 million of incremental net income in 2004 associated with the transaction. Assuming current CBOT trading volume levels, we will be adding additional head count in our clearing and technology department as we ramp up to prepare for a January 2004 launch date. We expect to incur between two and four million in 2003 for startup costs. Those are all the financial details we intend to provide at this early stage.

To summarize, we had a strong first quarter driven by the volume surge during the month of March. Throughout the organization we emphasize strong discipline during the quarter and our significant operating leverage was evident as operating margins approached 35 percent. Our balance sheet remains strong and we continue to invest in growth.

To comment on our commodity average daily volume, it was 35,000, not 35,000 in the first quarter and with . . .

You said 35. It was 35.

35,000 in the first quarter, not 35.

With that, I'd like to open the call for your questions.

Thank you.

The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key, followed by the digit one on your touch-tone telephone.

Once again, if you would like to ask a question, please press star one on your touch-tone telephone. We'll take as many questions as time permits and we'll take just one moment to assemble our roster.

And we'll take our first question from Henry McVey of Morgan Stanley.

Good morning.

Can you hear me?

Yes.

OK. Just a couple quick questions. One, you went through the pricing being a little bit better than expected. It looked like, also, one thing you didn't mention was the E-minis was certainly better than what we thought. Was there anything in the E-mini this quarter that would have accounted for increase in the pricing there?

One of the things we've seen in the E-minis is an increase in the mix actually month over month from coming from customers. That has resulted in a slight increase in the average rate per .

Something else, Henry. A number of our customers asked us if we could reduce the tick size on the E-mini to match the big contracts for the rollovers from March to June, for example, and we did do that and we saw some of the roll then move to the E-mini as well and I think that also helped increase the volume and the rate per trade.

So is the 71 cents a better run rate?

Well there was a surge in March, which probably brought it up a little bit higher in terms of -- if you -- our quarter end month are usually a little stronger on the rate per trade and it was on somewhat of a disproportion in the amount of volume in March. So it might have been a little bit high, plus there was a the clearing reserve which resulted in, on an aggregate basis, a increase of about a half cent, certainly a portion of that, maybe as much of as a half of the half cent would be related to the E-mini.

And just a couple of other quick ones. In terms of the CBOT arrangement, you said 2 to 4 million during the year and then 10 to 15 million in '04. Can you just give us some flow -- some guidance on the flow of the cost, as well as when the revenues and earnings hit note form and is that back-end loaded or is that equal during the year just based on -- I know you won't have all the details but just some type of guidance there?

I don't -- we aren't providing specific details as far as 2004 in terms of the timing of that. Annually we do expect that we will likely get between 10 and 15 million in net income. For 2003, though, the startup costs are going to begin immediately in the second quarter and we expect that that will be a combination of expense plus capital but under a guidance SOP 98 for capitalization, the designed portion, which will occur immediately, that is not -- we cannot capitalize that.

And just one final question. On the -- on the cost, the advertising came in a little bit lower than expected. Is anything going to roll -- is there anything we should know that we're just going to roll into the second quarter? I guess a lot of the reversal of, I think you said, telecommunications cost of 800,000 and then -- and then the promotion will drop off. Is there any other things that we should keep in mind?

On the promotion, I think last quarter we said we would expect 5.5 million incremental. It was 5.1. So some of that will roll into the later quarters and then we normally have a, you know, if you look at our run rate prior to the branding, we really had almost zero product advertising this quarter and that certainly will not continue.

And as far as the telecom 800,000, that basically 300,000 of that related to this year and the other 500,000 was related to the prior year. So there will be some 300,000 to three months, about 100,000 should roll.

Great. Thank you.

And as a reminder, if you would like to ask a question, please press star one on your touch-tone telephone to signal.

We'll take our next question from Charlotte Chamberlain of Jefferies & Company.

Hi. Congratulations on an outstanding, outstanding quarter.

Getting back to the pricing. If the contract looks like the pricing here has doubled or almost doubled relative to the four quarter and we're just wondering how that worked?

Sure.

