John C. Peschier - Managing Director of Investor Relations Phupinder S. Gill - Chief Executive Officer, Director, Member of Executive Committee and Member of Strategic Steering Committee James E. Parisi - Chief Financial Officer and Senior Managing Director of Finance & Corporate Development Terrence A. Duffy - Executive Chairman, President, Chairman of Executive Committee and Member of Strategic Steering Committee Derek Sammann - Senior Managing Director of Financial Products & Services

Richard H. Repetto - Sandler O'Neill + Partners, L.P., Research Division Alex Kramm - UBS Investment Bank, Research Division Howard Chen - Crédit Suisse AG, Research Division Michael Carrier - Deutsche Bank AG, Research Division Surinder Thind - Jefferies & Company, Inc., Research Division Niamh Alexander - Keefe, Bruyette, & Woods, Inc., Research Division Jillian Miller - BMO Capital Markets U.S. Patrick J. O'Shaughnessy - Raymond James & Associates, Inc., Research Division Matthew S. Heinz - Stifel, Nicolaus & Co., Inc., Research Division Kenneth B. Worthington - JP Morgan Chase & Co, Research Division Christopher J. Allen - Evercore Partners Inc., Research Division Edward Ditmire - Macquarie Research Brian Bedell - ISI Group Inc., Research Division

Welcome to the CME Group Second Quarter Earnings Call. [Operator Instructions] At this time, I'll turn the call over to Mr. John Peschier. Sir, you may begin.

Thank you, and thank you, all, for joining us this morning. Gill and Jamie will spend a few minutes outlining the highlights of the second quarter, and then we'll open up the call for your questions. Terry Duffy is also on the line, along with Kim Taylor and Derek Sammann. Before we begin, I'll read the Safe Harbor language. Statements made on the call and in the accompanying slides on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. More detailed information about factors that may affect our performance may be found in our filings with the SEC, including our most recent Forms 10-K and 10-Q on our website. Also note the final page of our earnings release contains a reconciliation to our GAAP results this quarter. Now I'd like to turn the call over to Gill.

Thank you, John, and good morning. I will discuss our performance in the second quarter and provide updates on a few of our strategic initiatives before turning things over to Jamie to review the financials. During the second quarter, several themes continued to unfold, including the European crisis, bank downgrades, the continuation of Operation Twist and the Fed's 0 interest rate policy. The environment we operate in remains challenged, and global trading volumes continue to be impacted by low levels of volatility. In light of this, the entire organization is working to be as efficient as possible. Average daily volume in the quarter was 12.4 million contracts, down 9% versus the second quarter 2011. However, we did experience better volumes in May and June, 13.2 million and 13.1 million, respectively which helped offset the slower April of 10.7 million contracts. Interest rate ADV in the second quarter declined 20% versus the same period last year. Volumes continued to be impacted by the Fed's 0 rate interest -- 0 interest rate policy and quantitative easing. The expectation of continued slower growth in the U.S. has pushed out the Fed funds great hike expectations, which also continued to weigh on volumes. Helping to stabilize our interest rate complex is a growth out the curve, especially in years 3 to 5, as well as in the so-called Mid-Curve Options. Our interest rate team has been successful in building this new liquidity, and we expect this to drive even when activity in the front end picks up again. This is a good example of how we leverage our people and our products for the benefit of our customers, making CME Group the most compelling place to manage interest rate risks. This is evident in the strong outperformance of our markets versus interest rate products…

Thanks, Gill, and good morning, everyone. Today, I'm going to review the results of what has been a very productive quarter, while we also continued our focus on efficiency. We accomplished a lot during the quarter, including the sale of the CBOT building, a smooth CEO transition and the close of our joint venture with McGraw-Hill at the end of June. I'm going to cover quite a few details, which should assist with modeling going forward. Many of the activities in the quarter drove nonrecurring items, which are included in our GAAP results and were noted in the earnings release. I will touch on these during my comments. In addition, we completed a 5 for 1 stock split in July, which is reflected in our results today, for all periods referenced. Let me start with revenue. As Gill mentioned, the average daily volume was down compared to the second quarter last year. However, volume trended up in the latter part of the second quarter, and in total, increased slightly from Q1. Total revenue came in at $796 million, up 3% from the first quarter. The rate per contract for the second quarter was $0.812, which was up slightly versus last year and in line with the Q1 rates. Compared to last quarter, the product mix was favorable, offset by unfavorable venue mix and higher volume discounts. Turning to expenses. Total CapEx spend was $327 million. Excluding the nonrecurring items from the quarter, operating expense would have been $306 million, down $17 million from the first quarter operating expense of $323 million. These items impacted us in the compensation, professional fees and license fee lines. Starting with compensation and benefits, this line item was $131 million, which included $12 million of contractual payments, including costs associated with the accelerated vesting of…

