CME Group Inc. is an American financial services company based in

Chicago Chicago is the List of municipalities in Illinois, most populous city in the U.S. state of Illinois and in the Midwestern United States. With a population of 2,746,388, as of the 2020 United States census, 2020 census, it is the List of Unite ...

that operates

financial derivatives In finance, a derivative is a contract between a buyer and a seller. The derivative can take various forms, depending on the transaction, but every derivative has the following four elements: # an item (the "underlier") that can or must be bou ...

exchanges including the

Chicago Mercantile Exchange The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is an American derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board ...

Chicago Board of Trade The Chicago Board of Trade (CBOT), is an American futures exchange, futures and options exchange that was founded in 1848. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange (CME) to form CME Group. CBOT and three other excha ...

New York Mercantile Exchange The New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by CME Group of Chicago. NYMEX is located at One North End Avenue in Brookfield Place in the Battery Park City section of Manhattan, New York City. ...

, and the Commodity Exchange. The company also owns 27% of

S&P Dow Jones Indices S&P Dow Jones Indices LLC is a joint venture between S&P Global and the CME Group, that was announced in 2011 and later launched in 2012. It produces, maintains, licenses, and markets stock market indices as benchmarks and as the basis of in ...

. It is the world's largest operator of

exchanges. Its exchanges are platforms for trading in agricultural products, currencies, energy,

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...

s, metals,

futures contracts In finance, a futures contract (sometimes called futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The item tr ...

, options,

stock index In finance, a stock index, or stock market index, is an index that measures the performance of a stock market, or of a subset of a stock market. It helps investors compare current stock price levels with past prices to calculate market perform ...

es, and

cryptocurrencies A cryptocurrency (colloquially crypto) is a digital currency designed to work through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. Individual coin ownership records ...

futures. In addition to its headquarters in Chicago, the company also has offices in New York, Houston, and Washington D.C., in the U.S., as well as abroad in Bangalore, Beijing, Belfast, Calgary, Hong Kong, London, Seoul, Singapore, and Tokyo.

History

The

(CME), was founded in 1898 as a

nonprofit corporation A nonprofit corporation is any legal entity which has been incorporated under the law of its jurisdiction for purposes other than making profits for its owners or shareholders. Depending on the laws of the jurisdiction, a nonprofit corporation ma ...

. In 1919, it established its clearing house. In 2000, CME

demutualized Demutualization is the process by which a customer-owned mutual organization (''mutual'') or co-operative changes legal form to a joint stock company. It is sometimes called stocking or privatization. As part of the demutualization process, member ...

(became a joint stock company). In 2002, CME Group, the parent company of CME, became a

public company A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in over-the-counter (finance), over-the-counter markets. A public (publicly traded) co ...

via an

initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investm ...

. On July 12, 2007, CME Group completed a merger with the CME's historical rival, the holding company for the

, founded in 1848, in an $8 billion deal that created the world's largest financial market. The company then launched as CME Group Inc., a CME/Chicago Board of Trade Company. In 2012, Phupinder Gill, then CME Group's president and COO, became the company's CEO. In November 2016, Gill retired from his role and Terrence A. Duffy, then executive chairman and president of the company, took on an expanded role as its CEO. In 2021, the firm struck a partnership with

Google Google LLC (, ) is an American multinational corporation and technology company focusing on online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce, consumer electronics, and artificial ...

to build its cloud strategy, which saw the tech giant investing $1 billion in CME Group. In 2022, CME Group futures and options reached a record average daily volume of 23.3 million contracts.

Mergers and acquisitions

On August 22, 2008, CME Group acquired

(NYMEX), owner of both the NYMEX exchange and the Commodity Exchange (COMEX), for $8.9 billion in cash and CME Group stock. On February 10, 2010, CME Group agreed to purchase 90% of Dow Jones & Company's financial-indexes business, including the

Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indice ...

. CME Group and Dow Jones & Company subsequently contributed the Dow Jones Indexes to the formation of

joint venture, with CME Group receiving a 24.4% ownership interest and Dow Jones & Company receiving a 2.6% ownership interest in the joint venture. In April 2013, CME Group purchased the remaining Dow Jones & Company interest for $80.0 million, increasing CME Group's interest in S&P Dow Jones Indices from 24.4% to 27.0%. On December 3, 2012, CME Group acquired the Kansas City Board of Trade, the dominant venue for the sale of hard red

winter wheat Winter wheat (usually ''Common wheat, Triticum aestivum'') are strains of wheat that are planted in the autumn to germinate and develop into young plants that remain in the vegetative phase during the winter and resume growth in early spring. C ...

