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CME Group Inc
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Good day, and welcome to the CME Group Fourth Quarter and Full-Year 2020 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. John Peschier. Please go ahead.
Good morning and thank you all for joining us today. I'm going to start with the safe harbor language. Then I'll turn it over to Terry and John for brief remarks followed by your questions. Other members of our management team will also participate in the Q&A session. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements.
These statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statements. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, on the final page of the earnings release, you will see a reconciliation between GAAP and non-GAAP measures.
With that, I would like to turn the call over to Terry.
Thank you, John and thank you all for joining us this morning. Our comments will be brief in time so we can get to your questions. I hope you and your families are all staying safe and healthy. We released our executive summary this morning, which provided extensive details on the fourth quarter and 2020. As John said, I have John, Sean, Derek, Sunil and Julie Winkler with me this morning, and we look forward to addressing any questions that you may have.
2020 was a challenge with low volatility in several asset classes, including the front-end of the rates curve and in our WTI contract for much of the year. We did see some very encouraging signs with some of our higher rate per contract products. Also during 2020, metals had its fifth consecutive year of record annual volume and is off to a strong start in 2021.
We saw very strong activity in our agricultural commodities in the fourth quarter and they continue to rise in the first month of this year, up 36% versus last year. Soybean futures had its second highest quarterly ADV, including record volume out of both Europe and Asia.
After the extreme volatility of the first quarter of 2020 as the pandemic began, the total volume came in at 15.6 million contracts per day in the third quarter and jumped to 16.2 million contracts per day in Q4. During this entire time, we have remained heavily engaged with our global customers.
During 2020, our volume from clients outside the United States grew by 7%, reflecting the global relevance of our markets. I am encouraged by the January 2021 volume, which came in at more than 19 million contracts per day. We are very pleased with the progress we made integrating the NEX business during 2020, including back-office migrations to support finance and HR systems and the building of an integrated global sales team.
Last week, we announced that Brokertec has migrated U.S. Treasuries benchmark trading and EU government bond and repo markets onto Globex. With BrokerTec's dealer-to-dealer platform now a fully integrated part of CME Globex, clients have an enhanced suite of government bond trading offerings across listed derivatives, cash and repo markets on a common platform allowing greater operational and technological efficiencies when managing risk across cash and futures.
We remain excited about the migration of EBS onto Globex by year-end and the ability to provide further efficiencies to our global customers in the FX market. During 2020 and the first quarter of this year, we have continued to innovate with several new products. We will begin trading global emission offset contracts referred to as GEO futures on March 1, and we just launched our new Ether futures earlier this week.
We continue to work closely with our global customer base on solutions to help them manage their risks. These new products build on the globally relevant products we have delivered recently including: SOFR futures, E-mini S&P ESG futures, the South American Soybean contract, Cobalt futures, options on our popular Bitcoin futures , and the popular micro products across several of our asset classes.
With that, let me turn it over to John, who will discuss the financial results. John?
Thanks, Terry. Throughout 2020, we navigated the difficult operating environment, executed on the integration with NEX, launched new and innovative products and actively managed our expenses. For the year, we delivered $4.9 billion in revenue, up slightly from the prior year, and with a strong focus on expenses, we achieved $6.72 in adjusted diluted EPS.
During the year, we announced our annual variable dividend of $2.50 per share, and we recently announced a regular dividend of $0.90 per share for the first quarter of 2021, a 6% increase compared to the first quarter last year. In terms of fourth quarter revenue, our average rate per contract across the product areas were fairly stable with our micro contracts continuing to perform well across several asset classes.
Market data revenue was very strong with an all-time quarterly high of $140 million and was up over 7%, compared to Q4 last year. We were intensely focused on expense management throughout the year. At the beginning of 2020, we provided guidance for adjusted operating expenses, excluding license fees, of between $1.64 billion and $1.65 billion. For the year, we came in approximately $90 million below the midpoint of that range and $80 million below 2019 levels at $1.557 billion.
In terms of synergies, we had initially targeted $110 million in run rate synergies by the end of 2020 related to the NEX acquisition. By year-end, we had exceeded that target and achieved a total of $140 million in synergies. This is net of the additional costs that we are carrying to run parallel infrastructures as we continue to work on the migrations to Globex. We remain committed to our target of $200 million of annual run rate synergies by the end of 2021.
Turning to guidance, for 2021, we currently expect full-year adjusted operating expenses, excluding license fees, to increase slightly from the already low 2020 levels to $1.575 billion. For capital expenditures, excluding one-time integration costs and net of leasehold improvement allowances, we expect to be in the range of $180 million to $190 million. In addition, we expect our 2021 adjusted effective tax rate to be between 23.2% and 24.2%.
Finally, we are very excited about the recently announced joint venture with IHS Markit and the opportunities that it will provide our clients and our shareholders. The JV will be a leader in trade processing and risk mitigation services that offers the combined clients complementary services across the global OTC marketplace in interest rate, FX, equity and credit asset classes. We don’t anticipate any material change to earnings as a result of the JV. We will provide more information when the transaction closes.
With that short summary, we'd like to open up the call for your questions. Based on the number of analysts covering us, please limit yourself to one question, and then feel free to jump back into the queue. Thank you.
Thank you. [Operator Instructions] We’ll take our first question from Rich Repetto of Piper Sandler. Please go ahead. Your line is open.
Good morning Terry, good morning John and I hope everyone at CME is safe and healthy as well. Hopefully we’re seeing some light at the end of the tunnel here.
Thanks Rich.
Thank you. So, my question is on the expense side. John, just trying to understand, you know you gave out that, I believe was 35 million, you expect to have the P&L impact of the synergies in 2021, can you tell us what the P&L impact the actual realized synergies in 2020 were? And also, what you’re assuming for COVID environment I guess, that expenses and sales and everything stay refrained or restricted about the full-year? So, those are the two questions. Thanks guys.
Great. Thanks Rich. Thank you very much. Yes, in terms of the synergies, we are anticipating achieving the $200 million run rates synergies by the end of this year. So, if you take a look at where we are at in terms of run rate synergies, we had originally targeted 50 million. In the first year, we achieved 64. We had targeted 110 by the end of this year and achieved 140; and we are planning on achieving the full 200 by the end of this year. So, if you look at it on a year-by-year basis we over achieved by, in terms of run rate synergies by $14 million last year in – by the end of 2019, again overachieved by approximately the same amount this year, we overachieved by about [$16 million] this year in terms of run rate synergies.
In terms of P&L, we anticipate our synergies being realized in our income statement in 2021 of $35 million and so that is what we expect to have in our P&L. This is being offset by additional costs that we anticipate having in terms of increased depreciation related to our migrations on to Globex. So, the way that works is that we do some programming that goes into work-in process, and then it goes from work-in process into production. And when it goes into production, then that's amortized over several years. We also are building out our data center in Disaster Recovery Center on the East Coast. So that's partially being offset by the synergy capture.
And lastly, in terms of, you know, our impacts, we do anticipate having some improved environment in terms of operating environment towards the back half of this year, and we anticipate having about $20 million in additional costs that we didn't have this year that we are building into the back half of 2021, you know, related primarily to travel marketing, and events. So, that's the story for 2021.
