A Record 36.2 Million-Contract Quarter Across All Six Asset Classes, and a Stock That Shrugged

Results vs. Consensus

Year-over-Year Comparison

Sequential (QoQ) Comparison

Revenue — the largest quarter ever, and it flowed through

Revenue of $1.88B (+14.5% YoY, +14% QoQ) was the highest in company history, on record clearing and transaction fees of $1.54B. The composition is the encouraging part: this was not one asset class spiking but all six setting records simultaneously, a first, with commodities +38% and financials +18%. The RPC drag ($0.652) is real and means the volume headline overstates the fee trajectory, but the CFO's framing is analytically correct: volume tiering intentionally lowers the marginal rate to encourage incremental trading, and that incremental volume is highly profitable because the cost of clearing it is near zero. The result was an ~84% incremental margin on the revenue increase.

Margins — a record 72.8%, on maximum operating leverage

The 72.8% adjusted operating margin is the highest in CME's history and the clearest demonstration of why the business is prized: at record volume, the fixed-cost base means nearly all incremental revenue is profit. Adjusted expenses ex-license grew ~7% year-over-year (some of it variable comp and technology consumption that scales with activity), well within the ~$1.695B full-year guide. The margin will not hold at 72.8% if volumes normalize, but the quarter shows the earnings power the franchise throws off when activity runs hot, and the operating leverage cuts both ways.

EPS — +20%, and the acceleration is real

Adjusted diluted EPS of $3.36 (+20% YoY) beat the $3.31 consensus and marks a clear acceleration from the +9–10% growth of the prior three quarters. The growth is operationally sourced (volume, leverage, the incremental-margin flow-through) with a supporting below-the-line contribution from float income and equity earnings. The GAAP figure of $3.18 is clean this quarter (no OSTTRA distortion). Even haircutting for a volume normalization, the exit run-rate implies a materially higher full-year earnings base than we, or consensus, were modeling a quarter ago.

Segment Performance

For the first time in CME's history, every one of the six asset classes set a volume record in the same quarter. That simultaneity is the single most important segment fact of the print: a one-asset volatility spike is cyclical, but broad-based records across rates, equities, energy, agriculturals, metals and FX, mirrored internationally in every region, point to a genuine step-up in the level of risk-transfer demand.

Average Daily Volume by Product Line

Rate Per Contract by Product Line

Interest Rates — the engine roars, on record Treasury open interest

Rates ADV surged to 18.7M (+24% YoY, +44% QoQ), by far the largest contributor to the record, as rate-path uncertainty and unprecedented demand for Treasury risk transfer drove activity. The most important datapoint is not the volume but the open interest: US Treasury open interest hit an all-time high of 36.3M contracts. The RPC fell to $0.457 on volume tiering (the marginal rate declines as a client's volume climbs) and the sheer scale of the low-RPC rates surge, which mechanically pulls down the blend, but the fee-dollar contribution was strongly positive.

Assessment: Record Treasury open interest is the crux of the upgrade case. It says clients are not just churning through a volatile window; they are holding record positions in CME's rates complex, which is the leading indicator of a durably higher activity base. With record global debt issuance the structural backdrop and the FICC cross-margining expansion (up to 80% client savings) deepening the capital-efficiency lock-in, the rates franchise looks stronger than at any point in our coverage. This is the pillar that has stepped up.

Energy — +37% on genuine supply-chain stress, share back to CME

Energy ADV jumped to 4.0M (+37% YoY, +58% QoQ) as Strait-of-Hormuz tension, Venezuela supply disruption, and continued US export growth drove hedging to records, with WTI share retrenching back to CME at 79–80%. Management framed the volatility as substantive (physical supply disruption) rather than pure headline noise, and pointed to resilient energy open interest (+14% since year-end) and double-digit growth across every client segment as evidence of a healthy, sustained base rather than a COVID-style spike. The RPC fell to $1.084 on a crude mix shift (lower-priced than nat gas), volume tiering, and a Micro energy surge (315k/day vs. 80k a year ago at ~$0.52).

