On the desk today · CME Group
It started with butter and eggs. Now it clears a quadrillion dollars a year.
| NASDAQ · CME |
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The Clearing House That
Never Closes
On September 22, 1898, twenty-two merchants in Chicago formed the Chicago Butter and Egg Board. Their problem was simple — dairy prices swung wildly from season to season, and wholesalers needed a way to lock in future prices so they wouldn't get wiped out between shipments. They created standardized contracts for butter and eggs and traded them in a room downtown. It was modest. It was practical. It was the beginning.
One hundred and twenty-eight years later, that butter board handles approximately $1 quadrillion in notional value every year.
I bought gas last week. The price on the pump — $3.49 a gallon — was determined, in part, by a crude oil futures contract traded on the New York Mercantile Exchange. That exchange is owned by CME Group. I checked the interest rate on my mortgage the same afternoon. The rate my bank offered was influenced by Treasury futures traded on the Chicago Board of Trade. That exchange is also owned by CME Group. When a farmer in Iowa hedges next year's corn crop, when an airline locks in jet fuel prices for the quarter, when a pension fund adjusts its equity exposure through S&P 500 futures — every one of those trades clears through the same building on South Wacker Drive in Chicago.
Most people have never heard of CME Group. But it sits at the center of global finance the way an electrical grid sits at the center of a city — invisible, essential, and impossible to route around.
The Butter and Egg Board became the Chicago Mercantile Exchange in 1919. In 1972, it launched the first financial futures contracts — currencies — through the International Monetary Market. In 2000, it was the first major exchange to demutualize and become a publicly traded company. In 2007, it merged with the Chicago Board of Trade — founded in 1848, one of the oldest exchanges on earth. In 2008, it acquired NYMEX and COMEX, adding energy and metals. Today, CME Group operates the world's largest derivatives marketplace.
Here is the math that makes it work. In fiscal 2025, CME Group reported $6.5 billion in revenue — a record, and the fourth consecutive year of record revenue, operating income, net income, and earnings per share. The average daily volume was 28.1 million contracts — also a record. The average fee per contract was $0.71. Seventy-one cents. That is the toll. But at 28.1 million contracts per day, across roughly 250 trading days, those seventy-one cents add up to billions. Operating margin hit 64.9%. The company paid $3.9 billion in dividends in 2025 alone and has returned $30 billion to shareholders since 2012.
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That $0.71 is the number I keep coming back to. It sounds like nothing. Less than a dollar. But the volume is so large — 28.1 million contracts every single day — that those fractions compound into $6.5 billion in annual revenue and a 64.9% operating margin. The economics are structural. Once the exchange is built and the clearing system is running, the cost of processing one more contract is close to zero. Every additional trade is nearly pure profit.
The moat is liquidity itself. An S&P 500 futures contract can only be traded on CME. A Eurodollar future — the most traded contract in history — exists only on CME's platform. These products are proprietary. But even beyond proprietary contracts, the depth of the order book keeps traders from leaving. A hedge fund that wants to buy 5,000 crude oil futures needs a market deep enough to absorb the order without moving the price. CME has that depth. No competitor comes close. Liquidity attracts more liquidity. The loop feeds itself.
Terry Duffy — who has led CME Group as chairman and CEO for more than two decades — said it plainly in the fourth-quarter 2025 earnings release: "Last year, CME Group delivered the best year in our history and our fourth consecutive year of record revenue, adjusted operating income, adjusted net income and adjusted earnings per share. In a risk-always-on environment, client demand for our products and services generated record average daily volume of 28.1 million contracts."
The flywheel runs on volatility and uncertainty. When interest rates move, banks hedge. When oil prices spike, airlines hedge. When currencies fluctuate, multinationals hedge. When stock markets sell off, institutions hedge. In every case, the hedge is a futures or options contract that clears through CME. The company does not need markets to go up. It needs markets to move. And markets always move. In 2025, CME's market data revenue — the fees it charges for real-time price data — reached a record $803 million, up 13%. The data is as valuable as the trades. Traders need the prices. Data vendors need the feed. Everyone pays CME.
WHY THIS WORKS
Proprietary products on a captive platform. You cannot trade an S&P 500 future, a Eurodollar future, or a WTI crude oil future anywhere else. CME owns the contracts. The exchange is the only venue.
Liquidity is the moat. The deeper the order book, the lower the execution cost. The lower the cost, the more traders come. The more traders come, the deeper the book. No competitor can bootstrap this loop.
Revenue rises with uncertainty. Volatility drives hedging. Hedging drives volume. Volume drives clearing fees. CME earns more when the world feels less certain — which is most of the time.
71 cents, multiplied by infinity. The toll per contract is almost invisible. But at 28.1 million contracts per day, the fractions compound into $6.5 billion in revenue and a 65% operating margin.
CME Group started in 1898 as a room where twenty-two merchants traded butter and egg contracts. One hundred and twenty-eight years later, it clears approximately $1 quadrillion in notional derivatives value annually. It has returned $30 billion to shareholders since 2012. And the toll — seventy-one cents per contract — is so small that no one ever questions it. That is the toll booth at its purest. The fee is invisible. The volume is infinite. And the building on South Wacker Drive stands at the center of every financial risk decision on earth.