Okay, thanks. Thanks very much, John.
Thanks, Rich.
We'll move on to our next question from Alex Kramm of UBS. Please go ahead. Your line is open.
Yeah. Good morning, everyone. Can you touch on real quick tech a little bit more now that the migration is complete, couple of things: one, you know, what should we be expecting from this combination now to drive in terms of any sort of upside on either side? But then, I think Terry last quarter, you made a comment that, as you improve, kind of the offering to your clients, you know that obviously, you [were not] compensated for that. So, any details on any pricing changes? You're contemplating or anything that should impact the financials more directly outside of more activity? Thank you.
Yeah. Let me go ahead and ask Sean to make some comments on that. And then the rest of course I might jump in as well Alex. So, thank you, Sean?
Yeah, thank you, Alex. And thank you, Terry. We are very excited about the migration of BrokerTec over to the Globex platform. I think I've spoken about before, but I’ll mention then now. We are very excited, particularly with the new technology of being able to offer new products and services, in particular, the new RV or relative value curve trading order type. So, we're broadly very excited about this curve trade spreads, very popular, especially in this market. And this new order type will allow you to reduce the risk of trading that order type by eliminating the [need to leg transactions].
One, two, we're going to reduce the minimum price increments, in the spreads relative to the outrights. And then three, we're going to have the CME Globex implied functionality, which means that when you have a spread order, let's say between two year notes, and five year notes, and you've got outright orders in two year notes, that then should theoretically, but not only theoretically actually does on Globex imply allied orders and five year notes.
So we're very excited about the new RV technology, we're launching it in March. Shortly thereafter, we're also going to be reducing the minimum price increments on three year notes. We’ve got a total of seven different initiatives that we will be taking in order to make that platform more attractive relative to alternatives. And, you know, in terms of pricing, I guess I'm most focused on making sure that the platform is more valuable to our clients. And then we get more volume over our platform. And that's really our focus.
And Terry, I don’t know if you want to jump in?
No. I think that answered. Alex, did that cover? I didn’t hear the other part of your question, if you have something on me?
No, I think you got both of it. Thank you.
Okay, great. Thanks, Alex.
We’ll now move on to our next question from Dan Fannon of Jefferies. Please go ahead. Your line is open.
Thanks. Good morning. So, market data was an area of strength in 2020. And I think in your prepared remarks you mentioned that the record – your sales pipeline as you kind of exiting the year. So, thinking – how could we think about growth in 2021, and potential pricing changes, as well as the demand side, which is about the build on the success you had this past year.
Thanks, Dan. Let me ask Julie Winkler, who runs that division to make some comments on market data. Julie?
Thanks for the question, Dan. Yeah, we did have a record year at data services, our revenue being up 5% year-on-year. And I think the work from home environment kind of further highlighted that need for real time data access, really across our global client base, as well as the need for historical data right, as we evaluated really the impacts of the volatile market conditions that we saw in Q2.
We also made some investments in our business last year and so bringing that data business closer to our commercial capabilities. We established a data sales team. And we also supported a number of new products and services. And so that's where we really feel kind of that continued investment is certainly helped me to grow the data business and positioning as well as we head into 2021.
Those solid trends we continue to see in the professional subscriber device count was strong throughout the quarter. And you know, with Q4, you know, revenue was up 7%, compared to where we were in Q4 2019. So, I think it's a strong, you know, definitely global demand, as well as things on the drive data front that are really kind of propelling the business. And this is just that longer-term trend that we've talked about on other calls, as customers use the technology and their trading strategies is increasing the need for our data through a number of these non-display used cases.
So, we did have some minor fee adjustments that are being made in 2021 to really reflect how our customers are utilizing our data now, and also just the value of the data that we offer and the services that we have and how our market data customers are really receiving and expecting to receive that data. So, there was a $5 increase to our real time data from 105 to 110 per DCM per month that goes into effect in April.
And then we also had some pricing changes on the non-display and historical redistribution side. And those will kind of trickle in throughout the year, since there's certainly some licensing and implementation that will need to be done between ourselves and our customers. But we feel well, you know, that we're in a good position and as we onboard those customers and that were really, you know, going to be in a good position to continue to grow the business going forward.
Great, thank you.
Thank you.
We’ll now move on to our next question from Brian Bedell of Deutsche Bank. Please go ahead. Your line is open.
Great, thanks. Good morning, folks. Hope everyone is well as well. Questions on retail participation, obviously, we're seeing that increase in the market, especially in equities and options, but also in futures, you know Schwab talked about leveraging Ameritrade capabilities and futures to the Schwab client, maybe if you could just give us some perspective on – into the portion of ADV or revenue that you think is coming from retail now, and some initiative where you can get – might be going in 2021, an initiative that you're working on in terms of conversations with retail providers like online brokers and also, obviously, you've been developing the micro complex. Maybe if you can talk about other product extensions across the micro complex that could help that as well.
Thanks, Brian. And let me ask Julie to comment and then I would comment as well as it relates to what we think is going to go down and go forward basis. Maybe you can give an idea of some of the flows, Julie?
Yeah, sure. Thanks, Terry, and a lot of questions in there. So, I will start and then hand things back to Terry. So, you know, I really think and you mentioned that a couple of our, you know, broker partners in your question, and it's really because of that strong broker distribution network, the vast educational programs, and really the content that we support the diverse product mix that we were in a really good position to be able to take advantage of the increase in overall retail trading in 2020.
We saw record levels of participation and revenue globally. And the number of retail traders that were active at CME Group last year increased over 50%. And so, you know, the biggest gains were definitely on the equity index products side where, you know, the volatility there really led to a lot of increased trading opportunities. And we also saw great year-on-year gains and metals that were up over 20% FX, as well as Ag. And that really speaks to, again, the diverse product mix and the fact that people are looking for different opportunities.
We have been investing quite a bit in our sales and marketing staff overseas, both in APAC, and EMEA. And now they are playing also a large role as we've grown the business globally on the retail side. So, we saw both APAC and EMEA retail business was up double digits, you know, countries with strong growth continue to be Korea, Taiwan, and Singapore and then Germany and Switzerland and in Europe.
So, I think, you know, the work from home environment, you know, has allowed I think, you know, the potential right for even more retail customers become active, and, you know, our digital outreach, I think was also just, you know, a real positive trend last year because we're able to just reach more retail and active traders than ever before. And so, the efforts through our education helped us reach over two and a half million new active individual traders throughout the broker, partner digital events that we have that were focused specifically on CME Group products, the largest group in Asia. We had events that the number of events increased over 65%, over 2019, so well over 400 events.
And by going digital, you know, we reached 15 times more active traders than we have in the past when more of those events were in person. And also, you know, we're seeing similar strong trends in North America where the firm's there were growing their webinar output by 225%. So, we feel that this continued investment is leading us to have well educated retail traders and that really kind of helps position us for continued success. And with that, I'll maybe turn it over to Terry.