Assessment: Energy is doing exactly what a global-benchmark franchise should in a fractured supply environment: monetizing genuine physical-supply stress and pulling share back to the core liquidity pool. The commodities lead's emphasis on rising open interest and broad client-segment growth is credible evidence this is sustained, not a flash. The RPC give-back is a real drag on the fee read-through but is a good problem (record incremental volume). A structural strength.

Metals — +130% YoY, the multi-quarter precious-metals run continues

Metals ADV of 1.7M more than doubled year-over-year (and rose 17% sequentially off the already-elevated Q4) as gold and silver continued their historic run (silver reportedly traded from ~$50 toward ~$118 before settling near $86). The RPC fell to $1.153 on the Micro surge. This is now several consecutive quarters of metals strength, extending the retail-Micro-plus-institutional-hedger flywheel.

Assessment: Metals has gone from a small book to a meaningful contributor across three quarters, and the retail-product expansion (one-ounce gold, the new 100-ounce silver) is a durable structural add on top of the cyclical rally. Some normalization is inevitable when the metals move cools, but the franchise has clearly broadened. Positive.

Equities and the Rest — broad participation, Micro option redesign

Equity ADV of 8.7M grew 8% year-over-year, agriculturals (2.0M) and FX (1.2M) both rebounded, and every book set a record. Management is filing to make Micro Equity Index options financially settled (rather than delivering into a future) to better serve the retail-skewed Micro user base, while keeping the institutional E-mini options deliverable, a targeted move to remove a barrier to entry for the next generation of traders without disturbing the institutional complex.

Assessment: The breadth of participation is the point, every book contributing, not one carrying the quarter. The Micro option redesign is a sensible, retail-oriented product refinement that fits the multi-year new-client-acquisition strategy. Collectively, the non-rates, non-energy books confirm that the step-up is broad rather than concentrated.

Key KPIs

Key Topics & Management Commentary

Overall Management Tone: Management was confident and expansive, treating the record as a demonstration of the franchise's essential role ("in a world in which risk has become the new normal") rather than a lucky window, and leaned hard on the open-interest and client-breadth data to argue durability. The CEO was notably combative and precise on competitive threats, dismissing perpetual futures as illegal and ill-suited to the hedging purpose of a futures market, and pointedly airing a dispute over an S&P 500 perpetual license granted without CME's knowledge despite its 27% stake in the index JV. On rate per contract, the tone was pre-emptive: management repeatedly urged analysts to look past the falling RPC to the growing revenue and client base.

1. The Record, and the Case That It Is Durable

"For the first time in our history, we achieved simultaneously record volume across every one of our 6 asset classes… open interest ended the quarter up 11% over the past year and up 19% since the beginning of 2026. During the quarter, U.S. treasury open interest reached an all-time high of 36.3 million contracts." — Terry Duffy, Chairman & CEO

The 36.2M ADV was ~6M contracts/day above any prior quarter, and management's argument for durability rested not on the volume but on the open interest: positions held, not churned, at record levels and rising through the quarter and into 2026. Commodity volume grew 38%, financials 18%, and the record was mirrored internationally in every region and every asset class.

Assessment: This is the evidence that resolves the question we have carried all year, whether a volume surge is a spike or a step-up. Simultaneous records across all six books plus record and rising open interest (especially the all-time-high Treasury OI) is the profile of a durably higher demand base, not a single-asset volatility flash. It directly satisfies the upgrade trigger we set at initiation: evidence that the through-cycle volume base has genuinely stepped up. It is the analytical heart of the upgrade.

2. Rate Per Contract: Look Past It

"Our pricing strategy includes volume tiering, which results in decreasing rate for contracts at higher levels of volume… this volume tiering encouraged incremental trading… and driving highly profitable incremental volume to the exchange." — Lynne Fitzpatrick, CFO

The blended RPC of $0.652 fell 5% year-over-year, and management pre-empted the concern: volume tiering is a deliberate design that lowers the marginal rate to encourage incremental trading, and because the incremental cost of clearing that volume is near zero, the incremental margin is extraordinary ($200M of the $238M revenue increase reached adjusted net income). The CEO closed the call by urging analysts to reframe RPC as a feature of growth, not a bug.

