芝加哥商業交易所 (CME) 2006 Q1 法說會逐字稿

Good day everyone, and welcome to the Chicago Mercantile Exchange first quarter 2006 earnings release. As a reminder, today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. John Peschier. Please go ahead, sir.

Thank you. Thank you everyone for joining us this morning. Craig Donohue, our CEO, and Jamie Parisi, our CFO will spend a few minutes outlining the highlights of the first quarter, and then we will open up the call for your questions. Terry Duffy, our Chairman and Rick Redding, our Head of Products and Services, are also here this morning and will participate in the Q&A session.

Please note that all references we make during this call to trading volume and rate per contract exclude our low-priced TRAKRS products and our economic auctions products. Before they begin, I will 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 detailed information about factors that may affect our performance may be found in our filings with the SEC, including our most recent annual report on Form 10-K, which is available on our website.

Also, we refer in this call to our cash earnings, a non-GAAP number. The reconciliation to net income can be found on our website under Investor Relations earnings releases. In addition, we have posted slides associated with this earnings call on the IR portion of the site. With that I would like to turn the call over to Craig.

Thank you for joining us this morning. We are pleased to report strong first quarter results as we traded record volumes across the board. I will start by providing the highlights of the quarter followed by an update on several growth initiatives. Let's begin with the key financial results for the first quarter compared to the same quarter a year ago.

Net revenues grew 23% to 263 million. We reported a record operating margin of 57%, up from 55%. Our diluted EPS for the quarter totaled $2.61, up from $2.04. And most important, we generated record cash flow during the quarter, achieving $94 million of cash earnings, up 32%.

In terms of contracts traded, our average daily volume was up 26% to a record 5 million contracts per day. Every productline posted all-time record quarterly trading volumes. In March we had a monthly volume record of 5.3 million contract per day. To put the trading volume in perspective, that is more contracts in a typical day then we averaged per week in 2000.

CME Globex average daily volume grew by 31% to a record 3.4 million contracts per day. During the quarter 69% of our volume was traded electronically.

Moving on to average daily volume by productline in Q1. Interest rate volume was up 31% to a record 2.9 million contracts per day. CME Eurodollar futures, which were 85% electronic, grew by 27% during the quarter to 1.9 million contracts per day. Eurodollar options, which were 95% open outcry based, grew by 38% to 1 million contracts per day. During the quarter Eurodollar options represented approximately 66% of total floor volume. We are making progress in terms of the growth of Eurodollar options on CME Globex, which I will talk about in a minute.

Overall foreign exchange volume was up 38% to a record 407,000 contracts per day. Much of that growth can be attributed to electronic FX trading, which was up 53%. In March we averaged 460,000 contracts per day, which represented $53 billion of underlying value traded per day.

We continue to see new market participants utilize CME FX futures because our worldwide CME Globex platform provides a transparent central limit orderbook, speed, anonymity and central counterparty clearing benefits. As a point of reference, EBS, the largest spot FX dealing platform, had quarterly growth of 2%, reaching 132 billion transactions per day compared to the prior year. While CME trade engine average match speed is approximately 50 milliseconds, EBS recently reported average speeds of 350 milliseconds.

E-mini volumes were up 14% to a record 1.4 million contracts per day, despite continued low volatility in the equity market. On a quarterly basis, the VICS has steadily declined since mid 2002, and remains at historically low levels. E-mini Russell 2000 futures grew 24%, and E-mini SMP MidCap 400 futures grew 34% during the quarter. Total equity options grew 76% during the quarter. The E-mini electronic options were up 171%, while the floor based options were up 49%.

Finally, commodities volume was up 42% to a record 73,000 contracts per day. Investors continue to increase their participation in commodities markets as an alternative asset class.

Next I would like to comment on several of our growth initiatives. First, our recently announced partnership with NYMEX to list their energy contracts on CME Globex creates additional value for our shareholders, as we provide our customers with access to new markets and as we attract new customers. This builds on our successful clearing processing arrangement with the Chicago Board of Trade. For CME the addition of energy contracts to the CME Globex platform further diversifies our product offering, and it creates the first electronic derivatives trading environment that offers global access to all major asset classes, interest rates, stock indexes, foreign exchange, agricultural commodities, and now energy.