[Operator Instructions] Our first question comes from Rich Repetto with Sandler O'Neill. Richard H. Repetto - Sandler O'Neill + Partners, L.P., Research Division: I guess the question, the first, I think there's a follow-up. But Jamie, can you just give us the expenses that are coming out with the JV that were attributed to the Dow, CME prior? Because you had $27 million in revenue, it was roughly breakeven?

So with the Dow and with JV and the sale of CMA as part of that JV, it's all embedded in the guidance, the expense guidance that I gave you for the second half of $595 million. The area that of that -- those particular ones will impact the most will be on the compensation line, the amortization of intangible line. And on the license fee line, you'll actually see an increase in license fees as a result of that due to that profit sharing that I noted earlier. Richard H. Repetto - Sandler O'Neill + Partners, L.P., Research Division: Okay, okay. And then the one follow-up would be, I guess, for Terry and Gill. You went through some good detail in walking through on the OTC expectations, the OTC clearing. And I guess, Gill, you said 1Q '13, if you just did the 3 months, you'd be in November, and I guess the phase is major swap deals in the beginning. Would you see -- expect to see a significant uptick at the end of the year or the first step-up at the end of this year? Or why that delay till later in -- early 2013?

I think what you're going to see is the mandate will kick in, it seems, to us in February of next year. What you're going to see, because we're talking about thousands of accounts that are going to come on board, the ramp-up period is definitely going to be in full gear in the fourth quarter of this year. And as I said a short while ago, we are seeing many accounts that are already now preparing to launch. And in the last 2 weeks especially, we've seen activity coming into us. So a safe assumption would be you're going to start seeing mostly serious clearing beginning around the end of the third quarter, and the fourth quarter is going to be very busy for everybody. Richard H. Repetto - Sandler O'Neill + Partners, L.P., Research Division: I think you're adding 3 months onto sort of the feedback loop that the CFTC get the -- I think that's where the 3 months comes from.

Yes.

Our next question comes from Alex Kramm with UBS.

Maybe we'll just stay on the OTC topic for a second here. I think you mentioned that in the quarter, you finalized some of the agreements with the dealers. And I think you said in the past that you're going to be focused more on getting some of the dealer volume, too, even though at LCH, they have a pretty nice sweetheart deal right now. So can you give us any more color on how those discussions are going? Could there still be some sort of restructuring of the agreements with the dealer? It sounds like you've been very aggressive in talking to the dealers in terms of getting some volume over here. So any indications would be great.

Sure. This is Gill, and I'll ask Jim to chime in if he has anything to add. I think with the finalization of the agreement with the dealers, it simply formalizes all the activity that has been going on up to this point in time, which both of us have taken on a good-faith basis. I think the dealers will continue to work with the buy sides just like we are working with them and the buy side. And keep in mind, for every one of these, that the buy side, there's a sell side transaction also associated with it. So the dealers are clearing here. And as capital efficiencies become more of an issue, which is actually here, especially when Basel 3 kicks in as a requirement. I think the rational thing to do is to work efficiently to lower the capital.

All right. Good. And then I don't know if Terry is on, but clearly with some of these customer losses at MF and I guess PFG, there's been more discussions or more noise from you guys in terms of holding some of -- more collateral at the clearing house level and not at the FCM level. So just wondering if you -- in what stage we are if you're engaging with FCM in terms of talking about how this could look, what the reception is? In particular, I think historically, FCM have made like, I don't know, 40%, 60% of their income on interest. So would this change? Or do you think there could still be a way for the FCM model to be fairly similar to how it looks like now from a profitability standpoint and how this could maybe impact friction in the system and trading volumes?

Gill, can you hear me? Alex, what I would say to that, and I testified -- I said this yesterday in Washington, is it's just not something that CME wants to do as far as holding the customer funds. We are not trying to impact this soon [ph] or remediate or anything of that nature of their model, realizing very much so that the percentages that you outlined are correct. At the same time, there has been 2 major events in our industry. Some have come to us looking for different solutions. This has been raised. What we had said in the release the other day is that we would have been prepared to work with the industry. We don't have all the mechanisms how it would work, but the important thing is we do not want to disrupt the FCM model. So this would not be a profit generator for CME Group. And again, what we're trying to do is just, again, build the confidence back into the marketplace for the clients, which they deserve. So that's really what we are trying to do here. The last thing we want to do is to have any notion of whether they were trying to disintermediate the FCMs, or holding their customer funds.

