CME Group Annual Report 2012

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FY2012 Annual Report · CME Group

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The Power of Risk Management
2012 AnnuAl RepoRt

Financial HigHligHTs

y e a r e n d e d o r at d ece m b e r 3 1

(in millions, except per share data and notional value)

Income Statement data

total revenues

operating income

Income before income taxes

net income attributable to CMe Group ¹

earnings per share:

Basic ¹

Diluted ¹

balance Sheet data

Current assets ²

total assets ²

Current liabilities ²

total liabilities ²

CMe Group shareholders’ equity

other data

total contract volume (round turn trades)

total electronic volume (round turn trades)

open interest at year end (contracts)

notional value of trading volume (in trillions)

2012

2011

Change

2,915

3,281

1,692

1,693

896

2,021

1,936

1,812

2.71

2.70

5.45

5.43

2,133

1,612

32,278

1,032

10,773

21,419

2,890

2,464

31,425

281

9,803

21,552

3,387

2,860

806

1,068

-11%

-16

-13

-51

-50%

-50

32%

n.m.

-1

-15%

-14

-11

-25

¹2011 results include a $646 million non-cash benefit from a tax adjustment primarily due to a revaluation of our deferred tax liabilities.

² Amounts exclude cash performance bonds and guaranty fund contributions.

n.m. not meaningful

All references to volume, notional value and rate per contract information in the text of this document
exclude our IRS, CDS, KCBT, CME Clearing Europe, TRAKRS and Swapstream contracts.

See the 2012 Annual Report on Form 10-K for the company's forward-looking statements.

7
8
3

8
7
0

0
9
8

8
7
9

5
8
5

1
8
2

4
0
0

5
1
9

3
1
6

1
6
5

2
6

2
1 6
6

1
6

8
5

2
1
8

,
1

1
5
9

6
2
8

6
9
8

5
1
7

09 10 11

TOTAL CONTRACT VOLUME
(in millions of round turn trades)

TOTAL REVENUES
(in millions of dollars)

OPERATING MARGIN
(in percentages)

NET INCOME
ATTRIBUTABLE TO CME GROUP 1
(in millions of dollars)

At CME Group, we believe that risk management empowers

customers to move ahead regardless of economic and geo-

political changes around the world. The year 2012 presented

further opportunities to deliver on that principle. As global

markets evolved, we took a number of bold new steps to ad-

dress the needs of existing and potential clients in the United

States, Europe, Asia and Latin America. With our expanded

global presence and increasing scale, we are providing even

more ways to manage risk – giving businesses, institutions

and individuals the power to advance with confidence in a

constantly shifting marketplace.

terrence a. duffy Executive Chairman and President

dear
ShareholderS

If there is one thing that stands out as
businesses begin to emerge from a dif-
ficult economic environment globally,
it’s that risk management is more im-
portant than ever. our focus has been to
expand ways to help customers world-
wide succeed in handling their evolving
needs as the demands of competition
and regulation intensify.

total company volume in 2012 was
nearly 3 billion contracts traded, which
generated more than $1.2 billion in cash
from operations. Reflecting this strength,
and consistent with the principles guid-
ing our capital structure, we raised the
regular quarterly dividend 59 percent
in 2012. We increased our payout target
from approximately 35 percent to ap-
proximately 50 percent of the prior year’s
cash earnings.

During 2012, we returned $1.2 billion
to our shareholders, representing an
aggregate dividend yield of nearly 7 per-
cent. this included an annual variable
dividend of approximately $430 million
based on 2012 results, which was accel-
erated from first-quarter 2013 due to
uncertainty surrounding the future tax
treatment of dividends.

As part of our global strategy, we an-
nounced plans to launch a new london-
based derivatives exchange in mid-2013
to serve customers outside the united
States. With more than 20 percent of
our electronic volume now originating
from europe, Asia and latin America,
having an exchange that can leverage our
european clearing house will provide ad-
ditional opportunities to serve our grow-
ing non-u.S. customer base.

We continued to advance our global growth strategy

by empowering customers through targeted risk

management tools and advanced clearing solutions

that address macroeconomic and regulatory changes.

In addition, we expanded our efforts in
Asia by enhancing agreements with key
partners. this follows our global growth
strategy of serving local needs through
selective partnerships such as those we
have with other exchanges worldwide in-
cluding BM&FBoVeSpA, Bursa Malaysia,
the Dubai Mercantile exchange and Bolsa
Mexicana de Valores.

In global agricultural markets, partici-
pants in both established and emerging
economies depend on liquid, transparent
risk management tools for price discov-
ery. our acquisition of the Kansas City
Board of trade (KCBt) serves this pur-
pose. It combines KCBt Hard Red Winter
Wheat products with our deep and liquid
CBot Soft Red Winter Wheat futures and
options markets to provide new trading
opportunities for market participants
around the world.

turning to the regulatory front, we
continue to work closely with key con-
gressional committees as well as the
Commodity Futures trading Commission
and other futures industry participants
to strengthen customer protections and
ensure the integrity of futures markets.

Furthermore, we are well positioned
to provide clearing services to the otC
market as the Dodd-Frank clearing man-
date is implemented. I believe the com-
bination of our otC clearing offering and
our unparalleled range of futures prod-
ucts provides the most comprehensive
risk management solutions available.

We now clear the seven major inter-
est rate swap currencies. In addition, we
received regulatory approval to imple-
ment portfolio margining for all market
participants.

In all our efforts, we are committed to
enabling customers worldwide to further
leverage the power of risk management
to meet their changing needs – whenever,
wherever and however they want.

terrence a. duffy
Executive Chairman and President

March 15, 2013

We are pleased with improving conditions so far in

2013, and will build on this momentum as we continue

to globalize the business by giving customers around

the world even more ways to manage their risk and

advance in challenging times.

to our
ShareholderS

our offering of the broadest range of
products across all major asset classes
was instrumental in helping customers
deal with economic and geopolitical chal-
lenges last year. our interest rate and en-
ergy products accounted for 20 percent
and 22 percent of 2012 revenues, respec-
tively. equities (15 percent), market data
and information services (13 percent),
agricultural commodities (13 percent),
foreign exchange (6 percent), and metals
(5 percent) rounded out revenue contri-
butions, with the remaining 6 percent
coming from other sources.

We also made significant progress
across several key areas. this included
launching new products, deepening rela-
tionships with our international strategic
partners, expanding our over-the-counter
(otC) clearing offering and solidifying
our position as a leader in index services
and information products. So far in 2013,
we have seen higher volumes relative to
last year.

Growing and diversifying the core
We successfully completed the acquisition
of the Kansas City Board of trade, which

will provide customers with greater capi-
tal efficiencies, new trading opportunities
and additional products to manage their
global wheat price risk. We also launched
CMe Direct technology for online trading
of both exchange-listed and otC markets
through a single application.

We completed our joint venture with
McGraw-Hill to create S&p Dow Jones In-
dices llC. As a result, we secured a long-
term exclusive license on S&p futures,
options and otC swaps. this will further
strengthen our position in index products
and services and allow us to extend prod-
uct development and co-branding across
asset classes.

Furthermore, we completed develop-
ment of our co-location services, which
went live in January 2012 and created an
additional revenue stream.

Globalizing our business
our globalization strategy is based on
serving the expanding needs of custom-
ers in developing and emerging markets.
As part of this effort, we launched a num-
ber of regionally specific products includ-
ing Black Sea Wheat and Chinese Steel

Rebar Swap Futures as well as u.S. Dollar
Denominated Ibovespa Futures, which
help us appeal to risk management needs
unique to particular geographies.
our planned exchange

in europe,
based in london, is an important next step
to meet the growing regional demand
from our customers. the initial suite of
FX products will allow us to serve clients
in the $4-trillion-a-day otC FX market,
largely traded out of london, and we plan
to expand into additional asset classes
over time.

We also strengthened our internatio-
nal partnerships, including implement-
ing our cross-listing and cross-licensing
arrangement with BM&FBoVeSpA and
increasing our stake in the Dubai Mer-
cantile exchange to 50 percent to help
build a new benchmark for crude oil east
of Suez. In addition, we advanced our
efforts in China, including helping to fa-
cilitate operational readiness of Chinese
Futures Commission Merchants (FCMs),
renewing our Memorandum of under-
standing (Mou) with the Shanghai Fu-
tures exchange and signing an Mou with
the Bank of China.

phupInder S. GIll Chief Executive Officer

adding otc offerings
the relative safety and soundness of
central counterparty clearing for otC
instruments has become increasingly
important. As a result, we have worked
closely with our customers and clear-
ing firms to provide a comprehensive,
multi-asset class clearing solution that
offers operational ease and capital
efficiencies when combined with listed
futures products.

to build on this, we have added buy-
and sell-side firms for otC clearing and
finalized long-term otC clearing agree-
ments with major sell-side banks for
clearing both interest rate swaps (IRS)
and credit default swaps (CDS). In addi-
tion, we received approval from the Com-
modity Futures trading Commission for
CMe Repository Service as a swaps data
repository for IRS, CDS, agricultural com-
modities and FX asset classes.

We also launched Deliverable Interest
Rate Swap Futures with strong support
from market participants. this product
fills an important gap in the rates market
and benefits clients by combining the eco-
nomic exposure of an interest rate swap
with the margin and liquidity benefits
of a futures contract. In addition, we are
providing portfolio margining to clearing
members and customers based on risk
offsets between otC IRS positions and
eurodollar/treasury futures positions.

achieving operational excellence
our best practices in clearing services
prompted Risk Magazine to name CMe
Clearing as “Clearing House of the Year”
in the magazine’s 2013 Risk Awards. this
achieve ment, based on customer feed-
back, validated the efforts of our global
team to develop the most efficient otC
clearing solution available.

We also completed significant en-
hancements to the CMe Globex electron-
ic trading platform, which increased the
capacity, consistency and predictability
of our system.

looking ahead, we will build on the
positive momentum so far in 2013 and
continue to globalize the business to
position CMe Group for success over
the long term.

phupInder S. GIll

Chief executive officer

March 15, 2013

coMPany acHieveMenTs in 2012

• Traded nearly 3 billion contracts worth approximately $1 quadrillion in notional value.

• Returned $1.2 billion of dividends to shareholders.

• Completed acquisition of Kansas City Board of Trade.

• Completed joint venture to create S&P Dow Jones Indices LLC.

• Announced plans to create London-based derivatives exchange, CME Europe.

• Launched regionally specific products in Europe, Asia and Latin America.

• Enhanced over-the-counter clearing offering, attracting new participants while providing

additional choice through Deliverable Interest Rate Swap Futures.

• Strengthened strategic partnerships with leading global exchanges including BM&FBOVESPA,
Bolsa Mexicana de Valores, Bursa Malaysia and Dubai Mercantile Exchange and expanded or
established memoranda of understanding with Shanghai Futures Exchange and Bank of China.

2012

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2012

2
9

.
1

2011

0
7
.

2011

2
1
.
1

2
9

0
19

8 1

09 10 11

12
Interest Rates

09 10 11

AVERAGE DAILY
TRADING VOLUME

(in thousands)

AVERAGE DAILY ELECTRONIC
TRADING VOLUME

(in thousands)

7
2
2

,
1

3
1
8

8
6
0

,
1

4
9
9

6
0
8

0
7
.

2
9

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1

2012

2
1
.
1

2
9

NOTIONAL VALUE

equities

(in trillions of dollars)

energy

DIVIDEND PAYOUT

(in dollars per share)

Foreign exchange

Agricultural Commodities

Metals

2011

09 10 11

AVERAGE DAILY

TRADING VOLUME

(in thousands)

AVERAGE DAILY ELECTRONIC
TRADING VOLUME

(in thousands)

NOTIONAL VALUE

(in trillions of dollars)

DIVIDEND PAYOUT

(in dollars per share)

PRODUCT LINE REVENUES

(as a percentage of total clearing and transaction fees)

PRODUCT LINE REVENUES

(as a percentage of total clearing and transaction fees)

PRODUCT LINE REVENUES

(as a percentage of total clearing and transaction fees)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2012

OR
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

Commission File Number 001-31553

CME GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

20 South Wacker Drive, Chicago, Illinois
(Address of Principal Executive Offices)

36-4459170
(IRS Employer
Identification No.)

60606
(Zip Code)

Registrant’s telephone number, including area code: (312) 930-1000

Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class

Class A Common Stock $0.01 par value

Name Of Each Exchange On Which Registered

NASDAQ GLOBAL SELECT MARKET

Securities registered pursuant to Section 12(g) of the Act: Class B common stock, Class B-1, $0.01 par value; Class B common stock, Class B-2, $0.01

par value; Class B common stock, Class B-3, $0.01 par value; and Class B common stock, Class B-4, $0.01 par value.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. È

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See

definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer È
Non-accelerated filer ‘ (Do not check if a smaller reporting company)

Accelerated filer
Smaller reporting company ‘

‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 29 2012, was approximately $17.7 billion (based
on the closing price per share of CME Group Inc. Class A common stock on the NASDAQ Global Select Market (NASDAQ) on such date). The
number of shares outstanding of each of the registrant’s classes of common stock as of February 13, 2013 was as follows: 333,577,524 shares of
Class A common stock, $0.01 par value; 625 shares of Class B common stock, Class B-1, $0.01 par value; 813 shares of Class B common stock,
Class B-2, $0.01 par value; 1,287 shares of Class B common stock, Class B-3, $0.01 par value; and 413 shares of Class B common stock, Class B-4,
$0.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE:

Documents

Portions of the CME Group Inc.’s Proxy Statement for the
2013 Annual Meeting of Shareholders

Form 10-K Reference

Part III

CME GROUP INC.

ANNUAL REPORT ON FORM 10-K

INDEX

PART I.

Business

Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4. Mine Safety Disclosures

Properties
Legal Proceedings

PART II.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of

Equity Securities
Selected Financial Data

Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information

PART III.

Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters

Item 13. Certain Relationships, Related Transactions and Director Independence
Item 14.

Principal Accountant Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Signatures

PART IV.

Page

1
2
16
31
31
32
32

32
35
36
58
64
100
100
103

103
103
103

103
104
104

105
105
112

PART I

Certain Terms

All references to “options” or “options contracts” in
the text of this document refer to options on futures
contracts.

references

Unless otherwise indicated,
to CME
Group Inc. (CME Group) products include references
to exchange-traded products on one of its regulated
exchanges: Chicago Mercantile Exchange
Inc.
(CME), Board of Trade of the City of Chicago, Inc.
Inc.
(CBOT), New York Mercantile Exchange,
(NYMEX), Commodity Exchange, Inc. (COMEX)
and The Board of Trade of Kansas City, Missouri,
Inc. (KCBT). Products listed on these exchanges are
subject to the rules and regulations of the particular
exchange and the applicable rulebook should be
consulted. Unless otherwise indicated, references to
NYMEX include its subsidiary, COMEX.

Further
information about CME Group and its
products can be found at http://www.cmegroup.com.
Information made available on our Web site does not
constitute a part of this Annual Report on Form 10-K.

Information about Contract Volume and Average
Rate per Contract

All amounts regarding contract volume and average
rate per contract exclude our TRAKRS, Swapstream,
credit default swaps, interest rate swaps and CME
Clearing Europe contracts.

Trademark Information

CME Group is a trademark of CME Group Inc. The
Globe logo, CME, Chicago Mercantile Exchange,
Globex, E-mini, Green Exchange, The Green
Exchange and Design, and GreenX are trademarks of
Chicago Mercantile Exchange Inc. CBOT and
Chicago Board of Trade are trademarks of Board of
Trade of the City of Chicago, Inc. NYMEX, New
York Mercantile Exchange
are
trademarks of New York Mercantile Exchange, Inc.
COMEX is a trademark of Commodity Exchange,
Inc. KCBT and Kansas City Board of Trade are
trademarks of The Board of Trade of Kansas City,
Missouri, Inc. Dow Jones, Dow Jones Industrial
Average, S&P 500, and S&P are service and/or
trademarks of Dow Jones Trademark Holdings LLC,
Standard & Poor’s Financial Services LLC and S&P/

and ClearPort

Dow Jones Indices LLC, as the case may be, and
have been licensed for use by Chicago Mercantile
Exchange Inc. All other trademarks are the property
of their respective owners.

FORWARD-LOOKING STATEMENTS

data,

current

including

references

expressions,

statements, we discuss our

From time to time,
in this Annual Report on
Form 10-K as well as in other written reports and
verbal
expectations
regarding future performance. These forward-looking
statements are identified by their use of terms and
such as “believe,” “anticipate,” “could,”
phrases
“estimate,” “intend,” “may,” “plan,” “expect” and
similar
to
assumptions. These forward-looking statements are
based on currently available competitive, financial and
economic
estimates,
forecasts and projections about the industries in which
we
and
and management’s
assumptions. 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. We want to caution you not to place undue
reliance on any forward-looking statements. We
undertake no obligation to publicly update any
forward-looking statements, whether as a result of new
information, future events or otherwise. Among the
factors that might affect our performance are:

expectations,

operate

beliefs

and
competition
increasing
increased
entities,
domestic
competition from new entrants
into our
markets and consolidation of existing entities;

by
including

foreign

keep

ability

complete

pace with

our
to
rapid
technological developments,
including our
ability
the
development,
implementation and maintenance of
the
enhanced
by
our
such
customers while
technology is not vulnerable to security risks;

functionality

ensuring

required

that

ability

continue

our
introducing
competitive new products and services on a
timely, cost-effective basis, including through
our electronic trading capabilities, and our
ability to maintain the competitiveness of our
existing products and services, including our
ability to provide effective services to the
over-the-counter market;

•

our ability to adjust our
expenses if our revenues decline;

fixed costs and

our ability to maintain existing customers,
develop strategic relationships and attract new
customers;

our ability to expand and offer our products
outside the United States;

and

domestic

non-U.S.
changes
regulations,
including the impact of any
changes in domestic and foreign laws or
to our
government policy with respect
industry, including any changes to regulations
and policies that require increased financial
and operational resources from us or our
customers;

the costs associated with protecting our
intellectual property rights and our ability to
operate our business without violating the
intellectual property rights of others;

data

our ability to generate revenue from our
reduced or
market
that may be
eliminated by the growth of
electronic
trading, the state of the overall economy or
declines in subscriptions;

changes in our rate per contract due to shifts
in the mix of the products traded, the trading
venue and the mix of customers (whether the
customer receives member or non-member
fees or participates in one of our various
incentive programs) and the impact of our
tiered pricing structure;

the ability of our financial safeguards package
to adequately protect us from the credit risks
of clearing members;

the ability of our compliance and risk
management methods to effectively monitor
and manage our risks, including our ability to
prevent errors and misconduct and protect our
infrastructure against security breaches and
misappropriation of our intellectual property
assets;

changes in price levels and volatility in the
derivatives markets and in underlying equity,
foreign
and
commodities markets;

exchange,

interest

rate

economic, political and market conditions,
including the volatility of the capital and

credit markets and the impact of economic
conditions on the trading activity of our
current and potential customers stemming
in the
from the
financial markets;

continued uncertainty

our ability to accommodate increases
in
contract volume and order transaction traffic
the
or
without
degradation
performance of our
trading and clearing
systems;

failure

our ability to execute our growth strategy and
maintain our growth effectively;

our ability to manage the risks and control the
costs
acquisition,
our
associated with
investment and alliance strategy;

our ability to continue to generate funds
and/or manage our indebtedness to allow us
to continue to invest in our business;

industry and customer consolidation;

decreases in trading and clearing activity;

the imposition of a transaction tax or user fee
on futures and options on futures transactions
and/or repeal of the 60/40 tax treatment of
such transactions;

the unfavorable resolution of material legal
proceedings; and

the seasonality of the futures business.

•

For a detailed discussion of these and other factors
that might affect our performance, see Item 1A. of
this Report beginning on page 16.

ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

Building on the heritage of its futures exchanges
(CME, CBOT, NYMEX, COMEX and KCBT), CME
Group serves the risk management and investment
needs of customers around the globe.

CME was founded in 1898 as a not-for-profit
corporation. In 2000, CME demutualized and became
a shareholder-owned corporation. As a consequence,
we adopted a for-profit approach to our business,
including strategic initiatives aimed at optimizing
contract volume, efficiency and liquidity. In 2002,

as well

over-the-counter

Chicago Mercantile Exchange Holdings Inc. (CME
Holdings) completed its initial public offering of its
Class A common stock, which is listed on the
NASDAQ Global Select Market under the symbol
“CME”. In 2007, CME Holdings merged with CBOT
Holdings, Inc. and was renamed CME Group. In
connection with the merger, we acquired the CBOT
exchange. CBOT is a leading marketplace for trading
agricultural and U.S. Treasury futures as well as
options on futures.
In 2008, we merged with
NYMEX Holdings and acquired NYMEX and
COMEX. On NYMEX, customers primarily trade
including
energy futures and options contracts,
contracts for crude oil, natural gas, heating oil and
gasoline,
energy
transactions cleared through CME ClearPort. On
COMEX, customers trade metal futures and options
contracts,
including contracts for gold, silver and
copper. We launched CME Clearing Europe in 2011
to expand our European presence and further extend
the geographical reach of our clearing services. In
January 2012, we launched our co-location business
which is comprised of hosting, connectivity and
customer
further
services
diversification of our revenue stream. In June 2012,
we established a new joint venture in which
McGraw-Hill contributed its Standard & Poor’s
(S&P) Indices business and we contributed a portion
of our CME Group Index Services business to create
S&P/Dow Jones Indices LLC (S&P/DJI), a global
leader in index services. Our CME Group Index
Services business was originally formed in 2010 as
part of a joint venture with Dow Jones & Company.
As part of the formation of the joint venture in 2012,
McGraw-Hill acquired our credit derivatives market
data business. In September 2012, we applied to the
United Kingdom’s Financial Services Authority
derivatives
to
(FSA)
exchange. Pending
a
as
Recognized Investment Exchange, CME Europe
Limited will initially begin trading foreign exchange
futures products and is expected to launch mid-2013.
In November 2012, we acquired KCBT, which is the
leading futures market for hard red winter wheat. In
2012, we began operating a registered swap data
repository service that supports credit, interest rates,
commodities and foreign exchange asset classes.

a London-based

regulatory

providing

approval

support

create

Our futures and clearing business has historically
the
been subject
Commodity Futures Trading Commission (CFTC).
As a result of our global operations, we are also

to the extensive regulation of

the

and

Securities

subject
to the rules and regulations of the local
jurisdictions in which we conduct business. This
includes the FSA, based on our offering of various
CME Group products and services to European
customers and the operation of CME Clearing
Europe,
Exchange
Commission (SEC), in connection with our offering
of clearing services for security-based swaps. In July
the Financial Stability Oversight Council
2012,
designated our U.S. clearing house as a systemically
important financial market utility which carries with
it additional regulatory oversight of certain of our
risk-management standards, clearing, and settlement
activities.

and

Our principal executive offices are located at 20
South Wacker Drive, Chicago, Illinois 60606, and
our telephone number is 312-930-1000.

FINANCIAL INFORMATION ABOUT
INDUSTRY SEGMENTS

The company reports the results of its operations as
one reporting segment primarily comprised of the
CME, CBOT, NYMEX, COMEX and KCBT
exchanges. The remaining operations do not meet the
thresholds
segment
information.

reporting

separate

for

NARRATIVE DESCRIPTION OF BUSINESS

rates, equity indexes,

We offer the widest range of global benchmark
products across all major asset classes based on
foreign exchange,
interest
energy, agricultural commodities, metals, weather
and real estate. Our products include both exchange-
traded and over-the-counter derivatives. We bring
buyers and sellers together through our CME Globex
electronic trading platform across the globe and our
open outcry trading facilities in Chicago, New York
City and Kansas City,
and provide hosting,
for electronic
connectivity and customer support
trading through our co-location services. Our CME
Direct
technology offers side-by-side trading of
exchange-listed and over-the-counter markets. We
also provide clearing and settlement services for
exchange-traded contracts, as well as for cleared
over-the-counter derivatives transactions. Finally, we
offer a wide range of market data services —
including live quotes, delayed quotes, market reports
and a comprehensive historical data service — and
have expanded into the index services business.

Our Competitive Strengths

CME Group offers a number of key differentiating
elements that set it apart from its competitors,
including:

Highly Liquid Markets—Our listed futures markets
provide an effective forum for our customers to
manage their risk and meet their investment needs
relating to our markets. We believe that our
customers choose to trade on our centralized market
due to its liquidity and price transparency. Market
liquidity—or the ability of a market to absorb the
execution of large purchases or sales quickly and
efficiently, whereby the market
recovers quickly
following the execution of large orders—is key to
attracting customers and contributing to a market’s
success.

interest

Most Diverse Product Line—Our products provide a
means for hedging, speculation and asset allocation
relating to the risks associated with, among other
things,
rate sensitive instruments, equity
ownership, changes in the value of foreign currency,
credit risk and changes in the prices of agricultural,
energy and metal commodities. The estimated
percentage of clearing and transaction fees revenue
contributed by each product line is as follows:

Product Line

Interest rate . . . . . . . . . . . . . . . . . .
Equity . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . .
Agricultural commodity . . . . . . . .
Energy . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Metal

2012

2011

2010

25% 27% 27%
21
19
7
7
13
16
26
27
6
6

21
7
12
27
6

the breadth and diversity of our
We believe that
lines and the variety of their underlying
product
contracts is beneficial
to our overall performance
when an individual product line or individual product
is impacted by macroeconomic factors. Additionally,
our asset classes contain various products designed to
address differing risk management needs.

Our products are traded through the CME Globex
electronic trading platform, our open outcry auction
markets in Chicago, New York City and Kansas City,
and through privately negotiated transactions that we
clear. The estimated percentage of clearing and
transaction fees revenue contributed by each trading
venue is as follows:

Trading Venue

2012

2011

2010

Electronic . . . . . . . . . . . . . . . . . . .
Open outcry . . . . . . . . . . . . . . . . .
Privately negotiated . . . . . . . . . . .
CME ClearPort (OTC) . . . . . . . . .

76% 75% 74%
9
7
5
6
11
11

10
5
11

generate

valuable

products

Our
information
regarding prices and trading activity. We distribute
our market data over the CME market data platform
directly to our electronic trading customers as part of
their access to our markets, as well as to quote
vendors who consolidate our market data with that
data
third-party
from other
providers and news sources, and then resell
their
consolidated data. The estimated contributions of our
market data and information services products,
excluding our index market data offerings, based on
percentage of total revenue over the last three years,
were 12% in 2012, 10% in 2011 and 11% in 2010.

exchanges,

other

In 2010, we expanded our market data offerings
through our joint venture with Dow Jones—CME
Group Index Services—which further diversified our
revenue streams. In June 2012, we established our
new joint venture with McGraw-Hill and contributed
a portion of our CME Group Index Services business
to create S&P/DJI. We derived 2% of our revenues
from our index services business in 2012, 3% in 2011
and 2% in 2010.

Safety
and Soundness of our Markets—We
understand the importance of ensuring that our
customers are able to manage and contain their
trading risks. As the markets and the economy have
evolved, we have worked to adapt our clearing
services to meet the needs of our customers. We
apply robust risk management standards and enforce
and facilitate applicable CFTC customer protection
standards for exchange-traded products and cleared
over-the-counter derivatives. Clearing member firms
are continually monitored and examined to assess
and
their
compliance with customer protection rules and
risk
regulations. We utilize a combination of

outstanding

adequacy

capital

risk,

management capabilities to assess our clearing firms
and their account exposure levels for all asset classes
24 hours a day throughout the trading week. Our U.S.
clearing house is operated within our CME exchange.
We also operate a UK clearing house—CME
Clearing Europe. In connection with our acquisition
of KCBT, we acquired its clearing house. We expect
to complete the integration of the KCBT clearing
house with our U.S. clearing house in April 2013.

Our integrated clearing function is designed to ensure
the safety and soundness of our markets. Our clearing
services are designed to protect the financial integrity
of our markets by serving as the counterparty to
every trade, becoming the buyer to each seller and
the seller to each buyer, and limiting credit risk. The
clearing house is responsible for settling trading
accounts, clearing trades, collecting and maintaining
performance bond funds, regulating delivery and
reporting trading data. CME Clearing marks open
positions to market at least twice a day, and requires
payment from clearing firms whose positions have
lost value and makes payments to clearing firms
whose positions have gained value. For
select
cleared-only markets, positions are marked-to-market
daily, with the capacity to mark-to-market more
frequently as market conditions warrant. We also
offer clearing services through CME ClearPort, a
comprehensive set of flexible clearing services for
the global over-the-counter market backed by CME
Clearing. See “Item 7A. Quantitative and Qualitative
Disclosures About Market Risk,” beginning on page
59 and “Item 1A. Risk Factors,” beginning on page
16, for more information on our financial safeguards
package and the associated credit risks related to our
clearing services.

Superior Trading Technology and Distribution—
We strive to provide the most flexible architecture in
terms of bringing new technology, innovations and
solutions to the market. Our CME Globex electronic
trading platform is accessible on a global basis nearly
24 hours a day throughout the trading week. In 2012,
we launched the next generation of CME Globex
reducing order entry and market data latency
variability along with increasing capacity and cost
efficiency.

Our platform offers:

•

certainty of execution;

•

vast capabilities to facilitate complex and
demanding trading;

direct market access;

fairness, price transparency and anonymity;
and

including

high-speed

distribution,

connection
global
international
through
telecommunications hubs in key financial
centers in Europe, Asia and Latin America,
and hosting or global order routing to our
global partner exchanges.

In January 2012, we launched our service offerings
for co-location at our data center facility, which
houses our trading match engines for all products
traded on the CME Globex platform. The service
provides the lowest
latency connection for our
customers. The offering is made available to all
customers on equal terms. We derived 2% of our
revenues from our co-location business in 2012. We
also enhanced our trading technology with the launch
of CME Direct, which offers on-line trading of both
exchange-traded and over-the-counter markets. In
2012, 84% of our contract volume was conducted
electronically.

Our Strategic Initiatives

The following is a description of our strategic
initiatives:

launches

Leading Core Business Innovation—We continue to
enhance our customer relations to allow us to further
cross-sell our products, expand on the strength of our
and launch new
existing benchmark products
three years, our key new
products. Over the last
product
included the Ultra-long Bond
Treasury futures and options, Weekly Treasury
options and a deliverable interest rate swap futures
product. During the year, we also completed the
acquisition of the KCBT, providing customers with
greater capital efficiencies, new trading opportunities
and additional products to manage their global wheat
price risk. We also acquired the Green Exchange,
LLC and integrated its products into our energy
product suite which adds to our energy complex and
expands our reach into the environmental market.

Globalizing our Company and our Business—Our
goal
is to continue to expand and diversify our
customer base worldwide and offer customers around
the world the most broadly diversified portfolio of
benchmark products. We expanded our product suite
with the launch of a number of regionally specific
including Black Sea Wheat, deliverable
products,
renminbi
futures and Chinese Steel Rebar swap
futures, which help us appeal to risk management
needs unique to a particular geography. We continue
to believe that we have significant opportunity to
expand the participation of our non-U.S. customer
base in our markets. We are focusing on core growth
in global markets because we believe that Asia, Latin
America, and other emerging markets will experience
superior economic and financial markets growth over
the next decade compared with the more mature
North American and European markets. In particular,
we plan to expand our presence in major financial
centers in Asia, grow our commodities business with
non-U.S. customers and products and penetrate
emerging markets, such as China and India.

our

further

enhance

customers’

arrangements

network. These

To
trading
opportunities, we have partnered with leading
exchanges around the world to make their products
available on or through our CME Globex platform
allow our
and
the world’s most
customers to access many of
actively traded equity futures contracts—Brazilian
IBovespa index futures, Korean Kospi 200 index
futures,
Indian Nifty 50 index futures, Japanese
Nikkei 225 index futures and the Mexican IPC index.
These strategic relationships allow us to accelerate
our market penetration, expand our customer reach,
lower barriers of access to global benchmarks and
develop product sales channels with local brokers.
These relationships are also designed to allow the
customers of our partner exchanges to access our
products and markets. During 2012, we strengthened
our
including
implementing our cross-listing and cross-licensing
arrangement
S.A.
(BM&FBOVESPA), and increasing our investment
in the Dubai Mercantile Exchange to help build the
new benchmark for crude oil East of Suez.

BM&FBOVESPA

partnerships,

international

with

In May 2011, we launched CME Clearing Europe
and we have made steady progress building on our
European presence to further extend the geographical
reach of our clearing services. We offer clearing
services on over-the-counter commodity derivative

products, including energy, agriculture, freight and
precious metals, through CME Clearing Europe, and
we continue to expand the range of eligible products.
Next steps include the clearing of interest rate swaps.

In September 2012, we applied to the FSA for
approval to create a London-based exchange that will
initially offer trading of foreign exchange futures
products and ultimately expand into other products.
We believe establishing an exchange in the United
Kingdom will
leverage the central counterparty
model of CME Clearing Europe and will allow us to
more closely align with our regional customers in
both listed and over-the-counter markets, and will
provide additional opportunities to our expanding
non-U.S. customer base.

Expanding our Existing Customer Base and
Enhancing our Product and Services Offerings to
Meet their Risk Management Needs—We plan to
grow our business by targeting cross asset sales
across client segments, driving international sales
(specifically in Asia and Europe) and generating new
client participation across all regions. We have a long
history of providing customer choice and flexibility
and believe that our products and services make us
well positioned to help our customers adapt and
comply with the new regulations, while enabling
them to manage their risks in as efficient a manner as
possible. With the continued implementation of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank) and Basel III Interim
Capital Framework (Basel III), we expect global
banks to look for capital efficiencies and move to
centralized clearing on a futures exchange. We
continue to focus on new customer onboarding for
swaps clearing services, expanding our over-the-
counter product offerings and working with the buy-
and sell-sides to meet
real-time
clearing, risk management and data reporting.

their needs for

Extending our Capabilities and Business in the
Over-the-Counter Markets—Our goal is to provide a
comprehensive multi-asset class clearing solution to
the market for maximum operational ease and the
capital efficiency that comes with connecting to a
single clearing house. Our over-the-counter offerings
provide participants the extensive counterparty credit
risk reduction and transparency of our clearing
services while preserving the prevailing execution
processes,
and economic
structures currently in use in the marketplace. We

technology platforms

and

futures

positions

strengthened

have built a multi-asset
class over-the-counter
clearing solution. We offer clearing services for
cleared over-the-counter derivatives in interest rate
swaps, credit default swaps, foreign exchange and
commodities.
the
2012, we
capabilities of our over-the-counter product offering
with the launch of portfolio margining of interest rate
swaps
all market
participants. We continue to collaborate with buy-
and sell-side customers to provide the innovative
products and services they need to manage their risk
effectively in a continuously evolving marketplace.
In 2012, we cleared over-the-counter transactions
with a notional value of over $1.1 trillion, and open
interest as of December 31, 2012 was $691.8 billion.
Our CME ClearPort platform offers an array of
clearing services that depend on the nature of the
product
traded and has the capacity to clear and
report transactions in multiple asset classes.

for

Establishing Ourselves as the Leading Exchange
Company Provider of Information Products and
Index Services and Enhancing our Intellectual
Property Portfolio—We offer a variety of market
data services for the futures, equities and the over-
the-counter markets. In June 2012, we established a
new joint venture in which McGraw-Hill contributed
its S&P Indices business and we contributed a
portion of our CME Group Index Services business
to create S&P/DJI, a global leader in index services.
This new venture creates a leading index provider
well-positioned to serve global institutional and retail
customers and will allow us to continue to be
and co-
innovative with product development
branding across asset classes. As part of
the
agreement, we acquired a long-term, ownership-
linked, exclusive license to list futures and options on
futures based on the S&P Indices. Our CME Group
Index Services business was originally formed in
2010 as part of a joint venture with Dow Jones &
Company. We also plan to expand our existing
intellectual property portfolio for our technology and
product and services offerings.

Patents, Trademarks and Licenses

We own the rights to a large number of trademarks,
service marks, domain names and trade names in the
United States, Europe and in other parts of the world.
important
We have registered many of our most
trademarks in the United States and other countries.
We hold the rights to a number of patents and have

trader user interface,

made a number of patent applications. Our patents
cover match engine,
trading
floor support, market data, general technology and
clearing house functionalities. We also own the
copyright to a variety of materials. Those copyrights,
some of which are registered, include printed and on-
line
advertisements,
educational material, graphic presentations and other
literature, both textual and electronic. We attempt to
protect our intellectual property rights by relying on
trademarks, patents, copyrights, database rights, trade
secrets, restrictions on disclosure and other methods.

publications, web

sites,

subject

We offer equity index futures and options on key
benchmarks, including S&P, NASDAQ, Dow Jones
and Nikkei indexes. We also have an agreement with
the Chicago Board Options Exchange (CBOE) to list
futures and options on futures for volatility indexes
on a variety of asset classes. These products are listed
by us
to license agreements with the
applicable owners of the indexes. We have exclusive
arrangements with Standard & Poor’s (S&P), The
NASDAQ OMX Group, Inc. (NASDAQ) and Dow
Jones, and non-exclusive arrangements with the other
third parties. In connection with our joint venture
with McGraw-Hill, we entered into a new license
agreement with S&P (S&P License Agreement),
which superseded our prior licensing arrangements
and was assigned to the joint venture. In accordance
with the terms and conditions of the S&P License
Agreement, the joint venture granted CME a license
to use certain S&P stock indexes and the related trade
names, trademarks and service marks in connection
with the creating, issuing, listing, trading, clearing,
futures
marketing and promoting of
contracts,
options on futures contracts,
swaps and other
derivative contracts. CME’s license for the S&P 500
Index will be exclusive for futures and options on
futures until one year prior to the termination of the
S&P License Agreement, and non-exclusive for the
last year. The license for the other S&P stock indexes
is generally exclusive for futures and options on
futures. The term of the S&P License Agreement will
continue until the later of (i) December 31, 2017 or
(ii) the date that is one year after the date that CME
Group ceases to own at least five percent (accounting
for dilution) of the outstanding joint venture interests.
Upon the occurrence of certain events,
including
certain terminations of the joint venture, the term
may be extended up to an additional ten years. The
S&P License Agreement also provides CME with
the
certain rights to sublicense its rights under

to any third-party exchange or other
agreement
organized trading facility located outside of
the
United States. CBOT has a license agreement (Dow
Jones License Agreement) with CME Group Index
Services LLC (CME Indexes), which has also been
assigned to the joint venture. The Dow Jones License
Agreement provides CBOT and certain of
its
affiliates a license to use certain Dow Jones stock
indexes and the related trade names, trademarks and
service marks in connection with the creating, listing,
trading, clearing, marketing and promoting of futures
contracts, options on futures contracts and other
financial products that are based upon such Dow
Jones stock indexes. Indexes to which CBOT has
exclusive license rights include the Dow Jones
Composite Index, the Dow Jones Industrial Average
Index, the Dow Jones Transportation Average Index
and the Dow Jones Utility Average Index, among
others. CBOT holds a non-exclusive license for the
Dow Jones Global Titans 50 Index, Dow Jones Italy
Titans 30 Index, Dow Jones Sector Titans Indexes
and Dow Jones U.S. Real Estate Index, among
others. CBOT also has certain rights to sublicense its
rights under the Dow Jones License Agreement to
futures
any other exchange for
contracts and options on futures contracts. The initial
term of the agreement is from July 1, 2011 through
June 30, 2026. Following the initial term, the Dow
Jones License Agreement shall automatically renew
for renewal terms of five years thereafter so long as
there is open interest
in any of CBOT’s or its
affiliates’ products based on one or more of the Dow
Jones licensed indexes. In the event there is no open
interest in any such products, then CME Indexes may
terminate the agreement by providing written notice
of non-renewal to CBOT at least six months prior to
the end of the initial term or the then current renewal
term—provided that if any open interest arises during
such
shall
automatically renew. Our NASDAQ license is
exclusive through 2019. Copies of our S&P, Dow
Jones and NASDAQ license arrangements have been
filed as material contracts. We pay the applicable
third party per trade fees based on contract volume
under the terms of these licensing agreements.

the trading of

agreement

six-month

period,

the

Following the well-publicized issues relating to the
credibility of the London Interbank Offered Rate
(LIBOR), numerous investigations were undertaken
by regulators and an official study of the benchmark
was commissioned to evaluate potential reforms. We
and membership
licensing
currently

have

agreement with BBA Enterprises Limited and the
British Bankers’ Association (collectively, BBA) for
the use of LIBOR to settle several of our interest rate
products, including our Eurodollar contract. For the
license, we paid an upfront fee and pay an annual fee.
Based on the ongoing review of LIBOR, we expect
LIBOR to be reformed rather than replaced and to
continue as a regulated benchmark. Depending upon
the outcome of the reform efforts, we may need to
enter into a new license agreement with BBA or the
organization appointed to administer the benchmark.

We cannot assure you that we will be able to
maintain the exclusivity of our licensing agreements
with S&P, Dow Jones and NASDAQ or be able to
maintain our other existing licensing arrangements.
In addition, we cannot assure you that others will not
succeed in creating stock index futures based on
information similar to that which we have obtained
that market participants will not
by license, or
including
instruments,
increasingly
securities and options based on the S&P, Dow Jones
or NASDAQ indexes, to manage or speculate on U.S.
stock risks. Parties may also succeed in offering
indexed products that are similar to our licensed
products without being required to obtain a license,
or in countries that are beyond our jurisdictional
reach and/or our licensors.

other

use

Seasonality

have

historically

Generally, we
experienced
relatively higher contract volume during the first and
second quarters and sequentially lower contract
volume in the third and fourth quarters. However,
such seasonality may also be impacted by general
market conditions or other events. During 2012, 27%
of our consolidated revenues were recognized in the
first quarter, 27% in the second quarter, 23% in the
third quarter and 23% in the fourth quarter.

Working Capital

We generally meet our funding requirements with
internally generated funds supplemented from time to
and commercial paper
time with public debt
offerings. For more information on our working
capital needs, see “Management’s Discussion and
Analysis of Operations and Financial Condition-
Liquidity and Capital Resources,” beginning on page
55, which section is incorporated herein by reference.

Customer Base

institutions,

Our customer base includes professional
traders,
financial
institutional and individual
corporations, manufacturers,
investors, major
producers and governments. Our customers can
access our CME Globex trading platform across the
globe. Customers may be members of one or more of
our CME, CBOT, NYMEX or COMEX exchanges or
a permit holder at KCBT. Rights to directly access
our markets will depend upon the nature of the
customer, such as whether the individual is a member
or permit holder of one of our exchanges or has
executed an agreement with us for direct access.

Trading rights and privileges are exchange specific.
is
Trading on our open outcry trading floors
conducted exclusively by our members and permit
holders. Membership on one of our futures exchanges
or ownership of a KCBT permit also enables a
customer to trade specific products at reduced rates
and lower fees. Under the terms of the organizational
documents of our exchanges, our members/permit
holders have certain rights that relate primarily to
trading
fee
protections and certain membership/permit holder
benefit protections. In 2012, 79% of our contract
volume was conducted by our members and permit
holders.

protections,

trading

certain

right

The majority of clearing and transaction fees
received from clearing firms represent charges for
trades executed and cleared on behalf of
their
customers. Two firms each represented 12% of our
clearing and transaction fees revenue for 2012. In the
event a clearing firm were to withdraw, we believe
that
the firm’s trading
activity would likely transfer to another clearing firm
of the exchange. In 2011, one of our largest clearing
firms was placed into bankruptcy and we transferred
all of their more than 30,000 customer accounts to
other futures commission merchants.

the customer portion of

Competition

The industry in which we operate
is highly
competitive and we expect competition to continue to
intensify, especially in light of the implementation of
Dodd-Frank and other
the financial
services industry. For example, Dodd-Frank gives the
CFTC authority to require certain swaps to be cleared
by central clearing houses and to require certain of

reforms of

those swaps mandated for clearing to be traded on
exchanges or swap execution facilities, unless no
exchange or swap execution facility makes the swap
available for trading. While these new requirements
create opportunities for us to expand our over-the-
counter business, a number of market participants
and other exchanges and less regulated trading
platforms have developed, and likely will develop in
the future, competing platforms and products.

stringent

We encounter competition in all aspects of our
business, including from entities having substantially
greater capital and resources, offering a wide range
of products and services and some operating under a
different and possibly less
regulatory
regime. We face competition from other futures,
securities and securities option exchanges; over-the-
counter markets; clearing organizations; consortia
formed
large market
participants; swap execution facilities; alternative
trade execution facilities; technology firms, including
market data distributors and electronic trading system
developers; and others.

our members

and

Competition in our Derivatives Business

We believe competition in the derivatives and
securities business is based on a number of factors,
including, among others:

•

depth and liquidity of markets;

transaction costs;

breadth of product offerings and rate and
quality of new product development;

ability to position and expand upon existing
products to address changing market needs;

transparency,
transaction processing;

reliability and anonymity in

connectivity, accessibility and distribution;

technological capability and innovation;

efficient and secure settlement, clearing and
support services;

regulatory environment; and

reputation.

