Good day and welcome to the CME Group First Quarter 2016 Earnings Call. I would like to turn the conference over to John Peschier. Please go ahead, sir.

Thank you for joining us this morning. Gill and John will spend a few minutes discussing the results and then we will open up the call for your questions. Terry, Bryan, Derek, Sean, and Kim are on the call as well and will participate in the Q&A session. Before they begin, I will read the Safe Harbor language. Statements made on this call and in the 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, which are available on our website. With that, I would like to turn the call over to Gill.

Thank you, Mr. Peschier, and thank you all for joining us. It was an exceptional start to the year, with record quarterly average daily volume, which was up 13% compared with an already strong first quarter last year. We had very balanced growth in both financial and commodity products, each up double-digits. We track customer segment activity closely, and in Q1 we had more than 10% growth from asset managers, hedge funds, corporates, proprietary trading firms and retail clients during the quarter. Volume from banks was up 1%, which is strong relative to their decrease in their overall trading businesses over each of the last few years. More recently, April activity has been fairly strong compared to last year, and is up more than 20% in total. It is encouraging to see relatively good volumes, as April has been our slowest month over the last two years. Open interest remains elevated and is up significantly since the beginning of the year. This morning, I will start with our secular drivers and then I will shift to a few product highlights. We have consistently expanded our global participation in spite of the challenging macro environment. We are very pleased with the tremendous results from outside of the U.S. during the first quarter. We had record quarterly non-U.S. volume by far, as well as the highest proportion of the business from outside of the U.S. since we started tracking the information, with more than 25% in first quarter, compared to 23% in the first quarter of last year. In Europe, we had a very strong first quarter activity, with volume increasing 28% form 2.3 million contracts per day last year to more than 2.9 million per day this year. The increase was led by equities, which jumped 70% and energy was up…

Thank you, Gill, and good morning everyone. Our team has been intensely focused on three things: driving global revenue growth, operating our business as efficiently as we can, and returning excess capital to our shareholders in a consistent way. As Gill mentioned, we had a tremendous start to the year, with strong and balanced revenue growth. Total revenue was up 11% compared to a very strong quarter last year, while total adjusted expense rose just 3%. Our adjusted operating margin expanded to 65% and adjusted EPS of $1.15 was up 17%. Our rate per contract for the first quarter was $0.756, down 4% from $0.789 in Q4, as our overall ADV rose 29% sequentially. The biggest impacts were members versus non-member mix and volume discount tiers this quarter due to the large increase in activity. Compared to the fourth quarter, our members’ volume grew 30% and non-members jumped 23%. In addition, we had higher volume discounts in Q1 relative to Q4, as a result of significant growth in certain products. Market data revenue was up 4.5% compared to Q1 last year, and in line with our guidance. We continue to monitor this line carefully as we are seeing some rationalization as we bring all customers in line with the full priced offering, and we are seeing some screen declines due to recent bank staff reductions. Adjusted operating expenses for the quarter totaled $327 million, up 3%, driven primarily by an $8 million increase in licensing and other fee agreements. Excluding license fees, our total expense year-over-year was approximately flat. And as a reminder, our annual guidance was a 1% increase on that basis. We ended the quarter with approximately 2,600 employees, with the majority of the hiring done in India and Belfast, which is part of our plan to reduce…

[Operator Instructions] We’ll go first to Dan Fannon with Jefferies. Please go ahead. Your line is open.

Thanks. Good morning.

Hi, Dan.

Good morning, Dan.

Since your last call, there’s been a lot of headlines around M&A, your potential M&A in your industry. And I guess, Gill, if you could update us on your thoughts around - your views around M&A like both large scale, as well as strategic; and then John, also maybe talk about the financial aspects as you guys think about returning thresholds around potential acquisitions?

Yeah. Dan, I think the story is consistent in what we have spoken to you about in the past, we will continue our focus on our globalization, on the options growth, and I talked a little bit about a short while ago, and as well as what we are now calling capital efficiencies which is a combination of a bunch of things, which is essentially the - whether we are talking about clearing a OTC trade, the futurization of the market place with brand - brand new clients are the cross-margining in the compression and services that we offer And with that focus that we have, we continue to remain opportunistic with respect to any kind of opportunities that we might see that makes sense, for both ourselves, our shareholders, as well as our clients.

Hi, Dan. This is John jumping in. We look at both organic and inorganic growth opportunities all the time. And really it’s about creating shareholder value in the best way possible. So we look at acquisitions in particular, we look at it from obviously multiple valuation metrics, as accretive over time to earnings, does it create a value by looking at cash flow models. So, we look at kind of return thresholds. We usually use about 9% to 10% is kind of the threshold that we look at. But I think for us it’s, are we creating shareholder value, how is the best way to get from a strategic perspective to where we want to be, is it growing the business organically, investing the business organically, or is it purchasing good services or another company from somebody else. So, that’s what we look at.

Great. Thank you.

Thanks, Dan.

And our next question comes from Richard Repetto with Sandler O'Neill. Please go ahead. Your line is open.