If I can just add and stress one thing. This is not a proposal, but it is an idea that we floated out there a few days ago with the intended purpose exactly as Terry pointed out. It is very specifically to restore confidence in the marketplace and in our actions. We clearly recognize that the vast majority of our FCMs have done a phenomenal job handling the client funds, and this, in no way, shape, or form, indicts any one of them. This is simply very specifically to restore the confidence that we know has been lost as a result of the rogue actions of 2 firms.

All right. So way too early to think about any potential timing, I guess.

Correct.

Our next question comes from Howard Chen with Credit Suisse. Howard Chen - Crédit Suisse AG, Research Division: I just wanted to get your take on the ongoing LIBOR investigations. And maybe more broadly, when I think about the CME, I think one of the core principles of the company is that you have these great global benchmark products. So how do you go about ensuring you've got that right suite of benchmark products for the next 10, 20 years like you have had for like the last 10, 30 years?

This is Gill. I'll start, and Derek Sammann who is with us, might want to add. I mean, where the LIBOR is concerned, we expect that it is going to remain the predominant short-term reference point contract. There are issues, as you did note those issues. We are in support of anything that would fix those issues. There's a lot of money that's indexed to that rate now, and CME has, in the past, worked with the BBA, and we will continue to work with the authorities and anybody else to make sure that it continues to be the benchmark on a going-forward basis. Just as a point of note though, it's not the only contract that we have. We have a suite of interest rate products. So as a reference point, we have the vast majority of any potential shifts that might occur. Derek?

Yes, that's a good question. Let me jump in also. I think what you're speaking to is our track record of successful product development, so product extensions. And when you look at what we have talked about in the last couple of years, the products we put on a curve, whether it's the Ultra Bond or the Weekly Treasury Options, the Mid-Curve Options, not to mention the service development that you've heard Kim and Gill refer to around the swaps currencies, so we think that as we continue to look at points on the curve and look at various products, various opportunities, we're going to continue to put products out there to speak about client demand, whether it's across the curve, or in terms of different products open to us as a result of OTC clearing. So you'll be hearing more from us. Kim did mention about the cross-margin opportunity for a range complex as a whole in swaps. That was rolled out, as Gill mentioned, on May 7. We're seeing people take up opportunities on that. We hope to have that provided out to customers over the coming months as well. So we look at this as a suite of products and services, and our track record of new product development and product extensions I think puts us in a good place, listening to our clients and putting product ideas out there to serve their needs.

Gill, can I jump in for one second?

Yes.

Howard, what I think is pretty fascinating, too, is I know LIBOR has come under a lot of scrutiny. And I agree with everything Gill and Derek have said. And I do believe that we will remain a preeminent benchmark. And just to add a little bit of credibility to this, some of the people that are crying the loudest are still using it, and that would be the United States federal government. The Fed still uses LIBOR as it makes its loans today. So they use that as a reference point when they make their loans. So I do believe that this will still continue to be the benchmark going forward. Howard Chen - Crédit Suisse AG, Research Division: Great. And my follow-up, Jamie, as you and the team begin the 2013 budgeting process, you evaluate working capital needs, you look over the M&A landscape, I was just hoping for your latest thoughts on how much of that cash on the balance sheet, over $700 million in it, you'll sweep and return to shareholders at the end of the year?

Yes, sure, Howard. It's hard -- I can't give you an exact answer. There's certainly -- we've been fairly active in doing smaller bolt-on acquisitions. So that will -- we'll use some of that cash for that and continue to do so. But that said, there is a significant amount that we've already generated through the first half of the year. We'll continue to generate through the second half, and we will look to, as we always say, look to return a significant portion of that excess to the shareholders. One thing that we are considering and thinking about is keeping our eye on the tax loss as it relates to that fixed dividend and seeing whether it would make sense to pull it forward into this year if the tax laws progress the way that they are currently written.

Our next question comes from Michael Carrier with Deutsche Bank.