We believe that we compete favorably with respect to
liquid markets; diverse
these factors. Our deep,
product offerings; rate and quality of new product

and

secure

development;
settlement,
efficient,
clearing and support services, distinguish us from our
competitors. We believe that in order to maintain our
competitive position, we must continue to expand
globally; develop new and innovative products;
enhance our technology infrastructure, including its
reliability and functionality; maintain liquidity and
low transaction costs, and adopt additional customer
protections designed to ensure the integrity of our
market and the confidence of our customers.

NYSE

Euronext

Our principal competitors include other exchanges
(NYSE),
such
IntercontinentalExchange, Inc. (ICE), the Hong Kong
Exchanges and Clearing Limited (HKEX) and Eurex
Group. In addition, recent industry developments and
alliances, such as the Electronic Liquidity Exchange
(ELX), have resulted in a growing number of well-
capitalized trading service providers that compete
with all or a portion of our business. We expect
industry participants to continue to look for ways to
grow their
challenging
regulatory environment. For example, in December
2012, NYSE and ICE entered into a merger
to which ICE would acquire
agreement pursuant
NYSE. HKEX completed its acquisition of
the
London Metal Exchange in 2012.

business

despite

the

We face competition from the over-the-counter
market with the trading of contracts similar to those
traded or cleared on our exchanges, such as swaps,
forward contracts and other exchange “look-alike”
contracts,
in which parties directly negotiate the
terms of their contracts, as well as from spot markets,
exchange-traded funds, contracts for difference and
other substitutes for our products. Development of
swap execution facilities and the mandated clearing
create
requirement
platforms that promote competitive substitutes for
our
exchange-traded
products. We primarily face competition from the
LCH.Clearnet Group in interest rate swaps and ICE
in credit default swaps.

products may

negotiated

privately

certain

and

for

Competition in our Transaction Processing
Business

In addition to the competition we face in our
derivatives
of
competitors in our transaction processing and other
business services. In the past few years, there has

business, we

number

face

been increased competition in the provision of
clearing services and we expect competition to
continue
in connection with the
implementation of Dodd-Frank, which requires the
mandatory central clearing of standardized over-the-
counter products.

to increase

ICE has its own clearing operations which are
comprised of regulated clearing houses across the
United States, Europe and Canada. The Options
Clearing Corporation clears U.S.-listed options and
clears futures on a number of underlying financial
assets including common stocks, currencies and stock
indexes. New York Portfolio Clearing, a clearing
house created by NYSE and The Depository Trust &
Clearing Corporation (DTCC), clears interest rate
futures contracts and cross-margins eligible positions
against U.S. Treasury and agency securities and
repurchase
by DTCC’s
subsidiary, Fixed Income Clearing Corporation. We
believe that other exchanges may also undertake to
provide clearing services, especially in light of Dodd-
Frank’s clearing mandate.

agreements

cleared

things,

We believe competition in the transaction processing
and business services market is based on, among
the services
other
the fees charged for
the services;
provided; quality and reliability of
timely
creditworthiness of
delivery of the services; reputation; offering breadth;
confidentiality of positions and information security
protective measures; and the value of providing
customers with capital efficiencies.

clearing house;

the

Competition in our Market Data Business

and

have

vendors

software

typically

front-end

substantial

Technology companies, market data and information
also
vendors
represent potential competitors because, as purveyors
of market data or trading software systems, these
firms
distribution
they also have
capabilities. As technology firms,
access to trading engines that can be connected to
their data and information networks. Additionally,
technology and software firms that develop trading
systems, hardware and networks that are otherwise
outside of the financial services industry may be
attracted to enter our markets. This may lead to
decreased demand for our market data.

Regulatory Matters

Our operation of futures exchanges is subject
to
extensive regulation by the CFTC under a principles-
based approach which requires that our exchange
subsidiaries satisfy the requirements of certain core
principles relating to the operation and oversight of
our markets and our clearing house, but also, as a
highly
regulations,
result
prescriptive regulatory regime. The CFTC carries out
the regulation of the futures markets in accordance
with the provisions of the Commodity Exchange Act
the Commodity
as amended by, among others,
Futures Modernization Act and Dodd-Frank. The
CFTC is subject to reauthorization every five years
and is scheduled for reconsideration in 2013.

recent

under

In light of widespread financial and economic
difficulties in the U.S. and abroad, particularly acute
in the latter half of 2008 and early 2009, there were
calls for a restructuring of the regulation of financial
markets. Dodd-Frank, which was signed into law in
is a comprehensive banking and financial
2010,
services reform package that
includes significant
changes to the oversight of the derivatives markets,
both over-the-counter and exchange-traded. Dodd-
Frank reinforces the core tenets of our markets:

•

price transparency,

liquid markets to minimize transaction cost,

• market integrity,

•

customer protection, and

safety

the
soundness
counterparty clearing services.

and

central

serve

Since the adoption of Dodd-Frank, the CFTC, the
SEC,
the Department of Treasury and other
regulators have engaged in extensive rulemaking to
implement the legislation. CME Group and others in
the industry continue to actively participate in the
the final
rulemaking process, with the goal
regulations
foster
competition and innovation and do not place the U.S.
competitive
sector
financial
disadvantage
financial
two years, a number of
markets. Over the past
regulations
were
relating to mandatory
finalized,
clearing and the operation of a clearing house, anti-
manipulation, large trader reporting, the definition of

at
evolving global

that
interest,

including rules

implementing

Dodd-Frank

services

in the

public

the

agricultural commodity and certain provisions of the
rules applicable to designated contract markets.
While we continue to believe that the new regulations
provide opportunities for our business which we
intend to explore, a significant portion of the Act,
however, remains subject to further rulemaking, and
such final regulations could include provisions that
negatively
Several
our
Congressional hearings have been held to evaluate
the situation and various policy suggestions have
been made to ensure the protection of customer
segregated funds. We have incurred and expect to
continue to incur significant additional costs to make
the necessary changes to our business to comply with
the provisions of Dodd-Frank and any new
regulations stemming from these events.

business.

impact

Our key areas of focus in the regulatory environment
are:

rules

• Changes to the core principles for designated
contract markets, including any changes to
the
competitive
implementing the
execution requirements of Core Principle 9.
Rules promulgated under this provision may
require us to make modifications to the
manner in which certain of our contracts trade
and/or require that such products be de-listed
as futures and re-listed as swaps after a
specified compliance period.

• Changes to the self-regulatory model, which,
if modified, could alter the manner in which
we currently oversee our marketplace. We
believe that we are best positioned to continue
to conduct financial and market surveillance
of our clearing firms.

• The implementation of

the position limit
rules, which could have a significant impact
on our commodities business relative to such
markets abroad given that it does not appear
that foreign jurisdictions will impose position
limits rules as stringent as those adopted by
the CFTC. Although the CFTC adopted new
position limits,
subsequently
vacated by the U.S. District Court for the
District of Columbia and remanded back to
the CFTC.

they were

• Concerns regarding the “one size fits all”
rules for capital charges implementing Basel
III, as well as whether we will be deemed a

“qualified” central counterparty, and the risk
that these new standards may impose overly
burdensome capital
requirements on our
clearing members and customers, which may
eliminate
liquid
exchange-traded derivatives instead of other
derivatives products with higher risk profiles.

incentives

to trade

the

• The potential elimination of the 60/40 tax
treatment of
certain of our derivatives
contracts, which would impose a significant
increase in tax rates applicable to our market
participants, and could result in a decrease in
their trading activity.

• The implementation of mechanisms to further
futures
the
level, and to restore

protect
commission merchant
confidence in the derivatives markets.

customer

funds

Pursuant to Dodd-Frank, in July 2012, the Financial
Stability Oversight Council designated CME, due its
operation of our U.S.
a
systemically important financial market utility which
carries with it additional regulatory oversight of
certain of our risk-management standards, clearing
and settlement activities.

clearing house,

In 2012, we began operating a registered swap data
repository service that is subject to the oversight of
the CFTC and we must comply with certain core
principles under the Commodity Exchange Act.

As a global company with operations and locations
around the world, we are also subject to the laws and
regulations in the locations in which we do business.

the FSA with oversight

The financial services industry outside of the United
States is also undergoing similar significant change,
particularly in Europe. For example, in the United
Kingdom the government has proposed to reorganize
its regulatory framework, which would include the
to be
dissolution of
transitioned in April 2013 to the Bank of England,
the Financial Conduct Authority and the Prudential
Regulation Authority depending upon the status of
in the United
the regulated entity. As a result,
Kingdom our operations could be subject to multiple
regulators: CME Clearing Europe Limited (our U.K.
clearing house) would be regulated by the Bank of
England, CME Europe Limited (our proposed U.K.
exchange) would be regulated by the Financial
Conduct Authority and CME (our U.S. clearing

house) would be
regulated by the European
Securities and Markets Authority (ESMA) as an
overseas clearing house. The European Union is also
undergoing similar change with multiple supervisory
authorities, such as ESMA established in 2011. In
addition to the national regulators, ESMA has a
supervisory and oversight
role over European
clearing houses, non-European clearing houses, non-
European exchanges, European trade repositories and
non-European trade repositories providing services in
Europe. Multiple legislations such as the European
Market
the Markets in
the Capital
Financial
Requirements Directive IV and the Market Abuse
Directive, have been proposed with provisions
similar to those contained in Dodd-Frank.

Infrastructure Regulation,

Instruments Directive,

Compliance with these new regulations may require
us and our customers to dedicate significant financial
and operational resources which could result in some
participants leaving our markets or decreasing their
trading activity which would negatively affect our
profitability.
regulatory
environment following the implementation of Dodd-
Frank and other financial reform regulations is less
beneficial for us or our customers, our business,
financial condition and operating results could be
negatively affected.

extent

the

If we fail to comply with applicable laws, rules or
regulations, we may be subject
to censure, fines,
cease-and-desist orders, suspension of our business,
removal of personnel or other sanctions, including
revocation of our designations as a contract market
and derivatives clearing organization.

accordance with

In 2012, notifications from one of our market data
the
distributors made
requirements of our market data license agreement
included disclosures
such distributor had
that
disseminated our market data to the Government
Trading Corporation (GTC) and to a European
subsidiary of the National
Iranian Oil Company
(NIOC). In 2012, the gross revenues attributable to
these
through the
subscriptions made
distributor were $3,150. The terms and conditions on
which the market data was disseminated by the
distributor to GTC and NIOC are the same as would
be provided to any other indirect subscriber. Other
than the execution of a uniform subscriber addendum
that is made available to all of our distributors for use
any
with their

subscribers, we do not have

indirect

Specially

contractual or other relationship with GTC or NIOC.
We believe that the distribution of our market data,
which is otherwise publicly available in other forms
on our Web site on a real-time and delayed basis, is
exempt
from applicable U.S. sanctions programs
pursuant to a statutory and regulatory exemption for
exports of information and informational materials.
Nevertheless, we are in the process of requesting that
our market data distributors refrain from providing
our market data to their subscribers that are located in
identified on the U.S.
sanctioned countries or
Treasury
Designated
Department’s
Nationals and Blocked Persons List. The distribution
of our market data to GTC and NIOC is subject to
disclosure pursuant to Section 219 of the Iran Threat
Reduction and Syria Human Rights Act of 2012
(ITRSHR Act) and Section 13(r) of the Securities
Exchange Act of 1934 (Exchange Act), which
requires an issuer
to disclose in its annual or
quarterly reports, as applicable, whether it or any of
its affiliates knowingly engaged in certain activities,
transactions or dealings relating to Iran or with
designated natural persons or entities involved in
terrorism or the proliferation of weapons of mass
destruction. Disclosure is required whether or not the
activities are sanctionable under U.S.
In
connection with these disclosures, we will be
required to separately file, concurrently with this
Annual Report, a notice that such activities have been
disclosed in this report, which notice must also
contain the information required by Section 13(r) of
the Exchange Act.

law.

There continues to be significant focus among the
CFTC, SEC and foreign regulators
relating to
perceived risks, level playing field considerations and
potential market abuses associated with algorithmic
trading and high frequency trading following recent
highly publicized technical problems, including the
2010 “flash crash” and the significant losses incurred
by Knight Capital. Although not clearly defined, high
frequency trading typically refers to professional
traders, acting in a proprietary capacity, that engage
in strategies that generate a large number of trades on
a daily basis. The CFTC has formed a subcommittee
to define high frequency trading within the context of
automated
the
appropriateness of creating multiple categories for
high frequency traders, conduct an analysis of the
oversight, surveillance and economic aspects, and
identify potential market disruptions that could be
provoked by such traders and possible mitigations.

determine

systems,

trading

We believe, and there is considerable supporting
that high frequency traders play an
evidence,
important
role in the marketplace by increasing
liquidity, narrowing spreads and enhancing the
efficiency of markets. At this time, however, it is
unclear whether
in
result
restrictions on the use of high frequency trading.

inquires will

these

In the United States and Europe, there are several
proposals to tax financial transactions or to assess
user fees for market participants. For example, in the
United States, there is discussion of assessing a user
fee to fund the CFTC, and in Europe, legislative
bodies are considering a tax on all
financial
transactions. In the past, efforts to implement a
transaction tax or user fee have not been successful.
The implementation of additional costs to use our
markets may discourage institutions and individuals
from using our products to manage their risks, which
could adversely impact our
contract volumes,
revenues and profits, and may also adversely impact
our ability to compete on an international level. A
transaction tax or user fee in the U.S. may also cause
market participants to transition to, and/or increase
their derivatives trading in, jurisdictions outside the
U.S. which do not necessarily impose a comparable
cost at this time.

the U.S. Congress may propose to
In addition,
eliminate the favorable 60/40 tax treatment
for
futures. The current tax treatment for futures trading
allows certain traders to pay a blend of taxes on their
gains and losses from trading futures and options,
with 60% at capital gains rates and 40% at ordinary
tax rates. Any repeal of 60/40 tax treatment would
impose a substantial increase in tax rates applicable
to our market participants who are most responsible
for creating liquid and efficient markets.

Employees

Bryan T. Durkin, 52

As of December 31, 2012, we had approximately
2,600 employees. We consider relations with our
employees to be good.

Executive Officers

The following are our executive officers, including a
description of their business experience over the last
five years. Ages are as of February 1, 2013. Effective
as of April 2012,
the titles for CME Group’s
Management Team were changed from Managing
Director to Senior Managing Director. As the change
was not a substantive change in the individual’s role
at the Company, we have continued to reflect the
original date that
the individuals assumed their
current roles.

Terrence A. Duffy, 54

Mr. Duffy has served as our Executive Chairman and
President since May 2012. Mr. Duffy previously
served as our Executive Chairman from 2006 and has
been a member of our board of directors since 1995.
He also served as President of TDA Trading, Inc.
from 1981 to 2002 and has been a member of our
CME exchange since 1981.

Phupinder S. Gill, 52

Mr. Gill has served as our Chief Executive Officer
and a member of our board of directors since May
2012. Previously, he served as our President from
2007 to May 2012. Mr. Gill joined us in 1988 and
since then has held various positions of increasing
responsibility within the organization,
including
President and Chief Operating Officer, and Managing
Director and President of CME Clearing and GFX
Corporation. Mr. Gill
our
representative on the board of Bursa Malaysia
Derivatives Berhad.

serves

also

Kathleen M. Cronin, 49

Ms. Cronin has served as our Senior Managing
Director, General Counsel and Corporate Secretary
since 2003. Previously she served as Corporate
Secretary and Acting General Counsel from 2002
through 2003. Prior to joining us, Ms. Cronin was a
Slate,
corporate
Meagher & Flom from 1989 through 1995 and from
1997 through 2002.

Skadden, Arps,

attorney

Mr. Durkin has served as our Chief Operating Officer
since 2007. He also held the title of Managing
Director, Products and Services from 2010 to July
2012. Mr. Durkin joined us in connection with the
CBOT merger and he previously held a variety of
leadership roles with CBOT from 1982 to 2007, most
recently as Executive Vice President and Chief
Operating Officer.

Julie Holzrichter, 44

Global

Operations

Ms. Holzrichter has served as Senior Managing
Director,
2007.
Ms. Holzrichter rejoined us in 2006 as our Managing
Director, CME Globex Services and Technology
Integration. Ms. Holzrichter previously held positions
of increasing responsibility in our organization from
1986 to 2003 in trading operations.

since

Kevin Kometer, 48

Information Officer

Mr. Kometer has served as Senior Managing Director
and Chief
since 2008. He
previously served as Managing Director and Deputy
Chief Information Officer from 2007 to 2008. Since
joining the company most recently in 1998, he has
held senior leadership positions in the Technology
including Managing Director, Trading
Division,
and Director, Advanced
Execution
Systems
Technology. Mr. Kometer was
also with the
company from 1994 to 1996.

James E. Parisi, 48

Mr. Parisi has served as our Chief Financial Officer
since 2004. Mr. Parisi joined us in 1988 and has held
increasing responsibility within the
positions of
organization,
including Managing Director &
Treasurer and Director, Planning & Finance.

Laurent Paulhac, 43

Mr. Paulhac has served as Senior Managing Director,
Financial and OTC Products & Services since 2012
and as Managing Director, OTC Products and
Services from 2009 to 2012. Prior to joining the
company, Mr. Paulhac most recently served as Chief
Executive Officer of Credit Market Analysis from
2005 to 2009.

Hilda Harris Piell, 45

Ms. Piell has served as Senior Managing Director
and Chief Human Resources Officer since 2007.
Previously she served as Managing Director and
Senior Associate General Counsel, as Director and
Associate General Counsel and as Associate Director
and Assistant General Counsel since joining us in
2000.

James V. Pieper, 46

Mr. Pieper has served as our Managing Director and
Chief Accounting Officer since 2010. Previously,
Mr. Pieper served as Director and Controller since
2006 and as Associate Director and Assistant
Controller from 2004 to 2006.

John W. Pietrowicz, 48

Mr. Pietrowicz has served as our Senior Managing
and Corporate
Director, Business Development
Finance since 2010. Mr. Pietrowicz joined us in 2003
and since then has held various positions of
increasing responsibility, including his most recent
position of Managing Director and Deputy Chief
Financial Officer from 2009 to 2010 and Managing
Director, Corporate Finance and Treasury from 2006
to 2009.

Linda Rich, 49

Ms. Rich has served as our Senior Managing
Director, Government Relations and Legislative
Affairs since April 2012. Prior to assuming her
current role, Ms. Rich served as Managing Director,
Government Relations and Legislative Affairs since
joining us in 2010. Before joining the company,
as Senior Vice President,
Ms. Rich
Government Relations for NYSE Euronext. Her
background also includes serving as senior counsel to
the U.S. House of Representatives Committee on
Financial Services and as counsel to the U.S. House
of Representatives Committee on Commerce.

served

Derek Sammann, 44

Mr. Sammann has served as our Senior Managing
Director, Financial Products and Services since 2009.
He previously served as our Global Head of Foreign
Exchange Products since joining us in 2006. Prior to
joining us, Mr. Sammann served as Managing
Director, Global Head of FX Options and Structured

Products at Calyon Corporate and Investment Bank
in London from 1997 to 2006.

Kimberly S. Taylor, 51

Ms. Taylor has served as our President, CME
Clearing since 2004 and as Managing Director, Risk
Management in the Clearing House Division from
1998 to 2003. Ms. Taylor has held a variety of
positions in the Clearing House,
including Vice
President and Senior Director. She joined us in 1989.

Kendal Vroman, 41

Mr. Vroman has served as our Senior Managing
Director, Commodity and Information Products &
Services since 2010. Mr. Vroman previously served
and Chief Corporate
as Managing Director
Development Officer
2010.
Mr. Vroman joined us in 2001 and since then has
held positions of increasing responsibility, including
recently as Managing Director, Corporate
most
Development and Managing Director, Information
and Technology Services.

from 2008

Scot E. Warren, 49

Mr. Warren has served as our Senior Managing
Director, Equity Index Products and Index Services
since 2010. Mr. Warren previously served as our
Managing Director, Equity Products since joining us
in 2007. Prior
to that, Mr. Warren worked for
Goldman Sachs as its Vice President, Manager
to
Trading and Business Analysis Team. Prior
Goldman Sachs, Mr. Warren managed equity and
option execution and clearing businesses for ABN
Amro in Chicago and was a Senior Consultant for
Arthur Andersen & Co. for financial services firms.

Robert Zagotta, 48

served

and Execution

Mr. Zagotta has served as Senior Managing Director,
Products and Services of CME Group since July
2012. Prior to joining the company, Mr. Zagotta most
as Executive Vice President,
recently
Business Strategy
for Project
Leadership Associates (PLA) from 2007 to July
2012, where he worked with CME Group on a
number of strategic consulting assignments. Before
joining PLA, Mr. Zagotta was a Partner and Co-
Founder of Fourth Floor Consulting, which was
acquired by PLA, and a Senior Manager
at
PricewaterhouseCoopers.

FINANCIAL
GEOGRAPHIC AREAS

INFORMATION

ABOUT

ITEM 1A. RISK FACTORS

CME Group has not historically tracked revenues
location. Beginning in
based upon geographic
September 2011, we began tracking trading volume
based on the country of origin of the transaction as
disclosed to us by the customer. Prior to September
2011, we tracked trading volume based on the time of
the execution of the trade and whether it occurred
during traditional U.S. trading hours or through our
international telecommunication hubs.

In 2012, we estimate that approximately 21% of our
electronic trading volume originated from outside of
the United States. The following table shows the
total contract volume on our
percentage of our
Globex electronic trading platform generated during
non-U.S. hours and through our international hubs
for the last three years.

Trading during non-U.S. hours . .
Trading through

2012

2011

2010

17% 16% 15%

telecommunication hubs . . . . .

15% 8% 9%

AVAILABLE INFORMATION

Our Web site is www.cmegroup.com. Information
made available on our Web site does not constitute
part of this document. We make available on our
Web site our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and amendments to those reports as soon
as reasonably practicable after we electronically file
or furnish such materials to the SEC. Our corporate
governance materials,
including our Corporate
Governance Principles, Director Conflict of Interest
Policy, Board
of Ethics,
Categorical Independence Standards, Employee Code
of Conduct and the charters for all
the standing
committees of our board, may also be found on our
Web site. Copies of these materials are also available
to shareholders free of charge upon written request to
Shareholder Relations, Attention Ms. Beth Hausoul,
CME Group Inc., 20 South Wacker Drive, Chicago,
Illinois 60606.

of Directors Code

In addition to the other information contained in this
Annual Report on Form 10-K, you should carefully
consider the factors discussed below, which are the
risks that we believe are material at this time. These
risks could materially and adversely affect our
business,
of
operations. These risks and uncertainties are not the
only
and
uncertainties not presently known to us or that we
currently believe to be immaterial may also adversely
affect our business.

us. Additional

condition

financial

results

facing

risks

ones

and

RISKS RELATING TO OUR INDUSTRY

Our business is subject to the impact of domestic
and international market, economic and political
conditions which are beyond our control and which
could significantly reduce our contract volumes and
make our financial results more volatile.

revenue is

Our
substantially dependent on the
contract volume in our markets. Our contract volume
is directly affected by domestic and international
factors that are beyond our control, including:

economic, political and geopolitical market
conditions;

volatile weather patterns, droughts, natural
disasters and other catastrophes;

broad trends in industry and finance;

changes in price levels, contract volumes and
volatility in the derivatives markets and in
underlying equity, foreign exchange, interest
rate and commodity markets;

changes in global or regional demand or
supply shifts in commodities underlying our
products;

legislative and regulatory changes, including
any direct or
restrictions on or
increased costs associated with trading in our
markets;

indirect

competition;

changes in government monetary policies,
especially central bank decisions related to
quantitative easing;

availability
our market
capital
participants and their appetite for risk-taking;

•

levels of assets under management; and

consolidation in our customer base and within
our industry.

interest

Any one or more of these factors may contribute to
reduced activity in our markets. Historically, our
trading volume has tended to increase during periods
of heightened uncertainty due to increased hedging
activity and the increased need to manage the risks
associated with, or speculate on, volatility in the U.S.
equity markets, fluctuations in interest rates and price
changes in the foreign exchange, commodity and
other markets. However, as evidenced by our
performance in recent years, in the period after a
material market disturbance,
there may persist
extreme uncertainties which may lead to decreased
volume due to factors such as reduced risk exposure,
lower
rates, central bank asset purchase
programs, and lack of available capital. During 2012,
the U.S. economy remained constrained due to
uncertainty surrounding the Presidential election, the
pending
global
recession. Europe also continues to face uncertainty
with some euro-zone countries in recession. As a
result, period-to-period comparisons of our financial
results are not necessarily meaningful. The shifts in
market
the
financial disturbance of 2008 may or may not persist,
and they will be affected by future economic
uncertainties,
decisions
regarding U.S. spending, central bank asset purchase
activity and currency management policies around
the world. All of these uncertainties as well as new
surprises may result in continued decreased trading
volume and a more difficult business environment for
us. Material decreases in trading volume would have
a material adverse effect on our financial condition
and operating results.

experienced since

trading patterns

including

pending

fiscal

fears

cliff,

and

the

We operate in a heavily regulated environment that
imposes significant costs and competitive burdens
on our business and such environment is currently
undergoing significant reform.

Our business has been extensively regulated by the
CFTC. In response to the economic crisis, the Dodd-
Frank Act was signed into law in 2010. This
legislation is a comprehensive banking and financial
services reform package that
includes significant
changes to the oversight of the derivatives markets,
both
In
accordance with Dodd-Frank, the CFTC’s authority

and exchange-traded.

over-the-counter

has been significantly expanded to include over-the-
counter derivatives.

the

serve

public

in our

services

that
interest,

at
evolving global

Since the adoption of Dodd-Frank, the CFTC, the
the Department of Treasury and other
SEC,
regulators have engaged in extensive rulemaking to
implement the legislation. CME Group and others in
the industry continue to actively participate in the
the final
rulemaking process with the goal
regulations
foster
competition and innovation and do not place the U.S.
competitive
financial
sector
financial
disadvantage
two years, a number of
markets. Over the past
regulations
were
finalized,
relating to mandatory
clearing and the operation of a clearing house, anti-
manipulation, large trader reporting, the definition of
agricultural commodity and certain provisions of the
rules applicable to designated contract markets.
While we continue to believe that the new regulations
provide opportunities for our business which we
intend to explore, a significant portion of the Act,
however, remains subject to further rulemaking, and
such final regulations could include provisions that
negatively impact our business, including changes to
Core Principle 9.

including rules

implementing

Dodd-Frank

rules

instead

derivatives

implementing

The implementation of Basel III and its “one size fits
all” rules for capital charges, as well as greater
capital charges that will apply if we are not deemed a
“qualified” central counterparty, may impose overly
burdensome capital
requirements on our bank-
affiliated clearing members and customers, which
to trade liquid
could eliminate the incentives
exchange-traded
other
of
derivatives products with higher risk profiles. The
international
local
standards have not been finalized. We will comply
with CFTC regulations that will be issued, and
therefore we expect
to be deemed a “qualified”
central counterparty when those regulations are
effective. However, to the extent that we are not
deemed a “qualified” central counterparty during the
interim period or
in
thereafter,
increased costs
to our bank-affiliated clearing
members and result in them electing to clear their
business at another “qualified” central counterparty
or imposing increased costs on customers that prefer
to clear at CME.

it could result

these

Additionally, the futures industry, its self-regulatory
model and the segregation and customer protection

regime are under
scrutiny by the CFTC and
Congress. Several Congressional hearings have been
held to evaluate the situation and various policy
suggestions have been made to ensure the protection
of customer segregated funds.

Our operation of a registered swap data repository
also subjects us to additional oversight of the CFTC
and we must comply with additional core principles
relating to the operation of
this newly formed
regulated business.

As a global company with operations around the
world, we are also subject to the laws and regulations
in the locations in which we do business. We cannot
assure you that we and/or our directors, officers,
employees and affiliates will be able to fully comply
with these rules and regulations. We also cannot
assure you that we will not be subject to claims or
actions by any of these regulatory agencies. Our
subsidiaries, CME Clearing Europe, CME Marketing
to
Europe and CME Europe Limited (subject
obtaining FSA approval), are also subject
to the
supervision and oversight of the FSA (and in the
future by the Bank of England and the Financial
Conduct Authority which will replace the FSA). The
regulatory environment in the United Kingdom and
the European Union is undergoing significant
reforms in connection with the oversight of the
In response to the
financial
economic crisis, a number of
service
legislations covering issues similar to those included
in Dodd-Frank have also been proposed in Europe.
As we continue to expand our operations in the
United Kingdom with our UK clearing house and
proposed UK exchange, changes in the European
(including the UK) regulatory environment will have
a greater impact on our business.

industry.

financial

services

Compliance with these new regulations may require
us and our customers to dedicate significant financial
and operational resources, which could result in some
participants leaving our markets or decreasing their
trading activity, which would negatively affect our
profitability.
regulatory
environment following the implementation of Dodd-
Frank and other financial reform regulations is less
beneficial for us or our customers, our business,
financial condition and operating results could be
negatively affected.

extent

the

If we fail to comply with applicable laws, rules or
to censure, fines,
regulations, we may be subject

cease-and-desist orders, suspension of our business,
removal of personnel or other sanctions, including
revocation of our designations as a contract market
and derivatives clearing organization.

In the United States and Europe, there are several
proposals to tax financial transactions or to assess
user fees for market participants. For example, in the
United States, there is a discussion of assessing a user
fee to fund the CFTC, and in Europe, legislative
bodies are considering a tax on all
financial
transactions. In the past, efforts to implement a
transaction tax or user fee have not been successful.
The implementation of additional costs to use our
markets may discourage institutions and individuals
from using our products to manage their risks, which
contract volumes,
could adversely impact our
revenues and profits and also adversely impact our
ability to compete on an international
level. A
transaction tax or user fee in the U.S. may also cause
market participants to transition and/or increase their
derivatives trading in jurisdictions outside the U.S.,
which do not necessarily impose a comparable cost at
this time.

the U.S. Congress may propose to
In addition,
eliminate the favorable 60/40 tax treatment
for
futures. The current tax treatment for futures trading
allows certain traders to pay a blend of taxes on their
gains and losses from trading futures and options,
with 60% at capital gains rates and 40% at ordinary
tax rates. Any repeal of 60/40 tax treatment would
impose a substantial increase in tax rates applicable
to our market participants who are responsible for
creating liquid and efficient markets.

Some of our largest clearing firms have indicated
their belief that clearing facilities should not be
owned or controlled by exchanges and should be
operated as utilities and not
for profit. These
clearing firms have sought, and may seek in the
future, legislative or regulatory changes that would,
if adopted, enable them to use alternative clearing
services for positions established on our exchanges
or to freely move open positions among clearing
houses in order to take advantage of our liquidity.
Even if they are not successful, these factors may
cause them to limit the use of our markets.

largest clearing firms, which are
Some of our
significant customers and intermediaries
in our
products, have stressed the importance to them of

centralizing clearing of futures contracts and options
on futures contracts in order
to maximize the
efficient use of their capital, exercise greater control
over their value at risk and extract greater operating
leverage from clearing activities. Many clearing
firms have expressed the view that clearing firms
should control the governance of clearing houses or
that clearing houses should be operated as utilities
rather than as part of for-profit enterprises. Some of
these firms, along with certain industry associations,
have sought, and may seek in the future, legislative
or regulatory changes to be adopted that would
facilitate mechanisms or policies that allow market
participants to transfer positions from an exchange-
owned clearing house to a clearing house owned and
controlled by clearing firms. Our strategic business
plan is to operate a vertically integrated transaction
execution, clearing and settlement business for our
futures and options on futures business. If these
legislative or regulatory changes are adopted, our
strategy and business plan may lead clearing firms to
establish, or seek to use, alternative clearing houses
for clearing positions established on our exchanges.
Even if they are not successful in their efforts, the
factors described above may cause clearing firms to
limit or stop the use of our products and markets. If
any of these events occur, our revenues and profits
could be adversely affected.

We face intense competition from other companies,
including some of our members. If we are not able
to successfully compete, our business will not
survive.

reforms of

The industry in which we operate
is highly
competitive and we expect competition to continue to
intensify, especially in light of the implementation of
the financial
Dodd-Frank and other
services industry. For example, Dodd-Frank gives the
CFTC authority to require certain swaps to be cleared
by central clearing houses and to require certain of
those swaps mandated for clearing to be traded on
exchanges or swap execution facilities, unless no
exchange or swap execution facility makes the swap
available for clearing. While these new requirements
create opportunities for us to expand our over-the-
counter business, a number of market participants
and other exchanges and less regulated trading
platforms have developed, and likely will develop in
the future, competing platforms and products.

We encounter competition in all aspects of our
business, including from entities having substantially

stringent

greater capital and resources, offering a wide range
of products and services and some operating under a
different and possibly less
regulatory
regime. We face competition from other futures,
securities and securities option exchanges; over-the-
counter markets; clearing organizations; consortia
formed
large market
participants; swap execution facilities; alternative
trade execution facilities; technology firms, including
market data distributors and electronic trading system
developers; and others.

our members

and

service

trading

Our principal competitors include other exchanges
such as NYSE, ICE, HKEX and Eurex Group. In
addition, recent industry developments and alliances,
such as ELX, have resulted in a growing number of
that
well-capitalized
compete with all or a portion of our business. We
expect industry participants to continue to look for
ways to grow their business despite the challenging
regulatory environment. For example, in December
2012, NYSE and ICE entered into a merger
to which ICE would acquire
agreement pursuant
NYSE. HKEX completed its acquisition of
the
London Metal Exchange in 2012.

providers

Other companies have entered into or are forming
joint ventures or consortia to provide services similar
to those provided by us. Others may become
competitive with us through acquisitions. Federal law
allows institutions that have been major participants
on our exchange to trade the same or similar products
among themselves without utilizing any exchange or
trading system. Many of our competitors and
financial,
competitors
potential
marketing,
resources
technological and personnel
than we do. These factors may enable them to
lower
develop
transaction costs and better execution to their
customers and to carry out their business strategies
more quickly and efficiently than we can. In addition,
our competitors may:

products,

provide

similar

greater

have

quickly

competitive
respond more
pressures,
including responses based upon
their corporate governance structures, which
may be more flexible and efficient than our
corporate governance structure;

develop products that are preferred by our
customers;

develop risk transfer products that compete
with our products;

•

their products

price
competitively;

and services more

and

develop
network
expand
infrastructure and service offerings more
efficiently;

their

utilize better, more user-friendly and more
reliable technology;

greater

take
alliances and other opportunities;

advantage

acquisitions,

• more effectively market, promote and sell

their products and services;

•

better
leverage existing relationships with
customers and alliance partners or exploit
better recognized brand names to market and
sell their services; and

regulated

regulatory

disparities

between
exploit
and
traditional,
from a
alternative markets
reduced regulatory burden and lower-cost
business model.

that benefit

exchanges

If our products, markets and services are not
competitive, our business, financial condition and
operating results will be materially harmed.

A decline in our fees or any loss of customers could
lower our revenues, which would adversely affect our
profitability.

Changes in regulations as a result of implementation
of the Dodd-Frank Act and other restructuring of the
regulation of
financial markets or
otherwise, may adversely impact our ability to
compete, especially on a global basis.

the global

contract

Our
volume, and consequently our
revenues and profits, would be adversely affected if
we are unable to retain our current customers or
attract new customers.

The success of our business depends, in part, on our
ability to maintain and increase our contract volume.
To do so, we must maintain and expand our product
offerings, our customer base and our trade execution
facilities. Our success also depends on our ability to
offer
an
increasingly price-sensitive business. For example, in
recent years, some of our competitors have engaged
in aggressive pricing strategies, including lowering

competitive

services

prices

and

the fees that they charge for taking liquidity and
increasing liquidity payments/rebates they provide as
an incentive for providers of liquidity in certain
markets. We cannot assure you that we will be able
to continue to expand our product lines, that we will
be able to retain our current customers or attract new
customers or that we will not be required to modify
our pricing structure to compete effectively. Changes
in our pricing structure may result in a decrease in
our profit margin. We bill a substantial portion of our
clearing and transaction fees to our clearing firms. If
we are unable to effectively compete, we could
experience decreased volumes. The majority of
clearing and transaction fees received from clearing
firms represent charges for
trades executed and
cleared on behalf of their customers. Two firms each
represented 12% of our clearing and transaction fees
revenue for 2012. Should a clearing firm withdraw,
we believe that the customer portion of the firm’s
trading activity would likely transfer
to another
clearing firm of the exchange. Additionally, from
time to time, certain customers may represent a
significant portion of
in our
individual product lines or contracts. If we fail to
maintain our contract volume; expand our product
offerings or execution facilities; or lose a substantial
number of our current customers, or a subset of
customers representing a significant percentage of
contract volume in a particular product line; or are
unable to attract new customers, our business and
revenues will be adversely affected. The shortfall in
customer segregated funds at MF Global and the
misappropriation of customer property at Peregrine
Financial Group, Inc. (PFG) may have an impact on
the overall confidence in the futures markets, which
could have a negative impact on contract volume.
Furthermore, declines in contract volume due to loss
of customers may negatively impact market liquidity,
which could lead to further loss of contract volume.

the open interest

As a financial services provider, we are subject to
litigation risk and potential securities
significant
law liability.

Many aspects of our business involve substantial
litigation risks. While we generally are protected by
our rules limiting liability for system failures and
certain forms of negligence and by statutory limits on
private causes of actions in cases where we have not
behaved in bad faith, we could be exposed to
substantial liability under federal and state laws and
court decisions, as well as rules and regulations

their

trade

quality

regarding

statements

connection with

promulgated by the SEC and the CFTC. These risks
include, among others, potential
liability from
disputes over terms of a trade, the claim that a system
to a
failure or delay caused monetary losses
customer,
that we entered into an unauthorized
transaction or that we provided materially false or
misleading
a
in
transaction. Dissatisfied customers frequently make
execution,
claims
improperly settled trades, mismanagement or even
fraud against
service providers. We may
become subject to these claims as a result of failures
or malfunctions of our systems and services we
provide. For example, we served as the designated
self regulatory organization for MF Global. There are
ongoing investigations by the Department of Justice,
the FBI, the CFTC, and the SEC into the events
surrounding the MF Global bankruptcy,
including
determining which individuals and entities may have
civil or criminal
the shortfall. We
liability for
continue to believe that we acted appropriately and
that our actions do not give rise to liability. We have
been named as a party to a number of lawsuits in
connection with the MF Global matter, which have
been consolidated. There is no guarantee that we will
not become the subject of additional
litigation
relating to the matter or that we will be successful in
defending against these claims or any other action
relating to MF Global or any matter brought in the
legal expenses
future. We could incur significant
defending claims, even those without merit.
In
addition, an adverse resolution of any future lawsuit
or claim against us could have a material adverse
effect on our business and our reputation.

Our role in the global marketplace may place us at
greater risk than other companies for a cyber attack
and other cyber security risks. Our networks and
those of our third party service providers may be
vulnerable to security risks, which could result in
wrongful use of our
cause
interruptions in our operations that cause us to lose
customers and contract volume and result
in
significant liabilities. We could also be required to
incur significant expense to protect our systems.

information or

We regard the secure transmission of confidential
information and the ability to continuously transact
and clear on our electronic trading platforms as
critical elements of our operations. Our networks and
those of our third-party service providers and our
customers may be vulnerable to unauthorized access,

regulation of

the perceived lack of

fraud, computer viruses, denial of service attacks,
terrorism, firewall or encryption failures and other
security problems. Recently, groups have targeted the
financial services industry as part of their protest
against
the
financial sector and economic inequality, including
calls to their supporters to launch cyber attacks on
numerous financial institutions, which in some cases
have resulted in brief outages to their external
corporate web sites. Our
in the global
marketplace may place us at greater risk than other
public companies for a cyber attack and other
information security risks.

role

Additionally, our
role as a leading derivatives
marketplace and the operation of our CME Globex
electronic trading platform may place us at greater
risk for misappropriation of our intellectual property.
For example, in 2012, a former employee of CME
Group plead guilty to theft of our trade secrets. While
we do not believe that any customer information,
trade data or required regulatory information was
compromised in this incident and we have no
evidence that the trade secrets were distributed in
connection with this matter, we cannot assure you
that we will not be the subject of future malfeasance.
Other persons who circumvent security measures
could wrongfully use our
information or cause
interruptions or malfunctions in our operations.

Although we have not been the victim of cyber attacks
or other cyber incidents that have had a material
impact on our operations or financial condition, we
have from time to time experienced cyber security
breaches
such as computer viruses and similar
information technology violations that are typical for a
company of our size that operates in the global
financial marketplace. As part of our global
information security program, we employ resources to
monitor the environment and protect our infrastructure
against
potential
attacks
misappropriation of our intellectual property assets.
However,
these measures may prove insufficient
depending upon the attack or threat posed, which
could result in system failures and delays that could
cause us to lose customers, experience lower contract
volume, incur significant liabilities or have a negative
impact on our competitive advantage.

cyber

such

and

the

We may be at greater risk from terrorism than other
companies.

•

We may be more likely than other companies to be a
direct target of, or an indirect casualty of, attacks by
terrorists or terrorist organizations. It is impossible to
accurately predict the likelihood or impact of any
terrorist attack on the derivatives industry generally
or on our business. While we have undertaken
significant measures to develop business continuity
plans and to establish backup sites, in the event of an
attack or a threat of an attack, these security measures
and contingency plans may be inadequate to prevent
significant disruptions in our business, technology or
access to the infrastructure necessary to maintain our
business. Such attack may result in the closure of our
trading and clearing facilities or render our backup
data and recovery systems inoperable. Damage to our
facilities due to terrorist attacks may be significantly
in excess of any amount of insurance received, or we
may not be able to insure against such damage at a
reasonable price or at all. The threat of terrorist
attacks may also negatively affect our ability to
attract and retain employees. Any of these events
could have a material adverse effect on our business,
financial condition and operating results.

RISKS RELATING TO OUR BUSINESS

The success of our markets will depend on our
ability to complete development of, successfully
implement and maintain the electronic trading
systems that have the functionality, performance,
reliability and speed required by our customers.

The future success of our business depends in large
part on our ability to create interactive electronic
marketplaces in a wide range of derivatives products
that have the required functionality, performance,
capacity, reliability and speed to attract and retain
customers. A significant portion of our overall
volume is generated through electronic trading on our
CME Globex electronic platform.

We must continue to enhance our electronic trading
platform to remain competitive. As a result, we will
continue to be subject
to risks, expenses and
uncertainties encountered in the rapidly evolving
market for electronic transaction services. These risks
include our failure or inability to:

•

provide reliable and cost-effective services to
our customers;

in a timely manner,

develop,
the required
functionality to support electronic trading in
our key products
is
competitive with the functionality supported
by other electronic markets;

in a manner

that

• match fees of our competitors that offer only

electronic trading facilities;

•

attract independent software vendors to write
front-end software that will effectively access
our electronic trading system and automated
order routing system;

respond to technological developments or
service offerings by competitors; and

generate sufficient
revenue to justify the
substantial capital investment we have made
and will continue to make to enhance our
electronic trading platform.

If we do not successfully enhance our electronic
trading platform, or our
current or potential
customers do not accept it, our revenues and profits
will be adversely affected. Additionally, we rely on
our customers’ ability to have the necessary back
office functionality to support our new products and
our trading and clearing functionality. To the extent
our customers are not prepared and/or
lack the
resources or infrastructure, the success of our new
initiatives may be compromised.

In addition, if we are unable to develop our electronic
trading systems
to include other products and
markets, or if our electronic trading systems do not
have
performance,
capacity, reliability and speed, we may not be able to
compete successfully in an environment
is
increasingly dominated by electronic trading.

functionality,

required

that

the

If we experience systems
failures or capacity
constraints, our ability to conduct our operations
could be
and execute our business
materially harmed and we could be subjected to
significant costs and liabilities.

strategy

We are heavily dependent on the capacity, reliability
and security of the computer and communications
systems and software supporting our operations. We
receive and/or process a large portion of our trade
orders through electronic means, such as through
public and private communications networks. Our
systems, or those of our third party providers, may

fail or operate slowly, causing one or more of the
following to occur:

•

unanticipated disruptions in service to our
customers;

slower response times;

delays in our customers’ trade execution;

failed settlement of trades;

incomplete
or
recording or processing of trades;

inaccurate

accounting,

financial losses;

security breaches;

litigation or other customer claims;

loss of customers; and

regulatory sanctions.

We cannot assure you that we will not experience
systems failures from power or telecommunications
failure, acts of God, war or terrorism, human error,
natural disasters, fire, sabotage, hardware or software
malfunctions or defects, computer viruses, acts of
vandalism or similar occurrences. If any of our
systems do not operate properly or are disabled,
including as a result of system failure, employee or
customer error or misuse of our systems, we could
suffer financial loss, liability to customers, regulatory
intervention or reputational damage that could affect
demand by current and potential users of our market.
For
a
significant portion of our customers’ infrastructure.
While we have undertaken measures to secure such
facility and to implement disaster recovery measures,
if we were to experience an outage at such location it
could have a significant impact on our revenues and
reputation.

co-location facility hosts

example, our

such as

From time to time, we have experienced system
errors and failures that have resulted in some
customers being unable to connect to our electronic
resulted in erroneous
that
trading platform, or
reporting,
that were not
transactions
authorized by any customer or reporting of filled
orders as canceled. Such errors may result in CME
Group being liable or in our voluntary assumption of
financial liability. We cannot assure you that if we
experience system errors or failures in the future that
they will not have a material adverse impact on our
business. Any such system failures that cause an
interruption in service or decrease our responsiveness

could impair our reputation, damage our brand name
or have a material adverse effect on our business,
financial condition and operating results.