Thanks Julie. You answered a lot of the questions, let me just add a little bit. And I'm going to ask John to comment a little bit on the cost of some of these products too. It’s really hard for us to predict buying what we think 2021 future volumes are for any particular constituent of the market participant going forward. But it doesn't take the last several weeks for us to think about the growth of retail trading. So, I don't, that's not the reason why we talk about retail trading. As you know, we've been building on this business for a number of years. But it's becoming more and more clear that in my opinion that retail traders want to have to participate in all different forms of markets.
We are looking at all different ways to allow them to come into our markets. As Julie referenced education is key though. You talked a little bit about the micros and the growth of them. We are looking at other ways to continually work with our partners to bring in more and more retail participants. It's just one of those things that's not going away. I don't believe it's going away. And I don't say that because of what happened with the run up in some recent equities, and/or even in what they perceive as running up into silver, you can talk about fundamental stories that are in silver versus not fundamental stories of some of the other products that had runs on them. But there's no question about it that the proliferation of social media, the proliferation of access to marketplaces is allowing people to participate more and more, and they want to do that.
And I think it's extremely encouraging for more and more young people to have interest in financial services and financial markets. So, we want to take advantage of that with them and bring them along in a very thoughtful smart way, as Julie outlined. So, it's not only micro products that we have, we're going to rebuild, we're looking at new and innovative ways to continue to move forward with this growing constituency of clients.
So, very excited by the growth of that, but at the same time, I don't want you to think that we're just bait putting all of our – everything into one basket, such as retail, because we're not I mean, the institutional clients of this company are critically important. The commercials are critically important. So all the different parts that go into making a trade work are very important as we continue to move forward and grow this business, but we do not want to deny the access to the retail participant in a good, thoughtful, smart way. I mean, we would like to talk a little bit about couple of – some of the fee changes associated with some of these micro products. And maybe I can ask John to do that.
Thanks Terry. As everybody here knows the micros have been a tremendous success not just in equities, but also in metals as well. When you take a look at the equity micros, you've seen our RPC steadily increase over time, it was at [$0.114 around churn] in Q4 of 2019 and it hit approximately 2 million contracts a day in Q4 of 2020. And the RPC increased to $0.14. This year, we're taking a very targeted approach to pricing. And we're really focused on changes to the non-member fees in our micro products, with increases in micro equities of $0.05 per side, micro gold of $0.20 per side and micro silver of $0.40 per side, and those are for non-member fees.
So, you know, I think we're continuing to add value in that product, whether it's increasing liquidity, working with our intermediary partners through education and also launching new products with the options on our equity products for the micros. So, those are some changes that we'll be rolling through, beginning in February.
Hopefully that gives you a little color. We’ll wrap with that Brian.
Yeah. Thank you so much, that’s super comprehensive. Thank you.
Thanks Brian.
We’ll now move on to our next question from Ari Ghosh of Credit Suisse. Please go ahead. Your line is open.
Good morning, everyone. Just a quick one on the joint venture with IHS on full screen, I was looking to talk about the market opportunity here, at least broadly given the large inflows and any thoughts around, you know, the potential size and growth of this business, just given the scale benefits that, you know, you'll enjoy in a stagnant market? And then any color on, you know, who joined customer base, the level of client overlap, versus perhaps you know, more of the complimentary portion of that that might be added to your overall client profile. So, any high level performance would be great? Thanks.
John?
Hi Ari. Thank you for the question. Yeah. We’re extremely excited about the joint venture with IHS Markit. For the customers and our shareholders, it'll be a leader in the trade processing and post-trade services. And it'll benefit customers by providing a more efficient access to services, and we think it'll be a great platform to launch new solutions across a broad set of asset classes, including interest rates, FX, equity and credit. This will allow us to innovate and bring to market analytics, workflow tools, and solutions that allow clients to manage their risk and process more efficiently. So, when you look at – when you look at the client base there is a substantial overlap in terms of large global banks, you know, utilizing the services, both of market serve, and our optimization businesses, but they're all across complimentary asset classes.
So, the strengths of market serve are very complimentary to the strengths of our optimization businesses. So what does that mean for clients? That means a much more efficient way for them to access those services because a lot of the information going to those platforms are very similar. And by providing, you know, one kind of point of access for that information, it will provide a lot of efficiencies for the clients and also reduce the amount of errors that could potentially occur as processes, you know, could potentially break down as you're accessing multiple platforms across multiple businesses.
So, very, very excited about that. So, you know, like I said, you know, the, the added value, I think that we're going to be able to provide, which I think will be very compelling for the clients is around, you know, additional analytics, additional workflow tools, and additional solutions that we're going to be able to offer clients, because we're going to be in a place where we're going to be able to provide our clients, you know, a window into a lot of their trade processing and post trade services across all those asset classes.
So, we think it's going to be pretty exciting. You know, just a couple of quick points on it. It's going to be a 50/50 joint venture. So, we will be using the equity method of accounting and it will not be consolidated, you know, at CME Group. So, you'll see a shift in the geography of our income statement, the revenue and expenses will be netted in the equity and unconsolidated subsidiary line of our income statement, similar to our indexing joint venture with S&P Global.
And as I mentioned, we don't anticipate any material changes to our earnings. One other point, just from a financial perspective is between now and close, you will be categorizing the optimization businesses as a held for sale asset in our 2021 financial statements. So, this will mainly impact balance sheet presentation. And there'll be minimal impact on our pro forma operating results. So, some change in geography, but most importantly, very positive change for the business. You know, and I think a real positive for our clients.
Appreciate all your comments. Thanks so much.
Yeah, thanks Ari.
We'll take our next question from Mike Carrier of Bank of America. Please go ahead. Your line is open.
Good morning and thanks for taking the questions. Given some of the pressure that you guys saw in [short rates] in WTI futures, yet in an improving economic and inflation outlook for, I believe for the back half of this year [indiscernible], just curious if you're seeing signs of increased traction in some of these areas, either from conversations with clients, the more participants or nuances in kind of the trading activity that you're seeing?
Derek, do you want to take that?
Yeah, thanks Mike. I appreciate the question. Yeah, we've seen a lot of action actually just in the last six weeks. If you look at the run up of the activity over the last six weeks, you've seen crude recover; you've seen WTI and brands actually move up in lockstep, there are a number of fundamental drivers as to what's going on. The market is generally responding to the increased expectation for economic activity with the vaccines rolling out, you've got significantly reduced stocks in Cushing. If you actually look at the drop in barrels, we've seen that a 14% reduction in the existing stock in Cushing. So, reduction we’re up 14%.
When you look at the – what's actually driving the uncertainty around U.S. Energy Policy and the Biden Administration and the increased flow of exports in the U.S., you're actually seeing the energy curve and WTI right now, in what's called backwardation, where the front-end of the curve is more expensive than the back-end of the curve. And why is that important? That's hugely important because that actually feeds into the narrative that we're seeing more broadly play out in both metals and particularly in eggs with an overall price rising cycle. What that means is, you've got folks piling in on the increase in expectation for growth in price. What impact does it have in the business?