Maybe just a follow-up on the customer fund. If we think about like the different options that the industry has, whether the clearing houses, you manage that, or if it's outsourced to a custodian or one of the trust banks, I guess more important because those are 2 different options. But just from the FCM's standpoint, like it's a tough business already. And so if they lose that or the customers have to pay for that, like do you sense that given the changes that are taking place, there's going to be more pressure on like industry trends or like volume trends or pricing trends? Or is there an outcome that can make customers more secure yet there won't be additional pressure on either volumes or pricing?

This is Gill. I think a couple of assumptions that you have to make, and I think these assumptions are good assumptions. The vast majority of the FCMs that we have are handling the customer funds in the right way. As you rightly point out, it's a straight component. It's a very large part of the business model of the FCMs. It is something that we're extremely sensitive to and have begun conversations with them with respect to how to best handle this confidence issue. It may be the highly restrictive investment policies that are in place now would be a very good engaging factor for these guys. There are several banks, as you might know, that are part of the infrastructure of our system, and those banks may get involved. And so if those banks do get involved, they tend to be considered as an independent third party, and they, instead of us, might be an alternative choice. The important thing, as Terry pointed out a short while ago, is to not change or harm the FCM business model as it exists now. There are -- to your point a short while ago, there are going to be continued pressures on the FCMs, but the 3 big things that we are focused on with respect to this issue is: number one, to restore the confidence; number two, to make sure that the FCMs continue to be able to operate their businesses as they do now; and the third piece, which we have heard from our firms, has been to lower the back office cost for our firms.

If I could just add to what Gill said, Michael. I think we have said this historically because it's true. The cheapest part of transactions in the futures industry are the cost of execution. And what drives the real benefits is the type they offer. So even though the cost of trading is down significantly, even if there was an uptick in cost by the FCMs, it would still be a -- the user would still be a main benefit because that is still the lowest cost of the trade. The slippage is where the real big cost comes in. So I don't see that as a real big impediment even if their model was to be impacted and competitively raised up to offset some of their revenue losses.

Okay. That's helpful. And then maybe just a quick follow-up with some of the tax rates. So guidance is a little bit lower now. When you look at your options or maybe what you're looking at in terms of how you can lower that over time, is there a lot more to be done? Because obviously, there was the Illinois stuff, but then it seems like for all companies like, you can look around and try to figure out if there's more ways to become more efficient. So I'm just trying to gauge like what inning are you in, in that process, albeit it's an ongoing process?

Yes, that's right. It's a good question. It is an ongoing process. We're looking for continuous improvement in the rates. The fact is that the vast majority of our assets and intellectual property and all else has been developed here in the United States. So that really does limit our ability to have any tax placed outside the U.S. A lot of those companies that you do reference that -- have strategies were they have acquired businesses outside the U.S., property outside the U.S. to drive income, that's allocated outside the U.S. Still, cash balances are outside the U.S., but they're not able to repatriate, and therefore, return to shareholders. So there's -- it's a lot of moving parts and a lot of things to consider as we continue analyzing our tax situation. I'd say the biggest potential opportunity for us, I'd say we are the poster child here in the U.S. for a reduction in corporate taxes. So corporate tax reform in the U.S. would be, I'd say, the best potential for us.

And just to add to that, Jamie, I think, Michael, when you hear about the fiscal cliff coming at the end of the year and how we're going to deal with that, one of the trading blocks, for lack of a better term, has been the corporate tax rate. And I think the Democratic side of the aisle is that, that's one of the ones that they'd like to use to modify to get other revenues up on other sides. So to Jamie's point, that could be our biggest benefit because that could be the one they could use to trade.

Our next question comes from Dan Fannon with Jefferies & Company. Surinder Thind - Jefferies & Company, Inc., Research Division: This is Surinder Thind calling in for Dan Fannon. I just wanted to talk a little bit about the voluntary exit program. You mentioned -- it went by really quickly. There was about 100 or so individuals in terms of the headcount reductions. Was that part of the exit program? And is that program come to an end at this point? Or what is the status of that?

Yes. The program, we implemented it last quarter, and it’s done in terms of people subscribing to it. Most folks that are still on the payroll and are subscribed, they're going to transition off over the coming months. I'd say on the decrease that you saw in headcount in this quarter was really driven by the CMA and other -- to settle the CMA business. Some of the Dow Jones headcount came off this quarter. More to come next quarter. And we also, obviously, have been trying to keep it as efficient as we can across our core. So really, we haven't seen a decrease from the voluntary incentive program yet in terms of headcount. It is a -- I'd say the number is a more modest number.