Assessment: The framing is analytically sound but investors must hold both truths: the RPC decline is a genuine drag on the fee read-through from volume (so 22% volume is not 22% fee growth), yet the incremental economics of tiered volume are so favorable that record volume at a lower rate is still highly accretive. For modeling, we treat RPC as structurally range-bound-to-lower and focus on total fee revenue and the incremental margin, which is where the value accrues.

3. Perpetual Futures and the S&P Licensing Dispute

"Perpetuals are against the law in the United States of America… They are not allowed under the Commodity Exchange Act of 2000… a futures contract… was defined as a contract for future delivery. It was not designed as a contract that never ended." — Terry Duffy, Chairman & CEO

Asked about the explosive growth of perpetual futures on crypto-native and blockchain venues (including an S&P 500 perpetual license granted to a third party), the CEO was emphatic: perpetuals are illegal in the US, are structurally ill-suited to the hedging/convergence purpose of futures (which need a physical-delivery anchor), and their eye-catching notional volumes are not comparable to CME's contract-based figures. He also aired a pointed grievance that the S&P perpetual license was granted without CME's knowledge despite CME's 27% stake in the index JV, and confirmed CME had "made our points very aggressively" to its partner over the intellectual-property breach.

Assessment: The competitive-threat dismissal is substantively correct, perpetuals serve speculators, not the commercial hedgers whose convergence needs define a futures market, and they are not currently legal in the US. But the S&P licensing episode is a genuine, if small, governance and moat concern: it shows the index-JV partner is willing to license CME's benchmark to competing structures, and it is worth monitoring as a longer-term risk to the equity franchise's exclusivity. Net: the near-term threat is overstated by the market; the licensing tension is a real watch item.

4. Prediction Markets: The Markets-First Thesis Is Working

"Since December, we've had over 150,000 new accounts trade at CME Group in these products… the actual… distribution of volume towards the market-based contracts across equity, crypto, energy and metals actually exceeded 30%." — Tim McCourt, Global Head of Equity & FX Products

The event-contract offering (launched December) crossed 220M contracts, attracted 150,000+ new accounts, and, since a mid-March FanDuel marketing push, saw market-based (non-sports) contracts grow to over 30% of volume, up from ~15%. The CEO underlined that the FanDuel deal was always about markets and distribution, not sports, and that the growing markets share is exactly the outcome he wanted. A separate FanDuel FCM application was clarified as non-competitive with the JV (contractually restricted), and the near-term revenue was downplayed in favor of the client-acquisition value.

Assessment: The markets-based share climbing to 30%+ validates the original thesis, that prediction markets are a distribution funnel to pull the next generation of traders into CME's benchmark products, rather than a sports-gambling sideshow. 150,000 new accounts and a rising markets mix are real early KPIs. The economics remain undisclosed (RPC reportedly ~$0.01), so it is still optionality on future graduation into core products, but it is optionality that is demonstrably converting.

5. Open Interest and Client-Base Health

"Open interest in energy is up 14% [since year-end]… every 1 of our client segments continues to perform up double digits across the board, led by our commercial customers… We are not seeing activity that we saw immediately following COVID, which was a spike… and reduction in activity." — Derek Sammann, Global Head of Commodities

Pressed on whether the volatility-driven activity is durable ("good vol vs. bad vol"), management made a detailed case for health: rising open interest, double-digit growth across every client segment (commercial, corporate, banks, buy-side, prop), broad-based activity rather than a single-product spike, and record short-dated options usage for event-risk management. The explicit contrast with the COVID spike-and-collapse pattern was the CEO's and commodities lead's way of arguing this is a sustained expansion, not a flash.

Assessment: This is the corroborating detail behind the headline open-interest number, and it is persuasive. A demand base that is broadening across client segments and holding rising open interest is structurally different from a volatility spike that pumps volume then evaporates. It is the strongest client-health read of our coverage period and the empirical backbone of the durability argument. The honest counter, that management flagged softer April activity, is why we frame the upgrade as a risk/reward call rather than a certainty.