And then in, just to be clear because there was quite a few answers with respect to the last question, should we be assuming roughly in terms of the overall rate per trade something in the 70 cent area going forward?

Well on your first question with respect to , I think the average, again, was about 1.2 cents.

Right.

And that is because we had no product introductions in the first quarter. When we have product introductions, we tend to get a lot of volume on the first couple of days and there's some tiered pricing in that. So we end up usually getting a much lower rate when we have a product introduction. So, from a run rate standpoint with no product introduction, you know, that may be a closer rate to anticipate.

OK.

But we do -- we will be continuing to roll out products.

On the aggregate rate per trade, again, there is the half cent in there related to the -- which was brought up a half a cent due to the reserve adjustment and then we, again, had a -- kind of a disproportion amount of volume in March which if you look -- every looked at, you don't get on a month -- a monthly basis but on a quarter end we have a higher rate per trade. So it's somewhat inflated by that and I can't, you know, it's really depend on the mix of products.

Right.

We had strong growth in FX, which brought up the rate per trade and we had strong growth in privately negotiated transactions, which brought up the rate.

So I can't, you know, give you the exact number but 71 was a little high due to the March effect and the half cent reserve adjustment.

OK. Great. Thanks so much.

Thank you.

And with one question remaining in the queue, we'll take our next question from Joel Gomberg from William Blair.

Thanks.

Jim, perhaps you could talk a little bit about the reception that Eagle, particularly with clients overseas, and also your pipeline of signing up new clients. And then on the euro dollar contract, could you talk a little bit more with your comment about hedging the refinancing activity in the mortgage area and how much that, you think, is adding to your euro dollar value. Thanks.

Sure, Joel.

First let me address the Eagle release. As you may remember, we launched Eagle in January. It -- people traded on it actively for the first day and half. We found a software glitch. We fixed it. We relaunched and from that point on we saw more and more people beginning to adopt Eagle, so that now we're beginning to see people doing what they did with E-minis in the early stages, which is arbitrage, the electronic platform, visa vi the pit, and that's in this very earliest stages.

We have a marketing program right now in Europe to introduce Eagle to some of the big European players and the reason for that is, we think that euro dollars are a benchmark product and one that can and should trade 24-hours a day and with the Eagle platform we certainly get to 23 hours a day trading electronically and I think that that should give us a really good impetus for growth in the future and we, as I mentioned, or Dave mentioned also, we hit 90,000 contracts one day in the month of March without any problems at all and so we will just continue to work to make sure that the big end users understand how to use the functionality of Eagle. And, as I said, it's very early stages.

In terms of refinancing and euro dollars, clearly euro dollars have, as a contract, have been used now many different ways. Traditionally euro dollars were really a liability. Hedgers contract and we saw the greatest volumes in times of rising interest rates. Then, as the U.S. government began to pull back on the issuance of Treasury bonds, we saw euro dollars become also an asset managers contract and so in a falling interest rate environment we began to get new volume and volume that hadn't previously come to CME. Most interestingly, with this very low rate of interest and 20 and 30 year low mortgage rates, we have seen another flow of business now coming to the euro dollar contract and that is hedging for the refinancing of mortgages and, as you know, there's been a record refinancing of mortgages that's in the recent months and a lot of that hedging is done not only on euro dollar futures but also euro dollar options and it seems as though the refinancing business is not dried up at all.

And Mr. Gomberg, has your question been answered?

Yes. Thank you.

Moving on. We'll take our next question from of .

Good morning, gentlemen.

Two questions. One, on the CBOT transaction, are these others like that throughout the world that could be of interest to you?

Hello, it's Jim McNulty.

I think that the CBOT transaction is one that from our end users point of view is most important and the reason for that is that CBOT has been trading approximately 1.4 million contracts a day and a lot of their products in a portfolio with our products would give significant capital reductions for the users if we treated them as a portfolio for purposes.

So in terms of an end users point of view, the CBOT deal is probably the best one that we could do. It also, as the second largest futures exchange in the United States, is one of the most interesting ones that we could do. We certainly are interested in continuing to provide services to third parties but this was the most interesting one out there.