Our status as a CFTC registrant generally requires
that our trade execution and communications systems
be able to handle anticipated present and future peak
contract volume. Heavy use of our computer systems
during peak trading times or at times of unusual
market volatility could cause our systems to operate
slowly or even to fail for periods of time. We
constantly monitor system loads and performance,
and regularly implement system upgrades to handle
estimated increases in contract volume. However, we
cannot assure you that our estimates of
future
contract volume and order messaging traffic will be
accurate or that our systems will always be able to
accommodate actual contract volume and order
messaging traffic without failure or degradation of
performance.
contract
volume and order messaging traffic may result in
connectivity problems or erroneous reports that may
affect users of
the platform. System failure or
degradation could lead our customers to file formal
complaints with industry regulatory organizations, to
file lawsuits against us or to cease doing business
with us, or could lead the CFTC or other regulators to
initiate inquiries or proceedings for failure to comply
with applicable laws and regulations.

Increased CME Globex

and we

execute our business

We will need to continue to upgrade, expand and
increase the capacity of our systems as our business
grows
strategy.
Generally, our goal is to design our systems to handle
two times our peak historical
transactions in our
highest volume products. As volumes of transactions
grow, the ability of our systems to meet this goal on
an ongoing basis depends on our ability to increase
our
system capacity on a timely basis while
maintaining system reliability. Although many of our
systems are designed to accommodate additional
volume and products and services without redesign
or replacement, we will need to continue to make
significant investments in additional hardware and
software to accommodate the increases in volume of
transaction traffic and to
transactions and order
provide processing services to third parties. If we
cannot increase the capacity and capabilities of our
systems to accommodate an increasing volume of
transactions and to execute our business strategy, our
ability to maintain or expand our businesses would be
adversely affected.

services

We, as well as many of our customers, depend on
third party suppliers and service providers for a
number of
important. An
interruption or cessation of an important supply or
service by any third party could have a material
adverse effect on our business, including revenues
derived from our customers’ trading activity.

that are

We depend on a number of suppliers, such as
banking,
clearing and settlement organizations,
telephone companies, on-line service providers, data
processors, and software and hardware vendors, for
elements of our trading, clearing and other systems,
as well
networking
equipment, computer hardware and software and
related support and maintenance.

communications

and

Many of our customers rely on third parties, such as
independent software vendors, to provide them with
front-end systems
to access our CME Globex
platform and other back office systems for their trade
processing and risk management needs. While these
service providers have undertaken to keep current
with our enhancements and changes to our interfaces
and functionality, we cannot guarantee that they will
continue to make the necessary monetary and time
investments to keep up with our changes.

To the extent any of our service providers or the
organizations that provide services to our customers
in connection with their trading activities cease to
provide these services in an efficient, cost-effective
manner or fail to adequately expand their services to
meet our needs and the needs of our customers, we
could experience decreased contract volume, lower
revenues and higher costs.

to
Our clearing house operations expose us
substantial credit risk of third parties and the level
of soundness of our clearing firms could adversely
affect us.

industry,

Our clearing house operations expose us to many
different
industries and counterparties, and we
routinely guarantee transactions with counterparties
including brokers and
in the financial
dealers, commercial banks, investment banks, mutual
and hedge funds, and other institutional customers.
Over the last few years, the global financial markets
have experienced significant uncertainty and negative
conditions as a result of the continued financial crisis
that began in 2008. As a result, many of our

customers have encountered credit limitations, losses
resulting from lower asset values, consolidations,
legislative changes and reduced liquidity. We could
be adversely impacted by the financial distress or
failure of one of our clearing firms.

As part of our overall growth initiatives, we have
expanded our clearing services to the over-the-
counter market in addition to standard futures and
options on futures products,
including products
offered for clearing through CME ClearPort and our
credit default swap and interest rate swap clearing
initiatives. The process for setting margins and
establishing other financial safeguards for over-the-
counter products is different and, in part, seeks to
assess and capture different risks than our historical
practices applied to our futures and options on futures
products. Although we believe that we have carefully
analyzed the process for setting margins and our
other
for over-the-counter
products, there is no guarantee that our procedures
will adequately protect market participants from the
unique risks of these products or ensure that our
financial safeguards will suffice to cover clearing
member defaults in extreme circumstances.

safeguards

financial

In 2011, CME Clearing Europe was launched. While
we have hired experienced management to oversee
the operations of CME Clearing Europe, as an
organization we have limited experience operating a
clearing house outside of the United States.

to meet

A substantial part of our working capital may be at
risk if a clearing firm defaults on its obligations to
the clearing house and its margin and guaranty fund
deposits are insufficient
its obligations.
Although we have policies and procedures to help
ensure that our clearing firms can satisfy their
obligations, these policies and procedures may not
succeed in detecting problems or preventing defaults.
We also have in place various measures intended to
enable us to cure any default and maintain liquidity.
However, we cannot assure you that these measures
will be sufficient to protect market participants from
a default or that we will not be adversely affected in
the event of a significant default. In addition, we
have established a $100 million fund designed to
provide payments, up to certain maximum levels, to
family farmers,
ranchers and other agricultural
industry participants who use our products and who
suffer losses to their segregated account balances
when their clearing firm member becomes insolvent.

The required capital and posted collateral of our
clearing firms may lose value given the volatility of
the market.

funds

certain amount of

To become a clearing member, a firm must meet
requirements and must
certain minimum capital
deposit
to meet
performance bond and guaranty fund requirements
with our clearing house as collateral for its trading
activity. We accept a variety of collateral to satisfy
these requirements, including cash, regulated money
market mutual funds, U.S. Treasury securities, U.S.
Government Agency securities, letters of credit, gold,
equities and foreign sovereign debt, and subject them
to established haircuts based on the type of collateral
and maturity. Given the level of market volatility,
these investments will
there is no guarantee that
continue to maintain their value. To the extent a
clearing firm was not
in compliance with these
it would be required to acquire
requirements,
funds, decrease its proprietary trading
additional
activity and/or transfer customer accounts to another
clearing firm. These actions could result in a decrease
in trading activity in our products.

Intellectual property rights licensed from third party
price reporting agencies form the basis for many of
our products from which we derive a significant
volume and revenue. Recent
portion of our
regulatory scrutiny into such benchmarks could
have a negative impact on our ability to offer such
products.

We are significantly dependent on the contract
volume of products which are based on intellectual
property rights of indexes derived from third party
price reporting agencies, including our benchmark
Eurodollar contract which is based on LIBOR. To
comply with CFTC core principles, we must be able
to demonstrate that our products may not be readily
subject
the well-
publicized issues relating to the credibility of LIBOR,
there has been heightened scrutiny surrounding the
integrity and potential manipulation of LIBOR and
other benchmarks which are derived from price
reporting agencies. Our inability to offer products
based on these indexes could have a negative impact
on our contract volume and revenues.

to manipulation. Following

Our market data revenues may be reduced or
eliminated by decreased demand, overall economic
conditions or the growth of electronic trading and
electronic order entry systems. If we are unable to
offset that reduction through terminal usage fees or
transaction fees, we will experience a reduction in
revenues.

the

total

years

during

to individuals

sell our market data

and
We
organizations that use our markets or monitor general
economic conditions. Excluding our index market
data offerings, revenues from our market data and
information services represented 12% and 10% of
our
ended
revenues,
December 31, 2012 and 2011,
respectively. A
decrease in overall contract volume may also lead to
a decreased demand for our market data from the
market data vendors. For example, in both 2012 and
2011, we experienced a decrease in the average
number of market data devices due to the continued
economic uncertainty, continued high unemployment
levels in the financial services sector and aggressive
cost
firms.
Additionally, electronic trading systems do not
usually impose separate exchange fees for supplying
market data to trading terminals.
If we do not
separately charge for market data supplied to trading
terminals, and trading terminals with access to our
markets become widely available, we could lose
market data fees from those who have access to
trading terminals. We will experience a reduction in
our revenues if we are unable to recover that lost
market data revenue through terminal usage fees or
transaction fees.

initiatives

customer

cutting

We may have difficulty executing our growth
strategy and maintaining our growth effectively.

We continue to focus on strategic initiatives to grow
our business, including our efforts to serve the over-
the-counter market as discussed in the following risk
factor and to distribute our products and services on a
global basis. There is no guarantee that our efforts
will be successful. Continued growth will require
additional
facilities,
in
information technology infrastructure and financial
and management systems and controls and may place
a significant strain on our management and resources.
For example, if we encounter limited resources, we
may be required to increase our expenses to obtain
the necessary resources, defer existing initiatives or
not pursue certain opportunities. We may not be

investment

personnel,

successful in implementing all of the processes that
are necessary to support our growth organically or, as
described below, through acquisitions, investments or
other strategic alliances. Unless our growth results in
an increase in our revenues that is proportionate to
the increase in our costs associated with our growth,
our future profitability could be adversely affected,
and we may have to incur significant expenditures to
and control
additional operational
address
requirements as a result of our growth.

the

There is no guarantee that our over-the-counter
initiatives will be successful.

for

creates

cleared

services

Our goal is to provide a comprehensive multi-asset
class clearing solution to the market for maximum
operational ease and the capital efficiency that comes
with connecting to a single clearing house. We offer
clearing
over-the-counter
derivatives, including credit default swaps and interest
rate swaps. Our strategy also includes extending our
over-the-counter services into other assets classes, as
well as enhancing our CME ClearPort functionality to
support additional products. While we believe the
new
of Dodd-Frank
implementation
opportunities for us to expand our over-the-counter
for
offerings,
trading
remains
uncertain. We cannot be certain that we will be able
to operate profitably under the new legislation. For
example, provisions within Dodd-Frank include
changes to the CFTC’s core principles, specifically
Core Principal 9, which could require us to make
modifications to the manner in which certain of our
contracts trade and/or require that such products be de-
listed as futures and re-listed as swaps. In addition, a
number of market participants and exchanges have
products,
developed
including ICE’s offering for credit default swaps. We
cannot be certain that we will be able to compete
effectively or that our initiatives will be successful.

the current
clearing

regulatory environment

competing

platforms

products

these

and

We intend to continue to explore acquisitions,
investments and other strategic alliances. We may
not be successful in identifying opportunities or in
integrating the acquired businesses. Any such
transaction may not produce
results we
anticipate, which could adversely affect our
business and our stock price.

the

We intend to continue to explore and pursue acquisitions
and other strategic opportunities to strengthen our

business and grow our company. We may make
acquisitions or
into strategic
investments or enter
partnerships,
joint ventures and other alliances. The
market for such transactions is highly competitive,
especially in light of the increasing consolidation in our
industry. As a result, we may be unable to identify
strategic opportunities or we may be unable to negotiate
or finance future transactions on terms favorable to us.
To the extent the trend of consolidation in our industry
continues, we may encounter increased difficulties in
identifying growth opportunities. We may finance future
transactions by issuing additional equity and/or debt. The
issuance of additional equity in connection with any
future transaction could be substantially dilutive to our
existing shareholders. The issuance of additional debt
could increase our leverage substantially. The process of
integration may also produce unforeseen regulatory and
operating difficulties and expenditures and may divert
the attention of management from the ongoing operation
of our business. To the extent we enter into joint
ventures and alliances, we may experience difficulties in
the development and expansion of the business of any
newly formed ventures, in the exercise of influence over
the activities of any ventures in which we do not have a
controlling interest, as well as encounter potential
conflicts with our joint venture or alliance partners. We
may not realize the anticipated growth and other benefits
from strategic growth initiatives we have made or will
make in the future, which may have an adverse impact
on our financial condition and operating results. We may
also be required to take an impairment charge in our
financial statements relating to our acquisitions and/or
investments, which could negatively impact our stock
price.

Expansion of our operations internationally involves
special challenges that we may not be able to meet,
which could adversely affect our financial results.

We plan to continue to expand our operations
internationally,
including through CME Clearing
Europe, our proposed UK exchange, directly placing
order entry terminals with customers outside the
United States and by relying on distribution systems
established by our current and future strategic
alliance partners. We face certain risks inherent in
doing business in international markets, particularly
in the regulated derivatives exchange business. These
risks include:

•

restrictions on the use of trading terminals or
the contracts that may be traded;

•

becoming subject to extensive regulations and
oversight, tariffs and other trade barriers;

difficulties in staffing and managing foreign
operations;

general economic and political conditions in
the countries from which our markets are
accessed, which may have an adverse effect
on our volume from those countries; and

•

potentially adverse tax consequences.

In addition, as a result of our expanding global
operations, we are subject to the laws and regulations
of foreign governmental and regulatory authorities,
including the FSA in connection with CME Clearing
Europe, our marketing efforts in Europe and our
proposed UK exchange. These may include laws,
rules and regulations relating to any aspect of the
derivatives business. To date, we have had limited
experience in marketing and operating our products
and services internationally. We cannot assure you
that we will be able to succeed in marketing our
products and services in international markets. We
may also experience difficulty in managing our
international operations because of, among other
things, competitive conditions overseas, management
foreign exchange risk, established domestic
of
markets,
language and cultural differences and
economic or political instability. Any of these factors
could have a material adverse effect on the success of
our international operations and, consequently, on
our business,
financial condition and operating
results.

Our compliance and risk management methods
might not be effective and may result in outcomes
that could adversely affect our reputation, financial
condition and operating results.

In the normal course of our business, we discuss
matters with our regulators raised during regulatory
examinations or we may otherwise become subject to
their inquiry and oversight. The CFTC has broad
enforcement powers to censure, fine, issue cease-and-
desist orders, prohibit us from engaging in some of
our businesses or suspend or revoke our designation
as a contract market or the registration of any of our
officers or employees who violate applicable laws or
regulations. Our ability to comply with applicable
largely dependent on our
laws
compliance,
establishment

and maintenance of

and rules

the

face

that may result

review and reporting systems, as well as our ability to
attract and retain qualified compliance and other risk
management personnel. We
risk of
intervention by regulatory authorities,
significant
including extensive examination and surveillance
activity. In the case of non-compliance or alleged
non-compliance with applicable laws or regulations,
we could be subject to investigations and judicial or
in
administrative proceedings
substantial penalties or civil lawsuits, including by
customers, for damages, which could be significant.
Any of these outcomes may adversely affect our
reputation, financial condition and operating results.
In extreme cases, these outcomes could adversely
affect our ability to conduct our business. In February
2013, the CFTC filed suit against NYMEX and two
former employees alleging disclosure of confidential
customer information in violation of the Commodity
Exchange Act. Based on our initial review of the
complaint, we believe that we have strong factual and
legal defenses to the claim.

information

risk management methods

Our policies and procedures to identify, monitor and
manage our risks may not be fully effective. Some of
upon
our
depend
evaluation
regarding markets,
customers or other matters that are publicly available
or otherwise accessible by us. That information may
not in all cases be accurate, complete, up-to-date or
properly evaluated. Management of operational,
financial, legal, regulatory and strategic risk requires,
among other things, policies and procedures to record
properly and verify a large number of transactions
and events. We cannot assure you that our policies
and procedures will always be effective or that we
will always be successful in monitoring or evaluating
the risks to which we are or may be exposed.

We could be harmed by misconduct or errors that
are difficult to detect and deter.

There have been a number of highly publicized cases
involving fraud or other misconduct by employees of
financial services firms in recent years. Misconduct
by our employees and agents, including employees of
GFX, our wholly-owned subsidiary that engages
primarily in proprietary trading in foreign exchange
futures to generate liquidity, could include hiding
unauthorized
or
unauthorized activities on behalf of customers or
improper
of
confidential information. Misconduct could subject

unauthorized

from us,

disclosure

improper

activities

use

losses or regulatory sanctions and
us to financial
seriously harm our
is not always
It
reputation.
possible to deter misconduct, and the precautions we
take to prevent and detect this activity may not be
effective in all cases. Our employees and agents also
may commit errors that could subject us to financial
claims for negligence, as well as regulatory actions,
or result in our voluntary assumption of financial
liability.

We may not be able to protect our intellectual
property rights, which may materially harm our
business.

We own the rights to a large number of trademarks,
service marks, domain names and trade names in the
United States, Europe and other parts of the world. We
have registered many of our most important trademarks
in the United States and other countries. We hold the
rights to a number of patents and have made a number
of patent applications. Our patents cover match engine,
trader user interface, trading floor support, market data,
general technology and clearing house functionalities.
We attempt to protect our intellectual property rights
by relying on trademarks, copyright, database rights,
trade secrets,
restrictions on disclosure and other
methods. Notwithstanding the precautions we take to
protect our intellectual property rights, it is possible
that third parties may copy or otherwise obtain and use
our proprietary technology without authorization or
otherwise infringe on our rights. For example, in 2012
a former employee of CME Group plead guilty to theft
of our trade secrets. In addition, in the future, we may
have to rely on litigation to enforce our intellectual
property rights, protect our trade secrets, determine the
validity and scope of the proprietary rights of others or
defend against claims of infringement or invalidity.
or
Any
unsuccessful, could result in substantial costs to us and
diversions of our resources, either of which could
adversely affect our business.

litigation, whether

successful

such

Any infringement by us on patent rights of others could
result in litigation and adversely affect our ability to
continue to provide, or increase the cost of providing,
our products and electronic execution services.

Patents of
third parties may have an important
bearing on our ability to offer certain of our products
and services. Our competitors as well as other
companies and individuals may obtain, and may be

expected to obtain in the future, patents related to the
types of products and services we offer or plan to
offer. We cannot assure you that we are or will be
aware of all patents containing claims that may pose
a risk of infringement by our products and services.
In addition, some patent applications in the United
States are confidential until a patent is issued and,
therefore, we cannot evaluate the extent to which our
products and services may be covered or asserted to
be covered by claims contained in pending patent
applications. These claims of infringement are not
uncommon in our industry.

In general, if one or more of our products or services
were to infringe on patents held by others, we may be
required to stop developing or marketing the products
or services, to obtain licenses to develop and market
the services from the holders of the patents or to
redesign the products or services in such a way as to
avoid infringing on the patent claims. We cannot
assess the extent to which we may be required in the
future to obtain licenses with respect to patents held
by others, whether such licenses would be available
or, if available, whether we would be able to obtain
such licenses on commercially reasonable terms. If
we were unable to obtain such licenses, we may not
be able to redesign our products or services to avoid
infringement, which could materially adversely affect
financial condition and operating
our business,
results.

RISKS RELATING TO AN INVESTMENT IN
OUR CLASS A COMMON STOCK

indebtedness

Our
could adversely affect our
financial condition and operations and prevent us
from fulfilling our debt service obligations. We may
still be able to incur more debt, intensifying these
risks.

As of December 31, 2012, we had approximately
$2.9 billion of total indebtedness and we had excess
borrowing capacity for general corporate purposes
under our existing facilities of approximately $1.8
billion.

Our indebtedness could have important
consequences. For example, our indebtedness may:

•

require us to dedicate a significant portion of
our cash flow from operations to payments on
our debt, thereby reducing the availability of

cash flows to fund capital expenditures, to
pursue acquisitions or investments,
to pay
dividends and for general corporate purposes;

increase our vulnerability to general adverse
economic conditions;

limit our
flexibility in planning for, or
reacting to, changes in or challenges relating
to our business and industry; and

place us at a competitive disadvantage against
any less leveraged competitors.

•

The occurrence of any one of these events could have
a material adverse effect on our business, financial
condition, results of operations, prospects and ability
to satisfy our debt service obligations. In addition, the
agreements governing our outstanding indebtedness
significantly limit our ability to incur
do not
additional
indebtedness, which could increase the
risks described above to the extent that we incur
additional debt. Our exchanges and clearing house
are also required to maintain capital as defined by the
CFTC at least equal to six months of their applicable
operating expenses.

Any reduction in our credit rating could increase
the cost of our funding from the capital markets.

is currently rated investment
Our long-term debt
grade by two of the major rating agencies. These
rating agencies regularly evaluate us. Their ratings of
our long-term debt are based on a number of factors,
including our financial strength as well as factors not
entirely within our control,
such as conditions
affecting the financial services industry generally. In
February 2012, S&P lowered our rating to AA- with
a negative outlook from AA with a negative outlook.
The ratings action stemmed from the newly provided
protection we extended to trading customers of
defaulted clearing member
firms. The continued
negative outlook reflects S&P’s view of the potential
legal and reputational fall-out from the MF Global
bankruptcy. In light of the difficulties in the financial
services industry and the financial markets over the
last few years, there can be no assurance that we will
maintain our current ratings. Our failure to maintain
those ratings could adversely affect the cost and other
terms upon which we are able to obtain funding and
increase our cost of capital.

Our investment in BM&FBOVESPA subjects us to
investment and currency risk.

own

interest

in BM&FBOVESPA
We
representing approximately 5% of its outstanding
shares, which had a fair value of $690.6 million as of
December 31, 2012. As an exchange, its ability to
maintain or expand its contract volume and operate
its business is subject to the same types of risks to
which we are subject. Additionally,
its stock is
valued in Brazilian real, which subjects us to
currency risk. There is no guarantee that our
investment in BM&FBOVESPA will be profitable.

impairment of our goodwill and other
Any
intangible assets or investments may result
in
material, non-cash writedowns and could have a
material adverse impact on our results of operations
and shareholders’ equity.

In connection with our acquisitions and investments,
including our mergers with CBOT Holdings and
NYMEX Holdings, we have recorded goodwill and
identifiable intangible assets. We assess goodwill and
intangible assets for impairment by applying a fair
value test looking at historical performance, capital
requirements and projected cash flows on an annual
basis or more frequently if indicators of impairment
arise. In the past, we have recorded impairment
charges in connection with some of our investments,
including our investment in BM&FBOVESPA. We
may continue to experience future events that result
in impairments. The risk of impairment losses may
increase to the extent our market capitalization and
earnings decline. An impairment of the value of our
existing goodwill and intangible assets could have a
significant negative impact on our future operating
results and could have an adverse impact on our
ratios or other
ability to satisfy the financial
covenants under our
future debt
agreements.

existing or

Our quarterly operating results fluctuate due to
seasonality. As a result, you will not be able to rely
on our operating results in any particular quarter as
an indication of our future performance.

We have historically experienced relatively higher
contract volume during the first and second quarters
and sequentially lower contract volume in the third
and fourth quarters. As a result of this seasonality,
you will not be able to rely on our operating results in

any particular period as an indication of our future
performance. If we fail to meet securities analysts’
expectations regarding our operating results, the price
of our Class A common stock could decline
substantially.

Our average rate per contract
to
fluctuation due to a number of factors. As a result,
you will not be able to rely on our average rate per
contract in any particular period as an indication of
our future average rate per contract.

subject

is subject

Our average rate per contract, which impacts our
operating results,
to fluctuation due to
shifts in the mix of products traded, the trading venue
and the mix of customers (whether the customer
receives member or non-member fees or participates
in one of our various incentive programs) and the
impact of our tiered pricing structure. For example,
we earn a higher rate per contract for trades executed
electronically than for trades executed on the trading
floor. In addition, our members and participants in
our various incentive programs generally are charged
customers.
lower
to
Variation in each of these factors is difficult
predict and will have an impact on our average rate
per contract in the particular period. Because of this
fluctuation, you may not be able to rely on our
average rate per contract in any particular period as
an indication of our future average rate per contract.
If we fail to meet securities analysts’ expectations
regarding our operating results,
the price of our
Class A common stock could decline substantially.

non-member

than

fees

our

Our cost structure is largely fixed. If our revenues
decline and we are unable to reduce our costs, our
profitability will be adversely affected.

Our cost structure is largely fixed. We base our cost
structure on historical and expected levels of demand
for our products and services. If demand for our
products and services and our resulting revenues
decline, we may not be able to adjust our cost
structure on a timely basis.
In that event, our
profitability will be adversely affected.

Eighteen of our board members own trading rights
or are officers or directors of firms who own trading
rights on our exchanges. As members,
these
individuals may have interests that differ from or
conflict with those of shareholders who are not also
members. Our dependence on the trading and
clearing activities of our members, combined with
their rights to elect directors, may enable them to
exert substantial influence over the operation of our
business.

Eighteen of our directors own or are officers or
directors of firms that own trading rights on our
exchanges. We are dependent on the revenues from
the trading and clearing activities of our members. In
2012, 79% of our contract volume was derived from
our members. This dependence may give them
substantial
influence over how we operate our
business.

Many of our members and clearing firms derive a
substantial portion of their income from their trading
or clearing activities on or through our exchanges. In
addition,
trading rights on our exchanges have
substantial independent value. The amount of income
that members derive from their trading, brokering
and clearing activities and the value of their trading
rights are, in part, dependent on the fees they are
charged to trade, broker, clear and access our
markets, and the rules and structure of our markets.
As a result, holders of our Class A common stock
may not have the same economic interests as our
members.
In addition, our members may have
differing interests among themselves depending on
the roles they serve in our markets, their method of
trading and the products they trade. Consequently,
members may advocate that we enhance and protect
their clearing and trading opportunities and the value
of their trading privileges over their investment in
our Class A common stock, if any.

Our members and permit holders have been granted
special rights, which protect their trading privileges,
require that we maintain open outcry trading until
volumes are not significant and, in the case of our
Class B shareholders, provide them with special
board representation.

Under the terms of the organizational documents of
our exchanges and in connection with our agreement
to acquire KCBT, our members and permit holders
have certain rights that relate primarily to trading

right protections, certain trading fee protections and
certain membership benefit protections. Additionally,
our Class B shareholders, who are members of our
CME exchange, are also entitled to elect six directors
to our board; even if their Class A share ownership
interest is very small or non-existent. In connection

with these rights, our ability to take certain actions
that we may deem to be in the best interests of the
company and its shareholders,
including actions
relating to the operation of our open outcry trading
facilities and certain pricing decisions, may be
limited by the rights of our members.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Our global headquarters are located in Chicago, Illinois, at 20 South Wacker Drive. The following is a
description of our key locations and facilities.

Location

Primary Use

Owned/
Leased

Lease Expiration

Approximate Size
(in square feet)(1)

20 South Wacker Drive
Chicago, Illinois

Global headquarters and office
space

Leased

2022(2)

490,000

141 West Jackson
Chicago, Illinois

333 S. LaSalle
Chicago, Illinois

550 West Washington
Chicago, Illinois

One North End
New York, New York

Chicago trading floor and
office space

Office space

New York trading floor and
office space

One New Change London

Office space

Annex Data Center
Chicagoland area

Remote Data Center
Chicagoland area

Data Center 3
Chicagoland area

4800 Main Street
Kansas City, Missouri

Business continuity

Business continuity and co-
location

Kansas City trading floor and
office space

Leased

2027(3)

150,000

Owned

N/A

300,000

Leased

2023

250,000

Mixed(4)

Leased

2069

2026

500,000(5)

40,000

Leased

2019

100,000

Leased

2017

50,000

Owned

N/A

430,000

Mixed(6)

N/A

166,000

(1) Size represents the amount of space leased or owned by us unless otherwise noted.

(2) The initial lease expires in 2022 with two consecutive options to extend the term for seven and ten years,

respectively.

(3) The initial lease expires in 2027 and contains options to extend the term and expand the premises.

(4) The One North End property is subject to a ground lease with the Battery Park City Authority for the site of
our New York offices and trading facility. In accordance with the terms of the lease, we are deemed to lease
the building and its improvements from the landlord. We do not make lease payments to the landlord related
to the building and we receive the financial benefit of the rental income.

(5) We occupy approximately 350,000 square feet of the One North End Building.

(6) This property is owned by Board of Trade Investment Company (BOTIC). KCBT maintains a 51%

controlling interest in BOTIC.

have

We also lease other office space around the world
and
global
telecommunications carriers in connection with our
telecommunications hubs whereby we place data

partnered with major

also

ITEM 3. LEGAL PROCEEDINGS

See “Legal and Regulatory Matters” in Note 14.
Financial
Contingencies

the Consolidated

cabinets within the carriers’ existing secured data
centers. We believe our facilities are adequate for our
current operations and that additional space can be
obtained if needed.

Statements beginning on page 91 for CME Group’s
legal proceedings disclosure which is incorporated
herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

PART II

Class A Common Stock

Our Class A common stock is currently listed on
NASDAQ under the ticker symbol “CME.” As of
February 13, 2013, there were approximately 3,106
holders of record of our Class A common stock.

stock effected by way of a stock dividend to its
Class A and Class B shareholders. The stock split
was effective July 20, 2012 for all shareholders of
record on July 10, 2012. As a result of the stock split,
all amounts related to shares and per share amounts
have been retroactively restated.

In May 2012,
the company’s board of directors
declared a five-for-one split of its Class A common

The following table sets forth the high and low sales prices per share of our Class A common stock on a quarterly
basis, as reported on NASDAQ.

2012

High

Low

2011

High

Low

First Quarter . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . .

$59.73
58.24
59.35
57.89

$45.20 First Quarter . . . . . . . . . . . . . . . . . .
50.70 Second Quarter . . . . . . . . . . . . . . . .
49.83 Third Quarter . . . . . . . . . . . . . . . . .
50.12 Fourth Quarter . . . . . . . . . . . . . . . .

$63.40
62.15
59.80
59.73

$56.06
52.45
47.43
45.20

Class B Common Stock

Our Class B common stock is not listed on a national
securities exchange or traded in an organized over-
the-counter market. Each class of our Class B
common stock is associated with a membership in a

specific division of our CME exchange. CME’s rules
provide exchange members with trading rights and
the ability to use or lease these trading rights. Each
share of our Class B common stock can be
transferred only in connection with the transfer of the
associated trading rights.

Class B shares and the associated trading rights are
bought and sold or leased through our shareholder
relations
and membership services department.
Although our Class B shareholders have special
voting rights, because our Class B shares have the
same equitable interest in our earnings and the same

dividend payments as our Class A shares, we expect
that the market price of our Class B common stock, if
reported separately from the associated trading rights,
would be determined by the value of our Class A
common stock. As of February 13, 2013, there were
approximately 1,697 holders of record of our Class B
common stock.

Dividends

The following table sets forth the dividends we paid on our Class A and Class B common stock in the last two
years:

Record Date

Dividend per Share Record Date

Dividend per Share

March 10, 2012 . . . . . . . . . . . . . . . . .
March 10, 2012 . . . . . . . . . . . . . . . . .
June 10, 2012 . . . . . . . . . . . . . . . . . . .
September 10, 2012 . . . . . . . . . . . . . .
December 10, 2012 . . . . . . . . . . . . . .
December 17, 2012 . . . . . . . . . . . . . .

$0.45
0.60
0.45
0.45
0.45
1.30

We intend to continue to pay a regular quarterly
dividend to our shareholders according to our annual
dividend policy, which remains at approximately
50% of the prior year’s cash earnings. The decision
to declare a dividend, however, remains within the
discretion of our board of directors and may be
affected by various factors,
including our future
earnings, financial condition, capital requirements,
levels of indebtedness and other considerations our
board of directors deems relevant. On January 30,
2013,
the board of directors declared a regular
quarterly dividend of $0.45 per share. The dividend
will be payable on March 25, 2013, to shareholders
of record on March 8, 2013. Assuming no changes in
the number of shares outstanding,
the total first
quarter dividend payment will be approximately
$149.3 million. The board of directors declared an
annual variable dividend of $1.30 per share on
December 5, 2012 and was payable on December 28,
2012 to the shareholders of record on December 17,
2012. In general, the amount of the annual variable
dividend will be determined after the end of each
year, and the level will increase or decrease from
year to year based on operating results, potential
merger and acquisition activity, and other forms of
capital return including regular dividends and share
buybacks during the prior year. The annual variable
dividend for 2013 was accelerated to the fourth
quarter of 2012 due to uncertainty surrounding
dividend income tax treatment beginning in 2013.

March 10, 2011 . . . . . . . . . . . . . . .
June 10, 2011 . . . . . . . . . . . . . . . . .
September 10, 2011 . . . . . . . . . . . .
December 10, 2011 . . . . . . . . . . . .

$0.28
0.28
0.28
0.28

The indentures governing our fixed rate notes, our
364-day clearing house credit facility for $5.0 billion
and our $1.8 billion multi-currency revolving senior
credit facility, do not contain specific covenants that
restrict
dividends. These
documents, however, do contain other customary
financial
place
restrictions on the operations of the company, which
could indirectly affect the ability to pay dividends.

covenants

operating

ability

that

and

pay

the

our

test,

defined

For example, under our senior credit facility, we are
required to remain in compliance with a consolidated
consolidated
net worth
shareholders’ equity as of September 30, 2012 after
giving effect to actual share repurchases made and
special dividends paid (including annual variable
dividends), but only up to the amount of such
repurchases and dividends publicly announced and
made or paid after September 30, 2012 (and in no
event greater than $2.0 billion in the aggregate for
such repurchases and dividends during the term of
the agreement), multiplied by 0.65. In addition, our
364-day clearing house credit facility contains a
requirement that CME remain in compliance with a
consolidated tangible net worth test, defined as
consolidated shareholder’s equity less
intangible
assets (as defined in the agreement), of not less than
$625.0 million.

CME Group, as a holding company, has no
operations of its own. Instead, it relies on dividends

declared and paid to it by its subsidiaries, including
CME, in order to provide a portion of the funds
which it uses to pay dividends to its shareholders.

CME Group and its subsidiaries are also required to
comply with restrictions contained in the general
corporation laws of their state of incorporation which
could also limit its (or their) ability to declare and
pay dividends.

PERFORMANCE GRAPH

The following graph and table compares the cumulative five-year total return provided shareholders on our
Class A common stock relative to the cumulative total returns of the S&P 500 index and our customized peer
group. The peer group includes CBOE Holdings, Inc., IntercontinentalExchange, Inc., NYSE Euronext and The
Nasdaq OMX Group Inc. An investment of $100 (with reinvestment of all dividends) is assumed to have been
made in our Class A common stock, in the peer group and the S&P 500 index on December 31, 2007 and its
relative performance is tracked through December 31, 2012.

CME Group Inc.
S&P 500
Peer Group

r
a
l
l
o
D

140

120

100

2007

2008

2009

2010

2011

2012

$100 invested on 12/31/07 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

The stock price performance included in this graph is not necessarily indicative of future stock price performance

CME Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Peer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2008

$31.07
63.00
37.87

2009

$51.04
79.67
39.89

2010

$49.64
91.67
45.92

2011

$38.39
93.61
45.66

2012

$ 42.38
108.59
50.98

Unregistered Sales of Equity Securities

On July 16, 2010, in connection with a definitive
Share Purchase and Investor Rights Agreement,
dated June 22, 2010, we issued to BM&FBOVESPA
11.0 million shares of our Class A common stock at a

purchase price per share of $55.02 in cash, or
approximately $607.0 million in the aggregate. The
shares of our Class A common stock issued in these
transactions were unregistered and were issued in
reliance on Section 4(2) of the Securities Act.

Issuer Purchases of Equity Securities

Period

(a) Total Number
of Shares (or
Units)
Purchased(1)

(b) Average Price
Paid Per Share
(or Unit)

(d) Maximum Number (or
Approximate Dollar
Value) of Shares (or
Units) that May
Yet Be Purchased Under
the Plans or Programs
(in millions)

October 1 to October 31 . . . . . . . .
November 1 to November 30 . . . .
December 1 to December 31 . . . .

Total . . . . . . . . . . . . . . . . . . . . . . .

—
—
9,375

9,375

$ —
—
51.23

—
—
—

—

$—
—
—

(1) Shares purchased consist of an aggregate of 9,375 shares of Class A common stock surrendered to satisfy

employee tax obligations upon the vesting of restricted stock.

ITEM 6. SELECTED FINANCIAL DATA

On March 23, 2008, CME Group Inc. (CME Group) acquired Credit Market Analysis Ltd., a private company
incorporated in the United Kingdom, and its wholly-owned subsidiaries (collectively, CMA). On August 22,
2008, NYMEX Holdings, Inc. (NYMEX Holdings) merged with CME Group. On March 18, 2010, the Board of
Trade of the City of Chicago, Inc. (CBOT) acquired a 90% ownership interest in CME Group Index Services
LLC (Index Services), a business venture with Dow Jones & Company (Dow Jones). In June 2012, the company
contributed certain Dow Jones Index assets and liabilities (DJI asset group) owned by Index Services to a new
business venture with The McGraw-Hill Companies Inc. (McGraw) and acquired a 24.4% interest in the new
business venture. As part of the transaction with McGraw, the company also sold CMA to McGraw. CBOT
acquired The Board of Trade of Kansas City, Missouri, Inc. (KCBT), on November 30, 2012.

The following data includes the financial results of CMA from March 24, 2008 through June 30, 2012, the
financial results of NYMEX Holdings beginning August 23, 2008 and the financial results of KCBT beginning
November 30, 2012. Assets and liabilities contributed or sold as part of the transaction with McGraw are
excluded from the following data beginning on June 30, 2012, while the financial results of the company’s 24.4%
interest in the new business venture with McGraw are included in the following data beginning on June 30, 2012.

(in millions, except per share data)
Income Statement Data:
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating income (expense)
. . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . .
Net income attributable to CME Group . . . . . . . . .
Earnings per common share attributable to CME

Group:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends per share . . . . . . . . . . . . . . . . . . . . .
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
CME Group Shareholders’ equity . . . . . . . . . . . . . .

Year Ended or At December 31

2012

2011

2010

2009

2008

$ 2,914.6
1,692.0
1.4
1,693.4
896.3

$ 3,280.6
2,021.1
(84.6)
1,936.5
1,812.3

$ 3,003.7
1,831.1
(109.2)
1,721.9
951.4

$ 2,612.8
1,589.1
(151.6)
1,437.5
825.8

$ 2,561.0
1,582.2
(334.2)
1,248.0
715.5

2.71
2.70
3.70

5.45
5.43
1.12

2.87
2.86
0.92

2.49
2.48
0.92

2.44
2.43
1.92

$38,863.2
749.7
2,106.8
21,419.1

$40,758.7

—
2,106.8
21,552.0

$35,046.1
420.5
2,104.8
20,060.1

$35,651.0
299.8
2,014.7
19,301.0

$48,158.7
249.9
2,966.1
18,688.6

The following table presents key statistical information on the volume of contracts traded, expressed in round
turn trades, and notional value of contracts traded. The 2008 volume data includes average daily volume for
NYMEX products for the period August 23 through December 31, 2008. The 2012 volume data includes the
average daily volume for KCBT products beginning November 30, 2012. All amounts exclude our credit default
swaps, interest rate swaps, KCBT, CME Clearing Europe, TRAKRS, and Swapstream contracts.

(in thousands, except notional value)

2012

2011

2010

2009

2008

Year Ended or At December 31

Average Daily Volume:
Product Lines:

Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . .
Agricultural commodity (1)
. . . . . . . . . . . . . . . . .
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Metal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,834
2,560
845
1,140
1,692
352

6,030
3,238
922
1,087
1,775
387

5,449
2,907
919
914
1,662
316

4,260
2,916
624
741
1,492
225

6,085
3,663
623
848
1,348
208

Total Average Daily Volume . . . . . . . . . . . . . . . .

11,423

13,439

12,167

10,258

12,775

Method of Trade:

Electronic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Open outcry . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Privately negotiated . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
CME ClearPort

9,739
1,045
221
418

Total Average Daily Volume . . . . . . . . . . . . . . . .

11,423

11,350
1,398
231
460

13,439

10,120
1,402
198
447

12,167

8,290
1,310
164
494

10,258

10,180
1,943
208
444

12,775

Other Data:
Total Notional Value (in trillions) . . . . . . . . . . . . . .
Total Contract Volume (round turn trades) . . . . . . .
Open Interest at Year End (contracts) . . . . . . . . . . .

806
2,890,036
69,894

1,068
3,386,716
78,318

994
3,078,149
84,873

813
2,584,891
78,102

1,227
2,978,459
63,049

(1) Agricultural commodities does not include the agricultural commodity contract volume for KCBT. The
average daily volume for KCBT’s agricultural commodity contracts was 16,100 for December 1, 2012
through December 31, 2012.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations is organized as follows:

• Executive Summary: Includes an overview of our business; current economic, competitive and
regulatory trends relevant to our business; our current business strategy; and our primary sources of
operating and non-operating revenues and expenses.

• Critical Accounting Policies: Provides an explanation of accounting policies which may have a significant

impact on our financial results and the estimates, assumptions and risks associated with those policies.

• Recent Accounting Pronouncements: Includes an evaluation of recent accounting pronouncements and

the potential impact of their future adoption on our financial results.

• Results of Operations: Includes an analysis of our 2012, 2011 and 2010 financial results and a

discussion of any known events or trends which are likely to impact future results.

• Liquidity and Capital Resources: Includes a discussion of our future cash requirements, capital

resources, significant planned expenditures and financing arrangements.

In March 2010, the Board of Trade of the City of
Chicago, Inc. (CBOT) acquired a 90% ownership
interest in CME Group Index Services LLC (Index
Services), a business venture with Dow Jones &
Company (Dow Jones). The discussion and analysis
that follow includes the financial results of Index
Services beginning March 19, 2010.

In June 2012, CBOT contributed certain assets and
liabilities (DJI asset group) owned by Index Services
to S&P/Dow Jones Indices LLC (S&P/DJI), a new
business venture with The McGraw-Hill Companies
Inc. (McGraw). In addition, Credit Market Analysis
Ltd. (CMA) was sold to McGraw as part of this
transaction. The discussion and analysis that follows
excludes the assets and liabilities disposed as part of
this transaction with McGraw beginning June 30,
2012.

Inc.

In November 2012, CBOT acquired The Board of
(KCBT),
Trade of Kansas City, Missouri,
including its wholly-owned clearing house, Kansas
City Board
of Trade Clearing Corporation
(KCBTCC) and its 51% controlling interest in Board
Investment Company (BOTIC). The
of Trade
discussion and analysis that follows includes the
financial results of KCBT beginning November 30,
2012.

References in this discussion and analysis to “we”
and “our” are to CME Group Inc. (CME Group) and
its consolidated subsidiaries, collectively. References
to “exchange” are to Chicago Mercantile Exchange
(CME), CBOT and New York Mercantile
Inc.
Exchange, Inc. (NYMEX), Commodity Exchange,
Inc.
(COMEX) and KCBT, collectively, unless
otherwise noted.

OVERVIEW

Business Overview

CME Group, a Delaware stock corporation, is the
holding company for CME, CBOT, NYMEX and
their respective subsidiaries as well as CME Clearing
Europe Limited (CMECE). The holding company
structure is designed to provide strategic and
operational
flexibility. CME Group’s Class A
common stock is listed on the NASDAQ Global
Select Market (NASDAQ) under the ticker symbol
“CME.”

Our exchange consists of designated contract markets
for the trading of futures and options on futures
contracts. We also clear futures, options on futures
three
and over-the-counter contracts through our
designated clearing organizations: CME Clearing,
which is a division of CME, KCBTCC and CMECE.
Futures contracts and options on futures contracts
provide investors with vehicles for protecting against,
and potentially profiting from, price changes in
financial instruments and physical commodities.

We are a global exchange with customer access
available virtually all over the world. Our customers
consist of professional traders, financial institutions,
investors, major
institutional
individual
corporations,
and
producers
manufacturers,
governments. Customers include both members of
the exchange and non-members.

and

equities,

We offer our customers the opportunity to trade
futures contracts and options on futures contracts on
a range of products including those based on interest
rates,
agricultural
commodities, energy, and metals. We also clear over-
lines
the-counter contracts on a range of product
including interest rate swaps, credit default swaps,
foreign
agricultural
energy
commodities.

exchange,

foreign

and

a means

Our products provide
for hedging,
speculating and allocating assets. We identify new
products by monitoring economic trends and their
impact on the risk management and speculative needs
of our existing and prospective customers.

Our major product
lines are traded through our
electronic trading platform and our open outcry
trading floors. These execution facilities offer our
immediate trade execution and price
customers
transparency. In addition,
trades can be executed
through privately negotiated transactions that are
cleared and settled through our CME and CMECE
clearing houses.