6. Capital Return: Buybacks Doubled

"We returned $3.2 billion to shareholders during the quarter, with $2.7 billion in variable and regular quarterly dividends and $536 million in shares repurchased… we've completed about half of that [OSTTRA proceeds]." — Lynne Fitzpatrick, CFO

Capital return accelerated sharply: $3.2B in the quarter, including a buyback that doubled to $536M (with ~half of the $1.55B OSTTRA proceeds now deployed and ~$758M remaining), on top of $2.7B in variable and regular dividends. The CEO framed capital allocation as dividend-plus-buyback for now, while explicitly keeping the door open to M&A if a value-accretive opportunity arises.

Assessment: The accelerating buyback, even as the stock had run up, is a modest EPS positive and a signal of balance-sheet confidence; deploying the OSTTRA windfall via repurchase is an efficient return. Combined with the ~$2.7B dividend, the total-return support is substantial and is part of the Outperform case, you are paid a growing return while the higher earnings base compounds. The one nuance is that buying near the highs is not a value statement; here, though, the subsequent de-rating means the remaining repurchases execute at better prices.

7. FICC Cross-Margining Expands to Clients

"We anticipate the savings can be upward of 80% for the client book just like we've seen on the House side… we do already have 1 clearing member that signed the agreement for the customer program scheduled to go live at the end of this month." — Suzanne Sprague, Chief Operating Officer

The CME–FICC cross-margining program, live for house accounts since 2024 (22 clearing members, ~$1.5B peak / ~$1B average daily savings), received SEC and CFTC approval to expand to end-user clients from April 30, with anticipated client savings of up to 80%. This brings two large rates liquidity pools together and deepens the capital-efficiency advantage that keeps rates business at CME.

Assessment: This is a concrete deepening of the franchise's core moat, capital efficiency, in its largest book, and it lands precisely as Treasury open interest hits record highs. Up-to-80% client margin savings is a powerful retention-and-acquisition tool that is hard for any competitor to match without a comparable multi-asset clearing pool. A genuine structural positive that reinforces the durability thesis in rates.

8. Energy Benchmark Globalization (WTI)

"We have seen share increases back in CME WTI north of 79%, 80%… when markets are going through times of undue stress, market retrenches to core liquidity on the home exchange." — Derek Sammann, Global Head of Commodities

With Middle East supply disruption and Venezuela uncertainty reshaping physical flows, WTI share moved back to CME (79–80%), and management detailed how the crude-grades contracts, the GME Dubai delivery point, and record US energy exports are entrenching WTI and Henry Hub as global benchmarks. The CEO added a forward-looking observation that a new constituency (shipping insurers and reinsurers hedging Strait-of-Hormuz risk on billion-dollar vessels) could expand the client base further.

Assessment: Energy is a structural share-and-globalization story, not just a volatility trade: US export growth indexes more global flow to CME's benchmarks, and stress periods pull share back to the core liquidity pool. The insurer/reinsurer hedging observation is a plausible new demand vector. This reinforces that the energy strength has legs beyond the current geopolitical spike.

9. Cloud Migration and Tokenized Cash Progress

"We are getting close to opening our Dallas facility for testing with our clients with the goal of ultimately operating markets in the cloud… the goal of being able to go live [on tokenized cash] by the end of this year." — Lynne Fitzpatrick, CFO and Suzanne Sprague, COO

The Google Cloud transformation advanced on multiple fronts: a Dallas facility opening this summer to test cloud-based markets (two agricultural products migrating to the cloud by year-end), tokenized cash progressing with settlement banks (Bank of Montreal publicly disclosed as a partner) toward a year-end go-live, a stablecoin license being pursued, and the Google preferred shares converting to common during the quarter. Management framed the cloud as "the future of markets."