Furthermore, in addition to our owned businesses, we have also seen dynamic growth in volumes in virtually every other asset class, driven by electronic training. We believe we are in the early stages of the same dynamic change in the energy marketplace. In addition, while volatility in equity and interest rate markets has decreased recently, there is significantly higher volatility in energy related markets.

Our technology and products and services groups are working closely with our colleagues at NYMEX regarding the launch plans for NYMEX products. The first phase of the rollout on CME Globex will be in the second quarter. We are currently finalizing an initial launch date, which we will announced soon. As we mentioned during the announcement earlier this month, CME will have the ability to designate a number of market makers who will trade at NYMEX member rate in order to help develop deep and liquid markets on CME Globex. We are currently receiving very strong interest from the trading community related to this offering.

Next, we remain very focused on electronic options growth. During the first quarter we made several important enhancements to our CME Globex platform to facilitate growth in electronic training of options, specifically within Eurodollars. As a result, we sat Q1 average daily option volume on CME Globex grow to 52,000 contracts compared to 13,000 contracts in the first quarter 2005.

We have been working closely with several large options front-end providers. In addition to Barclays, which we previously announced, several ISVs and other bank platforms have now completed development work, and are working with end-users on testing, while other ISVs are nearing the completion of their internal development efforts. By the end of Q2 we expect the majority of this software to be widely available to users, and we also expect to provide access to a new, higher bandwidth market data platform.

Last week we announced an incentive program to expand electronic trading. Effective May 1, members and lessees who trade at least 30% of their total CME Eurodollar options volumes electronically will be entitled to a discounted fee. For equity and clearing members who drive the vast majority of the volume, we will reduce these from $0.34 all-in per side to $0.24. That compares to $0.09 per side for the Eurodollar options traded by an open outcry. We believe this new pricing structure will attract new customers, as well as encourage increased participation from current customers. We use a similar incentive strategy as a successful catalyst to accelerate the migration of Eurodollar futures beginning in 2004.

Our technology team is on track to incorporate covered options functionality into our electronic Eurodollar options platform during the summer. This represents a significant enhancement, and will allow traders to create delta neutral or pure volatility trades by executing electronic trades with futures and options combined in a single transaction. Cover trades currently represent a significant portion of CME Eurodollar options volumes on the floor.

In summary, we had another impressive quarter with volume records across all of our productlines. In Q1 we continued to outperform the other large global derivatives exchanges in terms of volume growth as we successfully executed our strategy. We're looking forward to the launch of the NYMEX energy and metals products on CME Globex. And our technology team is intensely focused on delivering these services expeditiously and flawlessly to market users.

In addition to the transaction processing efforts, we're also very focused on our other major 2006 CME growth initiatives. These include expanding our presence in the FX market, further developing our electronic options markets, and continuing to expand our global presence. What that, let me turn the call over to Jamie to go over the financials.

We posted another strong quarter driven by continued volume growth. Our net revenue of $263 million for the first quarter was up 49 million, or 23%, compared with the same quarter last year. Average daily volume was up 26%, and clearing and transaction fees were up 25% to $201 million versus 161 million in Q1 of last year. Comparing the transaction fees to Q4, revenue was up $24 million, driven primarily by significantly higher trading volume.

Our average rate per contract, excluding TRAKRS, was $0.652 in Q1, down from $0.678 in Q4, and down from $0.668 during the same quarter last year. The primary driver of the overall rate per contract decrease from Q4 to Q1 was the product mix, with 59% of the first quarter volume coming from interest rate products compared with 54% in the fourth quarter. Venue mix also had an impact, as the percentage of the business that was electronic in Q1 was 69% compared with 72% in Q4, due primarily to a surge in Eurodollar options volume, which trades predominately on our floor. Additionally, the nonmember mix contributed slightly to the reduction, as member volumes grew faster than nonmember volumes.

Zeroing in on the rate per contract for interest rates. As I mentioned, interest rate products which are our lowest priced products made up an increased proportion of the volume, and the average rate per contract for interest rates dropped from $0.509 in Q4 to $0.493 in Q1. During the quarter we averaged 2.9 million interest rate contracts per day, up significantly from 2.2 million per day in Q4. Eurodollar options, which traded more than 1 million contracts per day in Q1, accounted for 35% of our interest rate volume during the quarter compared to 30% of the total in Q4, when we traded 660,000 per day.