And Jamie, isn't it fair to say that their first available date for these folks to do it is August 15?

Yes, that's right. Yes. Surinder Thind - Jefferies & Company, Inc., Research Division: Okay. So we should start seeing some modest additional headcount come down. And as a follow-up, I just want to talk a little bit about the open interest. And so we've seen the open interest come down a fairly significant amount from earlier in the year, and it seems most of that is from the -- within the interest rate complex. And so it seems there's been a lot of volatility. Can you talk a little bit about some of the factors that have been driving the open interests? And is that something that's just given the current condition, that's just kind of remain volatile and we have to wait for interest rates to start moving up? Or maybe some thoughts around that.

Sure. This is Derek. Thanks for your question. I think you're seeing a lot of this driven by the rates environment right now. I mean, you've heard us talk to you over the last couple of quarters about what's going on in the kind of the Front 2 contracts or the first 2 years of Eurodollars versus the Back 8. We're continuing to see in what we call the whites and the reds, or year 1 and year 2, both volumes and OI continue to contract. Certainly, what you saw on June 20, when the Fed announced the additional $400 billion in Twist and most likely pushing out rate rises out into late 2014, early 2015, that's continuing to be a drag on the very front of the Eurodollar curve. What we are seeing, and we've seen this trend for the last 18 months, and Gill referred to this, is we are still seeing good growth in years 3, 4 and 5. Now that being said, it's not fully offsetting the dropoffs in both volumes and open interest in years 1 and 2. Where we are seeing strong growth in open interest is both foreign exchange and agricultural products, and this is really driven by -- you saw a lot of the risk on appetite going into the Greek elections over the course of the first couple of weeks in June. We hit multiple open interest records at about 2.3 million contracts on June 7. We're also seeing significant growth in the ag complex. Volumes are up, and open interest is up, and that's clearly indicated to us that the market's continuing to come to CME and risk manage on the basis of what's going on here. So rates up. If you look at the 2012, the full year, June is up 7%. Rates were up 6%. Equities were up 21%. We haven't spoken much about equity so far. Energy at 3%. And as we mentioned, ag and metals up 17% and 18%. So I think we are seeing the bulk of the dropoff from the front end of the Eurodollar curve. We are making part of that up in the middle part of the curve, but it's not fully offsetting.

Our next question comes from Niamh Alexander with KBW. Niamh Alexander - Keefe, Bruyette, & Woods, Inc., Research Division: And if I could go back to the regulatory reform, we're so much further along than we were 2 years ago, but as well as that, I guess we saw the recent reports, the reports that IEF and whatnot about collateral for these non-paired derivatives. And I'm asking because where are you feeling now about the risk that the OTC markets just shrink too much in that it doesn't kind of get diverted into futures but the overall pie just shrinks? How do you think that risk has changed? Are you seeing any change in activity from your customers? And then I guess alongside that regulation, are you starting to see maybe some of the activity in the people yet top off at non-bank stops?

In terms -- let me take the first bit, and Kim might want to add. We have not seen a -- we have not had any positive indication as to the market shrinking at this time. What we are preparing for, I would say, and this would be consistent with respect to how other exchanges would think about the world, you're going to end up in 1 of 3 places, where OTC trades may become more efficient to be done because of the cleared nature of these trades. So you may see actually more of these swap trades, which is very correspondingly very positive for the futures. You may also see a futuristic environment where futures become more efficient, or you may see the market as it exists now, which is positive again on both sides as capital efficiencies with the gross margin offset that we provide become the norm. So there are, essentially, these are 3 ways in which we believe the market is going to evolve. With respect to the second part of your question, you're talking about the profit traders in the banks that may be coming up? Niamh Alexander - Keefe, Bruyette, & Woods, Inc., Research Division: Yes.

Yes. They have reemerged in shops. Either they have joined some shops or they have formed their own funds and they have started to actually clear. Kim, do you have anything to add? Niamh Alexander - Keefe, Bruyette, & Woods, Inc., Research Division: And Kim, if I could have my follow-on. The cash, you said you're at 1.6 billion in July so far. And thanks for the information about watching the tax rate changes that you could bring that annual variable forward to this year if the tax rates are likely to change. But could you update me on how much cash you need to keep on the balance sheet now that you've got this fixed move designation? And is it still around $750 million that you feel you need to operate and everything over that is excess?

Yes, this is Jamie. We're still at the $700 million range. We're keeping an eye, see how some of the capital requirements develop. But we're -- right now, we're comfortable with the $700 million.