Assessment: These are multi-year strategic builds, not near-term earnings drivers, but they matter for the long-run moat: cloud-native markets, tokenized collateral, and a potential CME stablecoin all extend the capital-efficiency and 24/7 capabilities that differentiate the franchise. The tokenized-cash year-end go-live (enabling weekend value movement for 24/7 crypto) is the most concrete milestone. Option value that de-risks the disruption narrative.

10. The 2026 Expense and Guidance Frame

"We saw about a 7% growth rate in Q1… with a high level of activity, you saw some of the variable expenses come in a bit higher… we're seeing a little bit of softer activity so far here in April." — Lynne Fitzpatrick, CFO

Adjusted expenses ex-license grew ~7% year-over-year in Q1, elevated by the activity-driven variable costs (comp, technology consumption), and management affirmed the ~$1.695B full-year guide while noting occupancy (Dallas) and technology (cloud) will continue to build. Crucially, the CFO volunteered that April activity has started "a little bit softer" than the Q1 surge.

Assessment: Two honest signals here. The expense guide is intact and the variable-cost step-up is a good problem (it scales with record revenue). The April-softer comment is the key near-term caution and the main risk to the upgrade: it confirms a chunk of the Q1 surge was elevated activity that is already normalizing. We weigh it against the record, rising open interest (a more durable signal than any single month of volume) and conclude the base has stepped up even if the Q1 peak does not fully persist.

Guidance & Outlook

CME continues to decline to guide volume, and the record Q1 makes that policy look wise, no one would have forecast 36.2M. The affirmed ~$1.695B expense guide implies the cost step-up is proceeding as planned, with the Q1 variable-cost elevation a function of record activity rather than a guide-breaking surprise. The near-term swing factors are the pace of volume normalization (April started softer) and the float-income line (Q1 cash collateral averaged $149B at 33bps, holding steady into April), which faces a rate-cut headwind later in the year.

Implied setup: Even assuming volumes normalize meaningfully from the 36.2M peak, the exit run-rate and the record, rising open interest point to a full-year earnings base well above where consensus sat a quarter ago. The new-product ramps (24/7 crypto from May 29, FICC client cross-margining from April 30, prediction-market graduation) are optionality on top. Our base case moves up: mid-teens revenue growth moderating through the year as comps harden, with the incremental-margin flow-through and buyback supporting double-digit EPS growth unless volumes fall sharply.

Guidance style: Unchanged and appropriately humble on volume; precise on the controllable lines. The affirmation of the expense guide amid a record quarter signals discipline, and the candor on softer April activity is the kind of straight talk that supports management credibility. The story now depends on how much of the elevated base holds, and the open-interest data is management's strongest, and most credible, evidence that a good deal of it will.

Analyst Q&A Highlights

Tokenized Collateral Mobility and the Clearing Business

The opening question probed how enhanced collateral mobility, tokenized Treasuries plus the expanded FICC cross-margining, could reshape CME's clearing business. Management framed tokenization as a friction-reducer that frees up liquidity, tied to its Google partnership and a potential CME stablecoin.

Q: "As you think about the intersection of these 2 initiatives, I'm curious how you see enhanced collateral mobility impacting CME's clearing business… with customers having the ability to move tokenized treasury collateral in real time, just what that could mean for the industry writ large?"
— Patrick Moley, Piper Sandler

A: "There is a benefit for the industry to be able to reduce friction moving collateral, especially for collateral that does not settle naturally same day. Treasuries is a good example…" (Sprague) … "We're looking at multiple different ways to make that $85 billion a day of margin efficiencies continue to grow… whether it's through tokenization, stable[coin], using cash and treasuries." (Duffy)
— Suzanne Sprague, COO; Terry Duffy, Chairman & CEO

Assessment: The answer connects the near-term (FICC cross-margining, live for clients April 30) to the multi-year (tokenized collateral, stablecoin) under one theme: extending the $85B/day capital-efficiency moat. Reduced collateral friction is genuinely additive to the clearing value proposition and hard for competitors to replicate without a comparable multi-asset pool. It reinforces that the moat is not static, it is being actively deepened, which underpins the durability half of the upgrade thesis.