We actually saw one of our biggest days in WTI yesterday. We traded about 1.3 million contracts. If you look at our February ADV, it's about 1.1 million. That's up from 784,000 in Q4 of last year. The reason that's important is that that's actually driven us back to open interest levels that we haven't seen for over 2.5 years. We're about 2.45 million contracts open interest versus where Brent does at about, right about 2.6 million. So, as you've heard us talk about Mike, as increasing economic activity takes place that's represented itself in the form of use of our crude benchmark globally. A lie on the rise, institutional investment flowing in, and there's broader talk and the overall commodity cycle resuming you've got soybeans at $13.5, you've got corn at $5, and you've got oil at highs in over a year now.
So, if the market is paying for economic recovery, you're seeing that reflecting both just below record levels of [WTI alike], and record amounts of Ag and metals product go into the franchise as well. So, I think this is the place [people are playing] in that Global Reflation Trade, and that's where you're looking at low yields in WTI at 8%. So, institutional investors are looking for yield. This is the place to get it in this market right now.
And just continue along with that a little bit, Mike, let me ask Sean, to talk just a little bit about some of the [rate] products, the silver and the ultra, maybe you can take about the back end of the Eurodollar especially Sean.
Yeah, thanks very much, Terry, greatly appreciate it. So there's no question we're seeing a much better marketing environment in the last couple of months, across the rates businesses, a very exciting development and one that we've expected. And we are especially seeing that further out the curve. Some examples in terms of the market itself, if you look at the two-year versus third year spread, that has widened out to 1.81% or 181 basis points. We haven't seen an environment like that since February of 2017.
So, the market is expecting very strong growth, and that's a very good indicator of strong growth on a go forward basis. Also, just very briefly, in terms of the Treasury Inflation-Protected Securities or TIPS, if you look at the 10-years TIPS, they're now implying an inflation rate – a consumer inflation rate over the next decade of 2.21%. That's the highest level we've seen in implied inflation since 2014, which is a 5-year TIPS, it's even more impressive at 2.31% implied by the market for inflation over the next five years. We haven't seen anything like that since 2013.
How is that impacting our markets? It's been a very big positive impact, especially [indiscernible]. We've seen several new records this year in terms of open interest in terms of our ultra 10-year futures in particular, we've also seen very good growth overall in the long-end of the Treasury Curve. So, if you look through January, the ultra 10-year ADV was up 44% year-over-year. The bond futures is up 13%, the ultra bond is up by 7%. If you look further out the curve, if you look at, in particular, I guess, if you look at the back 32, the back 32 contracts in our Eurodollar futures, we've seen significant growth there in the fourth quarter, which was very positive results. And further, I guess I looked in detail at the greens and the blues.
So, what are the greens. The greens are the 23 Eurodollar futures and the blues are the 24 Eurodollar futures. So, 2023 Eurodollar futures are running an ADV up or more than 100%. This year versus total year last year, and the Eurodollar futures likewise up more than 100% this year versus last year. The last thing I'll mention on the market side that directly impacting this, if you go back to the third quarter of last year, the first implied tightening by marketplace was in December of 2024. If you look at today's marketplace, they're implying a tightening in the summer of 2023.
So you see the much improved market outlook with the impact on market pricing and a significant impact on our volumes, actually, I will mention I apologize one last thing, large open interest holders have also seen a very nice bounce. Actually, since December 1, our rates, large open interest holders has increased by 9%. And have recovered half of the losses, basically that we saw during the recent crisis and only 9% below the all-time highs in our rates larger [indiscernible]. The first time we reached that peak where we are so, less than we reached. The first time I should say we reached the current levels of LOI age in rates was 2018. So, we're seeing a big recovery there as well. Sorry, Terry.
That was very helpful. Sean, thank you very much. Thank you, Mike. Hopefully that answered your questions?
Yeah, no, it's great. Thanks a lot.
We'll now move on to our next question from Alex Blostein of Goldman Sachs. Please go ahead. Your line is open.
Great, thanks. Good morning, everybody. Just wanted a clarification for me. I know you guys provided an incremental color around capture rates for E-mini and Gold and on the Micro side. I guess, you know, John, if you think about the current mix things, say I know you guys change pricing on just the non-member side, but assuming the mix of volumes stays roughly the same. Can you give us a sense of what kind of performer capture rates for those buckets would look like in 2021, kind of performer for the changes in pricing?
Yeah, sure. I think when you're talking about the mix of micros, and minis, is that what you're asking Alex?
Right. Right, exactly. So look, I know, you guys raised pricing on just a non-member side of the equation for both, I guess, you know, gold and gold micros and E-mini micros. So, I’m trying to get a sense of what the run recapturing there would be for, you know, kind of assuming similar mix of volumes?
Got it. Yeah. Okay. Couple of points. So, you know, one of the things that we've been doing over time is, you know, making adjustments in the, you know, some of the incentive plans for micros. And also, you know, as I just outlined, we made some fee adjustments. So, you know, a couple of things to think about. You know, number one, you know, the micros have been, have been hugely successful. And, you know, I think when you look at the changes that we're making, you know, I think from an overall company perspective, they're relatively modest. But when you look at the micros, you know, I think you'll see a more meaningful impact in terms of, you know, in terms of the, you know, the revenue, you know, and we don't think this is going to be impacting no volume, necessarily.
We're providing a lot of value for the clients in a product that's highly liquid. So, we think, you know, so we think it'll be, you know, from a volume perspective, not as impactful. When you look at the capture rate, you know, generally speaking, you know, it's roughly an 80/20 Rule 80% of the volume coming from, you know, coming from members, and then 20% coming from non-members. So, when you think about the capture rate, you know, that's something to think about. So about 20% of the volume roughly, will be impacted by the fee increase on the equity side. In metals, it's a little bit different. It’s a little bit heavier on the non-member side, you know, a little bit higher than the 80/20 in terms of the non-members.
Great. That's helpful. Thanks.
All right. Great. Thanks, Alex.
We'll now take our next question from Owen Lau of Oppenheimer. Please go ahead. Your line is open.
Good morning and thank you for taking my questions. So, CME just launched the Ether futures, and the volume of the Bitcoin contracts has been quite strong. Could you please talk about the regulatory environment for digital assets, and how it will impact CME to launch more products in this space? And also one more point, I want to plan to launch something like E-mini or micro E-mini become futures for retail investors. Thank you.
Thanks Owen. Yes, we have seen some upticks in our Bitcoin futures contract. Obviously, we're seeing a massive appreciation in the price, I think, as of this morning it’s around 46,000 a coin. So, we're seeing great appreciation there and of course, interest always follows those type of price improvement. Let me ask Sean, to talk a little bit, not only about crypto, but I think you also referenced E-minis in your question as well. So, Sean?
Yeah. So, in terms of the new crypto contracts, in terms of Ether futures, on the first day, we traded 388 contracts, 55 unique accounts across 15 FCMs, and about 40% of that was customer paper. So, good starts to that, in terms of the Bitcoin doing more than 11,000 contracts a day, we are the largest risk transfer platform for Bitcoin in the marketplace. And we've got a significant RPC in around $4 a contract. So, both growing very nicely.
You know, we do have [several thousand tag 50s]. They're trading at Bitcoin futures. So this also brings additional participants to our overall markets. I don't know if that answered the question.