Your next question comes from Patrick O'Shaughnessy with Raymond James. Patrick J. O'Shaughnessy - Raymond James & Associates, Inc., Research Division: I was wondering if you could update me on your outlook for M&A, I guess how CME is viewing M&A right now? And particularly in light of the loan melt's [ph] exchange-bidding process, it was rumored that you guys were participating in that process. So any color you can add there would be useful.

Yes, sure. This is Jamie. Our view hasn't changed all that much. I'd say we're still -- we still don't see much in the way of major significant M&A around the globe for all the reasons that we've gone through before. There will be opportunities for smaller-size, I'd say, or medium-size like you saw with LME to come take a look and review the opportunity. So we'll continue to be opportunistic, but our view really hasn't changed, and we'll continue to be very disciplined in our approach. Matthew S. Heinz - Stifel, Nicolaus & Co., Inc., Research Division: Okay, that's helpful. Then my follow-up question. The farmers and ranchers fund that you guys said you were going to make available in light of the Peregrine issue, do you have an early read on how much that might actually be utilized?

Yes. This is Jamie again. It's obviously a very important constituency. And we did open up the fund, as you pointed out, for those impacted at Peregrine. And our early read on it is that the impact on CME is not a material impact to our financials.

The next question comes from Ken Worthington with JPMorgan. Kenneth B. Worthington - JP Morgan Chase & Co, Research Division: First, on the Bush-era tax cuts, they are set to expire at the end of the year. You mentioned that you might move the dividends forward, but you're a big tax -- sorry, big dividend payer. In a world with upwards of 40% tax rate on dividends, does that change your view on your capital return policy? Or is it -- do you think it's still a good idea to do dividends over buybacks?

I think it's something that we're certainly going to evaluate. We'll analyze it. We'll talk with our Board about it. And as that develops, certainly we would inform the markets. Kenneth B. Worthington - JP Morgan Chase & Co, Research Division: Okay, fair enough. Then on the crude oil option side, ICE seems to be taking business away from CME. How are you responding to this? And is there a way to stop or slow the pace of attrition?

This is Gill. I think in all our markets, as we face competition, we have to respond, and we are doing exactly that. Kenneth B. Worthington - JP Morgan Chase & Co, Research Division: Can you let us know like are there tactics that you're using? Because I think their market share has gone from like 15% to 30%. Do your tactics -- are you adopting them? Or can you share with us what you're doing?

I think if you look some of the things that I've said earlier on, we are introducing CME Direct. And that just launched a short while ago. There are certain incentives that we have put in place. And those have taken hold. If you look at the performance of our options market, particularly in the last few months, a lot of that volume has started to come back to us in terms of the fundamentals. There are certain fundamentals that are driving the oil markets back to its TI, and I think if you look at where the options market is going, the incentives that are put in place, the system solutions that we put in place would all contribute to growing the market for CME, including bringing some of the volume, if not all of it, back. I think some of us compete on the basis of price and some of us compete on the basis of the value that we add on the portfolio basis.

Our next question comes from Chris Allen with Evercore.

I was wondering if you could just talk about the sequential decline in market data and information services? You obviously had the price increase in the first quarter. Wondering if there's any pullback in users, or was there something else driving that?

Yes, this is Jamie. Good question. We do continue to see some diminishment in the number of terminals out there. And I think it's really driven by cost cutting on the street as people are looking to become more efficient. They're always looking to reduce their terminals. That's one of the areas they can do it. You're seeing this across all the exchanges, actually. But that said, the price increases that we've been able to put through over the last several years have been outpacing the decrease in the terminals. And we would expect that as -- when market starts to repair and there's more hiring going on, then we'll start -- we'll see those terminals come back out.

Got it. And then I just want to make sure I have the math correct in terms of the impact of the index business. So roughly $27 million is coming out of revenues. I mean, some expenses have already come out. And then another $6 million, basically, sequentially next quarter, offset by a $15 million increase. So if we kind of think about it from where we are from Q2, it's about a $6 million hit sequentially, is that correct?

Yes. I'm sorry, you're tying it to off the -- you confused me a bit there. Can you go through it again with the -- you were tying it to the index business? Or were you just more general?

I guess it's a little bit more general just in terms of the guidance. $27 million coming out of the revenues we saw this quarter, which includes the index business at CME. Expense guidance of $6 million down sequentially, offset by $15 million in other non-operating income from the JV. So netting it all together, like $6 million sequentially, is that kind of correct?