Our clearing houses clear, settle and guarantee every
traded through our
futures and options contract
exchanges,
in addition to cleared over-the-counter
products. Our clearing house performance guarantee
is an important function of our business. Because of
this guarantee, our customers do not need to evaluate
the credit of each potential counterparty or limit
themselves to a selected set of counterparties. This

the

flexibility increases the potential liquidity available
for each trade. Additionally, the substitution of our
clearing houses
counterparty to every
transaction allows our customers to establish a
position with one party and offset the position with
another party. This contract offsetting process
provides
in
customers with
establishing and adjusting positions and provides for
collateral and margining efficiencies.

flexibility

our

Business Trends

Economic Environment. Our customers continue to
use our markets as an effective and transparent means
to manage risk and meet
their investment needs
despite recent economic uncertainty and volatility. In
trading activity in our centralized
recent years,
markets has fluctuated due to the ongoing uncertainty
in the financial markets caused by the United States
and European credit crises,
in the
availability of credit, variations in the amount of
assets under management as well as the Federal
Reserve Bank’s continued zero interest rate policy.
We continue to maintain high quality and diverse
products as well as various clearing and market data
services which support our customers
in any
economic environment.

fluctuations

continue

and we

industry. Competition is

Competitive Environment. Our industry is highly
competitive
encounter
competition in all aspects of our business. We expect
competition to continue to intensify, especially in
light of recent regulatory reforms in the financial
influenced by
services
liquidity and transparency of the markets, variability
in fee structures, breadth of product offerings
including quality of new product development as
well as efficient and innovative technology. We now
face competition from other futures, securities and
securities
over-the-counter
markets; clearing organizations; consortia formed by
participants;
and
our members
technology
alternative trade execution facilities;
firms,
and
electronic trading system developers, and others. As
the market continues to evolve, we have worked to
adapt our trading technology and clearing services to
meet the needs of our customers.

including market

data distributors

large market

exchanges;

option

Environment.

Regulatory
Exchange-traded
derivatives have historically been subject to extensive
regulation. As a result of the widespread difficulties

a
services

reform package that

across the economy over recent years, the Dodd-
Frank Wall Street Reform and Consumer Protection
Act (Dodd-Frank) was signed into law in July 2010.
comprehensive banking and
Dodd-Frank is
financial
includes
significant changes to the oversight of the derivatives
markets, both over-the-counter and exchange-traded.
While we believe that
the new regulations will
the new
provide opportunities for our business,
regulations remain subject to additional rulemaking
by various regulators. To the extent the regulatory
environment following the implementation of the
new legislation and other financial reform regulations
is less beneficial
for us or our customers, our
business, financial condition and operating results
could be negatively impacted. We continue to
actively participate in the rulemaking process with
the goal that the final regulations serve the public
interest, foster competition and innovation and do not
place
sector at a
competitive disadvantage. Pursuant to Dodd-Frank,
in July 2012,
the Financial Stability Oversight
Council has designated CME as a systemically
important
is
operating as a U.S. clearing house. This designation
creates additional regulatory oversight over our risk-
management
standards, clearing, and settlement
activities.

financial market utility because it

the U.S.

financial

services

As a global company with operations and locations
around the world, we are also subject to laws and
regulations
in foreign locations where we do
business. The financial services industry in Europe is
also undergoing similar regulatory reform, which
could result
regulation over our
European operations.

in additional

Business Strategy

customer

enhancing

Our strategy focuses on leveraging our benchmark
products,
relations,
our
expanding our customer base, advancing our clearing
and trading technologies, and deriving benefits from
our integrated clearing houses as well as our scalable
infrastructure. We focus specifically on opportunities
and
created
acceptance of derivatives, increased price volatility,
technological advances and the increasing need for
counterparty risk mitigation and clearing services.
This strategy allows us to continue to develop into a
more broadly diversified financial exchange that
provides trading and clearing solutions across a wide

increased market

awareness

range of products and asset classes. We believe that
we can build on our competitive strengths by
executing on the following initiatives:

• Grow our core business by launching new
products, expanding our existing benchmark
product
improving our
customer relations in order to cross-sell our
products;

lines as well as

• Globalize our business by expanding our
presence in Europe as well as diversifying our
worldwide customer base through strategic
investments and relationships with other key
exchanges and intermediaries around the
world,
including Asia, Latin America and
other emerging markets, which allows us to
and
accelerate
improve product sales channels;

our market

penetration

• Expand our existing customer base and
enhance our products and services offerings
sales, driving
by targeting cross
international sales and generating new client
participation across the world;

asset

• Offer

comprehensive multi-asset

class
clearing solution to the over-the-counter
market that maximizes operational efficiency,
as well as expand our over-the-counter
product offerings and clearing services;

• Establish ourselves as the leading exchange
provider of information products and index
services, which will allow us
to create
additional cross-listing opportunities and new
opportunities for index creation. It will also
allow us to create opportunities for licensing
across global markets as well as expanding
market data dissemination services to our
global network of clients and exchange
partners; and

Revenues

Clearing and transaction fees. A majority of our
revenue is derived from clearing and transaction fees,
which include electronic trading fees, surcharges for
privately-negotiated transactions and other volume-
related charges for contracts executed through our
trading venues. Because clearing and transaction fees
are assessed on a per-contract basis, revenues and
in contract
profitability fluctuate with changes
volume. In addition to the business trends noted

earlier, our contract volume, and consequently our
tend to increase during periods of
revenues,
economic
and geopolitical uncertainty as our
customers seek to manage their exposure to, or
speculate on,
the market volatility resulting from
uncertainty.

While volume has the most significant impact on our
clearing and transaction fees revenue, there are four
other
factors that also influence this source of
revenues:

•

rate structure;

product mix;

venue, and

percentage

by
the
customers who are members compared with
non-member customers.

executed

trades

Rate structure. Customers benefit
from volume
discounts and limits on fees as part of our effort to
increase liquidity in certain products. We offer
various incentive programs to promote trading in
various products and geographic locations. We may
periodically change fees, volume discounts, limits on
fees, and member discounts, perhaps significantly,
based on our review of operations and the business
environment.

Product mix. We offer trading of futures and options
on futures contracts as well as cleared-only swap
contracts on a wide-ranging set of products based on
interest rates, equities, foreign exchange, agricultural
commodities, energy and metals. Rates are varied by
product
in order to optimize revenue on existing
products and to encourage contract volume upon
introduction of new products.

Venue. Our exchange is an international marketplace
that brings
together buyers and sellers mainly
through our electronic trading and clearing platforms
as well as through open outcry trading on our trading
floors and privately negotiated transactions. Any
customer who is guaranteed by a clearing firm and
who agrees to be bound by our exchange rules is able
to obtain direct access to our electronic platforms.
Open outcry trading is conducted exclusively by our
members, who may execute trades on behalf of
customers or for themselves.

Typically, customers submitting trades through our
electronic platforms are charged fees for using the
platforms in addition to the fees assessed on all
transactions executed on our exchange. Customers
entering into privately negotiated transactions also
incur additional charges beyond the fees assessed on
other transactions. Privately negotiated transactions
include block trades, which are large transactions that
are executed between selected parties off the public
auction market on CME Globex or the trading floor.

Member/non-member mix. Generally, member
customers are charged lower fees than our non-
customers. Holding all other
member
factors
constant,
the percentage of
revenue decreases if
trades executed by members increases, and increases
if the percentage of non-member trades increases.

Other sources. Revenue is also derived from other
sources
including market data and information
services, access and communication fees and various
services
related to our exchange and building
operations.

Market data and information services. We receive
market data and information services revenue from
the dissemination of our market data to subscribers.
Subscribers can obtain access to our market data
through third-party
services
distributors.

either directly or

trade

Our service offerings include access to real-time,
delayed and end-of-day quotations,
and
summary market data for our products and other data
sources. Users of our basic service receive real-time
quotes and pay a flat monthly fee for each screen, or
device, displaying our market data. Alternatively,
customers can subscribe to market data provided on a
limited group of products. The fee for this service is
also a flat rate per month.

Pricing for our market data services is based on the
value of the service provided, our cost structure for the
service and the price of comparable services offered by
our competitors. Increases or decreases in our market
data and information services revenue are influenced
by changes in our price structure for existing market
data offerings, introduction of new market data services
and changes in the number of devices in use. General
the financial services
economic factors that affect
industry, which constitutes our primary customer base,
also influence revenue from our market data services.

and

firms

fees. Access

communication

Access
and
communication fees are the connectivity charges to
customers of the CME Globex platform,
to our
market data vendors and to direct market data
customers as well as charges to members and
clearing
various
telecommunications networks and communications
services, including our co-location initiative, which
was launched in January 2012. Access fee revenue
varies depending on the type of connection provided
to customers. Revenue from communication fees is
dependent on open outcry trading, as a portion relates
to telecommunications on our trading floors.

utilize

that

our

Other revenues. To further diversify the range of
services we offer, we have entered into processing
and development agreements with other exchanges
and service organizations. For example, we have an
agreement
S.A
(BM&FBOVESPA) to develop a new multi-asset
class electronic trading platform for their customers.
this agreement as
We recognize revenue under
services
developed
are
technology is delivered.

BM&FBOVESPA

and when

provided

with

fees

include

Additionally, other
for
revenues
administrating our Interest Earning Facility (IEF)
program, trade order routing, and various services to
members and clearing firms. We offer clearing firms
the opportunity to invest cash performance bonds in
our various IEF offerings. These clearing firms
receive interest income, and we receive a fee based
on total funds on deposit. In addition, other revenues
include trading gains and losses generated by GFX
Corporation (GFX), our wholly-owned subsidiary
that trades futures contracts to enhance liquidity in
our electronic markets for these products. Other
revenues also include gains on sales from various
operating assets.

Other revenues also include rent charged to third
party tenants as well as ancillary charges for utilities,
parking and miscellaneous
services provided to
tenants.

Expenses

The majority of our expenses do not vary directly
with changes in our contract volume. Licensing and
fee agreements and the majority of our
other
employee bonuses do vary directly with contract
volume.

bonuses,

employee wages,

Compensation and benefits. Compensation and
benefits expense is our most significant expense and
includes
stock-based
compensation, benefits and employer taxes. Changes in
this expense are driven by fluctuations in the number of
employees, increases in wages as a result of inflation or
labor market conditions, changes in rates for employer
taxes and other cost increases affecting benefit plans. In
addition, this expense is affected by the composition of
our work force. The expense associated with our bonus
and stock-based compensation plans can also have a
significant impact on this expense category and may
vary from year to year.

our

based

expense

The bonus component of our compensation and
benefits
financial
performance. Under the performance criteria of our
annual incentive plans, the bonus funded under the
plans
is based on achieving certain financial
performance targets established by the compensation
directors. The
board
committee
compensation committee may adjust the target level
of performance for material, unplanned operating
results or capital expenditures to meet intermediate to
long-term growth opportunities.

our

Stock-based compensation is a non-cash expense
related to stock options,
restricted stock and
performance share grants. Stock-based compensation
varies depending on the quantity and fair value of
awards granted. The fair value of options is derived
using the Black-Scholes model with assumptions
about our dividend yield, the expected volatility of
our stock price based on an analysis of implied and
historical volatility, the risk-free interest rate and the
expected life of the options granted. The fair value of
other awards is based on either the share price on the
date of the grant or a model of expected future stock
prices.

for

fees

includes

fees and outside

Professional
services. This
consulting services
expense
received on strategic and technology initiatives,
temporary labor as well as legal and accounting fees.
This expense may fluctuate as a result of changes in
services required to complete initiatives and legal
proceedings.

Amortization of purchased intangibles. This
expense includes amortization of intangible assets
obtained in our mergers with CBOT Holdings, Inc.
and NYMEX Holdings, Inc. as well as other asset

and business acquisitions. Intangible assets subject to
amortization consist primarily of clearing firm,
market data and other customer relationships.

Depreciation and amortization. Depreciation and
amortization expense results from the depreciation of
long-lived assets
leasehold
improvements,
fixtures and equipment.
This expense also includes the amortization of
purchased and internally developed software.

such as buildings,

furniture,

Other expenses. We incur additional ongoing
technology support
expenses for communications,
services and various other activities necessary to
support our operations.

for

our

connections

• Communications expense includes costs for
network
electronic
platforms and some market data customers;
telecommunications costs of our exchange;
and fees paid for access to external market
data. This expense may be impacted by
growth in electronic contract volume, our
capacity requirements and changes in the
number of
telecommunications hubs and
connections which allow customers outside
the United States to access our electronic
platforms directly.

• Technology support services consist of costs
related to maintenance of the hardware and
software required to support our technology.
Our technology support services costs are
driven by system capacity, functionality and
redundancy requirements.

• Occupancy and building operations expense
consists of costs related to leased and owned
real
property including rent, maintenance,
estate taxes, utilities and other related costs.
We have significant operations located in
Chicago and New York City with smaller
the world.
offices
Additionally, we have trading facilities in
Chicago, New York City and Kansas City as
well as data centers in various U.S. locations.

throughout

located

• Licensing and other fee agreements expense
includes license fees paid as a result of
contract volume in equity index products, and
royalty and broker rebates on energy and
metals products. This expense fluctuates with
changes in contract volumes as well as
changes in fee structures.

• Other expenses include marketing and travel-
related expenses as well as general and
administrative costs. Marketing, advertising
and public relations expense includes media,
print and other advertising costs, as well as
costs associated with our product promotion.
Other expenses also include litigation and
customer settlements, impairment charges on
and foreign currency
operational
transaction gains and losses resulting from
changes in exchange rates on certain foreign
deposits.

assets

Non-Operating Income and Expenses

Income and expenses incurred through activities
outside of our core operations are considered non-
operating. These activities include non-core investing
and financing activities.

•

Investment income includes dividend income
from our strategic equity investments; gains
and losses on trading securities in our non-
qualified deferred compensation plans; short-
term investment of excess cash, clearing
firms’ cash performance bonds and guaranty
fund contributions; and interest income and
realized gains and losses from our marketable
securities. Investment income is influenced by
the amount of dividends distributed by our
strategic investments, the availability of funds
generated by operations; market interest rates,
and changes in the levels of cash performance
bonds deposited by clearing firms.

purpose

• We use derivative financial instruments for
the
to
fluctuations in interest rates. Any ineffective
is
excluded portion of our hedges
or
recognized in earnings immediately.

exposures

hedging

•

and other borrowing costs

Interest
are
associated with various short-term and long-
term funding facilities. We also maintain a
commercial paper program with various
financial institutions.

• Equity in net gains (losses) of unconsolidated
subsidiaries includes income and losses from
our investments in S&P/Dow Jones Indices
LLC, Dubai Mercantile Exchange and Bursa
Malaysia Derivatives Berhad.

• Other income (expense) includes the net gain
related to the contribution of the DJI asset
group and the sale of CMA as well as gains
lending
related to our
program.

securities

former

CRITICAL ACCOUNTING POLICIES

and

results

principles

accounting

The notes to our consolidated financial statements
include disclosure of our significant accounting
policies. In establishing these policies within the
framework
generally
accepted in the United States, management must
make certain assessments, estimates and choices that
will result in the application of these principles in a
manner
financial
that appropriately reflects our
operations. Critical
condition
accounting policies are those policies that we believe
present
subjective
measurements and have the most potential to affect
our financial position and operating results. While all
decisions
are
important, there are certain accounting policies that
we consider to be critical. These critical policies,
which are presented in detail in the notes to our
statements,
consolidated financial
relate to the
valuation of
instruments, goodwill and
financial
intangible assets, revenue recognition, income taxes,
and internal use software costs.

the most

accounting

regarding

complex

policies

Valuation of financial instruments. Fair value is
defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly
the
transaction between market participants
measurement date, or an exit price. We have
instruments measured at fair
categorized financial
value into the following three-level
fair value
judgment
level of
hierarchy based upon the
associated with the inputs used to measure the fair
value:

• Level 1—Inputs are unadjusted, quoted prices
in active markets for
identical assets or
liabilities at the measurement date. Assets and
liabilities
level 1 fair value
generally include U.S. Treasury securities,
equity securities listed in active markets, and
investments in publicly traded mutual funds
with quoted market prices.

carried at

• Level 2—Inputs

either directly or
are
indirectly observable and corroborated by
market data or are based on quoted prices in

carried at

that are not active. Assets and
markets
liabilities
level 2 fair value
generally include municipal bonds, asset-
backed securities, U.S. government agency
securities and certain derivatives.

• Level 3—Inputs are unobservable and reflect
management’s best estimate of what market
participants would use in pricing the asset or
liability. Generally assets and liabilities at fair
value utilizing level 3 inputs include certain
other assets and liabilities with inputs that
require management’s judgment.

For further discussion regarding the fair value of
financial assets and liabilities, see note 19 in the
notes to the consolidated financial statements.

involves

assets. We

and intangible

Goodwill
review
goodwill for impairment on an annual basis and
whenever events or circumstances indicate that its
carrying value may not be recoverable. Goodwill
may be tested quantitatively for
impairment by
comparing the carrying value of a reporting unit to its
estimated fair value. Estimating the fair value of a
the use of valuation
reporting unit
techniques that rely on significant estimates and
assumptions. These estimates and assumptions may
include forecasted revenue growth rates; forecasted
rates;
operating margins;
forecasted economic and market conditions, and
industry multiples. We base our fair value estimates
on assumptions we believe to be reasonable given the
information that is available to us at the time of our
assessment; however, actual future results may differ
significantly from those estimates. Under certain
favorable circumstances, goodwill may be reviewed
qualitatively for indications of impairment without
utilizing valuation techniques to estimate fair value.
The qualitative assessment of goodwill relies on
significant assumptions about forecasts of revenue
growth, operating margins and economic conditions
as well as overall market and industry-specific trends.

risk-adjusted discount

We also review indefinite-lived intangible assets on
an annual basis or more frequently when events and
circumstances indicate that their carrying value may
not be recoverable. Indefinite-lived intangible assets
may be tested quantitatively for
impairment by
comparing their carrying values to their estimated
fair values. Estimating the fair value of indefinite-
lived intangible assets involves the use of valuation

fair value

techniques that rely on significant estimates and
assumptions. These estimates and assumptions may
include forecasted revenue growth rates; forecasted
allocations of expense, and risk-adjusted discount
rates. We base our
estimates on
assumptions we believe to be reasonable given the
information that is available to us at the time of our
assessment; however, actual future results may differ
to
significantly from those
goodwill, under certain favorable circumstances,
indefinite-lived intangible assets may be reviewed
qualitatively for indications of impairment without
utilizing valuation techniques to estimate fair value.
The
indefinite-lived
intangibles assets relies on significant assumptions
about forecasts of revenue growth, operating margins
and economic conditions as well as overall market
and industry-specific trends.

estimates. Similar

assessment

qualitative

Intangible assets subject
to amortization are also
assessed for impairment when indicated by a change
in economic or operational circumstances. The
impairment assessment of
requires
management to first compare the book value of the
amortizing asset to undiscounted cash flows. If the
book value exceeds the undiscounted cash flows,
management
is then required to estimate the fair
value of the assets and record an impairment loss for
the excess of the carrying value over the fair value.

these assets

Revenue recognition. A significant portion of our
revenue is derived from the clearing and transaction
fees we assess on each contract executed through our
trading venues and cleared through our clearing
houses. Clearing and transaction fees are recognized as
revenue when a buy and sell order are matched and
when the trade is cleared. On occasion, the customer’s
exchange trading privileges may not be properly
entered by the clearing firm and incorrect fees are
charged for the transactions in the affected accounts.
When this information is corrected within the time
period allowed by the exchange, a fee adjustment is
provided to the clearing firm. An accrual is established
for estimated fee adjustments to reflect corrections to
customer exchange trading privileges. The accrual is
based on the historical pattern of adjustments
processed as well as specific adjustment requests.

Income taxes. Calculation of
the income tax
provision includes an estimate of the income taxes
that will be paid for the current year as well as an
estimate of income tax liabilities or benefits deferred

into future years. Deferred tax assets are reviewed to
determine if they will be realized in future periods.
To the extent it is determined that some deferred tax
the assets are
assets may not be fully realized,
reduced to their realizable value by a valuation
allowance. The calculation of our
tax provision
involves uncertainty in the application of complex
tax regulations. We recognize potential liabilities for
anticipated tax audit issues in the United States and
other applicable foreign tax jurisdictions using a
more-likely-than-not recognition threshold based on
the technical merits of the tax position taken or
expected to be taken. If payment of these amounts
varies from our estimate, our income tax provision
would be reduced or increased at
the time that
determination is made. This determination may not
be known for several years. Past tax audits have not
resulted in tax adjustments that would result in a
material change to the income tax provision in the
year the audit was completed. The effective tax rate,
defined as the income tax provision as a percentage
of income before income taxes, will vary from year
to year based on changes in tax jurisdictions, tax rates
and regulations. In addition, the effective tax rate will
vary with changes to income that are not subject to
income tax, such as municipal interest income, and
changes in expenses or losses that are not deductible,
such as the utilization of foreign net operating losses.

Internal use software costs. Certain internal and
external costs that are incurred in connection with

RESULTS OF OPERATIONS

2012 Financial Highlights

developing or obtaining computer
software for
internal use are capitalized. Software development
costs incurred during the planning or maintenance
project stages are expensed as incurred, while costs
incurred during the application development stage are
capitalized and are amortized over the estimated
useful
life of the software, generally three years.
Amortization of capitalized costs begins only when
the software becomes ready for its intended use.

RECENT ACCOUNTING PRONOUNCEMENTS

over

rules

sheet

balance

agreements

In December 2011 and January 2013, the Financial
Accounting Standards Board issued updates
to
existing
offsetting
disclosure. The updates require entities to disclose
both gross and net information about certain financial
instruments eligible for offset in the balance sheet.
instruments may include derivatives,
Financial
repurchase
lending
transactions. The objective of these disclosures is to
facilitate comparison between those entities that
prepare their financial statements in accordance with
U.S. generally accepted accounting principles and
those entities that prepare their financial statements
using International Financial Reporting Standards.
The updates are effective for annual reporting periods
beginning on or after January 1, 2013, and interim
application
therein, with
periods
required for comparability purposes.

retrospective

securities

and

The comparability of our operating results for the periods presented may be impacted by mergers, acquisitions and
disposals of businesses and/or asset groups. Where material, these impacts are discussed in the analysis that follows.

The following summarizes significant changes in our financial performance for the years presented.

(dollars in millions, except per share data)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating income (expense)
. . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to CME Group . . . . . . . . . . .
Diluted earnings per common share attributable to

$2,914.6
1,222.6

$3,280.6
1,259.5

$3,003.7
1,172.6

(11)%
(3)

9%
7

58%
1.4
46%

62%

61%

$ (84.6)

$ (109.2)

(102)

(22)

45%

$ 896.3

$1,812.3

$ 951.4

CME Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from operating activities . . . . . . . . . . . . . .

2.70
1,216.8

5.43
1,346.3

2.86
1,359.6

(51)

(50)
(10)

90
(1)

•

In 2012 when compared with 2011,
the
decrease in total revenues was attributable to
lower contract volume and a decrease in
market data and information services revenue
as a result of the contribution of the DJI asset
group. Higher contract volume as well as
market data and information services revenue
contributed to an increase in revenues in 2011
when compared with 2010.

In 2011, we recognized expenses related to
the MF Global bankruptcy, resulting in a
decrease in expenses in 2012 when compared
with 2011 and an increase in 2011 when
compared with 2010. Higher compensation
and benefits expense partially offset
the
decrease in operating expenses in 2012 when
compared with 2011 and contributed to an
increase in expenses in 2011 when compared
with 2010.
In 2010, we also recognized
impairment charges on the goodwill and trade
name related to our CMA operations.

• Non-operating income increased from 2011 to
2012 primarily as a result of the net gain from

the contribution of the DJI asset group to
S&P/DJI and the sale of CMA. In addition,
we began recognizing our proportionate share
of net income from our venture with McGraw
in July 2012. The decrease in non-operating
expense in 2011 compared with 2010 was
attributable to lower interest expense resulting
from the repayment of the $420.5 million
term loan in January 2011 and the maturity of
the $300.0 million floating rate notes in
August 2010.

In 2011, we reduced our income tax provision
due to a revaluation of our deferred tax
liabilities resulting from a change in state tax
apportionment. This revaluation contributed
to an increase in the effective tax rate in 2012
when compared with 2011 and a decrease in
the effective tax rate in 2011 when compared
with 2010. The increase in the effective tax
rate in 2012 when compared with 2011 was
also due to the establishment of deferred tax
liabilities associated with S&P/DJI.

•

Revenues

(dollars in millions)

2012

2011

2010

2012-2011

2011-2010

Clearing and transaction fees . . . . . . . . . . . . . . . . . . . .
Market data and information services . . . . . . . . . . . . . .
Access and communication fees . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,371.5
387.1
88.8
67.2

$2,710.9
427.7
49.2
92.8

$2,486.3
395.1
45.4
76.9

(13)%
(9)
80
(28)

Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,914.6

$3,280.6

$3,003.7

(11)

9%
8
8
21

Year-over-Year Change

Clearing and Transaction Fees

The following table summarizes our total contract volume, revenue and average rate per contract. Total contract
volume includes contracts that are traded on our exchange and cleared through our clearing houses. Contract
volume also includes certain cleared-only contracts. Volume is measured in round turns, which is considered a
completed transaction that involves a purchase and an offsetting sale of a contract. Average rate per contract is
determined by dividing total clearing and transaction fees by total contract volume. All amounts exclude our
credit default swap, interest rate swap, TRAKRS and CME Clearing Europe contracts. The following table also
excludes volume from KCBT from December 1, 2012 through December 31, 2012.

Total contract volume (in millions) . . . . . . . . . . . . . . . .
Clearing and transaction fees (in millions) . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Average rate per contract

2,890.0
$2,365.6
0.819

3,386.7
$2,710.8
0.800

3,078.1
$2,486.2
0.808

(15)%
(13)
2

10%
9
(1)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Average rate per contract is impacted by our rate
structure, including volume-based incentives; product
mix; trading venue, and the percentage of volume
executed by customers who are members compared
with non-member customers. Due to the relationship
between average rate per contract and contract
volume, the change in clearing and transaction fees
attributable
an
to
approximation.

changes

each

only

We estimate the following increases (decreases) in
clearing and transaction fees based on change in total
contract volume and change in average rate per
contract during 2012 compared with 2011, and
during 2011 compared with 2010.

(in millions)

Increase (decrease) due to
change in total contract
volume . . . . . . . . . . . . . . . .

Increase (decrease) due to

change in average rate per
contract . . . . . . . . . . . . . . . .

Net increase (decrease) in
clearing and transaction
fees . . . . . . . . . . . . . . . . . . .

Year-over-Year Change

2012-2011

2011-2010

$(406.6)

$247.0

61.4

(22.4)

$(345.2)

$224.6

Contract Volume

The following table summarizes average daily contract volume. Contract volume can be influenced by many
factors, including political and economic factors, the regulatory environment and market competition.

(amounts in thousands)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Average Daily Volume by Product Line:
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agricultural commodity(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Metal

4,834
2,560
845
1,140
1,692
352

6,030
3,238
922
1,087
1,775
387

5,449
2,907
919
914
1,662
316

Aggregate average daily volume . . . . . . . . . . . . . . . . . . . . . .

11,423

13,439

12,167

Average Daily Volume by Venue:
Electronic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Open outcry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Privately negotiated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,739
1,045
221

Total exchange-traded volume . . . . . . . . . . . . . . . . . . . . . . . .
Total CME ClearPort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,005
418

11,350
1,398
231

12,979
460

10,120
1,402
198

11,720
447

Aggregate average daily volume . . . . . . . . . . . . . . . . . . . . . .

11,423

13,439

12,167

(20)%
(21)
(8)
5
(5)
(9)

(15)

(14)
(25)
(5)

(15)
(9)

(15)

11%
11

—

19
7
23

12
—
17

11
3

(1) The agricultural commodity product line does not include the agricultural commodity contract volume for
KCBT. The average daily volume for KCBT’s agricultural commodity contracts was 16,100 during
December 2012.

Interest Rate Products

The following table summarizes average daily volume for our key interest rate products. Eurodollar front 8
contracts include contracts expiring within two years. Eurodollar back 32 contracts include contracts expiring
within three to ten years.

(amounts in thousands)

Eurodollar futures and options:

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Front 8 futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Back 32 futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U.S. Treasury futures and options:

10-Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5-Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2-Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,099
579
410

1,255
567
427
230

1,717
510
767

1,454
720
415
297

1,646
357
726

1,380
546
388
274

(36)%
13
(47)

(14)
(21)
3
(22)

4%
43
6

5
32
7
8

Overall interest rate contract volume decreased in
2012 when compared with 2011 due to low interest
rate volatility as a result of the Federal Reserve’s
to maintain its zero interest rate
continued intent
policy through mid-2015. In 2012 when compared
with 2011, the increase in volume in the long-term
interest rate products, including the Eurodollar back
32 futures and the Treasury bond futures and options
contracts was attributable to periods of higher long-
term interest rate volatility in early 2012. The Federal
Reserve’s announcement in January 2012 to extend
shifted market
its
expectations regarding long-term interest rates, which
resulted in periods of higher volatility in early 2012.

interest

policy

zero

rate

in interest

the overall
In 2011 when compared with 2010,
increase
rate contract volume was
attributable to volatility caused by a change in market
regarding short-term and long-term
expectations
the Federal Reserve’s
interest
announcement in 2011 that it intended to maintain its
zero interest rate policy through 2013. In addition,
volatility caused by the downgrade of the United
States credit rating in August 2011 also contributed

rates

tied

to an increase in overall volume. Mid-term interest
rate contract volume, which includes Eurodollar back
32 futures and 5-year U.S. Treasury futures and
options, grew at a faster rate than short-term contract
volume because of a shift from contracts based on
short-term interest rates to mid-term interest rates due
to the continued zero interest rate policy.

We also believe that overall U.S. Treasury futures
and options contract volume increased in 2011 when
compared with 2010 due to institutional portfolio
adjustments caused by the downgrade of the United
States credit rating. Many institutional portfolios are
required to maintain an average minimum overall
credit rating. When the U.S. Treasury credit rating
was downgraded, the institutional portfolios had to
sell investments with lower credit ratings and buy
more U.S. Treasuries in order
to increase their
average minimum overall credit rating. In addition,
the growth in overall U.S. Treasury futures and
options contract volume was attributable to increased
demand for U.S. Treasury securities as a safe haven
investment during the European credit crisis.

Equity Products

The following table summarizes average daily volume for our key equity products.

(amounts in thousands)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

E-mini S&P 500 futures and options . . . . . . . . . . . . . . . . . . . . . .
E-mini NASDAQ 100 futures and options . . . . . . . . . . . . . . . . .

2,016
254

2,605
301

2,285
317

(23)%
(16)

14%
(5)

The decrease in equity contract volume in 2012 when
compared with 2011 was due to a decline in equity
market volatility, as measured by the CBOE Volatility
Index. The decline in volatility was the result of few
the macroeconomic
in
new
environment within the United States and European
markets. We believe a decline in assets under
management also contributed to a decrease in volume
in 2012 when compared with 2011.

developments

In 2011 when compared with 2010, an overall
increase in volatility contributed to higher equity
contract volume. We believe the periods of high
volatility within the equity markets during the third
quarter of 2011 were attributable to the downgrade of
the United States credit rating and the continuation of
the sovereign debt crisis in Europe. In general, equity
products such as the E-mini NASDAQ contracts that
hedge market risks different than those of the E-mini
S&P 500, our most liquid equity product, do not tend
to benefit
increased
from macro-level events or
volatility to the same extent.

Foreign Exchange Products

The following table summarizes average daily volume for our key foreign exchange products.

(amounts in thousands)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
British pound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

290
134
106
99
93

357
126
118
118
92

367
105
124
131
91

(19)%
7
(10)
(16)
1

(3)%
20
(5)
(10)
1

The overall decrease in foreign exchange contract
volume in 2012 when compared with 2011 was
attributable primarily to the decline in euro contract
volume. We believe trading activity in euro contracts
was impacted by the lack of a directional trend due to
uncertainty related to the health of the European
Union and concern regarding additional economic
stimulus provided by the Federal Reserve. The lack
of a trend has reduced trading in euro contracts
among customers who trade based on medium- to
long-term expectations. We believe th uncertainty
with the European Union also contributed to a
decline in British pound contract volume in 2012
when compared with 2011 because the British
economy is closely tied to the European Union. We
believe that intervention by the Japanese central bank

to control the yen foreign exchange rate beginning in
mid-2011 through 2012 caused market participants to
reduce their trading in Japanese yen contracts and to
focus on higher yielding currencies, such as the
Australian and Canadian dollars.

In 2011 when compared with 2010, foreign exchange
contract volume remained at a consistent level. We
believe that intervention by the Japanese central bank
the yen foreign exchange rate and
to control
uncertainty about the Euro as a result of the European
sovereign debt crisis caused the market to move to
safe haven currencies, such as the Australian dollar
and the Canadian dollar. As a result, Euro and
Japanese yen contract volume decreased while
Australian dollar volume increased.

Agricultural Commodity Products

The following table summarizes average daily volume for our key agricultural commodity products.

(amounts in thousands)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Soybean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wheat(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Soybean Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

392
278
129
118

426
232
115
105

358
186
109
89

(8)%
20
12
12

19%
25
5
18

(1) Wheat contract volume does not include volume for KCBT’s hard red winter wheat products. The average

daily volume for KCBT’s agricultural commodity contracts was 16,100 during December 2012.

The increase in agricultural commodity contract
volume in 2012 when compared with 2011 was
attributable to higher volatility resulting from severe
drought conditions in the Midwest in the second and
third quarters of 2012. We believe the increased
volatility was the result of supply constraint concerns
for soybean and wheat supplies. Corn volumes
declined slightly in 2012 when compared with 2011.
Early market expectations of excess supply in 2012
dampened corn price volatility in early 2012, which
resulted in the decline in volume.

We believe that the increase in contract volume in
2011 when compared with 2010 was attributable to a
decline in supply due to various weather events
including flooding, drought and excessive heat. The
change in supply resulted in increased volatility and
higher grain prices. We also believe that the increase
in volume resulted from increased demand for
feedgrains caused by higher demand for cattle and
other proteins in emerging markets.

Energy Products

The following table summarizes average daily volume for our key energy products.

(amounts in thousands)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Crude oil
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refined products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

729
600
314

900
533
275

853
489
244

(19)%
12
14

5%
9
13

Energy contract volume decreased slightly in 2012
when compared with 2011. A decline in crude oil
contract volume resulting from lower price volatility
contributed to an overall decrease in energy products
volume. Political unrest in the Middle East in the first
quarter of 2011 resulted in changes in global supply,
which contributed to higher price volatility in early
2011 relative to 2012. Additionally, lower crude oil
contract volume in 2012 was partially attributable to
oversupply in Cushing, Oklahoma. We believe that
the reversal of the Seaway Pipeline in the second
quarter of 2012, and ongoing capacity increases in
the pipeline, will continue to relieve oversupply and
provide needed infrastructure for ongoing expected
North American crude oil supply increases. However,
uncertainty remains over the timing and extent of the
impact the reversal will have on the overall crude oil

market. The decrease in crude oil contract volume
was partially offset by an increase in natural gas
contract volume. The increase in natural gas contract
volume resulted largely from volatility around
production shifts in the early part of 2012. Refined
products growth is due to increased volatility caused
by a growing US export market as global oil markets
adapt to increased supply of North American crude
oil, despite refinery shutdowns.

In 2011 when compared with 2010, we believe the
increase in energy contract volume was attributable
to increased price volatility within the energy market
during the first quarter of 2011. We also believe that
increased volatility caused by weather-related events
led to an increase in natural gas contract volume in
2011.

Metal Products

The following table summarizes average daily volume for our key metal products.

(amounts in thousands)

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Copper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Silver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

212
64
60

238
50
87

208
41
57

(11)%
29
(31)

14%
22
51

The overall decrease in metal products volume in
2012 when compared with 2011 was due to lower
volatility in the precious metals markets in 2012
when compared with 2011. We believe the August
2011 announcement of the Federal Reserve’s intent
to maintain its zero interest rate policy and deepening
Eurozone worries, which caused high volatility
within other financial markets in 2011, resulted in an
increased interest in precious metals as an asset class.
This increased interest in 2011 resulted in relative
decreases in gold and silver contract volume in 2012
when compared with 2011. This decrease was
partially offset by an increase in volume for copper
contracts as a result of economic growth in Asia as
well as global supply constraints.

increase in metal contract volume in
The overall
2011 when compared with 2010 was attributable to
the increased investment in precious metals as an
asset class due to high volatility and uncertainty
within the financial markets. We believe that there
was an increase in silver contract volume due to the
greater use of silver as an alternative investment.

Average Rate per Contract

The average rate per contract increased in 2012 when
compared with 2011 due to a shift in the relative mix
of product volume. In 2012, agricultural commodity
and energy product volumes, when measured as a
percentage of total volume, each increased by 2%
while interest
rate and equity product volumes
decreased by 3% and 2%, respectively. Agricultural
commodity and energy products have higher fees
compared with interest
rate products and equity
products.

In 2011 when compared with 2010, the average rate
per contract decreased due to an increase in member
contract volume, which increased faster than non-
member trading. In general, members receive lower
rates when compared with non-members.

clearing and transaction fees revenue in 2011. One
firm represented 13% and one firm represented 12%
of our clearing and transaction fees revenue in 2010.
Should a clearing firm withdraw, we believe that the
customer portion of the firm’s trading activity would
likely transfer
the
exchange. Therefore, we do not believe we are
exposed to significant risk from an ongoing loss of
through a particular
revenue received from or
clearing firm.

to another clearing firm of

Other Sources of Revenue

Market data and information services. The decline in
market data and information services revenue in 2012
when compared with 2011 resulted from a $53.2
million decrease in market data and information
services revenue from Index Services and CMA. In
the second quarter of 2012,
the DJI asset group,
including assets which generated market data and
information services revenue, was contributed to the
McGraw venture and CMA was sold to McGraw. In
addition, the decrease in revenue was due to a decline
in the basic device count in 2012 due to cost-cutting
initiatives at customer firms. The decrease in market
data and information services was partially offset by
an increase in our basic device service fee from $61
per month to $70 per month effective January 2012.

Revenues from Index Services contributed to an
increase in market data and information services
revenue in 2011 when compared with 2010. In March
2010, we formed Index Services, which generated
additional revenues of $35.6 million in 2011 when
compared with 2010. In addition, revenues from
Index Services increased in 2011 when compared
with
under
management, which was driven by underlying index
market performance. The overall increase in 2011
when compared with 2010 was partially offset by a
decline in revenue due to a decrease in basic device
resulting from cost-cutting initiatives at
counts
customer firms.

growth

assets

2010

due

Concentration of Revenue

We bill a substantial portion of our clearing and
transaction fees to our clearing firms. The majority of
clearing and transaction fees received from clearing
firms represent charges for
trades executed and
cleared on behalf of their customers. Two firms each
represented 12% of our clearing and transaction fees
revenue in 2012. One firm represented 12% of our

The two largest
resellers of our market data
represented, in aggregate, 43%, 39% and 45% of our
market data and information services revenue in
2012, 2011 and 2010,
respectively. Despite this
concentration, we consider exposure to significant
risk of revenue loss to be minimal. In the event that
one of these vendors no longer subscribes to our
market data, we believe the majority of that vendor’s

customers would likely subscribe to our market data
through another reseller. Additionally, several of our
largest
institutional customers that utilize services
from our two largest resellers report usage and remit
payment of their fees directly to us.

Access and communication fees. Our co-location
program contributed to an increase in access and
communication fees revenue from 2010 through
2012. During the fourth quarter of 2011, we
substantially completed installations of equipment for
customers and launched our co-location services on
January 29, 2012. We generated incremental revenue
of $47.8 million in 2012 when compared with 2011
and incremental revenue of $3.4 million in 2011
when compared with 2010.

Other revenue. In 2012 when compared with 2011,
the decrease in other revenue was largely due to a
decline in rental income of $13.1 million resulting
from the sale of the CBOT buildings in Chicago. In

the second quarter of 2011, we recognized a $9.8
million gain on the sale of certain Index Services
assets related to one of its service offerings, which
contributed to a decrease in other revenues in 2012
when compared with 2011. The initial phase to
develop a new multi-asset class electronic platform
for BM&FBOVESPA was completed in the third
quarter of 2011, which also resulted in a decrease in
revenues in 2012. The decrease in other
other
revenues in 2012 when compared with 2011 was
partially offset by additional processing services
revenue from various strategic relationships.

In 2011 when compared with 2010, the increase in
other revenues was largely attributable to the $9.8
million gain on the sale of certain Index Services
assets and additional processing services revenue.
The increase was partially offset by a decrease in
revenues resulting from our platform development
for BM&FBOVESPA.

Expenses

Year-over-Year Change

(dollars in millions)

2012

2011

2010

2012-2011

2011-2010

Compensation and benefits . . . . . . . . . . . . . . . . . . . . . .
Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology support services . . . . . . . . . . . . . . . . . . . . .
Professional fees and outside services . . . . . . . . . . . . .
Amortization of purchased intangibles . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .
Occupancy and building operations . . . . . . . . . . . . . . .
Licensing and other fee agreements . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 496.7
40.1
50.7
126.8
116.2
136.9
77.0
82.6
95.6

$ 475.7
42.3
52.1
126.1
132.0
128.5
77.5
84.9
140.4

$ 432.1
40.6
50.5
117.5
128.1
129.9
74.9
82.6
116.4

Total Expenses

$1,222.6

$1,259.5

$1,172.6

4%
(5)
(3)
1
(12)
6
(1)
(3)
(32)

(3)

10%
4
3
7
3
(1)
3
3
21

2012 Compared With 2011

Operating expenses decreased by $36.9 million in
2012 when compared with 2011. The following table
shows the estimated impact of key factors resulting in
the decrease in operating expenses.

(dollars in millions)

Salaries, benefits and

Year-
Over-Year
Change

Change as a
Percentage of
2011 Expenses

employer taxes . . . . . . .

$ 15.0

Stock-based

compensation . . . . . . . .

10.1

Non-qualified deferred

compensation . . . . . . . .
Bonus expense . . . . . . . . .
Amortization of purchased
intangibles . . . . . . . . . . .

MF Global-related

expense . . . . . . . . . . . . .
Other expenses, net . . . . . .

5.7
(15.2)

(15.9)

(27.6)
(9.0)

—

(1)

(3)
—

Total

. . . . . . . . . . . . . . . . .

$(36.9)

(3)%

In 2012 when compared with 2011, an increase in
salaries, benefits and employer taxes resulted from
higher salaries and rising healthcare costs. The
increase was partially offset by a decrease in average
headcount as a result of the contribution of the DJI
asset group to the McGraw venture and the sale of
CMA in the second quarter of 2012.

The increase in stock-based compensation expense
was due to the accelerated vesting of stock-based
compensation associated with our CEO transition in
2012 as well as the impact related to the September
2011 and 2012 grants.

our

increase

non-qualified

deferred
An
compensation liability, the impact of which does not
affect net income because of an equal and offsetting
change in investment
income, contributed to an
increase in compensation and benefits expense.

Overall expenses also decreased in 2012 when
compared with 2011 due to the expenses incurred in
2011 as a result of the MF Global bankruptcy filing
in the fourth quarter of 2011, which included write-
offs of accounts receivable, legal fees and losses on
collateral posted by GFX and held by MF Global in
customer segregated funds as well as other related
expenses. In 2012, we recognized a recovery on the
losses incurred on collateral posted by GFX in 2011.

2011 Compared With 2010

Operating expenses increased by $86.9 million in
2011 when compared with 2010. The following table
shows the estimated impact of key factors resulting in
the increase in operating expenses.

(dollars in millions)

Salaries, benefits and

Year-
Over-Year
Change

Change as a
Percentage of
2010 Expenses

employer taxes . . . . . . .

$ 44.2

MF Global-related

expense . . . . . . . . . . . . .

29.1

Stock-based

compensation . . . . . . . .
Marketing expense . . . . . .
Professional fees related to
Index Services . . . . . . . .

CMA goodwill and trade
name impairment

. . . . .
Other expenses, net . . . . . .

10.5
7.0

(10.7)

(20.5)
27.3

Total

. . . . . . . . . . . . . . . . .

$ 86.9

1
1

(1)

(2)
2

and

rising

increases

healthcare

Salary
costs
contributed to a rise in salaries, benefits and
employer taxes. An increase in average headcount
primarily due to the formation of Index Services and
investment
also
contributed to an increase in expense in 2011 when
compared with 2010.

in strategic growth initiatives

Bonus expense decreased due to performance relative
to our 2012 cash earnings target when compared with
2011 performance relative to our 2011 cash earnings
target.

Amortization of purchased intangibles declined as a
result of the contribution of the DJI asset group, the
sale of CMA and the disposal of certain lease-related
intangible assets in the second quarter of 2012.

Expenses increased due to the MF Global bankruptcy
filing in the fourth quarter of 2011.

Stock-based compensation increased in 2011 due to
the expense impact related to the September 2010
and 2011 grants.

Marketing expenses increased in 2011 due primarily
to new advertising initiatives.

A decrease in professional
in 2011 was
attributable to the formation and integration of Index
Services, which occurred in the first quarter of 2010.

fees

Impairment charges recorded in the second quarter of
2010 on the goodwill and trade name related to our
CMA operations also contributed to a decrease in
expenses in 2011 when compared with 2010.

Non-Operating Income (Expense)

Year-over-Year Change

(dollars in millions)

2012

2011

2010

2012-2011

2011-2010

Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-term investments . . . . . . . . . . . . . . . .
Gains (losses) on derivative investments . . . . . . . . . . . . . .
Interest and other borrowing costs . . . . . . . . . . . . . . . . . . .
Equity in net gains (losses) of unconsolidated

subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 38.7
—
(0.1)
(132.2)

$ 36.7
—
(0.1)
(116.9)

$ 42.3
(2.2)
(2.6)
(140.3)

30.7
64.3

(4.3)
—

(6.4)
—

—
—
13

n.m.
n.m.