Yeah, good morning, guys.

Hey.

So my question - good morning, Gill. Good morning, John. My question is on expenses. You’re running significantly below the full-year guidance like we can come out with 1.15 and the guidance, I believe, is 1.18. And this is post - this was a high revenue quarter, and you get high payroll taxes. The other thing that go along with that, you’re running significantly below on CapEx as well, the full-year run rate. So I’m just trying to see what the expense, guys, whether it’s’ maintained, and if it is maintained, what could we be spend the stuff on, in the back three quarters?

Sure. Thanks, Rich. Our expense control and running our business as efficiently as possible is a very big focus of the entire management team and it’s really become part of our DNA. When we look at the expenses, the first quarter tends to be a slower quarter in terms of expenses as we build up and projects get launched in the second and third quarters. But if you look at slide 14, you can see the results of our focus on expenses. You can see that over time, we’ve had expanding operating margins and we’ve got incremental margins last year of 112% and 90% incremental margins this quarter, and operating margins around 65%. So it’s been a large focus of ours. In terms of the guidance, we are - we have guided to a very modest 1% increase in expenses ex license fees, that’s - and we’re not adjusting guidance at this time. But we are intensely focused on the business and running the business as efficiently as efficiently as possible. And what this does is, this allows us to free up cost for growth initiatives and some of the growth initiatives Gill outlined in his prepared remarks. And, for example, Swaptions is something that we’ll be launching that maybe - Derek or Sean can comment on, as an example of what we’re working on.

Yeah, sure. In terms of our OTC clearing, which Gill talked about in terms of offering capital and margin efficiencies to the market place, we actually - we recently launched a BRL, interest rate swap clearing, which is a unique value proposition relative to our largest competitor. Mexican peso we launched a little over a year ago is doing extremely well. We did our first Swaptions trade very recently and we’re very excited about how that will develop over the coming two quarters. And in addition to that, we’re working very closely with the market place on Repo clearing, as Gill mentioned in his remarks. So we’re talking to and working closely with the same set of folks that we worked with in order to launch our successful interest rate swap clearing initiative, and we’re looking at replicating that with solving lot of the market places issues in the Repo, in particular in the treasury Repo market similarly.

So, Rich, I mean, we are focused on expense management, we are focused on reducing infrastructure cost and freeing up those costs, invest in new initiatives like Sean just mentioned.

And we’ll take our next question from Ken Worthington with JPMorgan. Please go ahead. Your line is open.

Hi, good morning.

Good morning, Ken.

In terms of your use of the fed for house positions, how money can get placed with the fed under kind of the existing structure that you just got set up with the approval? And to what extent can you move beyond this for just house positions in the future? And then you mentioned the passing of the majority income back to clients. To what extend this just gives CME an opportunity to keep more as well? And I’m sure you won’t answer, but I’ll ask it anyway. If so, how much?

Thanks, Ken. We’ve been very focused on driving our investment income line. In fact, if you take a look, since 2012, in the first quarter of 2012, we actually had an $18 million expense in non-operating income and now we’ve driven that to a $5 million income on that line. So overall, when you look at how the earnings that we got from managing collateral, we earned approximately $7 million this quarter through investing that collateral, which is about double last quarter. It was driven primarily by the increase in interest rates. Access to the fed accounts will be for house positions held in cash, to the extent that that cash balance increase, with an opportunity for us to earn more, and we’ll be able to provide more color on how much is about that impact next quarter when the fed accounts become operational. But to give you an idea about 20% of our $138 billion in collateral is house account related. Maybe Kim could comment on the fed account.

The cash component of the 20% is lower and that’s the part that we can - I think, Kim, it’s $3 billion?

Currently the cash balances on the house positions is $3 billion. That’s not a number that we control, it’s a number that the clearing members control with the decisions that they make about what they post for margin. But obviously the return that they get and the funds that they post with us is part of that decision.

And it’s a higher return for our client base, one of the exciting things of having this fed account for us.

And then you asked about the customer accounts. Those are authorized. Our VAT process is underway between the regulators, that’s’ not something that we can really comment on the timing up, but we know that it is still being worked on.

And our next question comes from Mike Carrier with Bank of America. Please go ahead. Your line is open.

Hey, good morning. This is actually Sameer Murukutla on for Mike Carrier. Thanks for taking my question.

Good morning.

Good morning.

Good morning. I’m going to just leverage off of Dan's question a bit. Can you provide an update on your thoughts into the level of your stake in BM&F given their current M&A that they are involved in? And any comments on the possible interest in the Indian Commodity Exchange? Thanks.

Sure. This is John. BVM&F is one of our most important international strategic relationships, regardless of any ownership stakes. We continue to hold about 4% stake in BVM&F, the value of which has increased over $150 million since the end of 2015, and we’ll continue to work with them as we have, historically. In terms of the India Exchange, we’re not going to comment on any of the -

Rumors.

Rumors or our M&A activity there.

Okay. Thanks for taking my question.

Thanks.

And our next question comes from Alex Kramm with UBS. Please go ahead. Your line is open.