During the quarter we averaged $0.34 per contract for Eurodollar options traded on the floor. Clearly, while we're pleased to see this acquittal volume growth, it is important to note that these contracts come in well below both the interest rate average and the overall corporate average rate. Craig mentioned our strategy to electronify this market. And when we begin to see a meaningful shift there will be a resulting increase in the rate per contract, revenues and ultimately cash flow.

Moving on to the processing services line, the Chicago Board of Trade reported volume of 3.1 million contracts per day, which generated $18 million of CME processing revenue for the quarter. Beginning in Q2 we will add the NYMEX related trade matching revenue to this line.

Quotation data fees were $20 million for the quarter, up 13% from $18 million in Q1 of '05, driven by a price increase at the beginning of the year. At the end of Q1 the screen count was 151,000 screens for the full CME data package.

I will now take a few minutes to review expenses. Total expenses for Q1 were $113 million, up 18% versus 96 million for Q1 last year, and up from $107 million last quarter. Highlighting a few of the main expense categories, first, compensation and benefits totaled $49.8 million for the quarter, up about $4.4 million sequentially. There are three components of this expense, salaries and benefits, bonus, and stock-based compensation. First, salaries and benefits totaled $39.8 million, up 5.7 million. The largest change, which is typical at the beginning of each year, is an increase in our Q1 FICA costs, vacation accruals, and unemployment tax on existing employees relative to the year-end quarter. This totaled approximately $4 million.

In addition, we had normal merit and promotion increases for employees, which accounted for a $1 million increase sequentially. Lastly, we added $700,000 sequentially due to the hiring of new employees. At the end of the quarter headcount stood at 1,355, up 36 compared to the end of 2005. This increase was primarily driven by increases to our technology group, which added 30 people during the quarter. Approximately half of those new employees represented previously utilized long-term consultants who were converted into full-time CME employees. Over the long run this is more cost effective than paying higher technology consulting fees.

Second, in Q1 of this year we recorded $6.7 million for the incentive bonus, down approximately $800,000 from Q4, evidencing the fact that we set our cash earnings targets for 2006 well above previous levels.

The final component of the comp and benefits line, stock-based compensation, totaled $3.3 million in the first quarter, down approximately $500,000 from Q4, some of which is to due to expected forfeitures. Non-comp expenses totaled $63 million in the first quarter compared with 62 million in Q4.

We incurred higher expenses within our professional fees and other operating expense, particularly travel related, associated with the growth opportunities we're currently working on, including energy market development. These costs across all growth initiatives accounted for an increase of slightly more than $1 million.

In Q1 we signed an agreement with Hewlett Packard to replace CME Globex's existing 16 HP Tandem servers, which are the core trade matching engines, with nine new HP Integrity NonStop servers that incorporate Intel Itanium processors. The result will be an increase in capacity for both our production and our disaster recovery systems, with faster processing speeds and lower annual maintenance costs. We expect this initiative to have a favorable impact of $1.7 million from Q2 to Q4 in the technology maintenance line, with a higher amount of savings expected in 2007.

In 2006 the savings will be offset almost completely by increased depreciation as we will shortened the depreciable lives of some of the existing systems. We will make the trade-in within our existing capital plan for 2006. In 2006 the Company expects overall expense growth in the 12 to 13% range compared to 2005, driven by continued investment in growth opportunities, many of which are technology related.

Finally, regarding the expense categories on our income statement, we have made some changes in order to improve transparency. First, we separated the license fess and fee sharing segment from the professional fees expense line, and we separated communications expense from technology maintenance expense. For a historical breakdown of these changes by quarter, you can go to the CME IR website, under investor information and earnings releases to find the income statement trends file.

Moving on to income before taxes, our pretax income was $151 million in the first quarter, up 27% from $118 million in the first quarter last year. This resulted in a record pretax operating margin of 57% compared to 55% in Q1 of last year. Our effective tax rate during the quarter was 39.3%, down from 39.6% for the full year of 2005.

In December we adjusted our investment policy to increase our cash management flexibility, allowing a broader array of highly rated municipal securities. These tax advantaged securities now make up approximately 35% of our cash and marketable securities portfolio. These instruments have a lower pretax yield than the rest of our portfolio, which decreases our investment income relative to potential investment in taxable instruments. However, this is more than offset by the tax savings, resulting in a higher after-tax yield.

Net income for the quarter was a record $91 million, and EPS was $2.61. Both of these are up approximately 28% compared to the same quarter a year ago.

