"The latest development was the definitive agreement we just signed with the Chicago Board of Trade to establish the CME/CBOT Common Clearing Link," said Chairman Terry Duffy. "Under this agreement, CME will provide clearing services for all CBOT products beginning on Jan. 2, 2004, subject to regulatory approval. This historic transaction between the two futures exchanges in the United States will give our clearing firms and customers significant operational, margin and capital efficiencies . . . Clearly, this agreement with the CBOT is one of the many important items on our agenda this year, and it follows a particularly noteworthy year of accomplishments at this exchange."
Duffy said that in 2002, CME reaffirmed its position as the largest futures exchange in the United States and second largest in the world for the trading of futures and options on futures. CME achieved record trading volume of 558.4 million contracts - an average of more than 2.2 million contracts a day - while volume on its GLOBEX® electronic trading platform reached a record 198 million. During the year, the company celebrated the 30-year anniversary of financial futures, the 20-year anniversary of S&P 500® futures, the 10-year anniversary of GLOBEX and the five-year anniversary of E-miniä S&P 500 futures. Also during 2002, CME enhanced its corporate governance structure by forming an Office of the CEO consisting of President and Chief Executive Officer Jim McNulty and Executive Vice President and Chief Administrative Officer Craig Donohue. And in December 2002, the exchange completed an initial public offering and became the first financial exchange in the United States to become a publicly traded company.
"Each accomplishment is significant in its own right," Duffy said, "but when you put them together - up to and including our successful IPO - you can start to see they are indicative of a much bigger story. That story is that CME is on the right track. We have the right strategy, including a dedicated, cohesive leadership team that combines Board and management experience and talent. We are making the right decisions and, as the results show, we are well-positioned for the future."
"The global landscape of derivatives exchanges and service providers is rapidly changing," said President and CEO Jim McNulty, "The trend is toward cross-border activities and industry consolidation. To compete more effectively, our exchange and others around the world are demutualizing and going public. In this competitive environment, CME seeks to offer top-of-class electronic and open outcry platforms, to distribute our benchmark products nearly 24 hours a day and to create clearing efficiencies for our customers. In 2003, we are focused on expanding our customer base, improving our technology and continuing to innovate new products and services, such as our E-mini S&P MidCap 400ä Index futures contract." "We also are seeking to grow our business through business partnerships, alliances and if appropriate, acquisitions," said Executive Vice President and Chief Administrative Officer Craig Donohue. "As Terry mentioned, last week we agreed to provide clearing and related services to the Chicago Board of Trade. In the past few months, we signed memoranda of understanding with both the Korea Futures Exchange and Shanghai Futures Exchange. Last year, we worked with Merrill Lynch to develop and launch a revolutionary new line of futures contracts, called TRAKRSSM, and launched our OneChicago joint venture with Chicago Board Options Exchange® and Chicago Board of Trade®. We are enthusiastic about our new ventures and see additional opportunities in these areas."
"In managing the financial aspects of our business in 2003, we intend to focus on maintaining our expense discipline, maximizing our cash flow, communicating with existing and prospective investors, and both analyzing and funding new products, potential acquisitions and strategic alliances," said Managing Director and Chief Financial Officer Dave Gomach.
Chicago Mercantile Exchange Holdings Inc. is the parent company of Chicago Mercantile Exchange Inc. (www.cme.com), the largest futures exchange in the United States based on notional value, trading volume and open interest. On Dec. 6, 2002, CME became the first publicly traded U.S. financial exchange. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX around-the-clock electronic trading platform. CME offers futures contracts and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moved about $1.5 billion per day in settlement payments in the first quarter of 2003 and managed $28.5 billion in collateral deposits at March 31, 2002.
Statements in this news release that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Among the factors that might affect our performance are: increasing competition by foreign and domestic competitors, including new entrants into our markets; our ability to keep pace with rapid technological developments; our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities; our ability to maintain the competitiveness of our existing products and services; our ability to efficiently and simultaneously operate both open outcry trading and electronic trade execution facilities; our ability to adjust our fixed costs and expenses if our revenues decline; changes in domestic and foreign regulations; changes in government policy, including interest rate policy; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; the ability of our joint venture, OneChicago, to obtain market acceptance of its products and achieve sufficient trading volume to operate profitably; and the continued availability of financial resources in the amounts and on the terms required to support our future business. In addition, our performance could be affected by our ability to realize the benefits or efficiencies we expect from our for-profit initiatives, such as fee increases, volume and member discounts and new access rules to our markets; our ability to recover market data fees that may be reduced or eliminated by the growth of electronic trading; changes in the level of trading activity, price levels and volatility in the derivatives markets and in underlying fixed income, equity, foreign exchange and commodities markets; economic, political and market conditions; our ability to accommodate increases in trading volume without failure or degradation of performance of our trading systems; our ability to manage the risks associated with our acquisition, investment and alliance strategy; industry and customer consolidation; decreases in member trading and clearing activity and seasonality of the futures business. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, which is available in the Investor Information section of the CME Web site. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
GLOBEX is a registered trademark of Chicago Mercantile Exchange Inc. E-mini is a service mark of CME. S&P, S&P 500 and other trade names, service marks, trademarks and registered trademarks that are not proprietary to Chicago Mercantile Exchange Inc. are the property of their respective owners, and are used herein under license.
Further information about Chicago Mercantile Exchange Holdings Inc. and Chicago Mercantile Exchange Inc. is available on the CME Web site at www.cme.com. An audio Webcast of the annual meeting, as well as the speeches and slides, will be posted on the Investor Relations section of the company's Web site after the annual meeting.