That’s helpful. Thank you very much.
And Owen, did you have a question about E-mini’s or not?
Yeah, exactly. Like any plan to launch E-mini or micro E-mini Bitcoin futures for retail? Thank you.
Okay, thank you. So, the question was on the micro – potential micro E-mini on the Bitcoin contract. So, I think it's right now, without saying yes or no, we've seen a great appreciation, as I've said, in the product of itself, the price, but at the same time, the volume is still being nurtured, it's still growing. We want to be cautious about how many people are participating in this new asset class or [store of products]. So, I still store value, we need to make sure that we're comfortable going forward.
We've always said, we're going to walk before we run when it comes to cryptos. I think with the launch of our new Ether contract, and people having the ability to trade one against another, we want to see how that starts to pan out for the pair trading or spread trading for other terms. And I think that's important before we decide we're going to move forward with a smaller version of a crypto contract.
So, again, I think, you know, this contract is not that old. It's relatively new, the options were just listed on it, I believe, in the last several months, I'm a big believer do you have to get a look at options market along with your futures contracts, so you can continue to bring it to a broader audience. And that broader audience might be the people that we referenced in the earlier part of this call, which is more on the retail side. And they will obviously not – it's hard for them to participate in such a high value contract.
So, smaller versions are something, you know, obviously, we're looking at it, but we have no plans to make any announcements at a launch of something of that nature, just at this point.
Okay, thank you very much, Terry.
Thank you.
We'll move on to our next question from Chris Harris of Wells Fargo. Please go ahead. Your line is open.
Great. So another one related to you know, the growth that's happening from retail investors. What do you guys think about the potential risk of increased regulatory scrutiny, the larger this business becomes, and related to that are there safeguards in place that prevent novice retail investors from trading futures?
Well, as far as the regulatory scrutiny, we don't need retail traders to get regulatory scrutiny, you get that with all different participants. And that was one thing that I've said forever, which is a benefit to this organization, that we are a highly regulated entity. And I believe regulation lends the credibility of any business and allows us to grow globally. And that's exactly what we've been able to do because of good smart regulation.
Now, the question might be this, do we invite different types of regulation, because of the retail client entering into the marketplace? I don't believe so only because we've had a growth of retail over the years regardless. And I think when people have access to marketplaces, it's not like the SEC where the SEC's main mission is to protect the public from manipulation and fraud and other things – we have a global regulator that obviously is looking into those things as well. But I am very convinced that the retail participants will continue to grow.
And it doesn't mean you have to have additional burdensome regulation against them or against the entity that wants to house them, as long as your practices are in good housekeeping for lack of a better term from your margin requirements, to the money that you have on deposit for your FCM.
So, the whole host of things that the smaller clients need to make sure that they have to understand that they still need to have those requirements. I'll ask Julie to make some comments on the retail globally and other places as well. Julie, do you want to comment a little bit about them? But I think on a regulation side, Chris, I don't believe because the growth of these particular group of people that would invite new regulation. I think what you're seeing right now is a lot of headline regulation being discussed. It doesn't mean it's going to happen.
Thank you, Jerry. I think, you know, he makes a very good point about the differences in the market structure, right, between equity markets and futures. The other thing I’d just had is that, you know, this is a critical part of what our broker partners and intermediaries really do to ensure that the retail and active traders that are going to be trading futures are qualified to do so. And so, we work with our partners throughout the globe, to ensure that.
So just because you're able to trade in the equity markets, you know, that's not the same as having a futures account. And so, there has to be an intentional, you know, opening of that account, those restrictions, you know, are different varying on countries. But what we see is that, typically, right, there's a graduation of retail and active traders from trading the equity markets into trading equity options, and then coming into the derivatives marketplace. And so, that lends itself to be a more sophisticated retail trader. And that's part of what we work with our broker partners on the education front as well.
So, they are well versed in what they're getting into and opening up accounts because they're ready to train in our markets, because we want to make sure they are well supported. And that, you know we have a good customer experience for them and a diverse set of products for them to access.
And so Chris, I've heard a lot of, and I'm sure you have as well is some headlines. And there's a whole host of people making different rhetoric as it relates to the recent activity by what supposedly some of the retail traders have done so that you have people talking about transaction tax, you have people talking about wealth taxes, and people talking about high frequency trading, and people talking about payment for order flow.
Just so we’re all clear, what happened in the marketplace last week could have happened without any of those things being in place at all. So, it had nothing to do with it, but people are seeming to pick their favorite regulation leisure or tax leisure to add to what's going on in the marketplace over the last several weeks as it relates to some of this retail activity, which it has nothing to do with it.
So, I'm hopeful that you know, we always have the ability to go voice our opinions as it relates to some of the potential regulatory conversations. There'll be a hearing coming up, I believe, this week or next. And then we will always participate in these to make sure that our voices heard. Again, I think what you're hearing right now is mostly headlines from a bunch of [pundits] about what they believe happened and how they believe they could have stopped it or not hadn't happened at all.
Got it. Thank you both.
Thank you.
Next we'll take a question from Ken Worthington with J.P.
Hey, good morning. I love to dig a bit deeper into the FX business in advance of the further integration with UBS. Your FX futures volume and OI growth has been maybe more stagnant over the last six years, despite being a global product at a time when you've been very successful in building up this global client base. So, what's been weighing on, sort of CME FX future trading in OI growth over the, maybe the, intermediate-term, as well as more recently in zero rates? And then I guess maybe more importantly, with the integration of next, upcoming for FX, how did things change for the FX futures business? And how does the combination sort of jumpstart futures for CME?
Sean, you want to take that?
Sure, thanks very much for the question, greatly appreciate it. We're very excited actually about the developments and the success we've had recently in our FX futures marketplace. We have over the last few years been continuously reducing the minimum price increments. We've done it across nine different instruments. We're excited actually. Late last year, we saw an all-time record open interest in our Euro versus USD futures, which is really amazing given the fact that volatility has been – has had a tremendous dampening effect on volumes.
If you look at last year across each of the major currency pairs, the volatility ranking was typically the lowest decile going back the last 20 years. So, in other words, 90% of the time, over the last 20 years, volatility was higher in each of the major currency pairs. Nonetheless, even in that environment, we saw a record number of record open interest in those euro versus USD contracts.
In addition to that, the changes we've been making in order to make our complex much more attractive we've also seen recently good growth in block trade. So in the month of December we saw our largest ever, U.S. dollar versus Sterling options block trades. And that was the equivalent of $2 billion in a single trade. So, market participants are migrating more of their options activity towards the listed space that actually could accelerate through this year [indiscernible].
You know, something we haven't spoken about in a while because it was delayed last year relative to COVID, but we do expect there’ll be 100 new participants, at least 100 new participants that are required this year globally to adhere to the uncleared margin rules that's in September of this year. That should drive more products, requiring greater efficiencies, and in particular, to positively impact our FX options.