OK. One other question. It was mentioned that your capital spending and capitalized software would be 11.2 million in Q1 or was 11.2 million in Q1. Can you break out the capitalized part of that? And also what that might be in the future? And also give us the amortized section?

The most significant is certainly the capital expenditures for hardware. The amount that was for software development I don't have right here. With the amortization for our hardware is usually four years, unless its PC's, then it would be three years, and we amortize our software development over three years.

OK. That's . Thank you very much.

Thanks, Neil.

Thank you.

And we'll take a follow-up question from Charlotte Chamberlain with Jefferies & Company.

Yes. Could you -- -- despite the falloff that you're reporting for April relative to the first quarter, could you just kind of -- if there is a reason for that? Is it seasonal or whatever? If you could give us some color on that.

The other thing is, going abroad, who do you see as your main competitors for GLOBEX and especially that foreign exchange product.

And then also, with respect to the last gentlemen's question about clearing. Is there any possibility of your clearance facilities being used for swaps where there's a big gap in terms of clearing house facilities.

Thanks.

Thanks very much, Charlotte.

Let me start with April versus Q1. April so far is looking relatively strong. I don't want to make it sound as though its being -- as though it's a sharp falloff. For example, in interest rates we're at a million 150 through last week, equity standard 100,000 a day, equity E-mini 906,000 a day, FX 105,000 a day and commodities 31,000 a day, which takes us to 2.3 million per day. So it's lower than March, which was a record month but higher than both January and February.

OK.

All right. And in terms of -- in terms of competition, we think that there's a lot of good competition out there. We see one model that looks particularly like our model. They basically are a fully integrated, vertical exchange with a clearing house and clearing capabilities, as well as good front end electronic software and that's and also competes with us actively on a daily basis.

OK and then the opportunity for clearing swap, if that's a possibility for you?

That's a very good question. Certainly we will continue to investigate those possibilities. We do see a trend overall in the market that there seems to be some blurring of the lines between OTC trading and also exchange trading and the clearing of those. So we certainly are investigating that kind of thing actively.

Great. Thanks.

Thank you.

And as a final, if you do have a question, please press star one to signal.

Lauren Smith of KBW has our next question.

Hi. Good morning. It's Lauren Smith. How are you?

Good morning, Lauren. Well, thank you.

Sorry, Dave, simple question but I just wanted to clarify your commentary relative to the comp and benefit line. You ran through several items that were seasonal. I just want to make sure I caught them all. An increase in salaries that go into effect the end of March, some FICA, vacation expense accruals, and then did you also say that the comp now includes stock-based compensation?

Yes. It was 600,000 for -- approximately 600,000, 630 for the month of -- for the quarter.

OK. OK. And then, you know, just looking at, you know, the margin, you know, it jumped nicely, you know, year on year and, you know, when you look at the drivers of the margin, you know, the lever, the pricing volume and, I guess, migrations into different products. You know, how much do you, you know, is it highly skewed to -- I mean my guess is pricing and volume are really the two dominate factors and, you know, how much do you really think is hinged on volume, you know, which is I'd say more, you know, the more volatile of the components? I'm just trying to get a sense for where that operating margin on a go-forward basis could go.

Well certainly it's volume that is the biggest contributor. Incremental volume flow pretty much totally to the bottom line, especially in our, for example, our euro dollar contract. So volume's very accretive. Pricing is accretive also but volume is the biggest contributor to that and over time, as things begin to migrate, that will become a larger contributor but has not been a significant one in compared to volume.

OK. Great. Thanks very much.

And it appears that there are no further questions at this time.

Gentlemen, I'd like to turn the conference back over to you for any additional or closing remarks.

Dave Gomach. I wanted to respond to -- Henry had a question on our -- the breakup between the capital expenditures and software development. Of the 11.2 million, 1.5 was for software development.

And I'd just like to say thank you for joining us today and thank you for your interest in CME and we look forward to talking with you again next quarter.

Bye-bye.

And that does conclude today's conference. Thank you for your participation.