CME Group Inc.

Greetings and welcome to the CME Group First Quarter 2023 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you would like to register for a question, please press the 1 followed by the 4 on your telephone. If you require operator assistance, please press star 0. As a reminder, this conference is being recorded today, Wednesday, April 26, 2023. It is now my pleasure to turn the conference over to Adam Minnick, Senior Director, Investor Relations. Please go ahead, sir.

Good morning, and I hope you're all doing well today. We will be discussing CME Group's first quarter 2023 financial results. I will start with the safe harbor language, and then I'll turn it over to Terry. Statements made on this call and in the 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 uncertainty and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, on the final page of the earnings release, you will see a reconciliation between GAAP and non-GAAP measures. With that, I'll turn the call over to Terry.

Thank you, Adam, and thank you all for joining us this morning. We released our executive commentary earlier today, which provides details on the first quarter of 23. I'll make a few brief comments on the quarter and current outlook, and Lynn will summarize our financial results. In addition to Lynn, we have other members of our management team present to answer questions after the prepared remarks. John Petrowitz is also on the call with us this morning. John will be staying on with CME through at least the end of the year as a special advisor to the company. Among other things, John's responsibilities will continue to be to work with investor relations activities. But this is the first for John to be on the call, not in the CFO role. So, John, please don't jump in when Linda's speaking. I'd like to thank you, John, for your over eight years as CFO. as well as your important work at CME prior to that. John has been a key part of every major milestone our company has achieved over the last 20 years, and we thank him for his many contributions to our business, and we look forward to continually working with John throughout the balance of the year. With that, I will turn to a few comments regarding the first quarter, which was continued evidence of this new era of uncertainty. As I said in my Financial Times op-ed from February, risk management has been elevated from a supporting player to the star attraction as investors are managing portfolios with near constant market challenges. Following the best year in CME Group's history, first quarter 2023 average daily volume increased 4% from an extremely strong first quarter 2022 to 26.9 million contracts and was just short of our all-time record. quarterly record average daily volume in the first quarter of 2020 of 27 million contracts. This quarter included our all-time highest single-day volume of 66.3 million contracts on March 13th. All of this and other things have led us to the highest adjusted diluted EPS in the history of CME Group. Throughout the entire quarter, there were shifting perceptions about the Fed's near-term rate path. as well as significant banking concerns in March. And the continued development of the SOFR market led to the increasing need for the management of interest rate risk. This drove 16% growth in our interest rate ADV to the record 14.5 million contracts. Record March SOFR futures ADV of 5.2 million contracts exceeded previous records seen in Eurodollar futures. And since quarter end, we successfully completed the migration of our Eurodollar open interest to SOFR without issue on April 15th. In addition, our past investments in building out our options franchises are paying off. With such turbulent macroeconomic backdrop, options are an increasingly important risk management tool. First quarter options ADV grew 26% year-over-year to a record 5.8 million contracts, including double-digit growth across interest rates, equities, and metals, and 30% growth in non-U.S. trading activity. First quarter options revenue grew 12% to a record $218 million. The first quarter was a great example of CME Group seamlessly doing what we are designed to do. The significant volatility spikes and associated turmoil affecting the banking sector in March further highlighted the systemic importance of sound risk management practices by institutional participants. There are no guarantees, but hedging can provide certainty, and the significant first quarter activity highlighted that some of today's most important trades are to manage risk. The future is more uncertain than ever, but we know we can expect a whirlwind of geopolitical and economic hurdles to persist and we will continue to focus on innovating and offering market participants meaningful capital and operational efficiencies across a diverse and global relevant product set to manage their risk. With that, I will turn the call over to our new CFO, Lynn Fitzpatrick, to cover the first quarter financial results.