In the month of January, after we saw the record block size in December in dollar versus Sterling, we saw a record block size in Aussie dollars that was 4 billion Aussie dollars. So, we have seen our FX futures last year actually outperform the spot market places. And we're seeing now some uptick in the option space, particularly in blocks. Now in terms of what the team is doing in order to make the [outset] more much more attractive and take the unique set of assets we have, right, so we now have EBS as well as the futures data.
So, we are looking to use this unique set of assets in order to bring greater analytics, greater tools to the marketplace, to cross-sell our products down, and particularly cross-sell the futures down the EBS distribution channel, and to show participants the value of using both marketplaces. We have the analytics now that we've recently launched, that show market participants that you really need to use both the features, as well as the spot liquidity pools in order to optimize your execution and reduce your execution costs. Some of the new tools that we've launched, so – we launched the new FX swap rate monitor, we did that now.
You know late summer of last year, more than 4,000 views, more than 3,000 users. This is using our FX link product. It's the first time ever with essential limit order book is standardized cleared lower total cost alternatives FX swaps available to market participants. We're seeing some greater uptick there. We are making some enhancements to technology that will come out later this year. That will make it much easier to consume for participants and we do expect to see significant growth once that technology is released.
In addition to that, we also released the new FX vol converter tool. This takes a lot of our listed FX options and it converts it to OTC equivalents. So, all OTC participants can see our FX options on futures the same way they look at the OTC markets. We think that that's a part of what drove that record block trade in December, and the record block trade in January.
Last thing I'll mention is our FX market profile tool. This was the first time synchronizes the data between EBS spot foreign exchange, and our foreign exchange futures, ensures the relative liquidity that they offer spread, the top of books or the size available to hit the list in each of the two markets simultaneously, and it quantitatively shows participants the benefits, the benefits of using both [markets].
So, we're very excited about these new tools. We are distributing them out to the very large tail of clients. You know who use EBS, especially regional banks across Europe and Asia. And the most exciting is, I mentioned earlier, the excitement I have over the migration of BrokerTec over Globex, and how that's going to allow us to offer new products and services with that greater technology.
Similarly, on the EBS side, they'll be migrating EBS overgrow Globex later this year, which will allow us to offer many new products and services across that platform, number one, number two, you'll also make it much simpler. Once we move it over for participants to trade on EBS. So, we should be able to attract new participants.
Last thing I’ll mention is, we've been investing in direct streaming technology. And we do expect to roll that out. Likewise, later this year, we expect to have the state of the art direct streaming platform available for participants in foreign exchange later this year. Once we do that foreign exchange, we will actually also roll that out in U.S. Treasuries.
Great. Very, very comprehensive. Thank you so much.
Thanks Ken. Thanks Sean.
We’ll now move on to our next question from Simon Clinch of Atlantic Equities. Please go ahead. Your line is open.
Hi, there. Thanks for taking my question. I was wondering if I could get an update please on the agreement with the DTCC regarding cross-margining, and whether that's already been submitted to the SEC, and in terms of timing of how long you think it might take for something like that to be proved, and when you might actually start to see the real benefits of that in your fundamental numbers?
Really good question, Simon. Let me turn it over to Sunil Cutinho. The President of Clearing House to address that [Simon].
Thank you, Terry. Very quickly, I think very few participants know this, but we currently have a cross-margining agreement with DTCC. Our effort right now is to improve that cross-margining agreement and enhance the savings. So we are actively working with DTCC. It's very hard to handicap regulatory approvals. So, all we can say is, we anticipate completing the operational effort this year. And then the rest depends upon the approval timelines with the SEC and the CFTC.
Just to add to that, Simon, we're hopeful that and Sunil has been working on this rigorously. But we talk a lot about efficiencies. And this is one of those efficiencies that we are very excited about once it gets put into place for our global client base trading and the rates in business. And you heard Sean Tully talk earlier about some of the encouraging sign around our rates business, especially with the widening of the yield curve a little bit and some of the things where this could be a huge benefit for us.
So, we're really excited about creating more and more of these efficiencies. It’s been pretty much one of the things that we've been focused on over the last several years is to bring clients efficiencies, which we think will bring greater growth to our businesses. And this asset class is waiting for that. So, we're looking forward to getting that agreement done with DTCC and the SEC, and then going forward with the growth that Sean has already pointed out in these rates businesses that would have a big part of truly. So, thank you for your question, Simon.
Okay, thanks both.
We will now move on to our next question from Jeremy Campbell of Barclays. Please go ahead. Your line is open.
Hey, thanks, guys. And I know we're getting into injury time here, but, Terry, maybe just a quick one of the admission contract. I know, you know, we've discussed, you know, carbon offsets and other green contracts in the past. Just kind of wondering, you know, what's changed on the demand side of the equation that led you guys to launch this contract? And can you characterize the competitive landscape and how big you think this might be over time?
Yeah, great question Jeremy. Let me turn to Derek who's been working on this and launch this contract for us. So, Derek?
Yeah. Thanks, Jeremy. It's an exciting space. I think what you're seeing right now, and you're absolutely right. There is an absence of mandates globally, right now. The existing markets emissions tend to be very, very regional in nature. And why we're excited about working with CBL exchange on this versus our partner and developing this contract is it this represents a significant change in that these carbon Offset futures represent a contract that is an offset versus whatever it is that underlying product or emitter might be involved in it.
Not limited just to the energy markets, imagine a farmer that wants to manage his carbon footprints, imagine an aluminum company that wants to adhere to either voluntary standards or regional standards and emissions credits. So this is a product that very capably is able to extend outside of just traditional space in energy and have an application across a full range of our commodities participants, even non-commodities participants.
The feedback that we've got in both in the validation stage of going out to the market, and assessing an interest in this, and actually since we've announced has been bigger and actually more overwhelming than we had anticipated. So, it is to remind everybody, this is a voluntary emission offset. It's based on standards that the market participants are agreeing to. And the competitive space is one that is open right now. We can look at the position that we're in, in our commodities markets. We are the largest metals market. We are the largest energy market. We're the largest agricultural products market.
So, the application of these offset products, extend well beyond just the energy space. So, we think this is going to be a process of not just dealing with fossil fuels market in transition. You look at most company charters, right now everybody's trying to adhere to ESG standards that apply to what they feel our carbon footprint needs are. So, this is broadly applicable to a lot of different market participants. The feedback we're getting validates that. We're excited to get this out. We've got a whole host of market makers and market takers lined up on this.
So, we're excited about what this could mean. And this is a slightly different product than what you're seeing in the existing products that we have, and others have that are really regionally focused. So, we think this is early days in this. We think this is extensible out to the range of benchmark markets that we run, and where we run the majority liquidity in. And so we think this will be a great service to customers, looking to extend their ESG credentials and manage their carbon footprint and really new and unique and market oriented ways.
Thanks, Derek. Thanks, Jeremy.
Thanks.
We'll take our next question from Kyle Voigt of KBW. Please go ahead. Your line is open.
Hi, thanks for squeezing me in here. Just wonder if you can update on your thoughts around M&A? You're in the final stages of the next integration, you’re at your leverage target. And as we look around the exchange sector, many of your global peers have just recently closed large transaction. So, I guess, are you seeing attractive opportunities out there? And what are you looking for strategically in terms of what that asset might add to CME? Is it improvement revenue growth within the different asset classes, you know adding non-transaction businesses? Just wondering, kind of what the strategic priority is? Thank you.