Perpetual Futures as a Retail Driver

A follow-up asked whether perpetual futures, exploding on crypto-native venues, could become a meaningful retail-engagement driver for CME. The CEO's response was an emphatic rejection on legal and structural grounds.

Q: "We've seen volumes explode in commodity perps… I'm curious how you're thinking about perpetual futures as a product structure that could eventually become a more meaningful driver of retail engagement… what regulatory or market structure hurdles would need to be cleared?"
— Patrick Moley, Piper Sandler

A: "Perpetuals are against the law in the United States of America… a futures contract… was defined as a contract for future delivery. It was not designed as a contract that never ended… the decisions that people want on perpetuals… seem to me more of they're trying to create a contract for the speculator. That's not the mission of the commodity exchange."
— Terry Duffy, Chairman & CEO

Assessment: The dismissal is substantively correct, perpetuals are not currently legal in the US and are structurally mismatched to the convergence/hedging purpose that defines a futures market, and the notional volumes on crypto-native venues are not comparable to CME's contract figures. The market periodically frets that perpetuals threaten CME; this exchange is a useful reminder that the threat is overstated. The more real, if minor, concern surfaced separately: the S&P index JV licensing a perpetual to a third party without CME's knowledge.

Energy Customer Durability Through Volatility

An analyst pressed on whether the extreme energy volatility ("this doesn't feel like great vol") reflects a durable customer base or a fragile spike. Management made a detailed health case built on open interest and client-segment breadth.

Q: "There's always a debate about good vol, bad vol. This doesn't feel like great vol. So if you think about what's happening with the underlying users and the durability perhaps of the customer base on the go-forward basis, I'd love to hear your comments."
— Alex Blostein, Goldman Sachs

A: "Open interest in energy is up 14% [since year-end]… every 1 of our client segments continues to perform up double digits across the board… We are not seeing activity that we saw immediately following COVID, which was a spike in activity closing open interest and reduction in activity across client segments. So we are seeing a healthy amount of activity."
— Derek Sammann, Global Head of Commodities

Assessment: This is the most important Q&A exchange for the rating, because it directly confronts the spike-vs-step-up question. The answer, rising open interest, broad client-segment growth, an explicit contrast with the COVID spike-and-collapse, is credible and specific, not hand-waving. It is the corroboration behind the headline OI figure and the empirical basis for treating the higher base as at least partly durable. The honest counterweight is the softer-April comment; together they justify an Outperform framed as favorable risk/reward rather than a sure thing.

Energy Rate Per Contract Decline

A numbers follow-up asked how to think about the sharp energy RPC decline. The CFO decomposed it into volume tiering, mix, and the Micro surge.

Q: "Obviously, with a lot of volumes coming through, RPCs came down a bit… I was hoping you could maybe frame how to think about near-term RPC across, particularly the energy markets where we're seeing the bigger decline."
— Alex Blostein, Goldman Sachs

A: "You would expect additional usage of volume tiering. You also saw a mix shift towards crude, which tends to be lower priced than things like our nat gas… the micro business really grew significantly… about 315,000 micro energy contracts a day this quarter… up from about 80,000… at about $0.52 a contract."
— Lynne Fitzpatrick, CFO

Assessment: The decomposition is useful and reinforces the core RPC message: the rate decline is a mix-and-tiering phenomenon driven by exactly the growth (record volume, retail Micros) the bull case wants, not a pricing concession to competition. For modeling, it confirms RPC should be treated as range-bound-to-lower with the fee-dollar and incremental-margin lines as the focus. It tempers the read-through from volume to fees without undermining the earnings story.

Prediction-Market Customer Graduation

A question asked what the 150,000 new prediction-market accounts look like and how they might graduate into traditional futures. Management described capturing traders earlier in their life cycle while declining to over-forecast.