Yes, you got it.

Our next question comes from Matthew Heinz with Stifel Nicolaus. Matthew S. Heinz - Stifel, Nicolaus & Co., Inc., Research Division: If we can just go back to the interest rate business for a moment. Trading activity has fallen off pretty sharply here in July following the brief recovery you saw in the back half of 2Q. I'm just wondering if this is at all LIBOR related on the Eurodollar side. That seems to be where most of the weakness is coming from. And then also just kind of what you're seeing out there in terms of customer engagement in the overall rate complex in light of all the moves being made by the Fed and then whether you still anticipate the influx of new business from swaps users.

Yes, this is Derek. I'll pick that one up. Yes, we haven't seen any direct correlation of the conversations around LIBOR directly impacting Eurodollar. What we're seeing is a continuation of the trend we've seen for 18 months, which is the Front 2 quarter, the Front 2 annuals, the whites and the reds or year 1, year 2 dropping off both in volume and ADV terms being partially offset by years 3, 4 and 5. So there is a couple of data points also I'll let you in. When you look at the growth of the 3-, 4- and 5-year, for example, we're actually now seeing significant growth with all the golds, which is the fifth year. In fact, on July 6, we just hit a record of 340,000 contracts in the Gold Mid-Curve Options. And this is the story that we told you a year ago in terms of what we're seeing from the blues. And that was falling from the greens. So what we're seeing, really interest and volatility further pushing out the curve, following Twist, following the expectations that weaker global economies will most likely push this further out, forcing that impact on the front end of the Eurodollar curve. In terms of the client's acquisition opportunities, you've heard each one of us talk about the clearing opportunities and across the margin offsets. We're also looking at the impact of the 1-day versus 5-day margin they may [ph] set up by CFTC. And what we're looking at is as we are seeing rules, clarifications, as we're seeing definitions lock down and now service starting at the cost for Q1 kick off, what we're actually seeing is using opportunities to talk to customers, not just about clearing but the potential to migrate customers directly in the future. So many of our conversations are walking into firms to talk about how we can provide OTC clearing for you as a direct result of the mandate, but we're using that opportunity to introduce futures in the equation as well. It's one of the scenarios that Gill talked about as an opportunity set for us. So if we see this in conjunction with the growth of our global sales force and what we've created and talked to you guys about in the last 18 months, as client acquisition opportunities, we're leveraging our broader suite of services beyond just exchange-rate derivatives and then the benefits across margin that accrue right now at house accounts, and we hope to have those accrued clients over the course of the coming months.

This is Gill. I just want to emphasize something that Derek mentioned, which is that the gross margin future that we are offering here is unique in the sense that it is not replicated, not able to be replicated by anybody. So you can't offer lower price here to get gross margin offsets, for example. You need the open interest. And that's what we have here. And as more of the swap trades come onboard, it becomes more capital efficient for our client base to actually put that rate here. Matthew S. Heinz - Stifel, Nicolaus & Co., Inc., Research Division: Okay, that's helpful. And then just a quick follow-up. So it looks like you expect about $60 million of annual pretax income from the new index JV. I'm just wondering if you can remind us what your total capital outlay was for your share of the business and what kind of ROIC you're targeting on that investment?

The total capital outlay, when we originally bought the Dow, was in the $600 million range. And we typically look to get a return on our capital in the, call it, 10% to 12% range, usually a little in excess of the 10% to 12%. They're kind of a hurdle.

Our next question comes from Ed Ditmire with Macquarie.

It does seem that the -- let me just put this question. On the LIBOR issue, I understand crystal clear that CME is committed to helping the LIBOR standard improve and continue as a global benchmark. But if due to situations out of your control, the market moved away from LIBOR, could you confirm that you guys would be able to adjust the contract specifications of the Eurodollar future and leverage the incumbent liquidity of your very deep franchise with whatever short-term interest rate standard the market wanted to use?

All right. This is Gill. I'll start and then I'll let Derek to add some details. This contract is too important for us not to continually adjust it or pay attention to it. It's one of the flagship contracts that CME has.

