CME Group Inc.

Ladies and gentlemen, good day and welcome to the CME Group first quarter 2020 earnings call. At this time, I would like to turn the conference over to our first presenter, Mr. John Pescher. Please go ahead, sir.

Good morning, and thank you all for joining us today. I'm going to start with the safe harbor language. Then I will turn it over to Terry, Derek, and John for brief remarks, followed by your questions. Other members of our management team will also participate in the Q&A. Statements made on this call and in Other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They 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 can be found in our filings with the SEC, which are on our website. Lastly, the final page of our 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.

Thank you, John, and thank you all for joining us this morning. We hope you and your families are healthy and staying safe. Today, we have Julie Winkler joining us along with Ken Broman. Julie heads up our global sales and research areas, and she has taken over our data business. Ken is now running our optimization area, and our international business. Julie and Ken are taking on several of Brian Durkin's responsibilities as he transitions to his role as an advisor. Also, I'm going to have Derek Salmon make a few comments regarding the energy market at the end of my remarks. These are obviously extraordinarily difficult and challenging times for all of us. The COVID-19 pandemic has taken a devastating toll on human life and created unprecedented uncertainty around the world. It has also changed our daily lives in ways that seemed unimaginable only a few weeks ago. The heroes in this crisis are clear. Our sincere thanks go out to the entire medical community fighting this disease on the front lines and aggressively working towards a vaccine. We also want to thank the many first responders who continue to risk their lives to keep us safe. At CME Group, we remain focused on the health and safety of our entire community. We took early action and we're the first in the industry to close our trading floor to protect our employees and market participants who access that facility on a daily basis. We also implemented work from home mandates and travel restrictions to protect employees across our global offices. We are proud of the resilience of our team and how they have risen to this new challenge. Our employees continue to work incredibly hard to help our customers and partners navigate through this challenge and its increased uncertainty and volatility. With that in mind, I'd like to highlight a number of metrics that we think reflect our performance this quarter and are important to consider as we look forward. Our systems and processes performed extremely well with peak order traffic during the quarter, and we saw very consistent response times. Our highest volume day on record took place in the first quarter, when we traded 58 million contracts on February 28th. Aside from the peaks, Q1 volume set records across many different product areas as our global clients managed risk. Average daily volume for the quarter was 27 million, up 45% from 2019. In addition, our volume in the first quarter from clients outside the United States was particularly strong, averaging 7.3 million contracts per day, or up 56%. As a result, clients continued to be able to manage their risk across all products in all time zones. We also maintained our industry-leading clearing function to provide safeguards for every trade. In response to increased volatility, we raised margins on many products across most asset classes. These prudent risk management policies were reviewed with both our clearinghouse risk committees and our regulators. We are in daily contact with our regulators to ensure the health of our markets during these unprecedented peaks of volatility. Let me turn to the trading floor for a moment. Our options volumes in key products, especially interest rates and equities, that have traditionally relied on the floor have held up well since we closed it. We've successfully assisted many clients who trade on the floor to the screens. leveraging our own front-end platform in order to quickly register and onboard a significant number of new users over a short period. And in the five weeks since then, interest rate options as a percentage of interest rate futures have remained at roughly the same levels. So far, these volumes are actually ahead of where they were on the last few days that the pits were opened. As many of you know, we have made a significant effort to increase our global sales presence. We began to make an investment several years ago and to deepen our client coverage around the globe, and that has served us extremely well with our regionally focused sales model. Today, more than half our sales staff is based outside the United States. We have sales professionals in 19 cities located in 15 countries around the world. Our sales, product management, clearing and operation teams have worked closely together to handle client engagement during this pandemic. With client interactions at record high, client feedback consistently mentions that our proactive outreach stands out compared to others in our industry. We believe these efforts will continue to pay off. We saw broad-braced strength across all customer groups, including asset managers, hedge funds, banks, prop trading firms, commercials, and retail. Our retail business was up more than 70% growth with considerable strength in the U.S., Europe, and Asia. Last, but certainly not least, we made considerable progress during Q1 to integrate the next business. We divested NextExchange, and we integrated our London offices where more than 600 of our employees work. We completed over 290 cross-selling meetings to clients from both our traditional futures business and those of the cash and optimization business we acquired. For reference, that compares to 400 of these cross-selling meetings during the full year of 2019. The largest percentage of these meetings continue to be focused on new clients in our interest rate and FX and options businesses. And we also are seeing success with optimization EBS, broker tech, and data services. To summarize the first quarter, the market environment was challenging for all of us on a professional and personal level. I am proud of the dedication of our employee base as they stepped up to the challenge. We also appreciate the trust that our market participants have in our ability to deliver results. Looking ahead, we do not know yet what the long-term impact of COVID-19 will be, But we do know that financial markets are an important part of maintaining our economy and ultimately recovering from this tragedy. As we move forward through 2020, our strategy remains the same. To build strong global benchmark offerings with deep liquidity around the clock. To continue to our commitment to offer all of these asset classes on common platforms. To deliver world-class risk management and capital efficiencies. to promote broad participation, offer robust distribution, and continue developing our strong channel partnerships. We look forward to answering your questions you have. But before that, I'm going to turn the call over to Derek Salmon. Derek?