The WFE 2020 Series: Terry Duffy, Chairman & Chief Executive Officer, CME Group

By: The WFE Team Feb 2020

1. As we start a new decade, please can you look into the future, and share your predictions on what the market infrastructure industry might look and feel like by 2025? 

While it is always difficult to make predictions, we know that our clients will continue to drive the pace of change for market infrastructure – both how and where they manage their risk. They are seeking greater efficiencies for both their capital and operations going forward.

Geopolitical uncertainty, unexpected events like coronavirus, ongoing challenges such as climate change, as well as disruptive technology all will fuel an ongoing need for risk management. It was not that long ago that major news would shake markets for weeks or months; now we see that market users can sometimes digest shocks in a matter of minutes. The 24/7 availability of news and information, as well as the capacity for deep, liquid markets around the clock and around the world, has increased the need for people to mitigate risk in futures markets. I only see that trend increasing in the next five years.

As our clients try to meet these challenges, it’s up to us to deliver value in a way that makes their trading experience easier and their risk management more effective than ever before.

2. And how is your firm getting ready for the changes you’ve outlined above? 

Delivering efficiencies for our clients is what drove our acquisition of NEX just over one year ago. This was really about creating a marketplace of the future – bringing together cash, futures, options, data and optimisation all in one place. As we merge platforms, our clients will be able to access our FX futures with EBS, and our interest rate futures with BrokerTec’s cash business. While market structure will not change, having these offerings available on a single platform will create significant benefits. It will allow participants to access new trading opportunities and operational efficiencies, most especially by streamlining technology.

We have also adapted our product set to serve the changing needs of the marketplace. As the only exchange to offer futures and options in every major investible asset class, we provide global benchmarks for everything from agriculture to energy, and from interest rates to foreign exchange. Product innovation has been our hallmark. And, in the last year, we launched Micro E-mini futures, SOFR futures and options, Bitcoin options, Liquified Natural Gas futures, and ESG futures, just to name a few.

Global access is also key. We are reaching more clients all over the world and further globalising our product offering. More than 30 percent of our revenue is now generated outside North America, and we’re seeing trading volumes grow in every region – up 48 percent in Latin America, 20 percent in APAC and 7 percent in EMEA in 2019. Additionally, we have expanded our global sales force in both Europe and Asia, so we are well positioned to continue to help solve client needs whether they are regional or global.

3. Entering a new decade isn't just about looking ahead; it’s also a good time for reflecting on the past. What’s the top lesson you’ve personally learned from the past ten years?

Our industry and our company have gone through significant changes during the last decade. We helped clients hedge and manage risk in some of the most difficult environments the markets have ever experienced. Whether it was the Financial Crisis, Brexit, or the volatility of 2018 and 2019, each event provided us with opportunities to learn, grow and evolve our risk management offerings to better support the changing needs of our clients. As a result, we launched many important new products and saw tremendous global growth.

For me, personally, the past ten years have reaffirmed a lesson I learned as a young man when I first began trading: the importance of discipline. There are many opportunities that are going to come up in any business. Undoubtedly, there will be challenges along the way. But the goal is to not be thrown off by searching for the next big trend. If we maintain a focus on the present and future needs of our clients, the results will follow.