Yes, I think that's a great point. And I would say we're continuing looking at ways that we can adjust, affirm and certainly streamline any other major products that we trade, particularly our benchmark products. And we would probably point to the CFTC's order and statements made a number of weeks ago as to the impact in the import that the global regulators are placing on, making sure that this remains a robust market mechanism for the long term to come. I would also just note that not only, as Gill mentioned, do we have our Eurodollar contracts but our Treasuries contracts and our Fed funds futures, which are trading about 30,000 contracts a day, and that's a product that already has significant open interest, about 500,000 contracts in the futures and about another 300,000 contracts in options outstanding as well. So not only do we have an existing suite of products beyond just Eurodollar and the certain [ph] complex, we also think that level of imports placed by the federal regulators, I think, just only enhances the long-term viability of this product over time.

Okay. On the JV, when you guys announced the deal last year, I think you guys said that you expect the deal to be breakeven. It seems to me that the numbers say that it's not quite breakeven on a run rate basis right now in 2012. Is that accurate? And if that's true, is it because the Dow Jones portion of the business had been doing better than the S&P portion of the business going into the deal?

No, I think you're right. It's not quite accretive in the way we've laid it out here for you. Something to consider is that over time, the equity market's been under pressure, assets under management have fallen, that sort of thing. The other thing to consider is that the deal is both an investment and a JV but also extending our license fee agreement with them. And anytime you go to negotiate and extend the license fee agreement, almost by definition that, that negotiation will end up in a dilutive transaction, if you already have that book of business right, as they look to raise rates and that sort of thing. So in some sense, dilution is tied to the licensing side of it. But I think long-term benefits and locking up -- locking down that license for as long as we own the JV. And the dilution here is really very -- not at all material to the overall CME Group.

And we have time for final question, and that comes from Brian Bedell with ISI Group.

One more follow-up question on the rates for Derek. As we move into 2013, can you comment on what your expectation is for being able to convert users of the OTC swaps into exchange rate? Obviously, you've been having those conversations for some time but probably you're not seeing it in volumes yet. I guess let me know if you think we are seeing it in the current volumes. What's your conviction that you'll be able to convince those users as we move into 2013? And about when do you think we'll start to see the impact of that on a rate complex?

Yes. So I think what we're really going to focus on is what we're doing and how we're positioning ourselves on the OTC clearing side. This is a new opportunity to be able to access and expand our customer base with a broader suite of services. This is about customer choice. This is about providing the customer the option in terms of the product of choice, the risk tool of choice and the source of the choice and the risk mitigants. We've talked about the ability to walk in and talk to a customer about the suite of services and the cross-margining capabilities available to that customer. That's highly attractive to customers that are already trading our futures and trade swaps already, and this is an opportunity to be able to really put the focus on the clearing side of the business and represent ourselves to provide the best of those clearing services into that customer base. With a clarity of the definitions coming through over the last couple of weeks and starting to clock for what we believe to be a mid-Q1 implementation and take-up, as you've heard Gill talk about before early in the conversation, they are beyond the sea of clients that are clearing in a pre-mandate world with us right now. There's a significant number of clients that are already through -- that have completed the testing phase and are simply waiting for the day to kick off. So we see that beginning to ramp up over the course of Q4, and we see -- at a pre-mandate point, I think you'll see a more significant jump in terms of those that have simply said, "I'll do everything I have to, to be prepared but will most likely do very little until the day that I have to clear." So we're spending our time with the customers, making sure that they are ready and able at the point where it puts over.

Great, that's very helpful. And then my follow-up would be just on expense flexibility. A question for Jamie. If we are in a tougher volume environment, near term, how do you think about near-term expense control versus some of the expenditures for some of the longer-term growth initiatives? Do we have material flexibility to reduce the current guidance from 595 in the second half?

I'd say we have -- there's obviously a lot of operating leverage in our business model that cuts both ways, right. So it's very difficult to naturally decrease expenses as volumes are not as strong as they've been in the past. But you have seen us taking a lot of -- making a very strong effort to be very disciplined. We'll continue to do that if there is a point. There are a couple of items that are volume-related in our expenses. Licensee fee and incentive program expense obviously fall under that category as does our bonus. And there is a point at which the bonus hits the cliff where if we perform below a certain level of 20% below our target for the year, that there will be no bonus payments. So that's a natural mitigant. But other than that, I'll say that we'll just -- we're going to continue to be as disciplined as possible while also keeping our eye on the future. This is -- for us, we view this as a cyclical downturn, and we're operating in that mindset.

And at this time, I'll turn the call back over to the speakers.

Thank you, everybody, for joining us this morning. We appreciate your interest in CME, and have a great day.

Thank you. This does conclude today's conference. We thank you for your participation. At this time, you may disconnect your lines.