John?
A - John Pietrowicz
Hi, Kyle. This is John, jumping in. You know, I don’t – there hasn't been any change in terms of our M&A strategy. You know, we are always looking for opportunities to create shareholder value. And as you've heard, you know, across the board here, you know, create efficiencies and opportunities for our clients. So, you know, the recently announced joint venture with IHS Markit, is a great example of that. We're taking our assets, combining them with assets of a partner of ours, and creating value for our clients, and ultimately our shareholders, by providing more efficiencies for those clients and then using that as a platform, you know, to provide other services around, you know, around that.
So, that's our primary focus. I wouldn't say that we necessarily are looking specifically for, you know, a type of revenue, whether it's, you know, whether it's transactional or subscription. I would say we are more focused on optimizing the revenue. And, you know, based on the industry that asset is in. We are very focused on completing the NEX integration. As we mentioned previously, you know, we're targeting 200 million in run rate synergies by the end of this year.
You know, we're well on track, and we've exceeded our synergies each of the last two years. And we’re well on track to achieve that 200 million for 2021. So that is, you know, that's our point of view. And with that, I'll turn it over to the next question.
We'll move on to our next question, which comes from Chris Allen of Compass Point. Please go ahead. Your line is open.
Yeah. Good morning, everyone. Just a real quick one from me. You talked about price increases in the market data and on the micros, have you enacted any other price increases in the other products that we should contemplate for this year?
John?
Yeah, thanks. Thanks, Chris. You know, as we recall, in 2020 we made a number of adjustments across all of our asset classes with an expected revenue impact of 1.5% to 2% in futures and options, transaction fees. And, you know, I've reviewed the results of that, and we did achieve our objective. Going into this year, we're being very targeted in our approach, and you hit on all the ones that we've announced. We've announced adjustments to our – the member fees of the micros, and we've made some selective adjustments to our market data business in terms of increasing the screen fees for real time data and also the non-display data.
So, those are the ones that we've announced thus far. I would say this is a year that will be flexible in terms of our approach. And, you know, a lot of, you know, a lot of it really depends on how the year plays out. So, you know, we'll always be looking at creating value for our clients, and, you know, charging appropriately for that value that we're adding.
Thanks, Chris. Thanks, John.
We’ll take our next question from Patrick O'Shaughnessy of Raymond James. Please go ahead. Your line is open.
Good morning. What's your assessment of the competitive landscape in cash U.S. Treasury is trading, particularly in light of the pending sale of NASDAQ fixed income to trade web?
Sean, you want to address that?
Yeah. So, no question we embraced the competition and we're continuously looking to make our platform and our services far more attractive to participants. As I mentioned earlier, we're very excited about moving the BrokerTec over to the Globex platform. That improved technology will allow us to create much more attractive products and services like RV technology. The implied that we have on RV are unmatched by any other technology in the marketplace. And so we are very excited about that as unique value proposition.
In addition to that, we've got a unique data set that nobody else in the world has, which is the ability to synchronize our treasury futures data along with our cash treasury data. So, in addition to the 100 billion plus of cash treasuries that we trade on BrokerTec every day, recall, we do $400 billion-ish a day in our treasury futures. So, we've got unique data sets with unique efficiencies that will provide market participants and unique analytics in order to improve their execution.
In addition to that, we are investing in, as I mentioned earlier, BrokerTec Stream. So, direct streaming of U.S. Treasuries. And on the benefits of having both the streaming platform as well as a central limit order book. So, we have the strongest dealer-to-dealer central limit order book in the world. We are building our direct streaming business dealer-to-dealer. And we're combining that with the unique data that we have in futures to provide a unique set of analytics and efficiencies that nobody else can offer.
So we embraced competition. And as I said earlier, I'm constantly focused on making sure that we have the single most attractive place, the single most attractive platform for any participants in order to execute their risk. I hope that helps.
Thanks, Sean. Thank you, Patrick.
We'll move on to our next question from Alex Kramm of UBS. Please go ahead. Your line is open.
Yeah, hey. Just a couple of quick follow-ups here, and I apologize if this has been mentioned before. One, on the other revenue, John, did you mention what drove the strength this quarter? And how do I think about the sustainability of that line item or what seasonally may change here, I guess over the next few quarters? And then just as a quick follow-up to the question just now on the treasury business.
I don't know if you've talked about this in the past, but I think it was in the prepared deck, again, the dealer declines, repo offering that you have, I guess, within BrokerTec now or NEX now. Have you talked about this before why you're doing this? And also, does that mean that you're maybe willing to play a little bit more on that D2C space, I think historically it's been really dealer-to-dealer? So, any quick comments there will be appreciated. Thanks.
Okay. Let me ask John to comment first and then I'll turn it to Sean. Before Sean makes a comment, let me reference something about the dealer decline and the dealer-to-dealer, the way our structure is with BrokerTec.
Yeah, thanks. No, we didn't – we hadn't covered the other revenues yet, Alex. So, when you take a look at our other revenues, you know it's up about $10 million sequentially between Q3 and Q4, and there are a number of puts and takes. But the primary driver of the increase is our annual adjustment based on exchange activity paid by our partner in Brazil for software that we licensed them.
There was also a termination fee related to our agreement with the Korean Exchange. Both these agreements concluded in the fourth quarter of 2020. So, you will not see that $10 million step-up between Q3 and Q4 going forward.
Sean, why don't you address real quickly the dealer-to-client I believe on the repo side and not so much on the BrokerTec dealer-to-dealer platform?
Yeah. Thanks very much, Terry. So, we do see – and thanks for the question. We do see the opportunity and we are executing on a dealer-to-client repo platform, both for Europe and we've recently launched it in the United States. We see it as offering huge operational efficiencies to market participants, especially between dealers and customers relative to that transactional handshake.
There are also opportunities then to leverage obviously the dealer-to-dealer platform in combination with the dealer-to-customer platform in repo. In dealer-to-customer space, we are seeing near all-time record European repo volumes on our dealer-to-dealer space recently. So, we are engaged in that space. We do believe that we can add electronic operational efficiencies to that space. And we are seeing so far good uptake from our customers.
And again, just to reemphasize, Sean, we have not changed any, structurally around our dealer-to-dealer platform as it relates to the BrokerTec treasuries just on the repos.
That's absolutely correct, Terry. Thank you for clarifying.
Okay. Thanks, Alex.
Thank you.
We'll now move on to our next question from Rich Repetto of Piper Sandler. Please go ahead. Your line is open.
Yeah. Thank you. And Terry, first, thanks on, sort of level headed comments on equity market structure. [We'll see] whether regulators and lawmakers follow that sort of the level headed thing about it.
We will see.
Yeah, we will see on February 18. So, I guess following that line and thinking up from a regulatory standpoint, you mentioned or someone asked about the margin efficiencies from DTCC to the CME Clearing House. And I know you bring benefits from a technology side, from a data side, but maybe this is sort of like just top off the whole promise of trading cash and futures on the same platform adding to those other benefits. Like, if there is an offset that that's clearly, what is the regulatory hang-up or process here if there was only cash and you have an offset from a future why – been a long process, but what make it more difficult, I guess is the question?