Q: "I think you said 150,000 new accounts that sort of started trading on CME's platform, having come through that prediction market funnel… what you're seeing, the early behaviors of those kinds of accounts, [and] how you think it might evolve as you sort of try and graduate those customers?"
— Simon Clinch, Rothschild & Co Redburn

A: "With the smaller-sized, full value margin contract, we now have the opportunity to perhaps be their first trade in the financial markets… capturing them earlier in that journey is one of the things that we find attractive… hard to say exactly what that graduation or life cycle will look like."
— Tim McCourt, Global Head of Equity & FX Products

Assessment: The honest "hard to say" on graduation is appropriate, and the strategic logic, being a trader's first venue rather than a later destination, is a genuinely new and potentially valuable customer-acquisition angle. The rising markets-based share (30%+) shows the funnel is pulling traders toward CME's benchmark products, not just sports. It remains optionality (economics undisclosed, graduation unproven), but it is optionality that is converting faster than we expected.

Capital Allocation and the Buyback Doubling

A question probed the buyback philosophy after repurchases doubled even as the stock rose, and any link to the OSTTRA proceeds or the preferred-share conversion. The CFO confirmed the OSTTRA deployment.

Q: "The buyback level doubled this quarter versus the prior quarter, even with the stock improving materially this quarter… do you view it as opportunistic buyback or is there anything related to the preferred conversion to common shares?"
— Chris Allen, KBW

A: "We did comment that we will be using the OSTTRA proceeds and putting those to work in the repurchase… between last quarter and this quarter, we've completed about half of that… we had about $758 million remaining in cash from the OSTTRA proceeds at the end of Q1."
— Lynne Fitzpatrick, CFO

Assessment: The doubling is explained as OSTTRA-windfall deployment rather than a new conviction on valuation, which is the honest framing. With ~$758M of proceeds still to be repurchased, there is a visible, ongoing bid under the stock through the year, and, helpfully, the post-print de-rating means the remaining repurchases execute at better prices. It is a supportive, if modest, piece of the total-return case underpinning the upgrade.

What They're NOT Saying

1. How much of 36.2M is durable: Management leaned on open interest to argue durability but pointedly did not put a number on the sustainable run-rate, and volunteered that April is "a little softer." The single most important variable, the through-cycle base, is left for investors to triangulate from OI rather than stated.
2. Prediction-market economics: 150,000 accounts and 220M+ contracts are impressive, but the revenue, RPC (reportedly ~$0.01), and margin were not disclosed, so the fast-growing volume cannot yet be sized as earnings.
3. The float-income path as rates fall: Q1 cash collateral of $149B at 33bps was a tailwind, but management gave the current spread without framing how much a rate-cut cycle subtracts later in 2026.
4. S&P licensing resolution: The CEO aired a real grievance over the S&P 500 perpetual license granted without CME's knowledge but did not say how it will be resolved, leaving an unquantified question mark over the index franchise's exclusivity.
5. Whether the RPC decline stabilizes: Management urged analysts to "look past" the RPC but did not indicate where it settles once volume tiering laps, leaving the fee-per-contract trajectory open.

Market Reaction

• Pre-print setup: CME closed at $284.40 on April 21, having de-rated ~13% from its 52-week closing high of $326.46 and down 7.2% over the prior 30 days. The stock had rallied to a fresh high (~$326) after the February record, then pulled back into the Q1 report, so it entered the print materially cheaper than at the Q4 all-time high.
• Reaction session (April 22, before-open report): The stock gapped down 3.3% at the open ($275.06) on the record print, traded a $274.60–$286.97 range, then recovered through the session to close at $285.71, up 0.5% (+$1.31) on elevated 3.4M shares (1.5x the 30-day average). The S&P 500 rose 1.0%, so CME lagged the tape on the day.

An all-time-record quarter, records in all six asset classes, EPS +20%, and the stock opens down 3.3% before clawing back to a fractional gain. The reaction says the market is treating 36.2M as a volatility spike that will mean-revert, exactly the interpretation the falling RPC and the softer-April comment feed. That skepticism is the opportunity: the market is pricing the higher earnings base as temporary, while the open-interest data argues a meaningful part of it is durable.