Moving on to the balance sheet. At the end of the quarter we had $990 million in cash and marketable securities, up $86 million during the quarter, and working capital stood at 1 billion. Capital expenditures totaled $17 million in the first quarter. For 2006 we still expect CapEx to range from 90 to $100 million based on our current plan. Cash earnings totaled a record $94 million for the first quarter, up 32% compared to Q1 of 2005.

Now I will summarize second quarter volume to date. We are averaging 5.1 million contracts per day is so far in April. Interest rate volume is averaging 3.1 million contracts per day. E-mini equities are averaging 1.4 million contracts per day, equity standard contract 113,000, foreign exchange 404,000, and commodity contracts are averaging 70,000 contracts per day. Related to our clearing processing agreement with CBOT their volume is averaging approximately 2.9 million contracts per day so far in April.

Beginning in April we're moving our weather and GSCI commodity index product from the equity standard productline to the commodities and alternative productline. Please note the monthly volume files available on our website beginning on May 1 will include an historical adjustment to both the average daily volumes and the rolling three-month rate per contract going back to the beginning of 2003.

In summary, we had another solid quarter of performance driven by broad based volume growth. We continue to upgrade our world-class CME Globex platform in terms of capacity and speed for our base business, but also to effectively handle our growth initiatives, such as providing trade matching services for NYMEX, further expansion of our worldwide distribution network, greater penetration of the FX market, growth of Eurodollar options on CME Globex, and the continued development of innovative products. With that, we would now like to open up the call for your questions.

(OPERATOR INSTRUCTIONS). Daniel Goldberg with Bear Stearns.

Can you talk I guess a little bit about -- Jamie, you gave some good detail in terms of the comp number, but that was, at least versus my numbers a significant differentiating point. Should we expect that to go back to a more normalized level, or in other words how should we think about that as a normalized, because that was a big difference?

As I mentioned, there is normally a pop in the first quarter as we have some of those onetime expenses with regard to FICA and unemployment that are based on income thresholds that get hit in that first quarter by a lot of employees. That drives up some of that -- some of the expense in the first quarter.

Our comp ratio, if you look at that historically, has gone from about 26% in '03 down to 19% in '05. And if you look at the first quarter, it was around 18%. And it does tend to trend down over the year. And I believe we will continue to see it trend down for those reasons, but there will also be -- mitigating that will also be the fact that we will continue to add employees as needed for our growth initiative.

You would expect it to continue to trend down, even with those new employees?

Yes.

In terms of the expense guidance, now I think looking back at comments from last quarter you said 11 to 13%. Now you're saying 12 to 13%. Is that changed, or is that just because 1Q was higher?

As the year progresses we are able to refine our estimates based on the activity in the current quarter, and then based on the knowledge we have gained in that quarter about the coming quarters. For example, we are able -- that we know we had to spend a bit more than we originally anticipated on prospecting and for development of growth opportunities. The change in our guidance for expenses is just a refinement. And the upper end of the range is still 13%, and it remains -- and that is around $466 million. Don't forget, we had NYMEX embedded in that as are other growth opportunities we are working on.

That's helpful. And then, Craig, maybe if you can give us a sense -- you can give us an update on the NYMEX and potential timing, which is uncertain still. How should we think about once you do roll that out out on to Globex, how quickly you can expect volume to really show up on Globex and maybe move from other competitors?

I think that is difficult to project. Certainly we have seen continued growth in the E-mini volumes following the transfer of the contracts from the CME Globex platform to the NYMEX platform. So we're going to expect that that will certainly continue in terms of the trend once those contracts are again listed on the CME Globex platform. But we're working with NYMEX presently with their management and with their Board, and as you said, we have not yet announced a specific plan for the launch of the different products on the CME Globex platform. Those plans and some of those decisions will impact the answer in terms of how rapidly we will see growth in electronic trading at the NYMEX product. And so we will be working with our partners at NYMEX, and when they are prepared to make the decision, we will make an announcement.

Rich Repetto with Sandler O'Neill.

The first question is on the rate per contract and the Eurodollar options. First, on sort of volumes in Eurodollar options. You gave us the numbers. It looks like -- I think you said somewhere around 35% growth. If you back out that -- the other interest rate products are growing at 24, still a very strong number. But I guess the question is, is there anything in the environment that makes that Eurodollar option contract grow more? Are people looking for more leverage for the option, or is that just because it is off a smaller base?