Yeah. Good question, Rich. Let me ask Sunil to comment a little bit. But you are absolutely correct. One of the great benefits of the transaction with NEX was doing the integration of BrokerTec on Globex to create the official to going forward. And we are, as you've heard other speakers talk earlier, very excited by that integration being completed and on to EBS to create new efficiencies. That is really what we're all about.
Let me ask Sunil to comment a little bit on the risk side and the efficiency side on the margins.
Thank you, Terry. Rich, just to give you a simple answer, we currently have cross-margining agreement and there are participants who are taking advantage of the offsets between cash and treasury futures. So, it is an existing program. We started this in 2003. And we continue to provide that service. What we are doing right now is enhancing that. So, we are actively working with DTCC.
Now, given that it is two clearing houses, two separate clearing houses, and the fact that we are regulated by – one is by the CFTC and the other is by the SEC, we just have to work through the process to get any enhancements improved. So that does take time, but we are very confident that we'll get through that process. It's just that it's very hard for us to give you a timeframe when it comes to regulatory approvals.
So that's what we're saying. So, operationally, we continue to work actively in improving the margin efficiencies between our two clearing houses. I hope that helps.
Yeah. And again, Rich, we can't control the bureaucracy of the SEC or the CFTC. But I will say that, I think the clients are really pressuring also because they know the efficiencies that this brings without adding any risk to the system, which is critically important, and the regulators hopefully are weighing that. In a very margin intense world that we live in, there always have been, especially in this world today of interest rates. So, I'm hopeful that we will get this agreement completed and start seeing the benefits go to the clients because that's exactly what they need to do to continue to run their businesses more efficiently, and I think the governments understand that well.
Okay. Got it. Thank you very much.
Thanks, Rich.
We will now move on to our final question from Brian Bedell of Deutsche Bank. Please go ahead. Your line is open.
Great. Thanks so much for taking my follow-up. Just want to clarify – I just want to follow-up to the retail question I had earlier, if you're disclosing the proportion of either revenue or ADV that's coming from retail, I think you did that a while back. And then maybe it's a question for Sean also on LIBOR for 2021 in terms of how you see that developing for the SOFR, the CME SOFR contracts versus the Eurodollar contracts. Whether you think that transition is really going to take a lot longer, and therefore, that switchover to SOFR will be much more slow – much more gradual?
So Brian, let me ask John and/or Julie to comment on your first question. I'll make a comment around LIBOR and kick it to Sean to wrap it up.
Yeah, thanks. We don't and haven't disclosed the revenue from retail for a while. In general, when you take a look at the retail business, we're generating in the fourth quarter about a million contracts a day from what we call the Retail segment or the Active Trader segment. So, it also – we made a comment today around the proportion of member, non-member mix and the adjustments we made to the pricing.
So that should help in terms of modeling it out. So that is – that question, I'll pass it over to Sean on the follow-up question.
And as Sean is getting ready to respond to that, let me just make a comment. One of the things that we have said as it relates to LIBOR and it relates to the transition over, especially over the last year, year and a half is that we believe we're in a very strong position to benefit from whatever is the outcome as it relates to LIBOR. And I think what you heard from Sean earlier, and I'm sure he will reference this himself, but I didn't want to – I'd be remiss if I didn't say it again.
When we're looking at the growth of the back 32 of the Eurodollar contract like we're seeing today, we're looking at the growth of the silver futures contract like we're saying failed. Roughly 94%, 96% of the open interest being held here at CME. We are the beneficiaries of interest of both products growing. And that is something we said is a strong possibility and we're starting to see that mature in our favor, and we're very encouraged by that.
So, Sean can talk about the timing or the transition from LIBOR to SOFR. And I guess Sean could be a bit speculative, but there are some hard dates that people are talking about and fall backs associated with that. But I would be remiss if I didn't remind folks that it is important that we have a really strong rate franchise with efficiencies that are almost unmatched anywhere in the world, and we are very excited that we can participate both in SOFR and in Eurodollars. Sean?
Yeah. So thanks so much, Terry, for that, and thanks for the question. There are several points in there. So again, in terms of the back 32 between the fourth quarter of 2019 and the fourth quarter of 2020 the ADV grew. So it's in the Eurodollar futures. They grew by 36%. So, a very positive result. As I said earlier, we've seen very good growth in January in the green and the blues of the 2023 and 2024 contracts. And for that curve, Eurodollar futures is growing very strongly. At the same time, we've recently seen a number of records in our SOFR futures.
2020 was a record year for volume in SOFR futures of 51,000 contracts. And so far this year, we're doing more than 100,000 contracts a day. In January, we also saw an open interest record of 727,000 SOFR futures contracts. We also saw a record number of large open interest holders in our SOFR futures of 175 large open interest holders. And we have more than 500 participants trading in the SOFR futures.
Last thing I'll mention in terms of SOFR is that if you look at the global SOFR marketplace in terms of futures, we have about 80% of the average daily volume so far this year and we are running 92%, 93% of the global open interest. So we see recently good growth in the back end of the Eurodollar futures, also extremely good growth in our SOFR futures. They absolutely have somewhat different takes on [each Street market] and both are useful from a participant standpoint.
We have seen from IBA and the FCA, they recently did launch a survey I guess of where they are potentially looking at whether or not LIBOR should continue to be published post June of 2023. So that's a long time away. There is a lot of uncertainty. In the meantime, our SOFR futures are growing strongly. The back-end of the Eurodollar futures are growing strongly. And I think we're exactly where we want it to be.
As Terry mentioned, in terms of efficiencies, with the huge open interest in our Eurodollar futures, the bulk of the open interest in SOFR futures, obviously from an execution, clearing standpoint both, the commodity spreads on the execution side as well as then margin offsets between the two futures contracts, no one else can compete with those sets of efficiencies.
In addition to that, we've got SOFR interest rate swaps, as well as obviously of our LIBOR-based interest rate swaps and the potential for portfolio margin offsets between all of those futures and all of those swaps left. In terms of the portfolio margining, I think I talked about this on last earnings call, but we did offer starting December of last year, portfolio margining between Eurodollar options and interest rate swaps. We've got more than a handful of participants taking advantage of that and already getting well over $100 billion a day worth of margin efficiency. So, we continue to enhance the efficiencies.
Last thing, I will mention one last thing. Don't forget, we have the single largest U.S. Treasury Repo platform on the planet. That is where SOFR is created every day to a large extent. So, we also are providing the actual transactions that go to making up SOFR every day in addition to our silver futures and silver swaps, and I will end there.
Thanks, Sean. Thanks, Brian. Hopefully they gave you a little color.
Yeah, super helpful. Thank you so much.
Thank you.
It appears there are no further questions at this time. I'd like to turn the conference back to management for any closing or additional remarks.
Thanks, John. We appreciate it very much. We appreciate you taking time out of your busy day to participate in our call today. And we wish you and your family continued safety and health. So, thank you for dialing.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.