The setup is the inverse of Q4, when a record met an all-time-high stock. Here a record meets a de-rated stock (~13% off its peak, now ~22x forward on a rising earnings base) that the market refuses to reward. That combination, a structurally higher base bought at a compressed multiple, with the reaction signaling misplaced skepticism, is the risk/reward inflection we have been waiting three quarters for.

Street Perspective

Debate: Spike or Step-Up?

Bull view: Simultaneous records across all six asset classes, record and rising open interest (Treasury OI at an all-time high), broad client-segment growth, and structural international expansion all point to a durably higher demand base, "risk is the new normal."

Bear view: The surge is volatility-driven (rates and energy up 40–58% sequentially), management already flagged softer April activity, and the RPC decline shows the incremental volume is low-quality per contract; the base will mean-revert and comps will be brutal.

Our take: Both contain truth, but the open interest tips it. Volume can spike and fade; open interest at record highs and rising is held positions, the leading indicator of a sustained base. We conclude a meaningful part of the step-up is durable even if the 36.2M peak does not fully persist, which is enough, at a de-rated multiple, to upgrade.

Debate: Does the RPC Decline Undermine the Earnings Story?

Bull view: Volume tiering is a deliberate growth mechanism; the incremental margin on tiered volume is so high (~84% of the revenue increase reached net income) that record volume at a lower rate is still highly accretive.

Bear view: A 5% RPC decline means volume growth badly overstates fee growth, and if RPC keeps falling as tiering deepens, the fee line decouples from the volume records the bull case celebrates.

Our take: The bulls have the better of it on this quarter's economics (the incremental-margin math is compelling), but the bears are right that RPC is a genuine governor on the volume-to-fee read-through. We model RPC as range-bound-to-lower and focus on total fee dollars and incremental margin, where the value clearly accrued this quarter.

Debate: Is the Competitive Threat (Perpetuals, S&P Licensing) Real?

Bull view: Perpetuals are illegal in the US and structurally unsuited to hedging; CME's regulated, deliverable, cross-margined complex is unassailable, and the noise around crypto-native venues is just noise.

Bear view: The S&P JV licensing a perpetual to a third party without CME's knowledge shows the moat has seams, and a shifting regulatory posture could eventually legitimize structures that peel off retail and speculative flow.

Our take: The near-term perpetuals threat is overstated, the CEO's legal and structural points are correct. But the S&P licensing episode is a legitimate, if small, watch item on the equity franchise's exclusivity. Net: not a thesis risk today, worth monitoring.

Model Update Needed

Valuation impact: A higher through-cycle earnings base (OI-confirmed) plus a de-rated entry re-rates the risk/reward. At ~$285 (~22x forward on a rising EPS base, down from ~26x at the Q4 peak), a franchise compounding double-digit EPS with an accelerating buyback and a ~2.7B-plus dividend has 12-month total-return potential ahead of the market. We see fair value in the low-$300s on a normalized-but-elevated base, supporting Outperform. The key risk is a sharp volume normalization; the open-interest data is our reason to think the base holds.

Thesis Scorecard Post-Earnings

Overall: Thesis strengthened, and the balance of the risk/reward has shifted decisively. The volume-step-up we set as an explicit upgrade condition at initiation has arrived and is corroborated by record, rising open interest, not just a volume headline. Simultaneously, the valuation constraint that kept us at Hold for three quarters has eased as the stock de-rated ~13% from its peak. Bear-1 moves from EMERGING to CHALLENGED; the two operating bull pillars are upgraded/strengthened. The residual risk is a sharp volume normalization (April started softer), which is why this is an Outperform with eyes open rather than a high-conviction table-pound.

Action: Upgrade to Outperform from Hold. After three quarters of Hold on a great business at a full price, we finally have both a structurally higher earnings base (open-interest-confirmed) and a de-rated entry (~22x on a rising base), with the market pricing the record as a spike. That asymmetry, higher base bought cheaper, with skepticism to be proven wrong, is the setup we have been waiting for. We would revert to Hold on clear evidence the volume base is mean-reverting toward the old ~28–30M level, or on a re-rating back toward the highs.