This is Rick Redding. One of the things we think is going on in the marketplace is a number of people are looking at the interest rate environment and trying to figure out where value is on the curve. More and more people have begun expressing that in terms of options contracts. We actually find that particular healthy in this environment, because as we continue to migrate that business electronically, having a larger base helps us a lot in that overall transition.

Understood. It is more profitable, the rate is higher when you migrate electronically, up correct?

That's correct.

Would you ever contemplate then, if this is one of the initiatives -- the growth initiatives as to migrate it -- would you ever contemplate raising the price since it is low compared to -- raising the hit price.

It is Craig again. I think obviously we don't want to do anything that is going to impair overall growth. We're certainly very pleased with the growth in the floor trade at Eurodollar options. I think that is not the right approach. I think we're very confident that in the same way in which we approached this with Eurodollar futures the combination of expanded functionality, expanded distribution, and as I mentioned, some of the pricing incentives that we have adopted should be very helpful to achieving our overall goal of growing electronic trading of our Eurodollar options. But I'm not prepared to do what you are suggesting at the moment.

And don't forget too that as they go electronic, we do pick up electronic fees. So even with these incentive program that Craig mentioned, we go from $0.09 to $0.24 a side on the options. And they have to trade 30% -- in order to get to that level they need to trade 30% electronically.

Understood. That makes -- that is why you are the CEO, Craig, and I'm an analyst looking out at this.

Right.

The last question I guess has to do with the NYMEX contract. On the call, the initial conference call after you announced the deal, you talked about the rate of $0.50 scaling down to $0.35 based on volumes in the short term. I remember that verbiage used specifically. Is it possible that it go -- if you just -- I know this would be a very positive condition to occur or event to occur. But is it a possibility the rate could go down even below $0.35 in the very short term if volumes exploded? Overall it would be more incrementally positive to you, but could the rate be below $0.35?

This is Jamie. No, as we said on that earlier call, it is it a tiered pricing structure, and it is $0.50 to $0.35 in the early years. And I believe I said also on that call that it is tied to volume. So if volumes were to come in extremely well in the early years, you could see a rate below that $0.35 on an average.

From Bank of America, Chris Allen.

On the fourth quarter conference call you guys spoke on the Reuter’s FX applet (inaudible) in the first quarter. We kind of saw some of the connectivity issues that these customers were having. Can you give us an update on that?

Sure. This is Rick. Reuter’s applet was rolled out in the first quarter, and it has been quite successful in getting people to signup for that applet going forward. It is still not a material piece of that increase in our FX volume, but we're very happy with the functionality that has been rolled out, and by the increase in the number of people in the pipeline and getting ready to trade. We're very pleased with that roll out.

Can you give us sense -- I think 3,000 customers Reuter’s has, any company signed up for the applet yet?

We haven't shared that information in the past, and I don't think we are prepared at this time to do that as well.

But the Reuter’s agreement has not had any material impact on FX volumes?

No.

Just on the bonus accrual, that is based on cash earnings, right?

Correct.

The cash earnings projections those are based on, do those include any impact from the NYMEX agreement?

The cash earnings?

The budget that the bonus is accrued against, right?

Yes, as we said, the expense guidance for example that we gave includes the NYMEX, the impact of NYMEX, as with the cash earnings estimate.

Okay. So that includes -- the revenue is (inaudible). I think that it for me. Thanks guys.

Don Fandetti with Citigroup.

Just one quick question. Some have pointed towards a potential slow down in Eurodollar futures volumes once the Feds stops. Rick, can you sort of talk about some of the factors that we should consider on that thought process?

Sure. This seems to be eternal question that we have been getting for the last year and a half. I think it came up in an earlier kind of question on what is happening in our Eurodollar options volume. And what we are seeing now is people kind of changing their strategies a little bit on how they trade. And that is why we believe we are seeing an increased percentage of Eurodollar options trades.

More and more, as time goes on, people are changing the way they approach the market, and that is why we still feel that the coverage functionality that we're putting in this summer is really important, because more and more we see these cover type trade coming in. What that indicates is people aren't taking out right bets here at this point. You are seeing more spread type training, and you're seeing the options being traded against the futures to try to take the systemic risk out of it.

So I don't see the market as slowing down here. What we have seen is the market changing the way it is trading. And it has been very positive for our volume growth, especially when you compare it to the interest rate markets in almost any other venue across the world. Our volumes continue to increase at a very healthy rate. And people have been perpetually saying the market has been slowing down. You had an environment where the Fed has been very transparent and volumes continue to go up. So that is kind of where we believe the market is right at this point.