Total Non-Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.4

$ (84.6) $(109.2)

(102)

(13)%
(100)
(96)
(17)

(33)
—

(22)

n.m. not meaningful

2010. The decrease in 2011 when compared with
2010 was partially offset by an increase in dividend
income from our investment in BM&FBOVESPA.
Total overall dividend income was $34.9 million in
2011 compared with $31.9 million in 2010.

Gains (losses) on derivative investments. In 2010, we
recognized an $8.6 million loss due to ineffectiveness
on the interest rate swap contract used to hedge
interest rate risk on our term loan. Both the swap
contract and the term loan were originally scheduled
to expire in August 2011. In December 2010, we
approved a plan to refinance the term loan in January
2011 resulting in ineffectiveness of the hedge.

Additionally, in March 2010, we recognized a $6.0
million gain on derivative investments as a result of a
settlement from the Lehman Brothers Holdings Inc.
(Lehman) bankruptcy proceedings. The settlement
related to an unsecured claim against Lehman as
counterparty to an over-the-counter put option
contract we purchased to hedge our risk of changes in
the fair value of BM&FBOVESPA stock resulting
from foreign currency exchange rate fluctuations
between the U.S. dollar and the Brazilian real.

Investment
income. The increase in investment
income during 2012 when compared with the same
period in 2011 was attributable to an increase in
gains on marketable securities related to our non-
qualified deferred compensation plan of $5.7 million.
Gains and losses from these non-qualified deferred
compensation plan securities are offset by an equal
amount of compensation and benefits expense. The
increase in investment income was also attributable
to other gains on investments. The increase in
investment income was partially offset by a decrease
in dividend income of $5.9 million in 2012 compared
with the same period in 2011 due largely to a
decrease in dividends
in
BM&FBOVESPA in 2012 when compared with
2011.

investment

from our

The decrease in investment
income during 2011
when compared with 2010 was due to a decline in
gains on marketable securities related to our non-
qualified deferred compensation plans of $4.1
million. In addition, we recognized a gain of $3.7
million from the sale of various equity and debt
securities in 2010, which contributed to the decrease
in investment income in 2011 when compared with

Interest and other borrowing costs. The following table shows the weighted average borrowings outstanding,
weighted average effective yield and average cost of borrowing for the periods presented:

(dollars in millions)

2012

2011

2010

2012-2011

2011-2010

Weighted average borrowings outstanding . . . . . . . . . .
Weighted average effective yield . . . . . . . . . . . . . . . . .
Average cost of borrowing(1) . . . . . . . . . . . . . . . . . . . . .

$2,344.1

$2,155.8

$2,668.1

$188.3

$(512.3)

5.06%
5.66

5.18%
5.47

4.96% (0.12)%
5.24

0.19

0.22%
0.23

(1) Average cost of borrowing includes interest, the effective portion of interest rate hedges, commitment fees,

discount accretion and debt issuance costs.

Year-over-Year Change

On September 10, 2012, we issued $750.0 million of
3.0% fixed rate notes due September 2022, which
contributed to the increase in the weighted average
borrowings outstanding and decreases in weighted
cost of
average
borrowings increased in 2012 when compared with
2011 because of higher commitment fees on the 364-
day fully secured, committed line of credit resulting
from an increase in the commitment.

effective yield. The

average

average borrowings and an increase in weighted
average
cost of
yield
borrowings in 2011 when compared with 2010.

and average

effective

investment

(losses) of unconsolidated
Equity in net gains
subsidiaries. In 2012, we recognized income from
our
in the McGraw venture, which
contributed to increases in equity in net gains (losses)
2012 when
subsidiaries
of
compared with 2011.

unconsolidated

Interest expense decreased in 2011 compared with
2010 due to repayment of the $420.5 million term
loan in January 2011 and the maturity of the $300.0
million floating rate notes in August 2010. The
decrease in 2011 compared with 2010 was partially
offset by the issuance, in March 2010, of $612.5
million of 4.40% fixed rate notes, which are due in
2018. As a result, there was a decrease in weighted

Other income (expense). In 2012, we recognized a
net gain of $58.9 million related to the contribution
the DJI asset group and the sale of CMA.
of
Additionally, in 2012, we recognized a gain of $5.7
million related to the recovery of a 2008 impairment
loss on a corporate debt security held in the NYMEX
securities lending portfolio.

Income Tax Provision

The following table summarizes the effective tax rate for the periods presented:

Year ended December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46.5% 6.3% 44.7% 40.2%

(38.4)%

2012

2011

2010

2012-2011

2011-2010

Year-over-Year Change

our

market

marking
in
BM&FBOVESPA which resulted in a $48.8 million
reduction in valuation allowances on unrealized
capital
losses previously reserved, which also
reduced our effective tax rate in 2011.

investment

In 2011, we reduced our income tax provision by
$646.0 million due largely to a revaluation of our
existing deferred tax liabilities resulting from a
change in state tax apportionment. This revaluation
contributed to an increase in the effective tax rate in
2012 when compared with 2011 and a decrease in the
effective tax rate in 2011 when compared with 2010.
In 2012, we
tax
liabilities associated with the McGraw venture
resulting in a $106.8 million increase in our income
tax provision, which also contributed to a higher
effective tax rate in 2012 when compared with 2011.
Additionally, in the first quarter of 2011, we began

established deferred income

LIQUIDITY AND CAPITAL RESOURCES

Cash Requirements

We have historically met our funding requirements
with cash generated by our ongoing operations.
While our cost structure is fixed in the short term, our
sources of operating cash are dependent on contract
volume levels. We believe that our existing cash,

cash equivalents, marketable securities and cash
generated from operations will be sufficient to cover
our working capital needs, capital expenditures, and
other commitments. However, it is possible that we
may need to raise additional funds to finance our
activities through issuances of commercial paper,
future public debt offerings or by direct borrowings
from financial institutions.

Cash will also be required for operating leases and non-cancellable purchase obligations as well as other
obligations reflected as long-term liabilities in our consolidated balance sheet at December 31, 2012. These were
as follows:

(in millions)

Operating
Leases

Purchase
Obligations

Other
Long-Term
Liabilities

Year
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014-2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 28.7
58.0
58.2
152.9

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$297.8

$16.6
17.7
1.5
1.0

$36.8

$46.4
—
—
—

$46.4

Total(1)

$ 91.7
75.7
59.7
153.9

$381.0

(1) Gross unrecognized income tax liabilities, including interest and penalties, of $57.8 million for uncertain tax

positions are not included in the table due to uncertainty about the date of their settlement.

Operating leases include rent payments for office
space in Chicago and other smaller offices in the
United States and in various foreign countries. The
operating lease for our headquarters in Chicago
expires in November 2022. Annual minimum rental
payments under this lease range from $11.0 million
to $13.5 million. We also maintain operating leases
for additional office spaces in Chicago, which expire
in November 2023 and April 2027. Annual minimum
rental payments under these leases range from $4.8
million to $6.2 million and $2.9 million to $4.3
million, respectively.

and

Purchase obligations include minimum payments due
under agreements to purchase software licenses,
as
well
maintenance
hardware
telecommunication
long-term
liabilities include funding obligations for other post-
retirement benefit plans as well as contingent
consideration.

as
services. Other

for

Future capital expenditures
technology are
anticipated as we continue to support our growth
in our co-location
investment
through additional
program, increased system capacity and performance
improvements. Each year, capital expenditures are

remote data centers,

incurred for improvements to and expansion of our
offices,
telecommunications
network and other operating equipment. In 2013, we
expect capital expenditures to total between $140.0
million and $150.0 million. We continue to monitor
our capital needs and may revise our forecasted
expenditures as necessary in the future.

We intend to continue to pay a regular quarterly
dividend to our shareholders. The decision to pay a
dividend, however, remains within the discretion of
our board of directors and may be affected by various
factors, including our earnings, financial condition,
capital requirements, levels of indebtedness and other
considerations our board of directors deems relevant.
CME Group is also required to comply with
restrictions contained in the general corporation laws
of its state of incorporation, which could also limit its
ability to declare and pay dividends. The distribution
target under our annual dividend policy remains at
approximately 50% of the prior year’s cash earnings.
On January 30, 2013, the board of directors declared
a regular quarterly dividend of $0.45 per share. The
dividend will be payable on March 25, 2013 to
shareholders of record on March 8, 2013. Assuming
no changes in the number of shares outstanding, the

quarter

dividend

payment will

first
total
approximately $149.3 million. The board of directors
also declared an additional, annual variable dividend
of $1.30 per share on December 5, 2012 paid on
December 28, 2012 to the shareholders of record on
December 17, 2012. This annual dividend will
typically be considered in the first quarter of each
year and will supplement the regular dividend. The
annual variable dividend for 2013 was accelerated to

the fourth quarter of 2012 due to uncertainty
surrounding dividend income tax treatment beginning
in 2013. In general, the amount of the annual variable
dividend will be determined after the end of each
year, and the level will increase or decrease from
year to year based on operating results, potential
merger and acquisition activity, and other forms of
capital return including regular dividends and share
buybacks during the prior year.

Sources and Uses of Cash

The following is a summary of cash flows from operating, investing and financing activities.

(dollars in millions)

2012

2011

2010

2012-2011

2011-2010

Net cash provided by operating activities . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . .

$1,216.8
(206.0)
(448.4)

$ 1,346.3
(153.6)
(1,005.6)

$1,359.6
(111.6)
(653.4)

(10)%
35
(55)

(1)%
38
54

Year-over-Year Change

Operating activities

In 2012 when compared with 2011, net cash provided
by operating activities decreased as a result of lower
contract volumes.

Net cash provided by operating activities decreased
slightly in 2011 when compared with 2010. Increased
profitability as a result of higher contract volumes
was offset by an increase in other current assets and
other assets resulting from a reclassification of cash
from cash and cash equivalents to other current assets
and other assets because the cash became subject to
restrictions in conjunction with the contribution to
the CMECE guaranty fund.

Investing activities

Cash used in investing activities in 2012 was higher
than cash used in 2011 due to the increased
investment in business ventures, partially offset by
the receipt of proceeds from the sale of the CBOT
buildings.

The increase in cash used in investing activities in
2011 when compared with 2010 was due to the
proceeds from the sales of a long-term investment
and our exercise rights privileges in 2010.

Financing activities

Cash used in financing activities was lower in 2012
when compared with 2011. The decrease in cash used
was attributable to the receipt of $747.7 million in

proceeds from debt
issued in September 2012 in
contrast with repayments of $420.5 million of debt in
the first quarter of 2011. In addition, we repurchased
$220.4 million of Class A common stock in 2011.
The net decrease in cash used was partially offset by
a $851.5 million increase in cash dividends paid in
2012 when compared with 2011.

The increase in cash used in 2011 compared with
2010 was attributable to proceeds from our issuance
of shares to BM&FBOVESPA in 2010 and an
increase in cash dividends in 2011 when compared
with 2010. The increase in cash used was partially
offset by a decrease in share repurchases of $354.9
million in 2011 when compared with the same period
in 2010.

Debt Instruments

The following table summarizes our debt outstanding
as of December 31, 2012:

(in millions)

Fixed rate notes due August 2013, stated

rate of 5.40% . . . . . . . . . . . . . . . . . . . . .
Fixed rate notes due February 2014, stated
rate of 5.75% . . . . . . . . . . . . . . . . . . . . .

Fixed rate notes due March 2018, stated

Par Value

$750.0

750.0

rate of 4.40%(1)

. . . . . . . . . . . . . . . . . . .

612.5

Fixed rate notes due September 2022,

stated rate of 3.00%(2)

. . . . . . . . . . . . . .

750.0

In February 2010, we entered into a forward-
that
starting interest

swap agreement

rate

(1)

modified the interest obligation associated with
these notes so that the interest payable on the
notes effectively became fixed at a rate of 4.46%.

(2)

rate swap agreement

In August 2012, we entered into a forward-
starting interest
that
modified the interest obligation associated with
these notes so that the interest payable on the
notes effectively became fixed at a rate of
3.32%.

facility with

the multi-currency revolving
In November 2012,
senior
financial
various
credit
institutions was increased from $1.0 billion to $1.8
billion. The proceeds from the revolving senior credit
facility can be used for general corporate purposes,
which includes providing liquidity for our CME
if
clearing house in certain circumstances and,
necessary, for maturities of commercial paper. As
long as we are not in default under the new senior
credit facility, we have the option to increase the
facility up to $2.3 billion with the consent of the
agent and lenders providing the additional funds. In
November 2012,
the maturity date was extended
from January 2014 to January 2016 except for $95.0
million of the existing commitments. The $1.8 billion
multi-currency
facility
includes a provision to issue up to $250.0 million of
stand-by letters of credit. The senior credit facility is
voluntarily prepayable from time to time without
premium or penalty. Under our credit facility, we are
required to remain in compliance with a consolidated
net worth test, which is defined as our consolidated
shareholders’ equity as of September 30, 2012,
giving effect to share repurchases made and special
dividends paid during the term of the agreement (and
in no event greater than $2.0 billion in aggregate),
multiplied by 0.65. We currently do not have any
borrowings under this credit facility.

revolving

senior

credit

funds

as well

money market mutual
the
performance bond assets of a defaulting firm can be
used to collateralize the facility. At December 31,
2012, guaranty fund collateral available was $4.8
billion. The line of credit provides for borrowings of
up to $5.0 billion. We have the option to request an
increase in the line from $5.0 billion to $7.0 billion,
subject
to the approval of participating banks. In
addition to the 364-day multi-currency line of credit,
we also have the option to use the $1.8 billion multi-
currency revolving senior credit facility to provide
liquidity for our clearing house in the unlikely event
of default in certain circumstances.

requirement

In addition, our 364-day multi-currency line of credit
contains
that CME remain in
compliance with a consolidated tangible net worth
test, defined as CME consolidated shareholder’s
equity less intangible assets (as defined in the
agreement) of not less than $625.0 million. In the
event that CME elects to increase the facility, the
minimum consolidated tangible net worth test would
increase ratably up to $875.0 million.

The indentures governing our fixed rate notes, our
$1.8 billion multi-currency revolving senior credit
facility and our 364-day multi-currency line of credit
for $5.0 billion do not contain specific covenants that
dividends. These
restrict
documents, however, do contain other customary
financial
place
restrictions on the operations of the company that
could indirectly affect the ability to pay dividends.

covenants

operating

ability

that

and

pay

the

At December 31, 2012, we have excess borrowing
capacity
of
approximately $1.8 billion under our multi-currency
revolving senior credit facilities.

corporate

purposes

general

for

We maintain a 364-day multi-currency line of credit
with a consortium of domestic and international
banks to be used in certain situations by our CME
clearing house. We may use the proceeds to provide
temporary liquidity in the unlikely event of a clearing
firm default, in the event of a liquidity constraint or
default by a depositary (custodian for our collateral),
or in the event of a temporary disruption with the
domestic payments system that would delay payment
of settlement variation between us and our clearing
fund
firms.
contributions received in the form of U.S. Treasury
securities, U.S. government agency securities or

firm guaranty

clearing

CME

At December 31, 2012, we were in compliance with
the various covenant requirements of all our debt
facilities.

CME Group, as a holding company, has no
operations of its own. Instead, it relies on dividends
declared and paid to it by its subsidiaries in order to
provide a portion of the funds which it uses to pay
dividends to its shareholders.

To satisfy our performance bond obligation with
Singapore Exchange Limited, we may pledge CME-
owned U.S. Treasury securities in lieu of, or in

combination with, irrevocable letters of credit. At
December 31, 2012, we had pledged letters of credit
totaling $181.0 million.

The following table summarizes our credit ratings as
of December 31, 2012:

Rating Agency

Standard &

Short-Term
Debt Rating

Long-Term
Debt Rating

Outlook

Poor’s . . . . . .

A1+

AA-

Negative

Moody’s

Investors
Service . . . . .

Aa3

Stable

grade

Given our cash flow generation, our ability to pay
down debt levels and our ability to refinance existing
debt facilities if necessary, we expect to maintain an
investment
are
downgraded below investment grade due to a change
of control, we are required to make an offer to
repurchase our fixed rate notes at a price equal to
101% of the principal amount, plus accrued and
unpaid interest.

ratings

rating.

our

Off-Balance Sheet Arrangements

As of December 31, 2012, we did not have any off-
balance sheet arrangements as defined by the
and Exchange
regulations
Commission.

Securities

the

Liquidity and Cash Management

Cash and cash equivalents totaled $1.6 billion at
December 31, 2012 and $1.0 billion at December 31,
2011. The balance retained in cash and cash
equivalents is a function of anticipated or possible
short-term cash needs, prevailing interest rates, our
investment policy and alternative investment choices.
A majority of our cash and cash equivalents balance
is invested in money market mutual funds that invest
only in U.S. Treasury securities or U.S. government
agency securities. Our exposure to credit and
liquidity risk is minimal given the nature of the
investments. Cash that is not available for general
corporate
regulatory
requirements or other restrictions is classified as
restricted cash and is included in other current assets
or other assets in the consolidated balance sheets.

purposes

because

Our practice is to have our pension plan 100%
funded at each year end on a projected benefit
obligation basis, while also satisfying any minimum
required contribution and obtaining the maximum tax
deduction. Based on our actuarial projections, we
estimate that a $19.9 million contribution in 2013
will allow us to meet our funding goal. However, the
amount of the actual contribution is contingent on the
actual rate of return on our plan assets during 2013
and the December 31, 2013 discount rate.

Regulatory Requirements

Clearing

CME and KCBTCC are regulated by the Commodity
as U.S.
Futures Trading Commission (CFTC)
Derivatives
(DCO).
Organizations
Beginning in May 2012, DCOs are required to
maintain capital as defined by the CFTC in an
amount at
to one year of projected
operating expenses as well as cash, liquid securities,
or a line of credit at least equal to six months of
projected operating expenses. CME and KCBTCC
are
the DCO financial
in
requirements.

compliance with

least equal

CME, CBOT, NYMEX, COMEX and KCBT are
regulated by the CFTC as Designated Contract
Markets (DCM). Beginning in October 2012, DCMs
are also required to maintain capital as defined by the
CFTC in an amount at least equal to one year of
projected operating expenses as well as cash, liquid
securities, or a line of credit at least equal to six
months of projected operating expenses. Our DCMs
the DCM financial
in
are
requirements.

compliance with

ITEM 7A. QUANTITATIVE AND

QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

We are subject to various market risks, including
those caused by changes in interest rates, credit,
foreign currency exchange rates and equity prices.

Interest Rate Risk

Debt outstanding at December 31, 2012 consisted of
fixed rate borrowings of $2.9 billion. Changes in
interest rates impact the fair values of fixed-rate debt,
but do not impact earnings or cash flows. We did not
have any variable rate borrowings at December 31,
2012.

Credit Risk

Our clearing houses act as the counterparties to all
trades consummated on our exchanges as well as
through third-party exchanges and over-the-counter
markets for which we provide clearing services. As a
result, we are exposed to significant credit risk of
third parties, including clearing firms. We are also
exposed, indirectly, to the credit risk of customers of
our clearing firms. These parties may default on their
obligations due to bankruptcy,
liquidity,
operational failure or other reasons.

lack of

In November 2012, we acquired The Board of Trade
of Kansas City, Missouri, Inc. (KCBT), including the
Kansas City Board of Trade Clearing Corporation
to integrate KCBTCC
(KCBTCC). We expect
operations with the operations of CME Clearing, a
division of CME, during 2013. As of December 31,
2012, we maintained a separate financial safeguard
package for KCBTCC clearing firms. In February
2013, the KCBTCC financial safeguard package was
incorporated into the CME Clearing financial
safeguard package.

and

over-the-counter

In order to ensure performance, we establish and
monitor financial requirements for our clearing firms.
We set minimum performance bond requirements for
products,
exchange-traded
including credit default swaps and interest
rate
swaps. For CME and KCBTCC clearing firms, we
establish performance bond requirements to cover at
least 99% of expected price changes for a given
product within a given historical period with further
quantitative and qualitative considerations based on

market risk. For CMECE clearing firms, we establish
performance bond requirements to cover at least 95%
to 99% of expected price changes for a given product
within a given historical period with further
quantitative and qualitative considerations based on
market
risk. We establish haircuts applied to
collateral deposited to meet performance bond
requirements to cover at least 99% of expected price
changes and foreign currency changes for a given
asset within a given historical period with further
quantitative and qualitative considerations. Haircuts
vary depending on the type of collateral and maturity.
We mark-to-market all open positions of CME,
KCBTCC and CMECE clearing firms at least twice a
day and require payment from clearing firms whose
positions have lost value and make payments to
clearing firms whose positions have gained value.
For
are
marked-to-market daily with the capability to mark-
to-market more frequently as market conditions
warrant. These practices allow our clearing houses to
quickly identify any clearing firms that may not be
able to satisfy the financial obligations resulting from
changes in the prices of their open positions before
those financial obligations become exceptionally
large and jeopardize the ability of our clearing house
to ensure performance of their open positions. This
transparency makes it difficult for traders to hide
losses or disguise unusual profits.

cleared-only markets, positions

select

Although we have policies and procedures to help
ensure that our clearing firms can satisfy their
obligations, these policies and procedures may not
succeed in detecting problems or preventing defaults.
We also have in place various measures intended to
enable us to cover any default and maintain liquidity.

Despite our safeguards, we cannot assure you that
these measures will be sufficient to protect us from a
default or
that we will not be materially and
adversely affected in the event of a significant
default.

CME Clearing

We maintain three separate financial safeguard
packages for CME Clearing member firms:

•

a financial safeguard package for all futures
and options contracts other than cleared over-
the-counter credit default swap and interest
rate swap contracts (base package),

•

a financial safeguard package for cleared
over-the-counter
swap
credit
contracts, and

default

a financial safeguard package for cleared
over-the-counter interest rate swap contracts.

In the unlikely event of a payment default by a
clearing firm, we would first apply assets of the
defaulting clearing firm to satisfy its payment
obligation. These assets include the defaulting firm’s
guaranty fund contributions, performance bonds and
any other available assets, such as assets required for
membership and any associated trading rights. In
addition, we would make a demand for payment
pursuant to any applicable guarantee provided to us
by the parent company of
the clearing firm.
remains
if
Thereafter,
unsatisfied, we would use the corporate contributions
designated for
the respective financial safeguard
package. We would then use guaranty fund
contributions of other clearing firms within the
respective financial safeguard package and funds
collected through an assessment against solvent
clearing firms within the
financial
safeguard package to satisfy the deficit.

respective

payment

default

the

We maintain a $5.0 billion 364-day multi-currency
line of credit with a consortium of domestic and
international banks to be used in certain situations by
CME Clearing. We have the option to request an
increase in the line from $5.0 billion to $7.0 billion.
We may use the proceeds to provide temporary
liquidity in the unlikely event of a clearing firm
in the event of a liquidity constraint or
default,
default by a depositary (custodian of the collateral),
or in the event of a temporary disruption with the
payments systems that would delay payment of
settlement variation between us and our clearing
firms. The credit agreement requires us to pledge
certain assets to the line of credit custodian prior to
drawing on the line of credit. Pledged assets may
include clearing firm guaranty fund deposits held by
us in the form of U.S. Treasury or agency securities,
as well as select money market mutual
funds
approved for our select Interest Earning Facility
(IEF) programs. Performance bond collateral of a
defaulting clearing firm may also be used to secure a
draw on the line. In addition to the 364-day multi-
currency line of credit, we also have the option to use
our $1.8 billion multi-currency revolving senior
credit facility to provide liquidity for our clearing
house in the unlikely event of default.

Aggregate performance bond deposits for clearing
firms for all three CME financial safeguard packages
was $86.8 billion,
including $5.6 billion of cash
performance bond deposits and $4.2 billion of letters
of credit. A defaulting firm’s performance bond
deposits can be used in the event of default of that
clearing firm.

the

available

following shows

at
The
December 31, 2012 in the event of a payment default
by a clearing firm for the base financial safeguard
package after first utilizing the defaulting firm’s
available assets:

assets

(in millions)

CME Clearing
Available Assets

Designated corporate contributions

for futures and options(1) . . . . . . . .
. . . . .
. . . . . . . . . . . .

Guaranty fund contributions(2)
Assessment powers(3)

Minimum Total Assets Available for
. . . . . . . . . . . . . . . . . . . .

Default(4)

100.0
2,899.5
7,973.6

$10,973.1

(1) CME Clearing designates $100.0 million of
corporate contributions to satisfy a clearing firm
default in the event that the defaulting clearing
firm’s guaranty contributions and performance
bonds do not satisfy the deficit.

(2) Guaranty fund contributions of clearing firms
include guaranty fund contributions required of
clearing firms, but do not include any excess
deposits held by us at the direction of clearing
firms.

(3)

In the event of a clearing firm default, if a loss
continues to exist after the utilization of the
assets of the defaulted firm, our designated
working capital and the non-defaulting clearing
firms’ guaranty fund contributions, we have the
right
to assess all non-defaulting clearing
members as defined in the rules governing the
guaranty fund.

(4) Represents the aggregate minimum resources
available to satisfy any obligations not met by a
defaulting firm subsequent to the liquidation of
the
bond
collateral.

performance

defaulting

firm’s

The following shows the available assets for the
credit default swap financial safeguard package at
December 31, 2012 in the event of a payment default
by a clearing firm that clears credit default swap
contracts, after first utilizing the defaulting firm’s
available assets:

The following shows the available assets for the
interest rate swap financial safeguard package at
December 31, 2012 in the event of a payment default
by a clearing firm that clears interest rate swap
contracts, after first utilizing the defaulting firm’s
available assets:

(in millions)

Designated corporate contributions

for credit default swap
contracts(1) . . . . . . . . . . . . . . . . . . .
. . . . .

Guaranty fund contributions(2)

Minimum Total Assets Available for
. . . . . . . . . . . . . . . . . . . .

Default(3)

CME Clearing
Available Assets

(in millions)

CME Clearing
Available Assets

Designated corporate contributions

for interest rate swap
contracts(1) . . . . . . . . . . . . . . . . . . .
. . . . .

Guaranty fund contributions(2)

Minimum Total Assets Available for
. . . . . . . . . . . . . . . . . . . .

Default(3)

$ 100.0
1,125.0

$1,225.0

$ 50.0
771.4

$821.4

(1) CME

that

Clearing

designates

corporate
contributions to satisfy a clearing firm default in
the event
the defaulting clearing firm’s
guaranty contributions and performance bonds
do not satisfy the deficit. The working capital
contributed by us would be equal to the greater
of $50.0 million and 5% of the credit default
swap guaranty fund, up to a maximum of $100.0
million.

(2) Guaranty fund contributions of clearing firms
for
include
guaranty fund contributions required of those
clearing firms.

swap contracts

credit default

firm’s

defaulting

performance

(3) Represents the aggregate minimum resources
available to satisfy any obligations not met by a
defaulting firm subsequent to the liquidation of
the
bond
collateral. In the event of a clearing firm default,
if a loss continues to exist after the utilization of
the assets of the defaulted firm, our designated
working capital and the non-defaulting firms’
guaranty fund contributions, we have the right to
assess all non-defaulting clearing members as
defined in the rules governing the credit default
swap guaranty fund.

(2) Guaranty fund contributions of clearing firms
for interest rate swap contracts include guaranty
fund contributions required of those clearing
firms.

firm’s

defaulting

performance

KCBTCC

fund

for KCBTCC clearing

At December 31, 2012, we maintained a separate
guaranty
firms.
Aggregate performance bond deposits for KCBTCC
clearing firms were $441.1 million, including $7.6
million in cash performance bonds at December 31,
2012. The guaranty fund contributions were $30.6
million at December 31, 2012. This collateral was
incorporated into CME Clearing’s base package in
February 2013.

CMECE

Foreign Currency Translation Risk

the

assets

include

defaulting

We maintain a financial safeguard package for
CMECE over-the-counter commodity clearing firms.
In the unlikely event of default by a CMECE clearing
firm, we would first apply assets of the defaulting
clearing firm to satisfy its payment obligations.
These
firm’s
performance bonds. Aggregate cash performance
bond deposits for CMECE clearing firms were $54.5
million. There were no non-cash performance bonds
on deposit at December 31, 2012. Thereafter, if the
default remains unsatisfied after first applying assets
of the defaulting clearing firm to satisfy its payment
obligation, we would use guaranty fund contributions
of $60.0 million of CMECE funds for commodity
clearing firms. As of December 31, 2012, guaranty
fund contributions were contributed by CMECE
instead of by the clearing firms. Commodity clearing
firms will begin contributing to the commodity
guaranty fund in 2013. Once the CMECE clearing
firms contribute to the commodity guaranty fund, we
would still use at least $20.0 million of CMECE
funds in addition to the clearing firms’ guaranty fund
contributions
in the event of a default of a
commodity clearing firm.

Beginning in 2013, we will maintain a separate
financial safeguard package for CMECE interest rate
swap clearing firms. CMECE will begin offering to
clear interest rate swap contracts in the first quarter
of 2013. In the unlikely event of default by a
CMECE clearing firm, we will first apply assets of
the defaulting clearing firm to satisfy its payment
obligations. If the default remains unsatisfied, we
will apply guaranty fund contributions of $52.5
million for interest rate swap clearing firms that will
be contributed by CMECE instead of by the clearing
firms. In the future, the interest rate swap clearing
firms may be asked to contribute to the interest rate
swap guaranty fund. Once the CMECE clearing firms
contribute to the guaranty fund, we would still use at
least $52.5 million of CMECE funds in the event of a
default of a interest rate swap clearing firm.

We have foreign currency translation risk related to
the translation of our foreign subsidiaries’ assets and
liabilities from their respective functional currencies
to the U.S. dollar at each reporting date. Fluctuations
in exchange rates may impact the amount of assets
and liabilities we report in our consolidated balance
sheets. The financial statements of certain of our
foreign subsidiaries are denominated in various
currencies and are translated into U.S. dollars using a
current exchange rate. Gains and losses resulting
from this translation are recognized as a foreign
currency translation adjustment within accumulated
other comprehensive income, which is a component
of shareholders’ equity and comprehensive income.
Aggregate translation adjustments, net of tax, for
2012, 2011 and 2010 were $10.9 million, $83.3
million and $(0.5) million, respectively. In 2011, we
reversed an unrealized loss of $81.7 million, net of
tax, which was attributable to foreign currency
recorded in
translation adjustments
accumulated other comprehensive income (loss)
upon recognizing impairment on our investment in
BM&FBOVESPA.

that were

Foreign Currency Risk Related to Equity Investments

We are also exposed to foreign currency exchange
rate risk related to certain equity investments as
discussed in the Equity Price Risk section below.

Foreign Currency Exchange Risk Related to
Customer Collateral

bond

deposits

performance

A portion
is
denominated in foreign currency. We mark-to-market
all deposits once a day and require payment from
clearing firms whose collateral has lost value due to
changes
and price.
Therefore, our exposure to foreign currency risk
related to performance bond deposits is considered
minimal and is not expected to be material to our
financial condition or operating results.

in foreign currency rates

Foreign Currency Exchange Rate Risk

Equity Price Risk

Foreign Currency Transaction Risk

Our exposure to foreign currency transaction risk
resulting from our operations is considered minimal
and is not expected to be material to our financial
condition or operating results.

We hold certain investments in equity securities for
strategic purposes.
to equity
price risks are generally recorded at their fair value.
Fair values for publicly-traded equity investments are
based on quoted market prices. Fair values are

Investments subject

subject to fluctuation and, consequently, the amount
realized in the subsequent sale of an investment may
differ significantly from its current reported value.
Fluctuations in the market price of a security may

result
from perceived changes in the underlying
economic characteristics of the issuer, the relative
price of alternative investments and general market
conditions.

The table below summarizes equity investments that are subject to equity price fluctuations at December 31,
2012. Equity investments are included in other assets in our consolidated balance sheets.

(in millions)

Cost
Basis

Fair
Value

Carrying
Value

Unrealized
Gain,
Net of Tax

BM&FBOVESPA S.A.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bolsa Mexicana de Valores, S.A.B. de C.V. . . . . . . . . . . . . . . . . . . . . . . .
IMAREX ASA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$262.9
17.3
—

$690.6
29.3
1.8

$271.4
7.6
1.1

We do not currently hedge against equity price risk.
Equity investments are assessed for other-than-
temporary impairment on a quarterly basis.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(dollars in millions, except per share data; shares in thousands)

December 31,

2012

2011

Assets
Current Assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,604.7
56.6
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
267.5
Accounts receivable, net of allowance of $0.8 and $1.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
204.3
Other current assets (includes $40.0 in restricted cash) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,584.8
Cash performance bonds and guaranty fund contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets—trading products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets—other, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets (includes $73.0 and $20.5 in restricted cash) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,717.9
724.0
17,175.3
2,853.7
7,566.9
1,825.4

$ 1,042.3
47.6
289.4
232.6
9,333.9

10,945.8
821.9
17,040.5
3,312.8
7,984.0
653.7

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38,863.2

$40,758.7

Liabilities and Equity
Current Liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash performance bonds and guaranty fund contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41.7
749.7
240.7
6,584.8

7,616.9
2,106.8
7,413.3
220.5

31.1
—
250.2
9,333.9

9,615.2
2,106.8
7,226.8
187.6

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,357.5

19,136.4

Redeemable non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80.8

70.3

CME Group Shareholders’ Equity:

Preferred stock, $0.01 par value, 10,000 and 9,860 shares authorized as of December 31, 2012

and 2011, respectively; none issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Series A junior participating preferred stock, $0.01 par value, 0 and 140 shares authorized at

December 31, 2012 and 2011, respectively; none issued or outstanding . . . . . . . . . . . . . . . . . . .

Class A common stock, $0.01 par value, 1,000,000 shares authorized, 331,832 and 330,653

shares issued and outstanding as of December 31, 2012 and 2011, respectively . . . . . . . . . . . .
Class B common stock, $0.01 par value, 3 shares authorized, issued and outstanding . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total CME Group shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

3.3
—
17,213.1
3,993.4
209.3

21,419.1
5.8

—

3.3
—

17,112.5
4,324.6
111.6

21,552.0
—

Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,424.9

21,552.0

Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38,863.2

$40,758.7

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data; shares in thousands)

Year Ended December 31,

2012

2011

2010

Revenues
Clearing and transaction fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market data and information services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Access and communication fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,371.5
387.1
88.8
67.2

$ 2,710.9
427.7
49.2
92.8

$ 2,486.3
395.1
45.4
76.9

Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,914.6

3,280.6

3,003.7

Expenses
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology support services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees and outside services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of purchased intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy and building operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Licensing and other fee agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

496.7
40.1
50.7
126.8
116.2
136.9
77.0
82.6
95.6

475.7
42.3
52.1
126.1
132.0
128.5
77.5
84.9
140.4

432.1
40.6
50.5
117.5
128.1
129.9
74.9
82.6
116.4

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,222.6

1,259.5

1,172.6

Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,692.0

2,021.1

1,831.1

Non-Operating Income (Expense)
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains (losses) on derivative investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and other borrowing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in net gains (losses) of unconsolidated subsidiaries . . . . . . . . . . . . . . . .
Other non-operating income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Non-Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: net income attributable to non-controlling interests . . . . . . . . . . . . . . . . .

38.7
—
(0.1)
(132.2)
30.7
64.3

1.4
1,693.4
786.7

906.7
10.4

36.7
—
(0.1)
(116.9)
(4.3)
—

(84.6)
1,936.5
122.1

1,814.4
2.1

Net Income Attributable to CME Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .

896.3

$ 1,812.3

Earnings per Common Share Attributable to CME Group:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.71
2.70

5.45
5.43

Weighted Average Number of Common Shares:

42.3
(2.2)
(2.6)
(140.3)
(6.4)
—

(109.2)
1,721.9
769.8

952.1
0.7

951.4

2.87
2.86

331,252
332,319

332,737
333,811

331,493
332,475

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax:

Investment securities:

Net unrealized holding gains arising during the period . . . . . . . . . . . . . .
Reclassification adjustment for gains included in net income . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investment securities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plans:

Net change in defined benefit plans arising during the period . . . . . . . . .
Amortization of net actuarial losses included in pension expense . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Defined benefit plans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative investments:

Net unrealized holding gains (losses) arising during the period . . . . . . .
Ineffectiveness on cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of effective portion of loss on cash flow hedges . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Derivative investments, net
Foreign currency translation:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification adjustment for loss included in net income . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign currency translation, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2012

2011

2010

$ 906.7

$1,814.4

$952.1

174.7
(1.8)
(64.6)

108.3

(13.0)
2.5
4.2

(6.3)

(25.3)
0.1
1.1
9.0

(15.1)

(1.3)
18.4
(6.2)

10.9

97.8

166.4
—
(23.7)

142.7

(19.1)
1.7
6.5

(10.9)

—
0.1
0.8
(0.3)

0.6

96.6
—
(13.3)

83.3

215.7

10.1
(1.2)
(3.6)

5.3

7.5
2.1
(3.8)

5.8

(9.7)
8.6
20.0
(7.4)

11.5

(0.9)
—
0.4

(0.5)

22.1

974.2
0.7

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: comprehensive income attributable to non-controlling interests . . . . . . . . . .

1,004.5
10.5

2,030.1
2.1

Comprehensive income attributable to CME Group . . . . . . . . . . . . . . . . . . . . .

$ 994.0

$2,028.0

$973.5

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY
(dollars in millions, except per share data; shares in thousands)

Class A
Common
Stock
(Shares)

Class B
Common
Stock
(Shares)

Common
Stock and
Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Total CME
Group
Shareholders’
Equity

Non-
controlling
Interest

Retained
Earnings

Total
Equity

Balance at

December 31,
2009 . . . . . . . . . . . . 332,567

3 $17,187.3 $2,239.9

$(126.2)

$19,301.0

$— $19,301.0

Net income

attributable to CME
Group and non-
controlling
interest . . . . . . . . . .
Other comprehensive
income attributable
to CME Group . . . .

Dividends on

common stock of
$0.92 per share . . .

Class A common
stock issued to
BM&FBOVESPA
S.A.

. . . . . . . . . . . .

Repurchase of

Class A common
stock . . . . . . . . . . .

Exercise of stock

(10,034)

options . . . . . . . . . .

448

Excess tax benefits
from option
exercises and
restricted stock
vesting . . . . . . . . . .

Vesting of issued

restricted Class A
common stock . . . .

Shares issued to
Board of
Directors . . . . . . . .

Shares issued under
Employee Stock
Purchase Plan . . . .

Stock-based

compensation . . . .

Balance at

173

951.4

22.1

951.4

22.1

(305.5)

11,032

607.1

(575.3)

12.6

5.8

(3.8)

2.4

1.4

40.9

(575.3)

12.6

(575.3)

12.6

5.8

(3.8)

2.4

1.4

40.9

5.8

(3.8)

2.4

1.4

40.9

December 31,
2010 . . . . . . . . . . . . 334,245

3 $17,278.4 $2,885.8

$(104.1)

$20,060.1

$— $20,060.1

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)
(dollars in millions, except per share data; shares in thousands)

Class A
Common
Stock
(Shares)

Class B
Common
Stock
(Shares)

Common
Stock and
Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Total CME
Group
Shareholders’
Equity

Non-
controlling
Interest

Retained
Earnings

Total
Equity

3 $17,278.4 $2,885.8

$(104.1)

$20,060.1

$— $20,060.1

1,812.3

215.7

Balance at

December 31,
2010 . . . . . . . . . . . . . 334,245

Net income attributable
to CME Group and
non-controlling
interest

. . . . . . . . . . .

Other comprehensive

income attributable to
CME Group . . . . . . .

Dividends on common
stock of $1.12 per
share . . . . . . . . . . . . .

Repurchase of Class A

common stock . . . . .

(4,048)

(220.4)

Exercise of stock

options . . . . . . . . . . .

170

Excess tax benefits

from option exercises
and restricted stock
vesting . . . . . . . . . . .

Vesting of issued

restricted Class A
common stock . . . . .

Shares issued to Board

of Directors . . . . . . . .

Shares issued under
Employee Stock
Purchase Plan . . . . . .

Stock-based

compensation . . . . . .

Balance at

213

5.8

0.6

(3.8)

2.3

1.6

51.3

(373.5)

(220.4)

5.8

0.6

(3.8)

2.3

1.6

51.3

(373.5)

(220.4)

5.8

0.6

(3.8)

2.3

1.6

51.3

December 31,
2011 . . . . . . . . . . . . . 330,653

3 $17,115.8 $4,324.6

$ 111.6

$21,552.0

$— $21,552.0

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)
(dollars in millions, except per share data; shares in thousands)

Class A
Common
Stock
(Shares)

Class B
Common
Stock
(Shares)

Common
Stock and
Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Total CME
Group
Shareholders’
Equity

Non-
controlling
Interest

Retained
Earnings

Total
Equity

Balance at

December 31,
2011 . . . . . . . . . . . . . 330,653

3 $17,115.8 $ 4,324.6

$111.6

$21,552.0

$— $21,552.0

Net income attributable
to CME Group and
non-controlling
interest . . . . . . . . . . .

Other comprehensive
income attributable
to CME Group . . . . .
Dividends on common
stock of $3.70 per
share . . . . . . . . . . . .

Non-controlling

interest resulting
from acquisition of
Kansas City Board
of Trade . . . . . . . . . .

Tax benefits from
Index Services
partnership
allocation . . . . . . . . .

Exercise of stock

options . . . . . . . . . . .

745

Excess tax benefits
from option
exercises and
restricted stock
vesting . . . . . . . . . . .

Vesting of issued

restricted Class A
common stock . . . . .
Shares issued to Board
of Directors . . . . . . .

Shares issued under
Employee Stock
Purchase Plan . . . . .

Stock-based

compensation . . . . .

Balance at

366

18.6

22.1

4.6

(9.8)

2.1

1.6

61.4

896.3

97.7

896.3

97.7

(1,227.5)

5.8

18.6

22.1

4.6

(9.8)

2.1

1.6

61.4

18.6

22.1

4.6

(9.8)

2.1

1.6

61.4

December 31,
2012 . . . . . . . . . . . . . 331,832

3 $17,216.4 $ 3,993.4

$209.3

$21,419.1

$ 5.8

$21,424.9

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

Cash Flows from Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating

activities:

Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of purchased intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss on derivative investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill and intangible assets . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MF Global accounts receivable write-off . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt financing costs and discount accretion . . . . . . . . . . . .
Gain on sale of Index Services assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on contribution of Dow Jones Index asset group . . . . . . . . . . . . . . . . .
Loss on sale of Credit Market Analysis Ltd. . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in net (gains) losses of unconsolidated subsidiaries . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2012

2011

2010

$ 906.7

$1,814.4

$ 952.1

61.4
116.2
136.9
0.1
—
—
—
5.3
—
(78.8)
19.9
(30.7)
82.2

(0.3)
(18.2)
(50.7)
11.2
71.9
(5.6)
(10.3)
(0.4)

51.3
132.0
128.5
0.1
—
—
21.7
4.9
(9.8)
—
—
4.3
(658.7)

(13.2)
(69.4)
(27.1)
(21.0)
(18.0)
(6.6)
13.2
(0.3)

40.9
128.1
129.9
8.6
20.5
2.2
—
4.9
—
—
—
6.4
22.3

(28.7)
(29.9)
(2.9)
6.1
12.4
79.6
5.3
1.8

Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,216.8

1,346.3

1,359.6

Cash Flows from Investing Activities
Proceeds from maturities and sales of available-for-sale marketable

securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of available-for-sale marketable securities . . . . . . . . . . . . . . . . . . . . .
Purchases of property, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of building property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid in business combinations, net of cash acquired . . . . . . . . . . . . . . . . . .
Investments in business ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of Credit Market Analysis Ltd., net of cash sold with

business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of Index Services assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Chicago Board Options Exchange exercise right privileges . . . . .
Settlement of derivative related to debt issuance . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29.5
(32.5)
(141.8)
151.5
(162.9)
(67.8)

42.4
—
—
—
(24.4)
—

11.3
(10.2)
(172.2)
—
—
—

—
18.0
—
—
—
(0.5)

11.9
(10.2)
(160.0)
—
(19.6)
(17.4)

—
—
47.2
39.7
(3.2)
—

Net Cash Used in Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(206.0)

(153.6)

(111.6)

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in millions)

Year Ended December 31,

2012

2011

2010

Cash Flows from Financing Activities
Repayments of commercial paper, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from other borrowings, net of issuance costs . . . . . . . . . . . . . . . . . . . .
Repayment of other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class A common stock issued to BM&FBOVESPA SA . . . . . . . . . . . . . . . . . . .
Repurchase of Class A common stock, including costs . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution paid to non-controlling interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits related to employee option exercises and restricted stock

vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,224.3)

747.7
—

$ — $ — $ (99.9)
608.0
(300.0)
(305.3)
607.1
(575.3)
12.6
(607.5)

—
(420.5)
(372.8)
—
(220.4)
5.8
—

—
—
22.1
—

4.6
1.5

0.6
1.7

5.8
1.1

Net Cash Used in Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(448.4)

(1,005.6)

(653.4)

Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . .

562.4
1,042.3

187.1
855.2

594.6
260.6

Cash and Cash Equivalents, End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,604.7

$ 1,042.3

$ 855.2

Supplemental Disclosure of Cash Flow Information

Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash investing activities:

624.4
110.6

816.1
111.9

$ 765.9
104.9

Investment in S&P/Dow Jones Indices LLC . . . . . . . . . . . . . . . . . . . .

878.4

—

See accompanying notes to consolidated financial statements.

CME GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

Inc.

Chicago Mercantile Exchange Inc. (CME), the Board
of Trade of the City of Chicago, Inc. (CBOT), New
York Mercantile
(NYMEX),
Exchange,
Commodity Exchange, Inc. (COMEX), The Board of
Trade of Kansas City, Missouri,
(KCBT),
wholly-owned subsidiaries of CME Group Inc. (CME
Group), are designated contract markets for
the
trading of futures and options on futures contracts.
CME, CBOT, NYMEX, COMEX, KCBT and their
subsidiaries are referred to collectively as “the
exchange” in the notes to the consolidated financial
statements. CME Group and its subsidiaries are
referred to collectively as “the company” in the notes
to the consolidated financial statements.

CME Group offers a wide range of products
including those based on interest rates, equities,
foreign exchange, agricultural commodities, energy
and metals. CME Group also offers clearing services
for cleared over-the-counter derivatives including
credit default swaps and interest rate swaps as well as
other swaps and forwards. Trades are executed
through CME Group’s electronic trading platform,
open outcry and privately negotiated transactions.
Through its U.S. clearing houses, CME Group offers
clearing, settlement and guarantees for all products
cleared through the exchange.
In 2011, CME
Clearing Europe (CMECE) began providing clearing
services for various over-the-counter derivatives in
Europe.

On March 18, 2010, CBOT acquired a 90%
in CME Group Index Services
ownership interest
LLC (Index Services), a joint venture with Dow
Jones & Company (Dow Jones). The financial
statements and accompanying notes presented in this
report include the financial results of Index Services
beginning on March 19, 2010. Index Services creates,
maintains and licenses the globally-recognized Dow
Jones indexes. The indexes are used as benchmarks
and as the basis of investment products. In June
2012, the company contributed certain Dow Jones
Index assets and liabilities (DJI asset group) owned
by Index Services to S&P/Dow Jones Indices LLC
(S&P/DJI), a new business venture with The
McGraw-Hill Companies Inc. (McGraw). Dow Jones
in Index
retains a 10% non-controlling interest

contributed or

sold as part of

Services. The company also sold Credit Market
Analysis Ltd. (CMA) to McGraw in conjunction with
the creation of the business venture. Assets and
liabilities
this
transaction are
company’s
consolidated financial statements and accompanying
notes beginning on June 30, 2012, while the financial
results of the company’s 24.4% interest in the new
business venture with McGraw are included in the
company’s consolidated financial statements and
accompanying notes beginning on June 30, 2012.

excluded from the

CBOT acquired KCBT and its subsidiaries,
the
Kansas City Board of Trade Clearing Corporation
(KCBTCC) and the Board of Trade Investment
Company (BOTIC), on November 30, 2012. KCBT
maintains a 51% controlling interest
in BOTIC,
resulting in a nonredeemable non-controlling interest
included in the company’s consolidated statements of
equity. The financial statements and accompanying
notes presented in this report include the financial
results of KCBT beginning on November 30, 2012.

2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

The

Presentation.

Basis
accompanying
consolidated financial statements are prepared in
accordance with accounting principles generally
accepted in the United States of America and include
the accounts of the company and its majority-owned
subsidiaries. All
and
balances have been eliminated.

intercompany transactions

consolidated

Use of Estimates. The preparation of consolidated
financial statements requires management to make
estimates and assumptions that affect the reported
amounts and the disclosure of contingent amounts in
the
and
financial
are based on
accompanying
historical
and
assumptions management believes are reasonable
under
the circumstances. Due to the inherent
uncertainty involved with estimates, actual results
may differ.

experience, where

notes. Estimates

applicable,

statements

Cash and Cash Equivalents. Cash and cash
consist of cash and highly liquid
equivalents
investments with a maturity of three months or less at
the time of purchase.

Financial Investments. The company maintains
short-term and long-term investments, classified as
available-for-sale or trading securities. Available-for-
sale investments are carried at their fair value, with
unrealized gains and losses, net of deferred income
taxes, reported as a component of accumulated other
comprehensive income. Trading securities held in
connection with non-qualified deferred compensation
plans are recorded at fair value, with net realized and
unrealized gains and losses and dividend income
reported as investment income. The company also
maintains long-term investments accounted for under
the equity method.

The company reviews its investments to determine
whether a decline in fair value below the cost basis is
other-than-temporary. If events and circumstances
indicate that a decline in the value of the assets has
occurred and is deemed to be other-than-temporary,
the carrying value of the investments is reduced to its
fair value and a corresponding impairment is charged
to earnings.

instrument

is the amount

Fair Value of Financial Instruments. The company
uses a three-level classification hierarchy of fair
value measurements that establishes the quality of
inputs used to measure fair value. The fair value of a
financial
that would be
received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants
at the measurement date. The fair value of financial
instruments is determined using various techniques
that involve some level of estimation and judgment,
the degree of which is dependent on the price
transparency and the complexity of the instruments.

company

Investments. The

Derivative
uses
derivative instruments, designated as cash flow
hedges, to limit exposure to changes in interest rates.
Derivatives are recorded at
fair value in the
consolidated balance sheets. The effective portion of
the changes in the fair value of cash flow hedges are
deferred
comprehensive
income. Any realized gains and losses from effective
hedges are classified in the consolidated statements
of income, and any ineffective or excluded portion of
a hedge is recognized in earnings immediately.

accumulated

other

Accounts Receivable. Accounts
are
composed of trade receivables and unbilled revenue
including clearing and transaction fees and market
data and information services revenue. All accounts

receivable

receivable are stated at cost. A significant portion of
accounts receivable and revenues are from clearing
firms that are also required to be shareholders of the
company. Exposure to losses on receivables for
clearing and transaction fees and other amounts owed
by clearing firms is dependent on each clearing
firm’s financial condition, the Class A shares as well
as the memberships that collateralize fees owed to the
exchange. The exchange retains the right to liquidate
shares to satisfy a clearing firm’s receivable. The
allowance for doubtful accounts is calculated based
on historical losses and management’s assessment of
probable future collections.

Bonds

and Guaranty

Performance
Fund
Contributions. Performance bonds and guaranty
fund contributions held by CME, CMECE or
KCBTCC for clearing firms may be in the form of
cash, securities or other non-cash deposits.

Performance bonds and guaranty fund contributions
received in the form of cash are held by CME,
CMECE or KCBTCC and may be invested overnight
in U.S. Government securities acquired through and
held by a broker-dealer subsidiary of a bank, reverse
repurchase agreements secured with highly rated
government
funds or
securities, money market
through CME’s selected Interest Earning Facility
earned on these
(IEF) program. Any interest
investments accrues to CME, CMECE or KCBTCC
and is
income in the
consolidated statements of
income. Because the
benefits and risks of ownership accrue to CME,
CMECE or KCBTCC, cash performance bonds and
guaranty fund contributions are reflected in the
consolidated balance sheets.

included in investment

Securities and other non-cash deposits may include
U.S. Treasury securities, U.S. Government agency
securities, Eurobonds, corporate bonds, other foreign
government securities and gold bullion. Securities
and other non-cash deposits are held in safekeeping
by a custodian bank. Interest and gains or losses on
securities deposited to satisfy performance bond and
guaranty fund requirements accrue to the clearing
firm. Because the benefits and risks of ownership
accrue to the clearing firm, non-cash performance
bonds and guaranty fund contributions are not
reflected in the consolidated balance sheets.

Cash contributed by CMECE to CMECE guaranty
funds is classified as restricted cash and is included
in other current assets and other assets in the
consolidated balance sheets.

and

Equipment

Property,
Leasehold
Improvements. Property, equipment and leasehold
improvements are stated at cost, less accumulated
depreciation and amortization. Depreciation and
amortization are calculated using the straight-line
method, generally over two to thirty-nine years.
Property and equipment are depreciated over their
estimated useful lives. Leasehold improvements are
amortized over the shorter of the remaining term of
the respective lease to which they relate or the
remaining useful life of the leasehold improvement.
Land is reported at cost. Internal and external costs
incurred in developing or obtaining computer
software
capitalized and
amortized on a straight-line basis over the estimated
useful life of the software, generally three years.

internal use

are

for

Operating Leases. All leases in which the company
is the tenant are accounted for as operating leases.
Landlord allowances are recorded as a reduction to
rent expense on a straight-line basis over the term of
the lease.

and

impairment

tests
assets

goodwill
for

Intangible Assets. The
Goodwill and Other
indefinite-lived
company
intangible
annually and
whenever events or circumstances indicate that their
carrying values may not be recoverable. Goodwill
represents the excess of the purchase price over the
fair value of the net assets acquired in a business
company may test goodwill
combination. The
quantitatively for
impairment by comparing the
carrying value of a reporting unit to its estimated fair
value. Estimating the fair value of a reporting unit
involves
in the
analysis including estimating the amount of and
timing of future cash flows and the selection of
appropriate discount rates and long-term growth rate
assumptions. Changes
and
assumptions could materially affect the determination
of fair value of the reporting unit. If the carrying
amount exceeds fair value, impairment is recorded.
In certain circumstances, goodwill may be reviewed
qualitatively for indications of impairment without
utilizing valuation techniques to estimate fair value.

significant

judgments

in these

estimates

inherent

company

The
of
indefinite-lived intangible assets by comparing the

recoverability

evaluates

the

value

fair
involves

estimated fair value of the intangible asset
to its
carrying value. If the indefinite-lived intangible asset
carrying value exceeds its fair value, an impairment
loss is recognized in an amount equal to that excess.
Estimating
indefinite-lived
the
intangible assets
the use of valuation
techniques that rely on significant estimates and
assumptions including forecasted revenue growth
rates, forecasted allocations of expense and risk-
adjusted discount rates. Changes in these estimates
affect
and
the
assumptions
determination of
indefinite-lived
intangible assets. In certain circumstances, indefinite-
lived intangible assets may be reviewed qualitatively
for
impairment without utilizing
valuation techniques to estimate fair value. For
further information on intangible assets and goodwill,
see note 7.

could materially
fair value for

indications of

Business Combinations. The company accounts for
business combinations using the purchase method.
The method requires the acquirer to recognize the
assets acquired,
liabilities assumed, and any non-
controlling interest in the acquiree at the acquisition
date, measured at their fair values as of that date. The
company may use independent valuation services to
assist in determining the estimated fair values.

Employee Benefit Plans. The company recognizes
the funded status of defined benefit postretirement
plans in its consolidated balance sheets. Changes in
that funded status are recognized in the year of
change in other comprehensive income (loss). Plan
assets and obligations are measured at year end. The
company recognizes future changes in actuarial gains
and losses and prior service costs in the year in which
the changes occur
through other comprehensive
income (loss).

functional

Currency

Translation.

accompanying

Foreign
Foreign
denominated assets and liabilities are re-measured
currency using period-end
into the
exchange rates. Gains and losses
from foreign
currency transactions are included in other expense in
the
of
income. When the functional currency differs from
the reporting currency, revenues and expenses of
from their
foreign
functional
using
weighted-average exchange rates while their assets
and liabilities are translated into U.S. dollars using
period-end exchange rates. Gains and losses resulting

consolidated

subsidiaries

into U.S.

statements

currencies

translated

dollars

are

from foreign currency translations are included in
accumulated other comprehensive income (loss)
within shareholders’ equity.

Revenue Recognition. Revenue recognition policies
for specific sources of revenue are discussed below.

traded,

execution,

the method of trade,

Clearing and Transaction Fees. Clearing and
transaction fees include per contract charges for
trade
trading on the
clearing,
company’s electronic trading platform and other
fees. Fees are charged at various rates based on
the
the product
exchange trading privileges of the customer
making the trade and the type of contract
cleared. Clearing and transaction fees are
recognized as revenue when a buy and sell order
are matched and the trade is cleared. Therefore,
unfilled or canceled buy and sell orders have no
impact on revenue. On occasion, the customer’s
exchange trading privileges may not be properly
entered by the clearing firm and incorrect fees
are charged for the transactions. When this
information is corrected within the time period
allowed by the exchange, a fee adjustment is
provided to the clearing firm. A reserve is
established for estimated fee adjustments to
reflect corrections to customer exchange trading
privileges. The reserve is based on the historical
pattern of adjustments processed as well as
specific adjustment
requests. The company
believes the allowances are adequate to cover
estimated adjustments.

for

the

dissemination

Market Data and Information Services. Market
data and information services represent revenue
earned
of market
information. Revenues are accrued each month
based on the number of devices reported by
vendors. The
periodic
examinations of the number of devices reported
and assesses additional fees as necessary. On
occasion, customers will pay for services in a
lump sum payment; however,
is
recognized as services are provided.

exchange

conducts

revenue

Access and Communication Fees. Access fees
are the connectivity charges to customers of the
company’s electronic trading platform that are
also used by market data vendors and customers.
The fees include co-location fees, access fees for
the electronic trading platform, line charges and

type of

hardware rental charges and can vary depending
on the
connection provided. An
additional
installation fee may be charged
depending on the type of service requested and a
disconnection fee may also be charged if certain
conditions
is generally
are met. Revenue
recognized monthly as the service is provided.

Communication fees consist of equipment rental
and usage charges to customers and firms that
utilize the various telecommunications networks
and services in the Chicago and New York City
facilities. Revenue is billed and recognized on a
monthly basis.

revenues

Other Revenues. Other
include
revenues from the rental of commercial space
that are recognized over the lease term using the
straight-line method. Under
this method,
revenue is recorded evenly over the entire term
of occupancy for leases with scheduled rent
increases or rent abatements. Allowances for
construction
are
other
considered lease incentives and are recorded as
a reduction to rental income on a straight-line
basis over the term of the lease. In April 2012,
the company sold the north and south towers of
the CBOT building and subsequently leased
back a portion of the property, which resulted in
a decrease in revenue.

tenant

costs

and

Also included in revenue are ancillary charges
for parking, utilities, and miscellaneous services
In addition, processing
provided to tenants.
services revenue is included in other revenue.
Processing services includes revenue generated
from various strategic relationships.

fees

transaction

revenue. One

Concentration of Revenue. Two firms each
represented 12% of the company’s clearing and
transaction fees revenue in 2012. In 2011, one
firm represented 12% of the company’s clearing
firm
and
represented 13% and one firm represented 12%
of the company’s clearing and transaction fees
revenue in 2010. Should a clearing firm
withdraw from the exchange, management
believes that the customer portion of that firm’s
trading activity would likely transfer to another
clearing firm. Therefore, management does not
exposed to
believe
significant risk from the ongoing loss of revenue
received from a particular clearing firm.

company is

that

the

The two largest
resellers of market data
represented approximately 43% of market data
and information services revenue in 2012, 39%
in 2011, and 45% in 2010. Should one of these
vendors no longer subscribe to the company’s
market data, management believes that
the
majority of that firm’s customers would likely
subscribe to the market data through another
does not
reseller. Therefore, management
believe
exposed to
the
significant risk from a loss of revenue received
from any particular market data reseller.

company is

that

Share-Based Payments. The company accounts for
share-based payments using a fair value method,
which is based on the grant date price of the equity
awards issued. The company recognizes expense
relating
an
accelerated basis. As a result, the expense associated
with each vesting date within a stock grant
is
recognized over the period of time that each portion
of that grant vests. The company estimates expected
forfeitures of stock grants.

compensation

stock-based

Marketing Costs. Marketing costs are incurred for
the production and communication of advertising as
well as other marketing activities. These costs are
expensed when incurred, except for costs related to
the production of broadcast advertising, which are
expensed when the first broadcast occurs.

Income Taxes. Deferred income taxes arise from
temporary differences between the tax basis and book
basis of assets and liabilities. A valuation allowance
is recognized if it is anticipated that some or all of a
deferred tax asset may not be realized. The company
accounts for uncertainty in income taxes recognized
in its consolidated financial statements by using a
more-likely-than-not recognition threshold based on
the technical merits of the tax position taken or
expected to be taken. The company classifies interest
and penalties related to uncertain tax positions in
income tax expense.

Segment Reporting. The company reports
the
results of its operations as one operating segment
primarily comprised of CME, CBOT, NYMEX,
COMEX and KCBT exchanges. The remaining
operations do not meet the thresholds for reporting
separate segment information.

3. BUSINESS TRANSACTIONS

Formation of S&P/DJI Indices LLC

On June 29, 2012, CME Group, Index Services and
McGraw completed the formation of a new index
business venture, S&P/DJI. The company contributed
the DJI asset group owned by Index Services to S&P/
DJI. On a consolidated basis, CME Group has a total
interest of 27.0% in S&P/DJI. Excluding the
ownership interest attributable to Dow Jones through
its non-controlling interest in Index Services, CME
Group has a 24.4% interest in S&P/DJI. As a result
of its contribution, Index Services derecognized the
DJI asset group and recorded a $78.8 million gain
included in other non-operating income in the
consolidated statements of income.

Sale of Credit Market Analysis Ltd.

On June 29, 2012,
the company sold CMA to
McGraw for $45.9 million in conjunction with the
formation of S&P/DJI. As a result,
the company
recognized a $19.9 million loss, which was included
in other non-operating expense in the consolidated
statements of income. The loss includes a previously
unrecognized foreign currency translation adjustment
of $18.4 million.

Acquisition of The Board of Trade of Kansas City,
Missouri, Inc.

On November 30, 2012, CME Group purchased
KCBT, the leading derivatives market for hard red
for $126.0 million in cash. This
winter wheat,
acquisition provides a growth opportunity for the
company by complementing existing products and by
providing new opportunities for customers to manage
their global wheat price risk.

for

the

guidance

accounting

Under
business
combinations, the purchase price of $126.0 million
was allocated to KCBT’s net tangible and identifiable
intangible assets based on their estimated fair values
as of the acquisition date. The excess of the purchase
price over the net tangible assets and identifiable
intangible assets was recorded as goodwill. Based on
the purchase price allocation, CME Group recorded
$134.8 million of identifiable intangible assets, $28.6
million of goodwill and $46.5 million of deferred tax
liabilities.

4. MARKETABLE SECURITIES

Available-for-Sale Securities. Certain marketable
securities have been classified as available-for-sale.
The amortized cost and fair value of these securities
at December 31 were as follows:

Trading Securities. CME maintains
additional
investments in a diverse portfolio of mutual funds
related to its non-qualified deferred compensation
plans (note 12). The fair value of these securities was
$38.7 million and $31.8 million at December 31,
2012 and 2011, respectively.

2012

2011

Amortized
Cost

Fair
Value

Amortized
Cost

Fair
Value

$17.5

$17.5 $ 5.1 $ 5.1

(in millions)

U.S. Treasury . . . . . .
Asset-back

securities . . . . . . .

0.8

0.4

U.S. Government

agency . . . . . . . . . —
Municipal bonds . . . —

—
—

1.1

4.9
4.1

0.9

5.3
4.5

Total . . . . . . . . . . . . .

$18.3

$17.9 $15.2 $15.8

Net unrealized gains (losses) on marketable securities
classified as available-for-sale are reported as a
component of other comprehensive income (loss) and
consolidated
included
statements
and
consolidated statements of equity.

comprehensive

accompanying

income

the

The fair value and gross unrealized losses of asset-
backed securities were $0.4 million and $0.4 million,
respectively, at December 31, 2012. The asset-
backed securities were in an unrealized loss position
for more than 12 months at December 31, 2012 and
were deemed not
to be other-than-temporarily
impaired. The company has the ability and intent to
hold these asset-backed securities until a recovery of
fair value, which may be at maturity, and does not
consider these asset-backed securities to be other-
than-temporarily impaired at December 31, 2012.

The amortized cost and fair value of marketable
securities at December 31, 2012, by contractual
maturity, were as follows:

(in millions)

Maturity of one year or less . . . . .
Maturity between one and five

Amortized
Cost

Fair
Value

$17.5

years . . . . . . . . . . . . . . . . . . . . .

—

Maturity between five and ten

years . . . . . . . . . . . . . . . . . . . . .
Maturity greater than ten years . .

—
0.8

—

—
0.4

Total . . . . . . . . . . . . . . . . . . . . . . .

$18.3

$17.9

5. PERFORMANCE BONDS AND GUARANTY

FUND CONTRIBUTIONS

The company maintains three clearing houses: CME
Clearing (a division of CME), KCBTCC and
CMECE. The clearing houses clear and guarantee the
settlement of contracts traded in their respective
markets. At December 31, 2012, the operations of
KCBTCC were separate from CME, but KCBTCC
will be fully integrated with CME Clearing during
2013. In their guarantor roles, the clearing houses
have precisely equal and offsetting claims to and
from clearing firms on opposite sides of each
contract,
standing as an intermediary on every
contract cleared. Clearing firm positions in the
United States are held according to Commodity and
regulatory
Futures Trading Commission (CFTC)
account segregation standards. To the extent
that
funds are not otherwise available to satisfy an
obligation under the applicable contract, the clearing
houses bear counterparty credit risk in the event that
future market movements create conditions that could
lead to clearing firms failing to meet their obligations
to the clearing houses. The clearing houses reduce
the exposure through risk management programs that
include initial and ongoing financial standards for
designation as a clearing firm, performance bond
requirements
fund
contributions. Each CME and KCBTCC clearing firm
is required to deposit and maintain balances in the
form of cash, U.S. Government securities, certain
foreign government securities, bank letters of credit
or other approved investments to satisfy performance
bond and guaranty fund requirements. Clearing firms
that clear through CMECE are required to deposit
and maintain collateral in the form of cash, certain
U.S. and foreign government securities or other
approved investments to satisfy performance bond
and guaranty fund requirements. All non-cash
deposits are marked to market and haircut on a daily
basis.

and mandatory

guaranty

In addition,
the rules and regulations of CBOT
require that collateral be provided for delivery of
capital
physical

commodities, maintenance

requirements and deposits on pending arbitration
matters. To satisfy these requirements, clearing firms
that have accounts that trade certain CBOT products
have deposited cash, U.S. Treasury securities and
letters of credit.

The clearing houses mark-to-market open positions at
least twice a day, and require payment from clearing
firms whose positions have lost value and make
payments to clearing firms whose positions have
gained value. For
cleared-only markets,
positions are marked-to-market once daily, with the
capability to mark-to-market more frequently as
market conditions warrant.

select

the

unlikely

scenario

extremely

Under
of
simultaneous default by every clearing firm who has
open positions with unrealized losses, the maximum
exposure related to positions other than over-the-
counter credit default and interest rate swap contracts
would be one half day of changes in fair value of all
open positions, before considering the clearing
houses’ ability to access defaulting clearing firms’
collateral deposits. For CME’s cleared over-the-
counter credit default swap and interest rate swap
contracts, the maximum exposure related to CME’s
guarantee would be one full day of changes in fair
value of all open positions, before considering
CME’s ability to access defaulting clearing firms’
collateral. During
houses
transferred an average of approximately $2.4 billion a
day through their clearing systems for settlement
from clearing firms whose positions had lost value to
clearing firms whose positions had gained value. The
clearing houses
reduce the guarantee exposure
through initial and maintenance performance bond
requirements
fund
the
contributions. The
guarantee liability is immaterial and therefore has not
recorded any liability at December 31, 2012.

company believes

and mandatory

guaranty

clearing

2012,

that

the

and

guaranty

performance

fund
bonds
Cash
contributions are included in the consolidated balance
sheets, and these balances may fluctuate significantly
over time due to investment choices available to
in the amount of
clearing firms and changes
contributions required. Securities are not reflected in
the consolidated financial statements and the clearing
houses do not earn any interest on these deposits.

CME Clearing

Clearing firms, at their option, may instruct CME to
deposit the cash held by CME into one of the IEF
programs. The total principal in the IEF programs
was $13.3 billion at December 31, 2012 and $15.4
billion at December 31, 2011. The guaranty fund
contributions held in one of the IEF programs may be
used as collateral for CME’s $5.0 billion multi-
currency line of credit. The consolidated statements
of income reflect management fees earned under the
IEF programs of $10.6 million, $11.2 million and
$10.0 million during 2012, 2011 and 2010,
respectively. These fees are included in other
revenues.

CME and The Options Clearing Corporation (OCC)
have a cross-margin arrangement, whereby a clearing
firm may maintain a cross-margin account in which a
CME clearing firm’s positions in certain equity index
futures and options are combined with certain
positions cleared by OCC for purposes of calculating
performance bond requirements. The performance
bond deposits are held jointly by CME and OCC
(note 15). Cross-margin cash, securities and letters of
credit jointly held with OCC under the cross-margin
agreement are reflected at 50% of the total, or CME’s
proportionate share per that agreement. In addition,
CME has cross-margin agreements with Fixed
Income Clearing Corporation (FICC) whereby the
clearing firms’ offsetting positions with CME and
FICC are subject
to reduced performance bond
requirements. Clearing firms maintain separate
performance bond deposits with each clearing house,
but depending on the net offsetting positions between
CME and FICC, each clearing house may reduce that
firm’s performance bond requirements.

In the event

Each CME clearing firm for futures and options is
required to deposit and maintain specified guaranty
fund contributions in the form of cash or approved
that performance bonds,
securities.
guaranty fund contributions, and other assets required
to support clearing membership of a defaulting CME
clearing firm are inadequate to fulfill that clearing
firm’s outstanding financial obligation,
the base
than over-the-
guaranty fund for contracts other
counter credit default and interest rate swaps is
available to cover potential losses after first utilizing
$100.0 million of corporate contributions designated
by CME to be used in the event of a default of a
clearing firm for the base guaranty fund.

rate

interest

In the event

clear over-the-counter

CME maintains a separate guaranty fund to support
the clearing firms that clear over-the-counter credit
default swap products. Additionally, CME maintains
a separate guaranty fund to support the clearing firms
that
swap
products. The funds
for over-the-counter credit
default and interest rate swaps are independent of the
base guaranty fund and are isolated to clearing firms
for products in the respective asset class. Each
clearing firm for cleared over-the-counter credit
default swaps and cleared over-the-counter interest
rate swaps is required to deposit and maintain
specified guaranty fund contributions in the form of
cash or approved securities.
that
performance bonds, guaranty fund contributions and
other assets required to support clearing membership
of a defaulting clearing firm for cleared over-the-
counter credit default swap contracts are inadequate
to fulfill that clearing firm’s outstanding financial
obligation,
contracts
credit default
guaranty fund is available to cover potential losses
after first utilizing corporate contributions designated
by CME to be used in the event of default of a
cleared over-the-counter credit default swap clearing
firm, which is equal to the greater of $50.0 million
and 5% of the credit default swap guaranty fund, up
to a maximum of $100.0 million. In the event that
performance bonds, guaranty fund contributions and
other assets required to support clearing membership
of a defaulting clearing firm for cleared over-the-
counter interest rate swap contracts are inadequate to
fulfill
that clearing firm’s outstanding financial
obligation, the interest rate swaps contracts guaranty
fund is available to cover potential losses after first
utilizing $100.0 million of corporate contributions
designated by CME to be used in the event of a
default of a cleared over-the-counter interest rate
swap clearing firm.

swaps

the

domestic

CME maintains a 364-day multi-currency line of
credit with
and
consortium of
international banks to be used in certain situations by
CME Clearing. CME may use the proceeds to
provide temporary liquidity in the unlikely event of a
clearing firm default,
in the event of a liquidity
constraint or default by a depositary (custodian of the
collateral), or in the event of a temporary disruption
with the domestic payments system that would delay
payment of settlement variation between CME and
its clearing firms. Clearing firm guaranty fund
contributions received in the form of U.S. Treasury
securities, U.S. government agency securities or

funds

as well

money market mutual
the
performance bond assets of a defaulting firm can be
used to collateralize the facility. The line of credit
provides for borrowings of up to $5.0 billion. At
December 31, 2012, guaranty fund contributions
available for CME clearing firms was $4.8 billion.
CME has the option to request an increase in the line
from $5.0 billion to $7.0 billion, subject
to the
approval of participating banks. In addition to the
364-day fully secured, committed multi-currency line
of credit, the company also has the option to use the
$1.8 billion multi-currency revolving senior credit
facility to provide liquidity for the clearing house in
the unlikely event of default.

KCBTCC

At December 31, 2012, the company maintained a
separate guaranty fund for KCBTCC clearing firms.
This guaranty fund was incorporated into CME’s
guaranty fund in February 2013.

CMECE

The company maintains a guaranty fund for CMECE
over-the-counter commodity clearing firms. In the
that a defaulting CMECE clearing firm’s
event
performance bonds are inadequate to fulfill
its
outstanding financial obligation, the company would
use guaranty fund contributions of $60.0 million of
CMECE funds for commodity clearing firms. As of
December 31, 2012, guaranty fund contributions
were contributed by CMECE and not by the clearing
begin
clearing
firms. Commodity
contributing to the commodity guaranty fund in 2013.
Once the CMECE clearing firms contribute to the
guaranty funds, CMECE will still use at least $20.0
in addition to the
million of CMECE funds
commodity
fund
clearing
contributions in the event of a default.

firms will

guaranty

firms’

Beginning in 2013, the company will also maintain a
guaranty fund for CMECE over-the-counter interest
rate swap clearing firms. CMECE will begin offering
to clear interest rate swap contracts in the first quarter
of 2013. In the unlikely event of default by a
CMECE clearing firm, the company will first apply
assets of the defaulting clearing firm to satisfy its
payment
remains
If
unsatisfied, the company will apply guaranty fund
contributions of $52.5 million for interest rate swap
clearing firms that will be contributed by CMECE

obligations.

default

the

instead of by the clearing firms. In the future, the
interest rate swap clearing firms may be asked to
contribute to the interest rate swap guaranty fund.
Once the CMECE clearing firms contribute to the
guaranty fund, the company would still use at least
$52.5 million of CMECE funds in the event of a
default of an interest rate swap clearing firm.

required under

CME and KCBTCC are
the
Commodity Exchange Act in the United States to
segregate cash and securities deposited by clearing
firms on behalf of their customers. In addition, CME
and KCBTCC require segregation of all
funds
deposited by its clearing firms from operating funds.
CMECE holds cash and securities deposited by
clearing firms in segregated accounts, and maintains
distinct accounts for its own operating funds.

Cash and non-cash deposits held as performance bonds and guaranty fund contributions at fair value at
December 31 were as follows:

(in millions)

Performance bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guaranty fund contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cross-margin arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance collateral for delivery . . . . . . . . . . . . . . . . . . . . . . . . .

2012

2011

Non-Cash
Deposits
and
IEF Funds

$77,414.1
4,419.0
83.1
0.5

Cash

$5,647.1
925.4
—
12.3

Cash

$8,103.4
1,156.3
60.0
14.2

Non-Cash
Deposits
and
IEF Funds

$80,250.7
3,869.8
202.9
12.0

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,584.8

$81,916.7

$9,333.9

$84,335.4

Performance bonds and guaranty fund contributions
include collateral for clearing firms for all
three
clearing houses. Cross-margin arrangements include
collateral for the cross-margin accounts with OCC
and FICC. The performance bond collateral
for
delivery includes deposits to meet CBOT delivery
requirements.

Cash performance bonds may include intraday
settlement, if any, that is owed to the clearing firms
and paid the following business day. The balance of
at
settlements was
intraday
December
at
and
2012
December 31, 2011. Intraday settlements may be
invested on an overnight basis and are offset by an
equal liability owed to clearing firms.

$175.9 million
$120.9 million

31,

In addition to cash, securities and other non-cash
deposits, irrevocable letters of credit may be used as
performance bond deposits for clearing firms. At
December 31, these letters of credit, which are not
included in the accompanying consolidated balance
sheets, were as follows:

(in millions)

Performance bonds . . . . . . . . .
Performance collateral for

2012

2011

$4,208.3

$4,214.8

delivery . . . . . . . . . . . . . . . .

1,019.7

1,449.3

Total Letters of Credit . . . . . . .

$5,228.0

$5,664.1

All cash, securities and letters of credit posted as
performance bonds are only available to meet the
financial obligations of that clearing firm to the
clearing houses.

6. PROPERTY

A summary of the property accounts at December 31 is presented below:

(in millions)

2012

2011

Land and land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and building improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software and software development costs . . . . . . . . . . . . . . . . . . . . . . . . . .

20.1
512.6
219.4
342.8
269.5

65.6
531.7
214.6
328.3
258.0

Total property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . .

1,364.4
(640.4)

1,398.2
(576.3)

Property, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 724.0

$ 821.9

Estimated Useful
Life

10 - 20 years (1)
3 - 39 years
3 - 24 years
2 - 7 years
2 - 4 years

(1) Estimated useful life applies only to land improvements.

In April 2012, CME Group sold two buildings in
Chicago for $151.5 million resulting in a gain of
$20.3 million. At the time of the sale, the company
leased back a portion of the property. As a result of

the leaseback, the company is required to recognize
the gain as a reduction to operating expenses over the
15 year term of the lease.

7. INTANGIBLE ASSETS AND GOODWILL

Intangible assets consisted of the following at December 31:

(in millions)

Amortizable Intangible Assets:
Clearing firm, market data and other

customer relationships . . . . . . . . . .
Lease-related intangibles . . . . . . . . . .
Technology-related intellectual

property . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .

Other(1)

Foreign currency translation

2012

2011

Assigned
Value

Accumulated
Amortization

Net Book
Value

Assigned
Value

Accumulated
Amortization

Net Book
Value

$2,838.8
25.4

$(467.4)
(8.2)

$ 2,371.4
17.2

$3,071.9
83.2

$(400.4)
(45.4)

$ 2,671.5
37.8

29.4
0.2

(14.4)
(0.1)

15.0
0.1

56.2
11.6

(28.4)
(10.6)

27.8
1.0

2,893.8

(490.1)

2,403.7

3,222.9

(484.8)

2,738.1

adjustments . . . . . . . . . . . . . . . . . . .

—

(8.8)

5.9

(2.9)

Total amortizable intangible assets . . .

$2,893.8

$(490.1)

2,403.7

$3,214.1

$(478.9)

2,735.2

Indefinite-Lived Intangible Assets:
Trade names . . . . . . . . . . . . . . . . . . . .
Foreign currency translation

adjustments . . . . . . . . . . . . . . . . . . .

Total intangible assets—other, net . . .

Trading products (2) . . . . . . . . . . . . . . .

450.0

—

$ 2,853.7

$17,175.3

578.0

(0.4)

$ 3,312.8

$17,040.5

(1) At December 31, 2012, other amortizable intangible assets consisted of a definite-lived trade name. At
December 31, 2011, other amortizable intangible assets consisted of service and market maker agreements
and a definite-lived trade name.

(2) Trading products represent futures and options products acquired in our business combinations with CBOT
Holdings, Inc. (CBOT Holdings), KCBT and NYMEX Holdings, Inc. (NYMEX Holdings). Clearing and
transaction fees revenues are generated through the trading of these products. These trading products, most
of which have traded for decades, require authorization from the CFTC. Product authorizations from the
CFTC have no term limits.

As part of its sale of the two buildings in Chicago in
April 2012, the company sold the rights to lease
agreements with tenants occupying space within the
buildings. The lease agreements, which are included
in lease-related intangibles, had a net book value of
$14.4 million on the date of sale. In June 2012, the
company contributed the DJI asset group to S&P/DJI.
Contributed intangible assets with an aggregate net
book value of $336.3 million included rights to
customer agreements, technology-related intellectual
property and trade names. In addition, the company
sold CMA-related intangible assets with a net book
value of $9.4 million.

The estimated useful lives for the amortizable
intangible assets as of December 31, 2012 are as
follows:

Clearing firm, market data and

other customer
relationships . . . . . . . . . . . . .

Lease-related intangible

5 - 30 years

assets . . . . . . . . . . . . . . . . . . 13 - 24.5 years

Technology-related intellectual
property . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . .

5 years
3 years

customer

In July 2012, the company recognized $17.0 million
of intangible assets related to the acquisition of Pivot,
and
Inc.,
including
technology-related
In
acquisition of KCBT in
connection with the
November 2012,
the company acquired trading
products, which are classified as indefinite-lived
intangible assets, in the amount of $134.8 million.

relationships
property.

intellectual

In the second quarter of 2011, the company sold its
rights
customer
Index
relationships for $18.0 million. The net book value of
these assets at the time of the sale was $8.2 million.

Services

certain

Total amortization expense for intangible assets was
$116.2 million, $132.0 million and $128.1 million for
the years ended December 31, 2012, 2011 and 2010,
respectively. As of December 31, 2012, the future
estimated
to
amortizable intangible assets is expected to be as
follows:

amortization

expense

(in millions)

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 102.8
101.5
2014 . . . . . . . . . . . . . . . . . . . . . . . . . .
101.3
2015 . . . . . . . . . . . . . . . . . . . . . . . . . .
97.9
2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . .
97.3
1,902.9
Thereafter . . . . . . . . . . . . . . . . . . . . . .

Goodwill activity consisted of the following for the years ended December 31, 2012 and 2011:

(in millions)

Balance at
December 31, 2011

Business

Combinations Divestitures Other Activity

Balance at
December 31, 2012

CBOT Holdings . . . . . . . . . . . . . .
NYMEX Holdings . . . . . . . . . . . .
Index Services . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . .

Total Goodwill . . . . . . . . . . . . . . .

$5,035.7
2,462.2
434.5
51.6

$7,984.0

$ —
—
—
46.3

$46.3

$ —
—
(434.5)
(28.9)

$(463.4)

$—
—
—
—

$—

$5,035.7
2,462.2
—
69.0

$7,566.9

(in millions)

Balance at
December 31, 2010

Business

Combinations Divestitures Other Activity(3)

Balance at
December 31, 2011

CBOT Holdings . . . . . . . . . . . . .
NYMEX Holdings . . . . . . . . . . .
Index Services . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Other

Total Goodwill . . . . . . . . . . . . . .

$5,035.7
2,462.3
435.6
50.0

$7,983.6

$—
—
—
—

$—

$—
—
—
—

$—

$—
(0.1)
(1.1)
1.6

$ 0.4

$5,035.7
2,462.2
434.5
51.6

$7,984.0

(3) Other activity includes adjustments to restructuring costs and tax contingencies, the recognition of excess

tax benefits upon exercise of stock options and foreign currency translation adjustments.

The company recognized goodwill
in connection
with the acquisitions of KCBT and Pivot, Inc. In
conjunction with the formation of S&P/DJI,
the
company divested the goodwill allocated to the Index
Services and CMA reporting units.

8. LONG-TERM INVESTMENTS

company maintains

The
long-term
investments as described below. The investments are
recorded in other assets in the consolidated balance
sheets.

various

BM&FBOVESPA S.A. The company owns an
approximate 5% interest in BM&FBOVESPA S. A.
(BM&FBOVESPA). BM&FBOVESPA is a stock
and derivatives exchange in Brazil. The company
could not sell its shares in BM&FBOVESPA until
February 2012. As a result, BM&FBOVESPA stock
was carried at cost until within twelve months of the
restriction lapsing, after which time the company
began accounting for the stock as an available-for-
sale security. The fair value and cost basis of the
investment was $690.6 million and $262.9 million,
respectively, at December 31, 2012. The company
and BM&FBOVESPA have entered into several
licensing, order
agreements including co-location,
routing and technology development arrangements.

financial

(Bolsa Mexicana),

Bolsa Mexicana de Valores, S.A.B de C.V. In
March 2010, the company acquired an approximate
2% interest in Bolsa Mexicana de Valores, S.A.B. de
C.V.
exchange
operator in Mexico. The company accounts for its
investment in Bolsa Mexicana stock as an available-
for-sale security. The fair value and cost basis of the
company’s
at
December 31, 2012 was $29.3 million and $17.3
respectively. The company and Bolsa
million,
Mexicana maintain a strategic partnership that

in Bolsa Mexicana

investment

includes an order routing agreement for derivative
products.

Bursa Malaysia Derivatives Berhad. The company
owns a 25% interest in Bursa Malaysia Derivatives
Berhad (Bursa Derivatives), and accounts for its
investment
in Bursa Derivatives using the equity
method of accounting. The company may not sell its
shares in Bursa Derivatives until November 2013.
The company’s investment in Bursa Derivatives was
$28.1 million at December 31, 2012. The company
and Bursa Derivatives have entered into several
agreements
provide
licensing, order routing and trade matching services.

agreements

including

equity method

DME Holdings Limited. The company owns an
approximate 50% interest in DME Holdings Limited
(DME Holdings), and accounts for its investment in
DME Holdings using the
of
accounting. The company’s investment
in DME
Holdings was $20.2 million at December 31, 2012. In
addition, in December 2011, the company provided a
$3.0 million loan to Dubai Mercantile Exchange
Limited, payable on demand. The company and DME
Holdings maintain
for Dubai
Mercantile Exchange (DME) futures contracts to be
exclusively traded on the CME Globex platform.

agreement

its investment

S&P/DJI Indices LLC. The company owns an
approximate 24% interest in S&P/DJI and accounts
in S&P/DJI using the equity
for
method of accounting. The company’s investment in
S&P/DJI was $942.4 million at December 31, 2012.
The company has long-term exclusive licensing
agreements with S&P/DJI to list products based on
the Standard & Poor’s Indices and on Dow Jones
Indices.

9. DEBT

Short-term debt consisted of the following at
December 31:

(in millions)

2012

2011

$750.0 million fixed rate notes due

August 2013, stated rate of
5.40% . . . . . . . . . . . . . . . . . . . . . .

$749.7

Total short-term debt

. . . . . . . . . . . .

$749.7

$—

Long-term debt consisted of the following at
December 31:

(in millions)

2012

2011

$750.0 million fixed rate notes
due August 2013, stated rate
of 5.40% . . . . . . . . . . . . . . .
$750.0 million fixed rate notes
due February 2014, stated
rate of 5.75% . . . . . . . . . . . .
$612.5 million fixed rate notes
due March 2018, stated rate
of 4.40%(1) . . . . . . . . . . . . . .
$750.0 million fixed rate notes
due September 2022, stated
rate of 3.00% (2) . . . . . . . . . .

$ — $ 749.2

749.0

748.0

610.1

609.6

$ 747.7

—

Total long-term debt

. . . . . . . .

$2,106.8

(1)

(2)

In February 2010, the company entered into a
forward-starting interest rate swap agreement
that modified the interest obligation associated
with these notes so that the interest payable on
the notes effectively became fixed at a rate of
4.46%.

In August 2012, the company entered into a
forward-starting interest rate swap agreement
that modified the interest obligation associated
with these notes so that the interest payable on
the notes effectively became fixed at a rate of
3.32%.

its

senior credit

The company maintains a commercial paper program
under
facility. There was no
commercial paper outstanding at December 31, 2012
or 2011. As of December 31, 2012, the most recent
commercial paper
issuance was in March 2011.
Commercial paper notes with an aggregate par value
of $1.0 billion and maturities ranging from 1 to 33
the
days were issued during 2011. During 2011,

average

weighted
of
balance,
commercial paper outstanding was $30.7 million. In
2011,
for
balance
commercial paper was $200.0 million in January.

the maximum month-end

value,

par

Long-term debt maturities, at par value, were as
follows as of December 31, 2012:

(in millions)

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter

$ —
750.0
—
—
—
1,362.5

The fair values of the fixed rate notes due 2013, 2014
and 2022 were estimated using quoted market prices
and are considered level 2 liabilities under
the
classification hierarchy for fair value measurements.
The fair value of the fixed rate notes due 2018, which
is considered a level 3 liability, was derived using a
standard
valuation model with market-based
observable inputs including U.S. Treasury yields and
interest rate spreads. For further information on the
three-level classification hierarchy of
fair value
measurements, see note 19. At December 31, 2012,
the fair values of the fixed rate notes by maturity date
were as follows:

(in millions)

Fair Value

$750.0 million fixed rate notes due

August 2013 . . . . . . . . . . . . . . . . . . . . .

$771.3

$750.0 million fixed rate notes due

February 2014 . . . . . . . . . . . . . . . . . . . .
$612.5 million fixed rate notes due March
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . .

$750.0 million fixed rate notes due

792.1

684.0

September 2022 . . . . . . . . . . . . . . . . . .

767.1

10. DERIVATIVE INVESTMENTS

The company mitigates certain financial exposures to
interest
rate risk through the use of derivative
financial instruments as part of its risk management
program. The company does not use derivative
instruments for trading purposes. All derivatives have
been designated as cash flow hedges.

the company entered into two
In August 2012,
forward-starting interest rate swap contracts, with an

aggregate notional value of $1.5 billion, to hedge the
risk of changes in underlying benchmark interest
rates associated with the expected issuances of fixed-
rate debt. One of these swap contracts was settled in
conjunction with the issuance of fixed-rate debt in
September 2012. The hedge was considered highly
effective. The effective portion is
included in
accumulated other comprehensive income and will be
amortized over the term of the debt.