, for $126 million in cash. On March 15, 2016, the firm announced the sale of its suburban Chicago data center in Aurora, IL to CyrusOne for $130 million, in a leaseback transaction. On November 2, 2018, CME Group acquired the London-based NEX Group for $5.5 billion.

Operations

CME Group operates a global derivatives marketplace that allows institutions and individuals to trade futures and options based on interest rates, equity indexes, foreign exchange, energy, metals, and agricultural commodities. The company runs an electronic trading platform, CME Globex, which allows customers in approximately 150 countries to trade futures and options contracts. The company also operates two cash market businesses: BrokerTec, which facilitates dealer-to-dealer trading for fixed-income markets, and EBS, which provides

foreign exchange The foreign exchange market (forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. By trading volume, it i ...

spot trading. In addition, CME Group operates CME Clearing, which serves as a counterparty to every cleared transaction, including both listed and OTC derivatives, within the company's marketplace. CME Group is a member of

CCP Global CCP Global (CCPG) is a global body that brings together central counterparty clearing houses (CCPs) from the world's major jurisdictions. Overview CCP Global was originally formed in 2001 as an informal group named CCP12 by twelve founding CCPs ...

, a trade group of central counterparty clearinghouses from around the globe.

Board governance

CME Group's history of member-owned exchanges and mergers and acquisition of rivals have led to an unconventionally large board size for a publicly traded company. In 2018, six of its 20 sitting board directors were elected by holders of Class B shares, representing owners of exchange seats, as opposed to that of publicly traded Class A shares. In comparison, the average company in the

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices and in ...

had no more than 11 board directors. On August 23, 2018, the company offered holders of Class B shares about $10 million to relinquish control of their six board seats. The move was subsequently rejected.

Notable events

2010 flash crash

CME Group was at the center of the 2010 flash crash, which took place on May 6, 2010. According to a

Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an Independent agencies of the United States government, independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures contract, fut ...

(CFTC) 2014 report, a significant cause of the event was the use of spoofing algorithms by Navinder Singh Sarao, a

British British may refer to: Peoples, culture, and language * British people, nationals or natives of the United Kingdom, British Overseas Territories and Crown Dependencies. * British national identity, the characteristics of British people and culture ...

financial trader; just prior to the flash crash, he placed orders for thousands of E-mini S&P 500 stock index futures contracts — which traded on CME Group's Globex platform — and later replaced or modified those orders at least 19,000 times before they were cancelled. The event led to the modern day implementation of coordinated cross-market

circuit breakers A circuit breaker is an electrical safety device designed to protect an Electrical network, electrical circuit from damage caused by current in excess of that which the equipment can safely carry (overcurrent). Its basic function is to interr ...

, as the CME's Globex platform halted trading in an automated response to the activity, while the

New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...

did not.

Awards and honors

* CME Group earned a score of 100% on the Human Rights Campaign's

Corporate Equality Index The Corporate Equality Index is a report published by the Human Rights Campaign Foundation as a tool to rate American businesses on their treatment of gay, lesbian, bisexual and transgender employees, consumers and investors. Its primary source of ...

in 2019, 2020, 2021, and 2022. * CME Group was named to the

Forbes ''Forbes'' () is an American business magazine founded by B. C. Forbes in 1917. It has been owned by the Hong Kong–based investment group Integrated Whale Media Investments since 2014. Its chairman and editor-in-chief is Steve Forbes. The co ...

Blockchain 50 list in 2021 and 2022. * In 2022, the company won WatersTechnology's IMD & IRD Awards for Best market data in the exchange category.

References

External links

*
The CME Group Collections
at

University of Illinois at Chicago The University of Illinois Chicago (UIC) is a public research university in Chicago, Illinois, United States. Its campus is in the Near West Side community area, adjacent to the Chicago Loop. The second campus established under the Universi ...

{{Authority control 1898 establishments in Illinois Companies listed on the Nasdaq Companies formerly listed on the New York Stock Exchange Companies based in Chicago Derivatives (finance) Electronic trading platforms Financial services companies established in 2007 Financial services companies based in Illinois Futures exchanges Market data