Howard Chen with Credit Suisse.

Thanks for all the detail this morning. First question, back to the sequential decline in the interest rate RPC. Can you provide any more detail on fleshing out that sequential drop, what was due to discount tiers versus the outside Eurodollar pit option growth versus member/nonmember mix.

This is Jamie. The predominant piece of the shift was the mix of options. They accounted for 35% in Q1 '06 versus 30% in Q4. And that rate per any options as we said is $0.34. Next on the list I would say is the member/nonmember shift. We did see a small shift towards member volumes as member volumes grew faster than nonmember volumes sequentially. Member volumes grew at about 35%, nonmember volumes grew at about 28%. And those are the two biggest components I would say.

And then with that, the acceleration and the options volumes, how much of that incremental volume could have been done with a cover cost strategy, or is that not the right way to think about it?

I would like to ask -- see if Rick can answer that for you.

Yes, I think that is very difficult to ascertain from looking from the outside. More and more though, as I was saying earlier, more and more of these trades are starting to be done as spreads rather than out right trades. That has been very positive for our volume.

Great. That is helpful. I guess moving on. Are there any regulatory updates on being able to list the Brent contract on CME Globex?

What are you referring to? Are you --?

Craig, you mentioned something on the NYMEX call, and to paraphrase something to the effect of it was unclear whether -- it would take some time for you -- NYMEX currently lists the Brent contracts. It would take some time for that to migrate over to Globex.

I don't remember saying that. These will continue to be NYMEX contracts that are listed for trading on the CME Globex platform. We're not the regulator, because we're not the designated contract market for that. If you are referring to the separate NYMEX Europe organization, there is a technical requirement because of the nature of the ownership structure there that the Board of NYMEX Europe separately approve that. It is not a regulatory issue, it is just --.

Got it.

You know, a corporate decision making issue. I don't expect about to be any kind of an impediment to a timely listing of the contracts on Globex. But there's no regulatory issue that I'm aware of.

So bottom line, have you said anything in regards to timing on specifically the Brent versus other contracts?

No, again, we are obviously working with our colleagues at NYMEX on that. And again these are their contracts and they will make that determination, and our job is to support them and bring the products to market as quickly as possible.

Great. Thanks. One last one for you, Jamie. Two quarters ago you spoke at a pick in marketing expenses relating to, I think in particular, FX. And then -- it is a small number but it steps down again this quarter. Is there anything seasonal to that, or things that we should be thinking about going forward on that particular expense line item?

I believe marketing will be more back end loaded. I would expect to see it trend up a bit over the coming quarters.

(OPERATOR INSTRUCTIONS). Rich Repetto.

I guess I incorrectly spoke. Actually the Eurodollar options have grown more like 50% quarter to quarter. Is that correct from about 660?

They were up 38% year-over-year.

Is it 30% you're saying from -- they made up 35% in this quarter, and you said 30% -- I thought you said in the prior quarter, or is it 1Q '05?

This is Jamie. It was 35% of the interest rate volumes in Q1 and 30% in Q4.

Okay. So that --.

And if you look at our current volumes for so far in April we're trending above the first quarter in terms of those options -- in terms of the options [volume].

And then the follow-up question is, or the last one would be, Craig, on the $100 million question on consolidation, just one cut at it. Your views on how a Deutsche Borse or Euronext merger might impact the CME?

I think that that is uncertain in terms of how that would impact us. Obviously both the derivatives business within Euronext Life and the separate Euronext derivatives business, each in their own right are certainly very formidable competitors with good product, good global distribution, and very good technologies. We view ourselves already as intensely competitive with them. In the extent to which a combination would further enhance their position, I think is somewhat uncertain. I don't know that I can give you a very good answer to that. But we are certainly expecting further consolidation. And our job is to continue to build the critical mass of what we represent in the market in terms of breadth product and breadth of distribution, and I think we will be well-positioned in that. I'm not overly concerned about that happening.

At this time there appears to be no further questions in the queue. I would like to turn the call back over to Mr. Donohue for any closing remarks.

Thank you for joining us today, and thank you for your continued interest in the CME. We look forward to talking with you again next quarter.

That does conclude our teleconference for today. We would like to thank everyone for your participation, and have a wonderful day.