The fair value and location of outstanding derivative
instruments in the consolidated balance sheet as of
December 31, 2012 were as follows.

(in millions)

Interest rate

Balance Sheet Location

Fair Value

contract . . . . . . .

Other liabilities

$1.0

There were no derivative instruments outstanding at
December 31, 2011.

The effects of derivative instruments on the consolidated statements of income as well as accumulated other
comprehensive income (OCI) within the consolidated statements of comprehensive income and consolidated
statements of equity for the years ended December 31, 2012 and 2011 were as follows. The effects are shown
before the tax impact.

Gains (Losses)
Recognized in OCI
(Effective Portion)

Gains (Losses) Reclassified from
Accumulated OCI
(Effective Portion)

Gains (Losses)
Recognized in Income
(Ineffective Portion)

2012

2011

Location

2012

2011

Location

2012

2011

(in millions)

Interest rate

contracts . . . . . . . . . . $(25.3) $—

Interest and other
borrowing costs

$(1.1) $(0.8)

Gains (losses) on
derivative investments $(0.1) $(0.1)

At December 31, 2012,
the company expects to
reclassify $2.8 million of net gains (losses) on
derivative
from accumulated other
comprehensive income to net income as additional
interest expense during the next twelve months.

instruments

11. INCOME TAXES

Income before income taxes and the income tax
provision consisted of the following for the years
to
ended December 31. The company is subject
regulation under a wide variety of U.S., federal, state
and foreign tax laws and regulations.

(in millions)

2012

2011

2010

Income before

income taxes:
Domestic . . . . . .
Foreign . . . . . . .

$1,703.5
(10.1)

$1,952.6
(16.1)

$1,733.0
(11.1)

Total

. . . . . . . . .

$1,693.4

$1,936.5

$1,721.9

Income tax

provision:

Current:

Federal . . . . . . . .
State . . . . . . . . . .
Foreign . . . . . . .

$ 585.2
117.6
1.7

$ 644.0
135.4
1.4

$ 601.6
148.9
(3.0)

Total

. . . . . . . . .

704.5

780.8

747.5

(in millions)

Deferred:

2012

2011

2010

Federal . . . . . . . . . . . .
State . . . . . . . . . . . . . .
Foreign . . . . . . . . . . .

Total

. . . . . . . . . . . . .

50.3
37.0
(5.1)

82.2

300.2
(954.1)
(4.8)

(658.7)

(53.9)
76.1
0.1

22.3

Total Income Tax

Provision . . . . . . . . . .

$786.7

$ 122.1

$769.8

Reconciliation of the statutory U.S. federal income
tax rate to the effective tax rate is as follows:

2012

2011

2010

Statutory U.S. federal tax

rate . . . . . . . . . . . . . . . . . .

35.0% 35.0% 35.0%

State taxes, net of federal

benefit

. . . . . . . . . . . . . . .

4.8

6.3

5.8

Increase (decrease) in
domestic valuation
allowance . . . . . . . . . . . . . —

(2.5)

(0.1)

Impact of revised state and
local apportionment
estimates . . . . . . . . . . . . .

Deferred taxes associated

with McGraw venture and
CMA sale . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . .

1.0

(33.4)

3.0

6.3 —
0.9
(0.6)

—
1.0

Effective Tax Rate . . . . . . . .

46.5% 6.3% 44.7%

In 2012, the effective tax rate was higher than the
statutory tax rate because of a $106.8 million
increase to the income tax provision due to the
establishment of deferred income tax liabilities
associated with the McGraw venture. In 2011, the
effective tax rate was lower than the statutory tax rate
because of a change in state tax apportionment which
resulted in a reduction in the company’s income tax
provision of $646.0 million largely due to a
revaluation of
its existing deferred income tax
liabilities. Also in 2011, the company began marking
to market its investment in BM&FBOVESPA which
resulted in a $48.8 million reduction in valuation
allowances on other unrealized capital
losses
previously reserved. In 2010, the effective tax rate
was higher than the statutory tax rate due to a $51.2
million charge to record the impact of the company’s
new combined state and local tax rate on its existing
deferred income tax liabilities.

At December 31, deferred income
(liabilities) consisted of the following:

tax assets

(in millions)

2012

2011

Net Current Deferred Income Tax

Assets:

Unrealized loss on securities . . . $
Stock-based compensation . . . .
Accrued expenses and other . . .

3.4 $

12.9
17.8

3.5
12.9
15.6

Net Current Deferred Income Tax

Assets

$ 34.1 $ 32.0

Net Non-Current Deferred Income

Tax Assets:

Domestic unrealized loss on

investment in
BM&FBOVESPA . . . . . . . . . $ — $ 37.8
22.7
44.6
10.2 —
40.0
47.9
20.3
27.5

Foreign losses . . . . . . . . . . . . . .
Domestic losses . . . . . . . . . . . . .
Stock-based compensation . . . .
Deferred compensation . . . . . . .
Unrealized losses on

securities . . . . . . . . . . . . . . . .
Accrued expenses and other . . .

29.7
49.2

46.4
46.4

Subtotal . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . .

187.2
(24.8)

235.5
(43.2)

Total non-current deferred

income tax assets . . . . . . . . . .

162.4

192.3

(in millions)

2012

2011

Non-Current Deferred

Income Tax Liabilities:

Domestic unrealized gain

on investment in
BM&FBOVESPA . . . .

Purchased intangible

(21.6)

—

assets . . . . . . . . . . . . . . .
Property . . . . . . . . . . . . . .

(7,523.6)
(30.5)

(7,342.0)
(77.1)

Total non-current deferred
income tax liabilities . . .

(7,575.7)

(7,419.1)

Net Non-Current Deferred

Income Tax Liabilities . . . . . $(7,413.3) $(7,226.8)

that some portion or all of

A valuation allowance is recorded when it is more-
likely-than-not
the
deferred income tax assets may not be realized. The
ultimate realization of the deferred income tax assets
depends on the ability to generate sufficient taxable
income of the appropriate character in the future and
in the appropriate taxing jurisdictions.

the

At December 31, 2012 and 2011, the company had
domestic and foreign income tax loss carry forwards
of $127.5 million and $110.8 million, respectively.
These amounts primarily related to losses from the
acquisition of Swapstream Limited and its affiliates,
the acquisition of Pivot, Inc., and losses incurred in
foreign entities. At
the operation of various
December 31, 2012 and 2011,
company
determined that it was not more-likely-than-not that
deferred income tax assets related to the acquisition
of Swapstream Limited and its affiliates and other
deferred income tax assets created from the start-up
of various foreign operations will be fully realized.
As a result, valuation allowances of $24.8 million
and $27.6 million were recorded at December 31,
2012 and 2011. The reduction of
the valuation
allowance from 2011 to 2012 was primarily related to
a reduced deferred income tax rate resulting from a
change in United Kingdom corporate income tax
rates.

At December 31, 2011, the company had a long-term
deferred income tax asset from foreign losses of
$15.6 million related to Brazilian taxes primarily as a
result of unrealized capital losses incurred in Brazil
in
related
BM&FBOVESPA. At December 31, 2011, valuation
allowances of $15.6 million related to this deferred

investment

company’s

the

tax asset. At December 31, 2011,
the company
determined that it was more-likely-than-not that it
will not be able to realize this deferred income tax
asset. As a result of changes in the stock price and
favorable foreign currency fluctuations, the company
no longer had a deferred tax asset related to its
investment
in BM&FBOVESPA at December 31,
2012.

The following is a summary of
unrecognized tax benefits:

the company’s

(in millions)

2012

2011

2010

Gross unrecognized tax

benefits . . . . . . . . . . . . . . .

$37.7

$36.8

$56.4

Unrecognized tax benefits,

net of tax impacts in other
jurisdictions . . . . . . . . . . .

Unrecognized interest and
penalties related to
uncertain tax positions . . .

Interest and penalties
recognized in the
consolidated statements of
income . . . . . . . . . . . . . . .

24.5

24.9

43.0

20.1

17.1

15.5

3.0

1.6

5.4

The company believes it is reasonably possible that
within the next
twelve months, unrecognized
domestic tax benefits will not change by a significant
amount.

A reconciliation of the beginning and ending amount
of unrecognized tax benefits is as follows:

local

The company is subject to U.S. federal income tax as
well as income taxes in Illinois and multiple other
state,
of
December 31, 2012, substantially all federal and state
income tax matters had been concluded through 2007
and 2004, respectively.

jurisdictions. As

foreign

and

12. EMPLOYEE BENEFIT PLANS

of
a

earnings. Employees who
continuous

Pension Plans. CME maintains a non-contributory
defined benefit cash balance pension plan for eligible
employees. CME’s plan provides for a contribution
to the cash balance account based on age and
earnings and includes salary and cash bonuses in the
have
definition
completed
of
employment and have reached the age of 21 are
eligible to participate. Participant cash balance
accounts receive an interest credit equal to the greater
of the one-year constant maturity yield for U.S.
Treasury notes or 4.0%. Participants become vested
in their accounts after three years of service. The
measurement date used for the plan is December 31.

12-month

period

The following is a summary of
projected benefit obligation:

the change in

(in millions)

Balance at January 1 . . . . . . . . . . .
Service cost . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . .
Benefits paid . . . . . . . . . . . . .

2012

2011

$148.8
16.0
7.9
18.5
(9.6)

$118.2
13.5
7.4
14.4
(4.7)

(in millions)

2012

2011

2010

Balance at December 31 . . . . . . . .

$181.6

$148.8

Balance at January 1 . . . . . .
Additions based on tax
positions related to
the current year . . . .

$36.8

$ 56.4

$42.6

5.3

6.0

10.4

The aggregate accumulated benefit obligation was
$158.8 million and $130.3 million at December 31,
2012 and 2011, respectively.

Additions for tax

positions of prior
years . . . . . . . . . . . .

Reductions for tax

positions of prior
years . . . . . . . . . . . .

Reductions resulting
from the lapse of
statutes of
limitations . . . . . . . .
Settlements with taxing
authorities . . . . . . . .

3.2

0.6

4.1

The following is a summary of the change in fair
value of plan assets:

(2.0)

(22.9)

(0.5)

(in millions)

2012

2011

2010

Balance at January 1 . . . .
Actual return on

$149.1

$121.3

$107.7

plan assets . . . . . .

16.4

4.5

12.8

Employer

(2.2) —

(0.2)

contributions . . . .
Benefits paid . . . . . .

28.0
(9.6)

28.0
(4.7)

5.2
(4.4)

(3.4)

(3.3) —

Balance at

Balance at December 31 . . .

$37.7

$ 36.8 $56.4

December 31 . . . . . . .

$183.9

$149.1

$121.3

The plan assets are classified into a fair value
hierarchy in their entirety based on the lowest level
of input that is significant to each asset or liability’s
fair value measurement. Valuation techniques for
level 2 assets use significant observable inputs such
as quoted prices for similar assets, quoted market
prices in inactive markets and other inputs that are
observable or can be supported by observable market
data. The fair value of each major category of plan
assets as of December 31 is indicated below.

(in millions)

Level 2:

Money market funds . . . . . . .
. . . . . . . . . . . .
Mutual funds:
U.S. equity . . . . . . . . . . .
Foreign equity . . . . . . . .
Fixed income . . . . . . . . .
Commodity . . . . . . . . . .

2012

2011

$ 29.4

$ 29.3

47.4
49.1
50.8
7.2

35.3
33.3
45.3
5.9

Total

. . . . . . . . . . . . . . . . . . . . . . .

$183.9

$149.1

At December 31, 2012 and 2011, the fair value of
pension plan assets exceeded the projected benefit
obligation by $2.3 million and $0.3 million,
respectively. This excess was recorded as a non-
current pension asset.

CME’s funding goal is to have its pension plan 100%
funded at each year-end on a projected benefit
obligation basis, while also satisfying any minimum
required contribution and obtaining the maximum tax
deduction. Year-end 2012 assumptions have been
from
used to project
December 31, 2012 to December 31, 2013. The result
of this projection is that estimated liabilities would
exceed the
at
December 31, 2013 by approximately $19.9 million.
is estimated that a $19.9 million
Accordingly,
contribution in 2013 will allow the company to meet
its funding goal.

the assets and liabilities

the plan assets

fair value of

The components of net pension expense and the assumptions used to determine the end-of-year projected benefit
obligation and net pension expense in aggregate are indicated below:

(in millions)

Components of Net Pension Expense:

2012

2011

2010

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 16.0
7.9
(11.0)
2.5

$13.5
7.4
(9.0)
1.5

$11.6
6.5
(8.3)
2.2

Net Pension Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 15.4

$13.4

$12.0

Assumptions Used to Determine End-of-Year Benefit Obligation:

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash balance interest crediting rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.10% 5.00% 5.70%
5.00
5.00
4.00
4.00

5.00
4.00

Assumptions Used to Determine Net Pension Expense:

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest crediting rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.00% 5.70% 5.70%
5.00
5.00
7.75
7.75
4.00
4.00

5.00
8.00
4.00

The discount rate for the plan was determined based
on the market value of a theoretical settlement bond
portfolio. This portfolio consisted of U.S. dollar
denominated Aa-rated corporate bonds across the full
maturity spectrum. A single equivalent discount rate
was determined to align the present value of the
required cash flow with that settlement value. The
resulting discount rate was reflective of both the
rate environment and the plan’s
current
distinct liability characteristics.

interest

The basis for determining the expected rate of return
on plan assets for the plan is comprised of three
components: historical returns,
industry peers and
forecasted return. The plan’s total return is expected
to equal the composite performance of the security
markets over the long term. The security markets are
represented by the returns on various domestic and
international stock, bond and commodity indexes.
are weighted according to the
These
allocation of plan assets to each market and measured
individually.

returns

The overall objective of the plan is to achieve
required long-term rates of return in order to meet
future benefit payments. The component of
the
investment policy for the plan that has the most
significant impact on returns is the asset mix. The
asset mix has a minimum and maximum range
depending on asset class. The plan assets are
diversified to minimize the risk of large losses by any
one or more individual assets. Such diversification is
accomplished, in part, through the selection of asset
mix
asset
and
allocation for
the plan, by asset category, at
December 31 was as follows:

investment management. The

Fixed income . . . . . . . . . .
U.S. equity . . . . . . . . . . .
Foreign equity . . . . . . . . .
Money market funds . . . .
Commodity . . . . . . . . . . .

2012

27.6%
25.8
26.7
16.0
3.9

2011

30.4%
23.6
22.3
19.7
4.0

The range of target allocation percentages for 2013 is
as follows:

Minimum Maximum

Fixed income . . . . . . . . . . . . . .
U.S. equity . . . . . . . . . . . . . . . .
Foreign equity . . . . . . . . . . . . .
Commodity . . . . . . . . . . . . . . .

33.0%
23.5
23.5
2.0

45.0%
35.0
35.0
8.0

The balance and activity of the prior service costs
losses, which are included in other
and actuarial
comprehensive income (loss),
for 2012 are as
follows:

(in millions)

Prior
Service Costs

Actuarial
Loss

Balance at January 1 . . . . . .
Unrecognized loss . . . .
Recognized as a

component of net
pension expense . . .

$ 0.2
—

—

Balance at December 31 . . .

$ 0.2

$46.3
13.0

(2.5)

$56.8

The company expects to amortize $4.0 million of
actuarial loss from accumulated other comprehensive
income (loss) into net periodic benefit costs in 2013.

At December 31, 2012, anticipated benefit payments
from the plan in future years are as follows:

(in millions)

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018-2022 . . . . . . . . . . . . . . . . . . . . . .

$11.5
12.7
13.3
14.7
15.6
96.3

times,

the company may determine that

At
is
necessary to place some assets in cash equivalent
investments in order to pay expected plan liabilities.
Given this, the actual asset allocation for the plan
may not fall within the target allocation ranges from
time to time.

According to the plan’s investment policy, the plan is
not allowed to invest in securities that compromise
independence, short sales of securities directly owned
by the plan, securities purchased on margin or other
uses of borrowed funds, derivatives not used for
hedging
illiquid
restricted
securities or any other transaction prohibited by
laws. If the plan directly invests in
employment
the
short-term and long-term debt obligations,
investments are limited to obligations rated at the
highest rating category by Standard & Poor’s (S&P)
or Moody’s.

stock or

purposes,

Plans. CME maintains

Savings
defined
contribution savings plan pursuant to Section 401(k)
of the Internal Revenue Code, whereby all U.S.
employees are participants and have the option to
contribute to this plan. CME matches employee
contributions up to 3% of the employee’s base salary
and may make additional discretionary contributions.

In addition to the plan for U.S. employees,
the
company maintains defined contribution savings
plans for employees in international locations.

Aggregate expense for all of the defined contribution
savings plans amounted to $8.9 million, $8.6 million
and $6.3 million in 2012, 2011 and 2010,
respectively.

CME Non-Qualified Plans. CME maintains non-
qualified plans, under which participants may make
assumed investment choices with respect to amounts
contributed on their behalf. Although not required to

do so, CME invests such contributions in assets that
mirror the assumed investment choices. The balances
in these plans are subject to the claims of general
creditors of the exchange and totaled $38.7 million
and $31.8 million at December 31, 2012 and 2011
respectively. Although the value of the plans is
recorded as an asset in marketable securities in the
consolidated balance sheets, there is an equal and
offsetting liability. The investment results of these
plans have no impact on net
the
investment results are recorded in equal amounts to
both investment
income and compensation and
benefits expense.

income as

Supplemental Savings Plan. CME maintains a
supplemental plan to provide benefits
for
employees who have been impacted by statutory
the qualified
the provisions of
limits under
pension and savings plan. Employees in this
plan are subject to the vesting requirements of
the underlying qualified plans.

Deferred Compensation Plan. A deferred
compensation plan is maintained by CME,
under which eligible officers and members of
the board of directors may contribute
a
their compensation and defer
percentage of
income
time of
thereon until
taxes
distribution.

the

COMEX Members’ Retirement Plan and Benefits.
COMEX maintains a retirement and benefit plan
under
the COMEX Members’ Recognition and
Retention Plan (MRRP). This plan provides benefits
to certain members of the COMEX division based on
long-term membership, and participation is limited to
individuals who were COMEX division members
prior to NYMEX’s acquisition of COMEX in 1994.
No new participants were permitted into the plan
after the date of this acquisition. Under the terms of
the MRRP, the company is required to fund the plan
with a minimum annual contribution of $0.8 million
until it is fully funded. All benefits to be paid under
actuarial
the MRRP are based on reasonable
assumptions which are based upon the amounts that
are available and are expected to be available to pay
benefits. Total contributions to the plan were $0.8
each of 2010 through 2012. At
million for
December 31, 2012 and 2011, the obligation for the
MRRP totaled $22.7 million and $21.6 million,
respectively. Assets with a fair value of $18.4 million
and $17.7 million have been allocated to this plan at
December 31, 2012 and 2011, respectively, and are
included in marketable securities and cash and cash

equivalents in the consolidated balance sheets. The
balances in these plans are subject to the claims of
general creditors of COMEX.

13. COMMITMENTS

Operating Leases. CME Group has entered into
various non-cancellable operating lease agreements,
with the most significant being as follows:

•

the

In April 2012,
company sold two
buildings in Chicago at 141 W. Jackson and
leased back a portion of the property. The
lease
operating lease, which has an initial
term ending on April 30, 2027, contains four
consecutive renewal options for five years.

In January 2011, the company entered into an
operating lease for office space in London.
The initial lease term, which became effective
on January 20, 2011, terminates on March 24,
2026, with an option to terminate without
penalty in January 2021.

an initial

In July 2008, the company renegotiated the
operating lease for its headquarters at 20
South Wacker Drive in Chicago. The lease,
term ending on
which has
November 30, 2022, contains two consecutive
renewal options for seven and ten years and a
contraction option which allows the company
after
to
November 30, 2018. In addition, the company
may exercise a lease expansion option in
December 2017.

occupied

reduce

space

its

In August 2006, the company entered into an
operating lease for additional office space in
Chicago. The initial lease term, which became
effective on August 10, 2006, terminates on
November 30, 2023. The lease contains two
5-year renewal options beginning in 2023.

At December 31, 2012, future minimum payments
under non-cancellable operating leases were payable
as follows (in millions):

Year

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 28.7
29.1
28.9
28.9
29.3
152.9

$297.8

Total rental expense, including equipment rental, was
$46.1 million in 2012, $41.0 million in 2011 and
$35.5 million in 2010.

Commitments

Other Commitments.
include
material contractual purchase obligations that are
non-cancellable. Purchase obligations
to
advertising, licensing, hardware and maintenance as
well as telecommunication services. At December 31,
2012, future minimum payments due under purchase
obligations were payable as follows (in millions):

relate

Year

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . .

$16.6
11.9
5.8
1.0
0.5
1.0

$36.8

14. CONTINGENCIES

Legal and Regulatory Matters. In 2008, Fifth Market,
Inc. (Fifth Market) filed a complaint against CME
Group and CME seeking a permanent
injunction
against CME’s Globex system and unquantified
enhanced damages for what the plaintiff alleges is
willful infringement of two U.S. patents, in addition
to costs, expenses and attorneys’ fees. Beginning in
March 2012,
the case was stayed pending the
outcome of reexamination by the U.S. Patent and
Trademark Office (USPTO) to determine the validity
of the patents at issue. Based on its investigation to
date and advice from legal counsel, the company
believes this suit
is without merit and intends to
defend itself vigorously against these charges.

the patent

In 2009, CME and CBOT filed a complaint against
Howard Garber seeking a declaratory judgment that
neither CME nor CBOT infringed the Garber patent
is invalid and unenforceable.
and that
Beginning in June 2011, the case was stayed pending
the outcome of the reexamination by the USPTO to
determine the validity of the patent at issue. Based on
its investigation to date and advice from legal
counsel, the company believes this suit is without
merit and intends to defend itself vigorously against
these charges.

In 2009, Realtime Data LLC (Realtime) filed a
complaint against CME Group and other exchanges

two additional

alleging willful infringement of four patents which
was later amended to add CBOT and NYMEX as
lawsuits
defendants. Subsequently,
the
have been filed each adding a claim for
infringement of an additional patent. Both of these
lawsuits have been consolidated with the original
action. Realtime is seeking a permanent injunction,
enhanced damages, attorneys’ fees and costs. The
court entered judgment in CME’s favor in September
2012 based on invalidity and non-infringement.
Realtime Data is expected to file its appeal brief in
March 2013. The USPTO is conducting a parallel
issue. Based on its
review of
investigation to date and advice from legal counsel,
the company believes this suit is without merit and
intends to defend itself vigorously against
these
charges.

the patents at

involve

foregoing

liability that

involve potential

The
alleged
legal matters
infringements of intellectual property, which due to
is
their nature
uncertain, difficult to quantify and involve a wide
range of potential outcomes. The company believes
that the matters are without merit and intends to
the claims. The
defend itself vigorously against
USPTO’s determination of validity of the patents in
the Fifth Market, Garber and Realtime matters may
have an impact on the merits of the cases. The timing
of the USPTO’s decisions are uncertain and will be
subject to further appeal.

A number of lawsuits were filed in federal court in
New York on behalf of all commodity account
holders or customers of MF Global who had not
received a return of 100% of their funds. These
matters have been consolidated into a single action in
federal court
in New York, and a consolidated
filed on
amended class action complaint was
November 5, 2012. The class action complaint
alleges that CME violated the Commodity Exchange
Act (CEA), aided and abetted violations of the CEA
by other defendants, and aided and abetted a breach
of fiduciary duty by certain officers and directors of
MF Global. The class complaint also alleges that
CME Group aided and abetted CME’s violation of
the CEA. The complaint does not allege the amount
of damages sought, but rather seeks compensatory
and exemplary damages to be determined at trial.
Based on the initial analysis of the class complaint,
the company believes that it has strong legal and
factual defenses to the claims. In addition to the class
complaint, the company is aware of two plaintiffs

the

who intend to pursue their claims individually. Given
that these matters are in the very early stage, at this
time
the
reasonably
reasonably possible loss or
possible loss in the unlikely event it was found to be
liable in these matters.

company is unable

to estimate

range of

In February 2013,
the CFTC filed suit against
alleging
NYMEX and two former
employees
disclosure of confidential customer information in
violation of the CEA. Based on the initial review of
the complaint, the company believes that it has strong
factual and legal defenses to the claim.

fines,

penalties

In the normal course of business,
the company
discusses matters with its regulators raised during
regulatory examinations or otherwise subject to their
inquiry and oversight. These matters could result in
censures,
sanctions.
Management believes the outcome of any resulting
impact on its
actions will not have a material
consolidated
of
results
or
operations. However,
the company is unable to
predict the outcome or the timing of the ultimate
resolution of these matters, or the potential fines,
penalties or injunctive or other equitable relief, if
any, that may result from these matters.

financial

position

other

In addition, the company is a defendant in, and has
potential for, various other legal proceedings arising
regular business activities. While the
from its
the
ultimate results of such proceedings against
company cannot be predicted with certainty,
the
company believes that the resolution of any of these
matters on an individual basis will not have a
material impact on its consolidated financial position
or results of operations. At December 31, 2012 and
2011, the company had accrued $13.2 million and
$12.8 million, respectively, for legal and regulatory
matters that were probable and estimable.

Indemnifications. Certain
Intellectual Property
agreements with customers and other third parties
related to accessing the CME Globex platform, the
CME ClearPort platform, and/or the Clearing 21
licensing
platform; utilizing market data services;
CME SPAN software; and calculating indexes as a
service provider and licensing indexes as the basis of
financial products may contain indemnifications from
intellectual property claims that may be made against
them as a result of their use of the applicable
products and/or services. The potential future claims

relating
estimated and,
recorded.

these

indemnifications

be
therefore, no liability has been

cannot

15. GUARANTEES

Mutual Offset Agreement. CME and Singapore
Exchange Limited (SGX) have a mutual offset
agreement with a current term through October 2013.
The term of the agreement will automatically renew
for a one-year period unless either party provides
advance notice of their intent to terminate. CME can
in the form of U.S. Treasury
maintain collateral
securities or
credit. At
December 31, 2012, CME was contingently liable to
SGX on irrevocable letters of credit totaling $181.0
million. Regardless of the collateral, CME guarantees
all cleared transactions submitted through SGX and
would initiate procedures designed to satisfy these
financial obligations in the event of a default, such as
the use of performance bonds and guaranty fund
contributions of the defaulting clearing firm.

irrevocable

letters of

Cross-Margin Agreements. CME and OCC have a
cross-margin arrangement, whereby a clearing firm
of both CME and OCC may maintain a cross-margin
account
in which the clearing firm’s positions in
certain CME futures and options on futures contracts
are combined with certain positions cleared by OCC
for purposes of
calculating performance bond
requirements. The performance bond deposits are
held jointly by CME and OCC. If a participating firm
defaults, the gain or loss on the liquidation of the
firm’s open position and the proceeds from the
liquidation of the cross-margin account would be
allocated 50% each to CME and OCC.

A cross-margin agreement exists with CME and
Fixed Income Clearing Corp (FICC) whereby the
clearing firms’ offsetting positions with CME are
subject
to reduced margin requirements. Clearing
firms maintain separate performance bond deposits
with each clearing house, but depending on the net
offsetting positions between CME and FICC, each
clearing house may reduce the firm’s performance
bond requirement. In the event of a firm default, the
total
loss on the firm’s
offsetting open positions and the proceeds from the
liquidation of the performance bond collateral held
supporting offsetting
by each clearing house’s
positions would be divided evenly between CME and
FICC. Additionally, if, after liquidation of all the

liquidation net gain or

liquidating

positions and collateral of the defaulting firm at each
respective clearing organization, and taking into
account any cross-margining loss sharing payments,
any of the participating clearing organizations has a
remaining
other
participating clearing organization has a remaining
liquidating deficit, any additional surplus from the
liquidation would be shared with the other clearing
house to the extent that it has a remaining liquidating
deficit. Any remaining surplus funds would be passed
to the bankruptcy trustee.

surplus,

and

any

guarantee

the amount of

$550.0 million

MF Global Bankruptcy Trust. The company provided
a
the
financial
bankruptcy trustee of MF Global to accelerate the
distribution of funds to MF Global customers. In the
event that the trustee distributed more property in the
second or
than was
third interim distributions
permitted by the Bankruptcy Code and CFTC
regulations, the company will make a cash payment
the erroneous
to the trustee for
distribution or distributions up to $550.0 million in
the aggregate. A payment will only be made after the
trustee makes
the
reasonable efforts
property erroneously distributed to the customer(s). If
a payment is made by the company, the company
may have the right to seek reimbursement of the
erroneously distributed property from the applicable
cover
guarantee
customer(s). The
distributions made by the trustee to customers on the
basis of their claims filed in the bankruptcy. Because
the trustee has now made payments to nearly all
customers on the basis of their claims, the company
believes that the likelihood of payment to the trustee
is very remote. As a result, the guarantee liability is
estimated to be immaterial at December 31, 2012.

to collect

does

not

Family Farmer and Rancher Protection Fund. In
April 2012,
the company established the Family
Farmer and Rancher Protection Fund (the Fund). The
Fund is designed to provide payments, up to certain
to family farmers, ranchers and
maximum levels,
other agricultural industry participants who use CME
Group agricultural products and who suffer losses to
their segregated account balances due to their CME
the
clearing member becoming insolvent. Under
terms of the Fund, farmers and ranchers are eligible
for up to $25,000 per participant. Farming and
ranching cooperatives are eligible for up to $100,000
an aggregate
per
maximum payment amount of $100.0 million. If
payments to participants were to exceed this amount,

cooperative. The Fund has

payments would be pro-rated. Clearing members and
customers must register in advance with the company
and provide certain documentation in order
to
substantiate their eligibility.

Inc.

(PFG)

Peregrine Financial Group,
filed for
bankruptcy protection on July 10, 2012. PFG was not
one of CME’s clearing members and its customers
had not registered for the Fund. Accordingly, they
were not technically eligible for payments from the
Fund. However, because the Fund was newly
implemented and because PFG’s customers included
many agricultural industry participants for whom the
program was designed,
the company decided to
waive certain terms and conditions of the Fund,
solely in connection with the PFG bankruptcy, so that
ranchers and
otherwise eligible family farmers,
agricultural cooperatives could apply for and receive
benefits from CME. Based on the number of such
PFG customers who applied and the estimated size of
their claims, the company has recorded a liability in
the amount of $2.1 million at December 31, 2012.

16. REDEEMABLE NON-CONTROLLING

INTEREST

The following summarizes the changes in redeemable
non-controlling interest for the years presented. Non-
controlling interests that do not contain redemption
features are presented in the statements of equity.

(in millions)

Balance at January 1 . . . . .
Contribution by Dow

2012

2011

2010

$70.3

$68.1

$ —

Jones . . . . . . . . . . . —

Distribution to Dow

Jones . . . . . . . . . . . —

Allocation of stock-

based
compensation . . . . —

—

675.0

(607.5)

0.1

—

Total comprehensive
income attributable
to redeemable non-
controlling
interest . . . . . . . . . .

10.5

2.1

0.6

Balance at

December 31 . . . . . . . . .

$80.8

$70.3

$ 68.1

17. CAPITAL STOCK

Shares Outstanding. The following table presents
information regarding capital stock:

(in thousands)

Class A common stock

December 31,

2012

2011

authorized . . . . . . . . . . . . . 1,000,000 1,000,000

Class A common stock

issued and outstanding . . .

331,832

330,653

Class B-1 common stock
authorized, issued and
outstanding . . . . . . . . . . . .

Class B-2 common stock
authorized, issued and
outstanding . . . . . . . . . . . .

Class B-3 common stock
authorized, issued and
outstanding . . . . . . . . . . . .

Class B-4 common stock
authorized, issued and
outstanding . . . . . . . . . . . .

0.6

0.8

1.3

0.4

0.6

0.8

1.3

0.4

In May 2012,
the company’s board of directors
declared a five-for-one split of its Class A common
stock by way of a stock dividend to its Class A and
Class B shareholders. The stock split was effective
July 20, 2012 for all shareholders of record on
July 10, 2012. As a result of the stock split, all
amounts related to shares and earnings per share have
been retroactively restated. Since the par value of the
class A common stock remained at $0.01 per share,
the recorded value for class A common stock was
retroactively adjusted to reflect the par value of total
outstanding shares.

CME Group has no shares of preferred stock issued
and outstanding.

Associated Trading Rights. Members of CME,
CBOT, NYMEX, COMEX and permit holders of
KCBT own or lease trading rights which entitle them
to access the trading floors, discounts on trading fees
and the right to vote on certain exchange matters as
provided for by the rules of the particular exchange
and CME Group’s or the subsidiaries’ organizational
documents. Each class of CME Group Class B
common stock is associated with a membership in a
specific division for trading at CME. A CME trading
is not part of or
right
evidenced by the associated share of Class B

is a separate asset

that

common stock of CME Group. The Class B common
stock of CME Group is intended only to ensure that
the Class B shareholders of CME Group retain rights
to representation on the board of
with respect
directors and approval rights with respect to the core
rights described below.

Trading rights at CBOT are evidenced by Class B
memberships in CBOT, at NYMEX by Class A
memberships in NYMEX, at COMEX by COMEX
Division Memberships and at KCBT by trading
permits. Members of CBOT, NYMEX and COMEX
and permit holders at KCBT do not have any rights to
elect members of the board of directors and are not
entitled to receive dividends or other distributions on
their memberships or trading permits.

Core Rights. Holders of CME Group Class B
common shares have the right to approve changes in
specified rights relating to the trading privileges at
CME associated with those shares. These core rights
relate primarily to trading right protections, certain
trading fee protections and certain membership
benefit protections. Votes on changes to these core
rights are weighted by class. Each class of Class B
common stock has the following number of votes on
matters relating to core rights: Class B-1, six votes
per share; Class B-2, two votes per share; Class B-3,
one vote per share; and Class B-4, 1/6th of one vote
per share. The approval of a majority of the votes
cast by the holders of shares of Class B common
stock is required in order to approve any changes to
core rights. Holders of shares of Class A common
stock do not have the right to vote on changes to core
rights.

Voting Rights. With the exception of the matters
reserved to holders of CME Group Class B common
stock, holders of CME Group common stock vote
together on all matters for which a vote of common
shareholders is required. In these votes, each holder
of shares of Class A or Class B common stock of
CME Group has one vote per share.

contained

Transfer Restrictions. Each class of CME Group
to transfer
Class B common stock is
restrictions
of
Incorporation of CME Group. These
transfer
restrictions prohibit the sale or transfer of any shares
of Class B common stock separate from the sale of
the associated trading rights.

subject
the Certificate

Election of Directors. The CME Group Board of
Directors is currently comprised of 30 members.
Holders of Class B-1, Class B-2 and Class B-3
common stock have the right to elect six directors, of
which three are elected by Class B-1 shareholders,
two are elected by Class B-2 shareholders and one is
elected by Class B-3 shareholders. The remaining
directors are elected by the Class A and Class B
shareholders voting as a single class.

Dividends. Holders of Class A and Class B common
stock of CME Group are entitled to receive
proportionately such dividends, if any, as may be
declared by the CME Group board of directors.

CME Group Omnibus Stock Plan. CME Group has
adopted an Omnibus Stock Plan under which stock-
based awards may be made to employees. A total of
40.2 million Class A common stock shares have been
reserved for awards under the plan. Awards totaling
22.4 million shares have been granted and are
outstanding or have been exercised under this plan at
December 31, 2012 (note 18). Shares reserved under
the CME Group Omnibus Stock Plan have been
adjusted to reflect the stock split.

CBOT Holdings Long-Term Equity Incentive
Plan. In connection with the merger with CBOT
Holdings, CME Group assumed CBOT Holdings’
2005 Long-Term Equity Incentive Plan. Under the
plan, stock-based awards may be made to certain
directors, officers and other key employees or
individuals. A total of 2.3 million shares have been
reserved for awards under the plan. In connection
with receiving shareholder approval to increase the
amount of authorized shares under the Omnibus
Stock Plan in May 2009, the company undertook to
freeze future awards under this plan. As a result,
1.6 million shares that remained authorized for future
awards under this plan were frozen. Shares reserved
under the this plan have been adjusted to reflect the
stock split.

NYMEX Holdings Omnibus Long-Term Incentive
Plan. In connection with the merger with NYMEX
Holdings, CME Group assumed NYMEX Holdings’
2006 Omnibus Long-Term Incentive Plan. Under the
plan, stock-based awards may be made to any
director, officer or employee of the company and
other key individuals providing services to the
company. A total of 5.0 million shares have been
reserved for awards under the plan. In connection

with receiving shareholder approval to increase the
amount of authorized shares under the Omnibus
Stock Plan in May 2009, the company undertook to
freeze future awards under this plan. As a result,
3.5 million shares that remained authorized for future
awards under this plan were frozen. Shares reserved
under the this plan have been adjusted to reflect the
stock split.

Director Stock Plan. CME Group has adopted a
Director Stock Plan under which awards are made to
non-executive directors as part of
their annual
compensation. A total of 625,000 Class A shares
have
and
approximately 234,000 shares have been awarded
through December 31, 2012. Shares reserved under
the this plan have been adjusted to reflect the stock
split.

reserved

under

plan,

been

this

Employee Stock Purchase Plan. CME Group has
adopted an Employee Stock Purchase Plan (ESPP)
under which employees may purchase Class A shares
at 90% of the market value of the shares using after-
tax payroll deductions. A total of 500,000 Class A
shares have been reserved under this plan, of which
approximately 158,000 shares have been purchased
through December 31, 2012 (note 18). Shares
reserved under the Employee Stock Purchase Plan
have been adjusted to reflect the stock split.

Share Repurchases. In February 2010, CME Group
was authorized by its board of directors to purchase
up to 11.8 million shares of Class A common stock.
The authorization of the repurchase was approved in
connection with the company’s agreement to issue
additional
to
BM&FBOVESPA to increase its aggregate share
ownership in the company to 5%. During 2010,
10.0 million shares were purchased at an average
price of $57 per share for a total cost of $575.3
million. This plan’s authorization has expired.

common

Class

In May 2011, the board of directors authorized a
share buyback program of up to $750.0 million of
CME Group Class A common stock over a 12 month
period. During 2011, 4.0 million shares were
purchased at an average price of $54 per share for a
total cost of $220.4 million. This plan’s authorization
has expired.

18. STOCK-BASED PAYMENTS

awards may be made

CME Group adopted an Omnibus Stock Plan under
which stock-based
to
employees. A total of 40.2 million Class A shares
have been reserved for awards under
the plan.
Awards totaling 22.4 million shares have been
granted and are outstanding or have been exercised
under the plan as of December 31, 2012. Awards
granted before 2009 generally vest over a five-year
period, with 20% vesting one year after the grant date
and on that same date in each of the following four
years. Beginning in 2009, awards granted generally
vest over a four-year period, with 25% vesting one
year after the grant date and on that same date in each
of the following three years.

expense

compensation

Total
stock-based
payments and total income tax benefit recognized in
the consolidated statements of income for stock-
based awards were as follows:

for

(in millions)

Compensation expense . . . . .
Income tax benefit

2012

2011

2010

$61.4

$51.3

$40.9

recognized . . . . . . . . . . . .

22.5

18.8

16.4

future

estimates

forfeitures,

at
of
Excluding
December 31, 2012, there was $89.0 million of total
unrecognized compensation expense
related to
employee stock-based compensation arrangements
that had not yet vested. This expense is expected to
be recognized over a weighted average period of 2.1
years.

In 2012,
the company granted employees stock
options totaling 81,040 shares under the Omnibus
Stock Plan. The options have a ten-year term with
exercise prices ranging from $53 to $57, the closing
market prices on the grant dates. The fair value of
these options, which was measured at the grant dates
totaled
using the Black-Scholes valuation model,
$1.0 million. The fair value is
recognized as
compensation expense on an accelerated basis over
the vesting period.

The Black-Scholes fair value of each option grant
was calculated using the following assumptions:

Grant Year

2012

2011

2010

Dividend

yield . . . .

4.2%-4.5% 1.2%-2.4% 1.4%-1.7%

Expected

volatility

40%-41% 41%-42% 42%-44%

Risk-free
interest
rate . . . . .

Expected

life . . . . .

0.8%-1.5% 2.0%-2.3% 1.9%-2.9%

5.0 to
6.2 years

5.6 to
6.2 years

6.2 years

The dividend yield was calculated by dividing that
year’s expected dividends by the market price of the
stock at the dates of grant. A weighting of implied
and historical volatility was used to estimate
expected future volatility. The risk-free interest rate
was based on the U.S. Treasury yield in effect at the
time of each grant. The expected life of options
granted has been determined using the simplified
method as outlined in guidance from the Securities
and Exchange Commission.

The following table summarizes stock option activity for 2012. Aggregate intrinsic value is in millions.

Number of Shares

Outstanding at December 31, 2011 . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,086,080
81,040
(744,509)
(527,340)

Outstanding at December 31, 2012 . . . . . . . . . . . . .

5,895,271

Exercisable at December 31, 2012 . . . . . . . . . . . . .

4,066,056

Weighted
Average
Exercise
Price

$60
54
30
78

Weighted Average
Remaining
Contractual Life

Aggregate
Intrinsic Value

6.4 years

$29.1

5.7 years

4.7 years

15.2

14.9

The weighted average grant date fair value of options
granted during 2012, 2011, and 2010 was $13, $19
and $20 per share, respectively. The total intrinsic
value of options exercised during the years ended
December 31, 2012, 2011 and 2010, was $19.0
million, $4.2 million and $15.6 million, respectively.

recognized

$54.5 million, which

In 2012,
the company granted 931,340 shares of
restricted Class A common stock and 4,048 shares of
restricted stock units. Restricted common stock and
restricted stock units generally have a vesting period
of 2 to 4 years. The fair value related to these grants
as
was
compensation expense on an accelerated basis over
the vesting period. Beginning with restricted stock
grants in September 2010, dividends are accrued on
restricted Class A common stock and restricted stock
units and are paid once the restricted stock vests. In
2012, the company also granted 138,410 performance
shares. The fair value related to these grants was $7.7
compensation
million, which is
expense on an accelerated and straight-lined basis
over the vesting period. The vesting of these shares is
contingent on meeting stated performance or market
conditions.

recognized as

The following table summarizes restricted stock,
restricted stock units, and performance shares activity
for 2012:

Number of
Shares

Weighted
Average
Grant Date
Fair Value

1,432,610
1,073,798
(366,388)
(226,493)

$57
54
55
63

Outstanding at December

31, 2011 . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . .

Outstanding at December

31, 2012 . . . . . . . . . . . . . .

1,913,527

The total fair value of restricted stock, restricted
stock units, and performance shares that vested
during the years ended December 31, 2012, 2011 and
2010, was $20.9 million, $11.6 million and $10.3
million, respectively.

Eligible employees may acquire shares of Class A
common stock using after-tax payroll deductions
made
of
approximately six months in duration. Shares are

consecutive

offering

periods

during

purchased at the end of each offering period at a price
of 90% of the closing price of the Class A common
stock as reported on the NASDAQ Global Select
Market. Compensation expense is recognized on the
dates of purchase for the discount from the closing
price. In 2012, 2011 and 2010, a total of 27,768,
32,085 and 21,855 shares, respectively, of Class A
common
participating
employees. These shares are subject to a six-month
holding period. Annual expense of $0.1 million, $0.2
million and $0.1 million for the purchase discount
was recognized in 2012, 2011 and 2010, respectively.

stock were

issued

Non-executive directors receive an annual award of
Class A common stock with a value equal
to
$75,000. Non-executive directors may also elect to
receive some or all of the cash portion of their annual
stipend, up to $25,000, in shares of stock based on
the closing price at the date of distribution. As a
result, 40,260, 40,585 and 37,350 shares of Class A
common stock were issued to non-executive directors
during 2012, 2011 and 2010, respectively. These
shares are not subject
to any vesting restrictions.
Expense of $2.2 million, $2.1 million and $2.4
million related to these stock-based payments was
recognized for the years ended December 31, 2012,
2011 and 2010, respectively.

19. FAIR VALUE MEASUREMENTS

securities

of marketable

In general, the company uses quoted prices in active
markets for identical assets to determine the fair
value
equity
investments. Level 1 assets generally include U.S.
Treasury securities, equity securities listed in active
markets, and investments in publicly traded mutual
funds with quoted market prices. If quoted prices are
not available to determine fair value, the company
uses other inputs that are directly observable.

and

Assets included in level 2 generally consist of asset-
backed securities, municipal bonds, U.S. government
agency securities and interest rate swap contracts.
Asset-backed securities, municipal bonds and U.S.
government agency securities were measured at fair
value based on matrix pricing using prices of similar
securities with similar inputs such as maturity dates,
interest
ratings. The company
determined the fair value of its interest rate swap
contracts using standard valuation models with
market-based observable inputs including forward
and spot exchange rates and interest rate curves.

rates and credit

The company determined the fair value of
its
contingent consideration liabilities, considered level
3 liabilities, using a discounted cash flow model to
calculate the present value of future payouts. The
liabilities were
because
management used significant unobservable inputs,
including a discount
rate of 20% and payout
probabilities ranging from 89% to 100%. Significant
increases or decreases in any of those inputs in

included

level

isolation would result in a significantly different fair
value.

recorded in the
Financial assets and liabilities
consolidated balance sheet as of December 31, 2012
and 2011 were classified in their entirety based on
the lowest level of input that was significant to each
asset or liability’s fair value measurement.

Financial Instruments Measured at Fair Value on a Recurring Basis:

(in millions)

Assets at Fair Value:
Marketable securities:

U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31, 2012

Level 1

Level 2 Level 3

Total

$ 17.5

$ — $ — $ 17.5
38.7
—
0.4
0.4 —

38.7 —
—

56.2

721.7 —

0.4 —
—

56.6
721.7

Total Assets at Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$777.9

$ 0.4

$ — $778.3

Liabilities at Fair Value:

Interest rate swap contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $ 1.0
—

—

$ — $
12.6

1.0
12.6

Total Liabilities at Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $ 1.0

$12.6

$ 13.6

(in millions)

Assets at Fair Value:
Marketable securities:

December 31, 2011

Level 1

Level 2 Level 3

Total

U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Government agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $ — $

5.1
31.8 —
—
—
—

—
4.5 —
0.9 —
5.3 —

5.1
31.8
4.5
0.9
5.3

36.9

552.8 —

10.7 —
—

47.6
552.8

Total Assets at Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$589.7

$10.7

$ — $600.4

Liabilities at Fair Value:

Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $ — $10.3

$ 10.3

Total Liabilities at Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $ — $10.3

$ 10.3

There were no transfers of assets between level 1 and
level 2 during 2012 and 2011. The following is a
reconciliation of liabilities valued at fair value on a
recurring basis using significant unobservable inputs
(level 3) during 2011 and 2012. There were no assets
valued at
fair value on a recurring basis using
significant unobservable inputs (level 3) during 2012
and 2011.

(in millions)

Fair value of liability at December 31,
2010 . . . . . . . . . . . . . . . . . . . . . . . . .
Realized and unrealized gains (losses):
Included in operating expense . . .

Fair value of liability at December 31,
2011 . . . . . . . . . . . . . . . . . . . . . . . . .

Contingent obligation arising from

acquisition . . . . . . . . . . . . . . . . . . . .
Realized and unrealized gains (losses):
Included in operating expense . . .

Fair value of liability at December 31,
2012 . . . . . . . . . . . . . . . . . . . . . . . . .

Contingent
Consideration

$ 9.5

0.8

10.3

1.2

1.1

$12.6

There were no assets or liabilities valued at fair value
on
significant
unobservable inputs (Level 3) during 2012.

nonrecurring

using

basis

20. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net
income attributable to CME Group by the weighted
average number of shares of all classes of common
stock outstanding for each reporting period. Diluted
earnings per share reflects the increase in shares
using the treasury stock method to reflect the impact
of an equivalent number of shares of common stock
if stock options were exercised and restricted stock
awards were converted into common stock. Anti-
dilutive stock options and restricted stock awards
were as follows for the years presented:

(in thousands)

2012

2011

2010

Stock options . . . . . . . . . . . .
4,851
Restricted stock awards . . . . —

4,689
—

4,239
16

Total . . . . . . . . . . . . . . . . . . .

4,851

4,689

4,255

The following table presents the earnings per share calculation for the years presented:

Net Income Attributable to CME Group (in millions) . . . . . . . . . . . . . . . . . . . .
Weighted Average Common Shares Outstanding (in thousands):

2012

2011

2010

896.3

$ 1,812.3

951.4

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of stock options and restricted stock awards . . . . . . . . . . . . . . . . . .

331,252
1,067

332,737
1,074

331,493
982

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

332,319

333,811

332,475

Earnings per Common Share Attributable to CME Group:

2.71
2.70

5.45
5.43

2.87
2.86

21. QUARTERLY INFORMATION (UNAUDITED)

(in millions, except per share data)

Year Ended December 31, 2012
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating income (expense) . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to CME Group . . . . . . . . . . . . . . . . . . . .
Earnings per common share attributable to CME Group:

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Year to
Date

$774.6
451.2
(17.8)
433.4
266.6

$795.9
469.2
41.5
510.7
244.9

$683.2
396.0
(0.2)
395.8
218.0

$660.9
375.6
(22.1)
353.5
166.8

$2,914.6
1,692.0
1.4
1,693.4
896.3

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.81
0.80

$ 0.74
0.74

$ 0.66
0.66

$ 0.50
0.50

2.71
2.70

Year Ended December 31, 2011
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating income (expense) . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to CME Group . . . . . . . . . . . . . . . . . . . .
Earnings per common share attributable to CME Group:

$831.6
524.1
(12.5)
511.6
456.6

$838.3
534.5
(25.2)
509.3
293.7

$874.2
572.1
(26.2)
545.9
316.1

$736.5
390.4
(20.7)
369.7
745.9

$3,280.6
2,021.1
(84.6)
1,936.5
1,812.3

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1.37
1.36

$ 0.88
0.88

$ 0.95
0.95

$ 2.26
2.25

5.45
5.43

22. SUBSEQUENT EVENTS

The company has evaluated subsequent events
through the date the financial statements were issued.
there were no
The company has determined that
subsequent events that require disclosure.

ITEM 9. CHANGES IN AND

DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-
15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (Exchange Act)) as of the
end of the period covered by this Annual Report on
Form 10-K. Based on such evaluation, our Chief
Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, our
disclosure controls and procedures are effective.

Management’s Annual Report on Internal Control
over Financial Reporting

Management
is responsible for establishing and
maintaining adequate internal control over financial
internal control system has been
reporting. Our
designed
to
provide
management and the board of directors regarding the
preparation and fair presentation of published
financial statements.

reasonable

assurance

assessed the

effectiveness of

Management
the
Company’s internal control over financial reporting as
of December 31, 2012. Management based its
assessment on criteria for effective internal control
over financial reporting described in Internal Control-
Integrated Framework Issued by the Committee of
Treadway
Sponsoring Organizations
Commission. Management’s
included
evaluating the design of our internal control over
financial
reporting and testing the operational
effectiveness of our internal control over financial
reporting. The results of its assessment were reviewed
with the audit committee of the board of directors.

of
assessment

the

Based on this assessment, management believes that,
as of December 31, 2012, our internal control over
financial reporting is effective. The effectiveness of
our internal control over financial reporting as of
December 31, 2012 has been audited by Ernst &
registered public
an independent
Young LLP,
accounting firm, as stated in the following report.

100

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of CME
Group Inc.

We have audited the accompanying consolidated
balance sheets of CME Group Inc. and subsidiaries
as of December 31, 2012 and 2011, and the related
consolidated statements of income, comprehensive
income, shareholders’ equity and cash flows for each
of the three years in the period ended December 31,
2012. Our audit also included the financial statement
schedule listed in the Index at Item 15(a). These
financial statements are the responsibility of the
Company’s management. Our responsibility is to
express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with the
standards of
the Public Company Accounting
Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An
audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in
the financial statements. An audit also includes
assessing
and
significant estimates made by management, as well
statement
overall
as
presentation. We believe that our audits provide a
reasonable basis for our opinion.

accounting

evaluating

principles

financial

used

the

in all material respects,

In our opinion, the financial statements referred to
above present fairly,
the
consolidated financial position of CME Group Inc.
and subsidiaries at December 31, 2012 and 2011, and
the consolidated results of their operations and their
cash flows for each of the three years in the period
ended December 31, 2012, in conformity with U.S.
generally accepted accounting principles.

financial

in accordance with the
We also have audited,
the Public Company Accounting
standards of
Oversight Board (United States), CME Group Inc.’s
internal control over
reporting as of
December 31, 2012, based on criteria established in
Internal Control-Integrated Framework issued by the
the
Committee of Sponsoring Organizations of
Treadway Commission
dated
February 28, 2013 expressed an unqualified opinion
thereon.

report

and

our

Ernst & Young, LLP

Chicago, Illinois
February 28, 2013

101

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of CME
Group Inc.

the

We have audited CME Group Inc.’s internal control
over financial reporting as of December 31, 2012,
based on criteria established in Internal Control-
Integrated Framework issued by the Committee of
Treadway
Sponsoring Organizations
Commission (the COSO criteria). CME Group Inc.’s
management is responsible for maintaining effective
internal control over financial reporting, and for its
assessment of the effectiveness of internal control
over
the
accompanying Management’s Annual Report on
Internal Control over Financial Reporting. Our
to express an opinion on the
responsibility is
company’s internal control over financial reporting
based on our audit.

reporting

financial

included

in accordance with the
We conducted our audit
standards of
the Public Company Accounting
Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal
control over financial reporting was maintained in all
material respects. Our audit included obtaining an
understanding of
financial
reporting, assessing the risk that a material weakness
exists,
testing and evaluating the design and
operating effectiveness of internal control based on
the
and performing such other
procedures as we considered necessary in the
circumstances. We believe that our audit provides a
reasonable basis for our opinion.

internal control over

assessed risk,

financial

statements

A company’s internal control over financial reporting
is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of
for external
purposes in accordance with generally accepted
accounting principles. A company’s internal control
over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of
records that,
in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the
assets of
(2) provide reasonable
assurance that transactions are recorded as necessary
financial statements in
to permit preparation of

the company;

accordance with generally accepted accounting
principles, and that receipts and expenditures of the
company are being made only in accordance with
authorizations of management and directors of the
company; and (3) provide reasonable assurance
regarding
of
or
unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on
the financial statements.

prevention

detection

timely

Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk
that controls may become inadequate because of
changes
the degree of
compliance with the policies or procedures may
deteriorate.

in conditions, or

that

In our opinion, CME Group Inc. maintained, in all
material
respects, effective internal control over
financial reporting as of December 31, 2012, based
on the COSO criteria.

in accordance with the
We also have audited,
the Public Company Accounting
standards of
Oversight Board (United States),
the consolidated
balance sheets as of December 31, 2012 and 2011
and the related consolidated statements of income,
comprehensive income, shareholders’ equity, and
cash flows for each of the three years in the period
ended December 31, 2012 of CME Group Inc. and
our report dated February 28, 2013 expressed an
unqualified opinion thereon.

Ernst & Young LLP

Chicago, Illinois
February 28, 2013

102

Changes
Reporting

in Internal Control over Financial

the company’s management,

As required by Rule 13a-15(d) under the Exchange
including the
Act,
company’s Chief Executive Officer and Chief
Financial Officer, have evaluated the company’s
internal control over financial reporting (as such term
is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) to determine whether any changes
occurred during the fourth quarter of 2012 that have
materially affected, or are reasonably likely to
materially affect, the company’s internal control over
financial reporting. There were no changes in the
company’s internal control over financial reporting
during the period covered by this report that have
materially affected, or are reasonably likely to
materially affect,
financial
reporting.

internal control over

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE

OFFICERS AND CORPORATE
GOVERNANCE

senior

our Web

financial officers.

We have adopted a written code of conduct
applicable to all of our employees,
including our
Executive Chairman & President, Chief Executive
Officer, Chief Financial Officer, Chief Accounting
Officer and other
In
accordance with SEC rules and regulations, our Code
of Conduct
is available on our Web site at
www.cmegroup.com under the “Investor Relations-
Corporate Governance” link. We intend to disclose
substantive
site
promptly
amendments
in
to our Code of Conduct and,
the
accordance with the listing requirements of
NASDAQ, any waivers granted to our executive
officers or Board members will be promptly
disclosed on a Current Report on Form 8-K. In
addition, we have adopted Corporate Governance
Principles which govern the practices of our board of
directors. You may also obtain a copy of our Code of
Conduct and our Corporate Governance Principles by
this
following the instructions in the section of
Annual Report on Form 10-K entitled “Item 1.
Business-Available Information.”

any

Certain of the information called for by this item is
hereby incorporated herein by reference to the
relevant portions of CME Group’s definitive proxy
statement for the Annual Meeting of Shareholders to
be held on May 22, 2013, to be filed by CME Group
with the Securities and Exchange Commission
pursuant to Regulation 14A within 120 days after
December 31, 2012 (Proxy Statement). Additional
information called for by this item is contained in
Item 1 of this Annual Report on Form 10-K under the
caption “Employees-Executive Officers.”

ITEM 11. EXECUTIVE COMPENSATION

Certain of the information called for by this item is
hereby incorporated herein by reference to the
relevant portions of the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND
RELATED SHAREHOLDER
MATTERS

Certain of the information called for by this item
certain
relating to the
beneficial owners
is hereby
incorporated herein by reference to the relevant
portions of the Proxy Statement.

security ownership of
and management

Equity Compensation Plan Information

We currently have the following equity compensation
plans: CME Group Inc. Amended and Restated
Omnibus Stock Plan,
the CME Group Inc. 2005
Director Stock Plan, CME Group Inc. Amended and
Restated Employee Stock Purchase Plan, Amended
and Restated CBOT Holdings, Inc. 2005 Long-Term
Equity Plan and the Amended and Restated NYMEX
Inc. 2006 Omnibus Stock Plan. A
Holdings,
description of each of these plans and the number of
shares authorized and available for future awards is
included in note 17 of the notes to consolidated
and
financial
subsidiaries.
receipt of
shareholder approval
to increase the authorized
shares under our Omnibus Stock Plan and our
Director Stock Plan, we agreed not to issue future
awards under the CBOT Holdings and NYMEX
plans.

statements of CME Group Inc.

In connection with our

103

Prior to our holding company reorganization in 2001,
CME issued options under the Chicago Mercantile
Exchange Omnibus Stock Plan, which was not
approved by CME shareholders. In connection with
our holding company reorganization, CME, as the
sole shareholder of CME Holdings, approved the
assumption by CME Holdings of the Omnibus Stock
Plan. After the reorganization, the plan was amended
and restated as the Chicago Mercantile Exchange
Holdings Inc. Amended and Restated Omnibus Stock
Plan. Options issued prior to the sole shareholder
approval are listed in the table below as being made
under an equity compensation plan not approved by
security holders, and options issued after such time

are listed below as being made under an equity
compensation plan approved by security holders. The
Employee Stock Purchase Plan and the 2005 Director
Stock Plan were approved by shareholders at our
2005 annual meeting of shareholders. In connection
with our mergers with CBOT Holdings and NYMEX
Holdings, we assumed their existing equity plans.
The shares relating to the CBOT Holdings and
NYMEX Holdings plans are listed in the table below
as being made under an equity compensation plan
approved by security holders based upon the fact that
shareholders of the Company approved the related
merger transactions.

Number of Securities to be
Issued Upon Exercise of
Outstanding Options (a)

Weighted-Average Exercise
Price of Outstanding
Options (b)

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(excluding securities
reflected in column (a))(c)

Plan category

Equity compensation plans

approved by security holders . . .

5,895,271

$62.51

23,725,139

Equity compensation plans not

approved by security holders . . .

—

Total

. . . . . . . . . . . . . . . . . . . . . . . .

5,895,271

23,725,139

ITEM 13. CERTAIN RELATIONSHIPS,

ITEM 14. PRINCIPAL ACCOUNTANT FEES

RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE

AND SERVICES

Certain of the information called for by this item is
hereby incorporated herein by reference to the
relevant portions of the Proxy Statement.

104

PART IV

ITEM 15. EXHIBITS AND FINANCIAL

STATEMENT SCHEDULES

(a) Financial Statements, Financial Statement

Schedules and Exhibits

(1) Financial Statements

The following Consolidated Financial Statements and
related Notes included within Item 8, together with
Independent Registered Public
the Reports of
Accounting Firm with respect thereto and included
within Item 9A,
are hereby incorporated by
reference:

Reports of Independent Registered Public
Accounting Firm

Consolidated Balance Sheets at December 31,
2012 and 2011

Consolidated Statements of Income for the Years
Ended December 31, 2012, 2011 and 2010

Consolidated Statements of Comprehensive
Income for the Years Ended December 31, 2012,
2011 and 2010

Consolidated Statements of Equity for the Years
Ended December 31, 2012, 2011 and 2010

Consolidated Statements of Cash Flows for the
Years Ended December 31, 2012, 2011 and 2010

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

The following Financial Statement Schedule is filed as part of this Annual Report on Form 10-K:

CME Group Inc. and Subsidiaries
Schedule II—Valuation and Qualifying Accounts
For the Years Ended December 31, 2012, 2011 and 2010
(dollars in millions)

Balance at
beginning
of year

Charged
against
goodwill

Charged
(credited) to
costs and
expenses

Balance
at end
of year

Other(1)

Year Ended December 31, 2012
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . .
Allowance for deferred tax assets . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31, 2011
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . .
Allowance for deferred tax assets . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31, 2010
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . .
Allowance for deferred tax assets . . . . . . . . . . . . . . . . . . . . .

1.3
43.2

$
1.6
258.4

1.9
264.4

$—
0.5

$ 1.0
(3.0)

(1.5) $
(15.9)

0.8
24.8

$—
—

$ 22.4
(46.4)

$ (22.7) $
(168.8)

1.3
43.2

$ 0.2
(6.1)

$ (0.5) $ 1.6
258.4

0.1

(1)

Includes write-offs of doubtful accounts and reversals of deferred tax asset valuation allowances against
accumulated other comprehensive income.

All other schedules have been omitted because the
forth in those
information required to be set
schedules is not applicable or
is shown in the
consolidated financial statements or notes thereto.

(3)

Exhibits

See (b) Exhibits below

105

(b) Exhibits

Exhibit
Number

Description of Exhibit

Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession

2.1

Agreement and Plan of Merger, dated as of March 17, 2008, among CME Group Inc., CMEG NY
Inc., NYMEX Holdings, Inc. and New York Mercantile Exchange, Inc. (incorporated by reference
to Exhibit 2.1 to CME Group Inc.’s Form 8-K, filed with the SEC on March 21, 2008, File No.
000-33379); Amendment, dated June 30, 2008 (incorporated by reference to Exhibit 2.1 to CME
Group Inc.’s Form 10-Q, filed with the SEC on August 7, 2008, File No. 001-31553);
Amendment, dated as of July 18, 2008 (incorporated by reference to Exhibit 2.1 to CME Group’s
Current Report on Form 8-K, filed with the SEC on July 23, 2008, File No. 001-31553);
Amendment, dated as of August 7, 2008 (incorporated by reference to Exhibit 2.2 to CME
Group’s Form 10-Q filed with the SEC on November 10, 2008, File No. 001-31553).

Articles of Incorporation and Bylaws

3.1

3.2

Fourth Amended and Restated Certificate of Incorporation of CME Group Inc. (incorporated by
reference to Exhibit 3.1 to CME Group Inc.’s Current Report on Form 8-K, filed with the SEC on
May 29, 2012, File No. 001-31553).

Ninth Amended and Restated Bylaws of CME Group Inc. (incorporated by reference to
Exhibit 3.1 to CME Group Inc.’s Current Report on Form 8-K, filed with the SEC on November
14, 2012, File No. 001-31553).

Instruments Defining the Rights of Security Holders

4.1

4.2

4.3

4.4

4.5

4.6

Commercial Paper Dealer Agreement, dated as of August 16, 2007, among CME Group Inc., as
Issuer, and Lehman Brothers Inc., as Dealer (subsequently assigned to Barclays Capital Inc. in
connection with the bankruptcy of Lehman Brothers Holdings Inc.) (incorporated by reference to
Exhibit 4.2 to CME Group Inc.’s Form 10-Q, filed with the SEC on November 8, 2007,
File No. 000-33379).

Issuing and Paying Agency Agreement, dated as of August 16, 2007, between CME Group Inc.
and JPMorgan Chase Bank, National Association, as Issuing and Paying Agent (incorporated by
reference to Exhibit 4.3 to CME Group Inc.’s Form 10-Q, filed with the SEC on November 8,
2007, File No. 000-33379).

Commercial Paper Dealer Agreement, dated as of August 20, 2008, between CME Group Inc., as
Issuer, and Banc of America Securities LLC, as Dealer (incorporated by reference to Exhibit 10.1
to CME Group Inc.’s Current Report on Form 8-K, filed with the SEC on August 26, 2008,
File No. 001-31553).

Commercial Paper Dealer Agreement, dated as of August 22, 2008, between CME Group Inc., as
Issuer, and Goldman, Sachs & Co., as Dealer (incorporated by reference to Exhibit 10.2 to CME
filed with the SEC on August 26, 2008,
Group Inc.’s Current Report on Form 8-K,
File No. 001-31553).

Indenture, dated August 12, 2008, between CME Group Inc. and U.S. Bank National Association
(incorporated by reference to Exhibit 4.1 to CME Group Inc.’s Current Report on Form 8-K, filed
with the SEC on August 13, 2008, File No. 001-31553).

Third Supplemental Indenture, dated August 12, 2008 (including the form of 5.4% note due
2013), between CME Group Inc. and U.S. Bank National Association (incorporated by reference
to Exhibit 4.4 to CME Group Inc.’s Current Report on Form 8-K, filed with the SEC on
August 13, 2008, File No. 001-31553).

106

Exhibit
Number

Description of Exhibit

4.7

4.8

4.9

Fourth Supplemental Indenture (including the form of 5.75% note due 2014), dated February
9, 2009, between CME Group Inc. and U.S. Bank National Association (incorporated by
reference to Exhibit 4.2 to CME Group Inc.’s Current Report on Form 8-K, filed with the SEC
on February 9, 2009, File No. 001-31553).

Fifth Supplemental Indenture (including the form of 3.00% note due 2022), dated September
10, 2012, between CME Group Inc. and U.S. Bank National Association (incorporated by
reference to Exhibit 4.2 to CME Group Inc.’s Current Report on Form 8-K, filed with the SEC
on September 10, 2012, File No. 001-31553).

Indenture (including the form of 4.40% note due 2018), dated March 18, 2010, between CME
Group Index Services LLC, CME Group Inc. and U.S. Bank National Association
(incorporated by reference to Exhibit 4.1 to CME Group Inc.’s Current Report on Form 8-K,
filed with the SEC on March 23, 2010, File No. 001-31553).

10.

Material Contracts

10.1(1)* CME Group Inc. Amended and Restated Omnibus Stock Plan, amended and restated effective
as of May 23, 2012 (incorporated by reference to Exhibit 10.1 to CME Group Inc.’s Form 8-K,
filed with the SEC on May 29, 2012, File No. 001-31553); First Amendment to the Amended
and Restated Omnibus Stock Plan, effective as of December 5, 2012.*

10.2(1)* Form of Equity Grant Letter for Executive Officers.

10.3(1)

Form of equity grant
letter for performance based shares based on specific Company
initiatives (incorporated by reference to Exhibit 10.7 to CME Group Inc.’s Form 10-Q, filed
with the SEC on August 5, 2011, File No. 001-31553).

10.4(1)* Form of equity grant letter for annual grant of performance shares.

10.5(1)

10.6(1)

CME Group Inc. 2005 Director Stock Plan, amended and restated effective as of May 13, 2009
(incorporated by reference to Exhibit 10.2 to CME Group Inc.’s Current Report on Form 8-K,
filed with the SEC on May 18, 2009, File No. 001-31553).

Form of Equity Stipend Grant Letter for Non-Executive Directors (incorporated by reference
to Exhibit 10.4 to CME Group Inc.’s Form 10-K, filed with the SEC on February 26, 2010,
File No. 001-31553).

10.7(1)* CME Group Inc.’s Amended and Restated Employee Stock Purchase Plan, amended and
restated as of May 23, 2012 (incorporated by reference to Exhibit 10.2 to CME Group Inc.’s
Form 8-K, filed with the SEC on May 29, 2012, File No. 001-31553; First Amendment to the
Amended and Restated Employee Stock Purchase Plan, effective as of December 5, 2012.*

10.8(1) Amended and Restated CBOT Holdings, Inc. 2005 Long-Term Equity Plan, amended and
restated as of December 31, 2008 (incorporated by reference to Exhibit 10.6 to CME Group
Inc.’s Form 10-K, filed with the SEC on March 2, 2009, File No. 001-31553).

10.9(1) Amended and Restated NYMEX Holdings, Inc. 2006 Omnibus Long-Term Incentive Plan,
amended and restated as of December 31, 2008 (incorporated by reference to Exhibit 10.7 to
CME Group Inc.’s Form 10-K, filed with the SEC on March 2, 2009, File No. 001-31553).

10.10(1) Chicago Mercantile Exchange Inc. Senior Management Supplemental Deferred Savings Plan
(SMSDSP) consisting of the Grandfathered SMSDSP, amended and restated as of January 1,
2008, and the Amended and Restated 409A SMSDSP, amended and restated as of January 1,
2008 (incorporated by reference to Exhibit 10.7 to CME Group Inc.’s Form 10-K, filed with
the SEC on February 28, 2008, File No. 000-33379).

107

Exhibit
Number

Description of Exhibit

10.11(1) Amended and Restated Chicago Mercantile Exchange Inc. Directors’ Deferred Compensation
Plan, amended and restated as of January 1, 2009 (incorporated by reference to Exhibit 10.9
to CME Group Inc.’s Form 10-K, filed with the SEC on March 2, 2009, File No. 001-31553).

10.12(1) New York Mercantile Exchange, Inc. Executive Deferred Compensation Plan for Key
Inc.’s

Employees (incorporated by reference to Exhibit 10.5 to NYMEX Holdings,
Form 10-K, filed with the SEC on March 29, 2001, File No. 333-30332).

10.13(1)

10.14(1)

Chicago Mercantile Exchange Inc. Supplemental Executive Retirement Plan consisting of the
Grandfathered Supplemental Retirement Plan, amended and restated as of January 1, 2008,
and the Amended and Restated 409A Supplemental Executive Retirement Plan, amended and
restated as of January 1, 2008 (incorporated by reference to Exhibit 10.9 to CME Group
Inc.’s Form 10-K, filed with the SEC on February 28, 2008, File No. 000-33379).

Chicago Mercantile Exchange Inc. Supplemental Executive Retirement Trust; First
Amendment thereto, dated September 7, 1993 (incorporated by reference to Exhibit 10.5 to
Chicago Mercantile Exchange Inc.’s Form S-4, filed with the SEC on February 24, 2000,
File No. 333-95561); Second Amendment to Chicago Mercantile Exchange Inc. Senior
Management Supplemental Deferred Savings Plan, executed as of April 25, 2011
(incorporated by reference to Exhibit 10.4 to CME Group Inc.’s Form 10-Q, filed with the
SEC on August 5, 2011, File No. 001-31553)

10.15(1)

COMEX Members’ Recognition and Retention Plan (incorporated by reference to Exhibit
10.11 to NYMEX Holdings, Inc.’s Form 10-K, filed with the SEC on March 29, 2001,
File No. 333-30332).

10.16(1) Amended and Restated CME Group Inc. Incentive Plan for Named Executive Officers
(incorporated by reference to Exhibit 10.3 to CME Group Inc.’s Current Report on Form 8-K,
filed with the SEC on May 18, 2009, File No. 001-31553); Amendment, effective as of
February 2, 2010 (incorporated by reference to Exhibit 10.14 to CME Group Inc.’s
Form 10-K, filed with the SEC on February 26, 2010, File No. 001-31553); Second
Amendment to the Amended and Restated CME Group Inc. Annual Incentive Plan for
Named Executive Officers, executed as of April 25, 2011 (incorporated by reference to
Exhibit 10.5 to CME Group Inc.’s Form 10-Q, filed with the SEC on August 5, 2011,
File No. 001-31553).

10.17(1)* CME Group Inc. Severance Plan for Eligible Executives, amended and restated effective

January 1, 2013.

10.18(1)* CME Group Inc. Severance Plan, amended and restate effective January 1, 2013.

10.19(1) Amended Agreement, effective as of April 18, 2012, between CME Group Inc. and Terrence
A. Duffy (incorporated by reference to Exhibit 10.1 to CME Group Inc.’s Form 10-Q, filed
with the SEC on May 8, 2012, File No. 001-31553).

10.20(1) Amended Agreement, effective as of April 18, 2012, between CME Group Inc. and
Phupinder S. Gill (incorporated by reference to Exhibit 10.2 to CME Group Inc.’s
Form 10-Q, filed with the SEC on May 8, 2012, File No. 001-31553).

10.21(1)

Consulting Agreement between Leo Melamed and CME Group Inc., dated June 26, 2009
(incorporated by reference to Exhibit 10.2 to CME Group Inc.’s Form 10-Q, filed with the
SEC on August 6, 2009, File No. 001-31553).

108

Exhibit
Number

10.22(1)

Description of Exhibit

Consulting Agreement between Leo Melamed and Chicago Mercantile Exchange Holdings Inc.,
dated November 14, 2005 (incorporated by reference to Exhibit 10.28 to Chicago Mercantile
Exchange Holdings
Inc.’s Form 10-K filed with the SEC on March 6, 2006,
File No. 000-33379); Amendment, dated as of June 21, 2012 (incorporated by reference to
Exhibit 10.4 to CME Group Inc.’s Form 10-Q, filed with the SEC on August 8, 2012,
File No. 001-31553).

10.23(1)* Consulting Agreement between John F. Sandner and Chicago Mercantile Exchange Holdings
Inc., dated October 10, 2005 (incorporated by reference to Exhibit 10.4 to Chicago Mercantile
Exchange Holdings
filed with the SEC on November 4, 2005,
File No. 000-33379); Amendment, dated November 30, 2012.*

Inc.’s Form 10-Q,

10.24(1)

10.25(2)

Craig S. Donohue Retirement Agreement, dated as of May 1, 2012 (incorporated by reference to
Exhibit 10.1 to CME Group Inc.’s Form 8-K, filed with the SEC on May 2, 2012,
File No. 001-31553).

License Agreement, dated June 29, 2012, between Standard & Poor’s Financial Services LLC
and Chicago Mercantile Exchange Inc. (incorporated by reference to Exhibit 10.6 to CME
Group Inc.’s Form 10-Q, filed with the SEC on August 8, 2012, File No. 001-31553).

10.26(2) Amended and Restated Index License Agreement, between CME Group Index Services LLC
and the Board of Trade of the City of Chicago, Inc., effective as of July 1, 2011 (incorporated by
reference to Exhibit 10.5 to CME Group Inc.’s Form 10-Q, filed with the SEC on August 8,
2012, File No. 001-31553).

10.27(2)

10.28

License Agreement, effective as of October 9, 2003, between The Nasdaq Stock Market, Inc., a
subsidiary of National Association of Securities Dealers, Inc., and Chicago Mercantile Exchange
Inc. (incorporated by reference to Exhibit 10.9 to Chicago Mercantile Exchange Holdings Inc.’s
Form 10-K, filed with the SEC on March 11, 2004, File No. 001-31553), Amendment, dated
April 26, 2005 (incorporated by reference to Exhibit 10.1 to Chicago Mercantile Exchange
Holdings Inc.’s Form 10-Q, filed with the SEC on August 4, 2005, File No. 001-31553);
Amendment, dated June 22, 2005 (incorporated by reference to Exhibit 10.2 to Chicago
Mercantile Exchange Holdings Inc.’s Form 10-Q, filed with the SEC on August 4, 2005,
File No. 001-31553); Amendment, dated as of June 26, 2008 (incorporated by reference to
Exhibit 10.1 to CME Group Inc.’s Form 10-Q, filed with the SEC on August 7, 2008,
File No. 001-31553).

Credit Agreement, dated as of November 30, 2012, among CME Group, certain financial
institutions and other persons party thereto as lenders, and Bank of America, N.A., as
administrative agent, Barclays Bank PLC, Citibank, N.A., UBS Securities LLC, and Wells
Fargo Bank, National Association as co-syndication agents, and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Barclays Bank PLC, UBS Securities LLC, and Wells Fargo Securities, LLC
as joint lead arrangers and joint book managers (incorporated by reference to Exhibit 10.2 to
CME Group Inc.’s Form 8-K, filed with the SEC on December 5, 2012, File No. 001-31553);
Amendment No. 1 to Credit Agreement and Joinder Agreement, dated as of November 30, 2012,
including the Consolidated Form Credit Agreement as Annex A, among CME Group Inc.,
certain financial institutions and other persons party thereto as lenders, and Bank of America,
N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to CME Group Inc.’s
Form 8-K, filed with the SEC on December 5, 2012, File No. 001-31553).

109

Exhibit
Number

10.29

10.30

10.31

10.32

10.33

10.34

10.35

Description of Exhibit

Chicago Mercantile Exchange Credit Agreement, dated as of November 8, 2012, with each
of the banks from time to time party thereto; Bank of America, N.A., as administrative
agent; Deutsche Bank Trust Company Americas, as collateral agent; Barclays Bank PLC
and Bank of China, New York Branch, as syndication agents; The Bank of Nova Scotia,
BMO Harris Bank N.A., Citibank, N.A., Lloyds TSB Bank PLC, The Bank of Tokyo-
Mitsubishi UFJ, LTD., UBS Securities LLC, and Wells Fargo Bank, National Association,
as documentation agents; and Merrill Lynch, Piece, Fenner & Smith Incorporated,
Barclays Bank PLC and Bank of China, New York Branch, as joint lead arrangers
(incorporated by reference to Exhibit 10.1 to CME Group Inc.’s Form 8-K, filed with the
SEC on November 14, 2012, File No. 001-31553).

Commercial Paper Dealer Agreement, dated as of August 16, 2007, among CME Group
Inc., as Issuer, and Lehman Brothers Inc., as Dealer (subsequently assigned to Barclays
Capital Inc.
in connection with the bankruptcy of Lehman Brothers Holdings Inc.)
(incorporated by reference to Exhibit 4.1 above).

Issuing and Paying Agency Agreement, dated as of August 16, 2007, between CME Group
Inc. and JPMorgan Chase Bank, National Association, as Issuing and Paying Agent
(incorporated by reference to Exhibit 4.2 above).

Commercial Paper Dealer Agreement, dated as of August 20, 2008, between CME Group
Inc., as Issuer, and Banc of America Securities LLC, as Dealer (incorporated by reference
to Exhibit 4.3 above).

Commercial Paper Dealer Agreement, dated as of August 22, 2008, between CME Group
Inc., as Issuer, and Goldman, Sachs & Co., as Dealer (incorporated by reference to Exhibit
4.4 above).

Ground Lease between Battery Park City Authority and New York Mercantile Exchange
dated May 18, 1995 (incorporated by reference to Exhibit 10.3 to NYMEX Holdings,
Inc.’s Registration Statement on Form S-4, filed with the SEC on April 14, 2000, File No.
333-30332).

Funding Agreement among New York State Urban Development Corporation, New York
City Economic Development Corporation, Battery Park City Authority and New York
Mercantile Exchange dated May 18, 1995 (incorporated by reference to Exhibit 10.4 to
NYMEX Holdings, Inc.’s Registration Statement on Form S-4, filed with the SEC on April
14, 2000, File No. 333-30332).

12.1*

21.1*

23.1*

31.1*

31.2*

32.1*

Ratio of Fixed Charges.

List of Subsidiaries of CME Group Inc.

Consent of Ernst & Young LLP.

Section 302—Certification of Phupinder S. Gill.

Section 302—Certification of James E. Parisi.

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.

110

Exhibit
Number

Description of Exhibit

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema Document

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Extension Definition Linkbase

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

(1) Management contract or compensatory plan or arrangement.

(2) Confidential treatment pursuant to Rule 406 of the Securities Act has been previously granted by the SEC for

portions of this exhibit.

111

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Chicago and State of Illinois on the 28th day of February, 2013.

CME Group Inc.

By:

/s/

JAMES E. PARISI
James E. Parisi
Managing Director and Chief Financial Officer

Signature

Title

/s/ TERRENCE A. DUFFY
Terrence A. Duffy

/s/ PHUPINDER S. GILL
Phupinder S. Gill

/s/

JAMES E. PARISI

James E. Parisi

/s/

JAMES V. PIEPER

James V. Pieper

/s/ LEO MELAMED
Leo Melamed

Executive Chairman of the Board and Director &
President

Chief Executive Officer and Director

Senior Managing Director and Chief Financial Officer

Managing Director and Chief Accounting Officer

Chairman Emeritus and Director

/s/

JEFFREY M. BERNACCHI

Director

Jeffrey M. Bernacchi

/s/ TIMOTHY S. BITSBERGER
Timothy S. Bitsberger

/s/ CHARLES P. CAREY
Charles P. Carey

/s/ MARK E. CERMAK
Mark E. Cermak

/s/ DENNIS H. CHOOKASZIAN
Dennis H. Chookaszian

/s/

JACKIE CLEGG

Jackie Clegg

Director

/s/

JAMES A. DONALDSON

Director

James A. Donaldson

112

/s/ MARTIN J. GEPSMAN
Martin J. Gepsman

/s/ LARRY G. GERDES
Larry G. Gerdes

/s/ DANIEL R. GLICKMAN
Daniel R. Glickman

Director

/s/

J. DENNIS HASTERT

Director

J. Dennis Hastert

/s/ BRUCE F. JOHNSON
Bruce F. Johnson

/s/ GARY M. KATLER
Gary M. Katler

/s/ WILLIAM P. MILLER II
William P. Miller II

Director

/s/

JOSEPH NICIFORO

Director

Joseph Niciforo

/s/ C.C. ODOM II
C.C. Odom II

/s/

JAMES E. OLIFF

James E. Oliff

/s/ RONALD A. PANKAU
Ronald A. Pankau

/s/ EDEMIR PINTO
Edemir Pinto

/s/ ALEX J. POLLOCK
Alex J. Pollock

Director

/s/

JOHN F. SANDNER

Director

John F. Sandner

/s/ TERRY L. SAVAGE
Terry L. Savage

/s/ WILLIAM R. SHEPARD
William R. Shepard

Director

113

/s/ HOWARD J. SIEGEL
Howard J. Siegel

/s/ CHRISTOPHER STEWART
Christopher Stewart

/s/ DENNIS A. SUSKIND
Dennis A. Suskind

/s/ DAVID J. WESCOTT
David J. Wescott

Director

114

corporate citizenship

As the world’s leading and most diverse derivatives marketplace, CME Group believes that

it is both a responsibility and a privilege to give back to the global communities where we

live and work. In 2012, CME Group contributed nearly $5.4 million through our charitable

programs, corporate foundation and independent foundations that we support.

During 2012, our members and employees provided
more than 2,400 hours of volunteer service to local
non-profit organizations in Chicago, new York and
london through Amicus, our community outreach
program. partner agencies included Christopher
House, KaBooM!, Hephzibah House, House of the
Good Shepherd, Inspiration Café, Salvation Army
emergency lodge, Special Spectators, new York
Henry Street Settlement and london Winter night
Shelter. Fundraising drives were organized to benefit
organizations such as Greater Chicago Food Deposi-
tory and united Way.

CMe Group also entered its eighth year of part-
nership with Washington Irving elementary School as
part of the Chicago public Schools’ Futures exchange
program. CMe Group volunteers participated in
a number of service projects in 2012 designed to
enrich the educational experiences of the Irving stu-
dents, thus helping assure the success of tomorrow’s
leaders. CMe Group also continued its partnership
for a third year with new York City public elementary
School 277 (pS277) in the South Bronx, supporting
the school’s programming through in-kind donations
and educational field trips.

the CMe Group Community Foundation (www.
cmegroup.com/company/corporate-citizenship)
provides charitable grants focused on meeting
the needs of the global communities in which we
live and do business, as well as disaster relief. the

foundation provides support to three primary areas
of concern: children in need, education and health
and human services. through a matching gift
program, the foundation also funds many worth-
while charitable organizations that are important to
the CMe Group community.

the company also provides non-financial support
to two independent foundations: CMe Group Foun-
dation and CBot Foundation.

the CMe Group Foundation (www.cmegroup-
foundation.org) enhances economic opportunity by
supporting academic initiatives and activities, pri-
marily in the Chicago region, that promote research,
teaching and learning in financial markets, futures
and derivatives; the education of disadvantaged
children and youth; and the health and education of
young children.

the CBot Foundation (www.cmegroup.com/
company/corporate-citizenship) continues to provide
a number of non-profit agencies in the Chicagoland
area with the funds needed to effect positive change
in the lives of those in need. the CBot Foundation
supports projects by providing direct grants to orga-
nizations that help strengthen educational opportu-
nities, promote and protect children and seniors and
support animal wildlife and cultural opportunities.

For more information on CMe Group’s corpo-
rate citizenship, please refer to the 2012 Corporate
Citizenship Report.

BoaRd oF di RecTo Rs

terrence a . d uff y
executive Chairman
and president

phupInder S. GI ll
Chief executive officer

leo m el amed
Chairman emeritus
Chairman and Chief executive

officer, Melamed and
Associates, Inc., Chicago, Ill.

John f. Sandner
Retired Chairman of the Board
Chairman, e*trade Futures, llC,
Chicago, Ill.

Jeffery m . b ernacchI
president, JMB trading Corp.,

Barrington, Ill.

Managing Member, Celeritas
Capital, llC, Chicago, Ill.
Class C Member, trade lifts,

llC, Chicago, Ill.

tImothy S. bI tSberGer
Managing Director, official
Institutions FIG Coverage
Group, Bnp pnA,
Washington, D.C.

Former Senior Vice president

and treasurer, Freddie Mac,
Mclean, Va.

Former Assistant Secretary,

u.S. treasury, Washington, D.C.

charleS p . c arey
Former Vice Chairman
partner, Henning and Carey

trading, Chicago, Ill.

mark e . c ermak
Director, execution Services,

ABn AMRo Clearing Chicago,
llC, Chicago, Ill.

dennIS h . c hook aSzIan
Former Chairman, Financial
Accounting Standards
Advisory Council,
norwalk, Conn.

Former Chairman and

Chief executive officer,
CnA Insurance Companies,
Chicago, Ill.

JackIe m . c leGG
Managing partner, Clegg

JameS a . d onaldSon
Independent trader, naples, Fla.

martIn J. GepSman
Independent Broker and trader,

International Consultants, llC,
Washington, D.C.

Former Vice Chair, Board of

Directors of the export-Import
Bank of the united States,
Washington, D.C.

Chicago, Ill.

l arry G. GerdeS
General partner, Gerdes Huff
Investments, Atlanta, Ga.

danIel r . GlIckman
Vice president, Aspen Institute

Congressional program

Senior Fellow, Bipartisan policy
Center, Washington, D.C.
u.S. Secretary of Agriculture

(1995–2001)

Member of Congress, Kansas

(1977–1995)

J. d ennIS h aStert
Retired Speaker of the House

bruce f. JohnSon
Independent trader,

of Representatives

Chicago, Ill.

Member of Congress, Illinois

(1987–2007)

Gary m . k atler
Vice president, ABn AMRo
Clearing Chicago, llC,
Chicago, Ill.

WIllIam p. mI ller II
Senior Managing Director

and Chief Financial officer,
Financial Markets International,
Inc., Bethesda, Md.

JoSeph nI cIforo
principal, Henning

and Careytrading,
Chicago, Ill.

BoaRd oF diRecToRs

c.c. o dom II
Independent Member/trader,

JameS e . o lIff
president, FIlo Corp.,

San Antonio, texas

Chicago, Ill.

Sole proprietor, odom Invest-
ments and Argent Venture
Capital, San Antonio, texas

ronald a . pank au
Independent trader,

Chicago, Ill.

owner, J. H. Best and Sons
Steel Fabricating Co.,
Chicago, Ill.

edemI r pInto
Chief executive officer,
BM&FBoVeSpA,
São paulo, Brazil

alex J. p ollock
Resident Fellow, American
enterprise Institute,
Washington, D.C.

terry l . SavaGe
Financial Journalist and Author
president, terry Savage

hoWard J. SIeGel
Independent trader,

Chicago, Ill.

productions, ltd., Chicago, Ill.

chrIStopher Ste Wart
Former Chief executive officer,

dennIS a . SuSkInd
Retired partner, Goldman,

davId J. WeScot t
president, the Wescott Group

Gelber Group, llC,
Chicago, Ill.

Sachs & Co.,
Southampton, n.Y.

ltd., Chicago, Ill.

WIllIam r . Shepard (not pictured)
president and Founder,

Shepard International, Inc.,
Chicago, Ill.

ManageMenT TeaM

terrence a . d uff y
executive Chairman

and president

phupInder S. GIll
Chief executive officer

k athleen m . c ronIn
Senior Managing Director,
General Counsel and
Corporate Secretary

bryan t. d urkIn
Chief operating officer

hIlda h arrIS pI ell
Senior Managing Director

and Chief Human
Resources officer

JulIe hol zrIchter
Senior Managing Director,

Global operations

kevIn k ometer
Senior Managing Director and
Chief Information officer

JameS e . parISI
Chief Financial officer

l aurent paulhac
Senior Managing Director,

Financial and otC
products and Services

John W. pI etroWIcz
Senior Managing Director,
Corporate Development
and Finance

lInda d . rI ch
Senior Managing Director,
Government Relations
and legislative Affairs

derek l . Sammann
Senior Managing Director,

kImberly S. taylor
president, CMe Clearing

kendal l . v roman
Senior Managing Director,

Financial products
and Services

Commodity and
Information products
and Services

Scot e . Warren
Senior Managing Director,
equity Index products
and Services

robert z aGot ta
Senior Managing Director,
products and Services