Yeah. Hey, good morning.

Good morning, Alex.

Good morning. Wanted to just touch on the energy business for a second here. Clearly one of the more impressive areas in terms of growth, but one of the things that always span or that has been spanning out, is that you are outperforming at least in terms of ADV, your primary competitor. So would love you to talk a little bit about what’s going on there. And obviously, you all have different product mix. So maybe if you can drill a little bit deeper, not just about brands, but also about WTI, natural gas, gas oil, other areas where you are competing more or less directly, where you’re winning and why you’re winning, if you’re winning? Thanks.

Yeah. Derek here. I want to say we’re absolutely pleased but not fully satisfied with the growth that we continue to impact here on the energies business. I mean, we have - not only have we grown sort of record levels in Q1, we’ve increased our large open interest orders, and it’s been pretty strong for us. We talked last quarter about the benefits of the overall broad market adoption increasingly towards WTI, with the result of the lifting of the export ban in the U.S., and that’s actually significantly increased participation in our markets on the futures, as well as the options side, but in terms of where we’re going outside of that options, it has been a significant area of growth for us inside the energies business and I’d actually also direct you to some of the comments that Gill made in his prepared remarks around where and how we’re globalizing our footprint right now. If you look at where the growth of our business is coming from, our EMEA business for energy business up about 40%, that’s outperforming the business as a whole. What’s really exciting is the investments that we’ve made in boots on the ground sales campaigns and product sales in Asia for us is bearing significant fruit. Our Asian energy business is up 82% year-on-year and that is significant growth in almost every major trading center. I was in Shanghai and Singapore last week, meeting with a lot of our clients and we continue to be able to attract them with our functionality, both on the futures as well as the options side and the broad base of participation in our markets. So we tell a lot of the WTI story. There is a nat gas story. There is a gasoline story. We set an all-time record in our gasoline futures as well. So it’s broad based growth, it’s global growth and it’s across our asset class in the presence of building OI and large open interest holders.

I would just add to that specifically on the international side within Asia for example, we’re seeing growth coming from each of our client segments in the energy quadrant. Props are up 31%. Banks interestingly enough were up 104%, hedge funds 96%. Corporate firms coming in 88%, retail 85%. We’re seeing similar activities coming out of Europe. So for example, on the hedge fund and in the asset management community, 26% growth specifically in the energy quadrant. So it goes to our sales penetration and efforts in that regard in terms of how we’re targeting our focus and our campaigns in these areas.

Our next question comes from Alex Blostein with Goldman Sachs. Please go ahead. Your line is open.

Thanks. Hi, guys. Good morning. Just a quick follow-up on market data, I don't think it was asked yet, but the 4% to 5% guidance for the year that you guys provided on the last earnings call, does that still hold or just kind of given some of the headwinds that you highlighted on the headcount reductions, should we think about a slower number, a lower number for the year?

Thanks, Alex. When we provided guidance last year, we provided a range because it’s very difficult to predict. We had given guidance at 4% to 5% growth rates. We came in this quarter, up 4.5% from Q1 last year, which is in line with our guidance. We are seeing pressure as customers move to our full priced offering as well as the decline in screen counts, as banks lay off staff as you’ve probably heard from the bank’s earnings calls. So we’re very focused and working hard on our data business, but we’re seeing some headwinds as you indicated.

And we’ll go next to Brian Bedell with Deutsche Bank. Please go ahead. Your line is open.

Hi. Good morning, folks. Just to pile on the Asia question, thanks for all the disclosure on that. That was a good discussion you just had about some of the progress there. But I guess if you can think about or try to highlight how big you think this market can eventually be for CME in terms of penetration rates? Obviously the growth recently has been especially strong. But do you see this as just from an, say, ADV perspective being able to become as large as Europe let's say in the next two or three years? Can you talk about some of that penetration opportunity? And then also related to, John, I think you cited more projects in growth initiative spend later in the year. Is part of that included in that spending plan?

Sure. Brian, this is Gill. I’m going to start and I’m going to ask Brian to basically expand more as to where he’s seen growth specifically. If you look at the product opportunity set, if you look at the opportunity in terms of the products that we have, across all the asset classes that we have, we have highly relevant products for all of our clients in all places around the world. Within Asia specifically, we’ve been focused over the last few years on China, but what we’ve not talked about is the sales effort that Brian will go a little bit into other parts of Asia which I would say have more developed in terms of the education side of things, Korea comes to mind. China, we have given you some numbers this quarter, specific to China, these are based on China, but they might be trading, they probably will be trading from outside of China. As China continues to expand its policies for access, you would see that number grow. The timing behind that remains to be seen, but as we sit here now, China is allowing and has allowed their intermediaries as well as their direct accounts such as the hedge funds, the prop shops and the commercial entities to establish operations outside of China and that’s the flow that we’re seeing. India is an uncapped opportunity at this time. There are very significant changes afoot in India that will also lend themselves and translate into opportunities for us. So with that broad view about China, and I am only talking about areas in which you will see the highest impact. I am going to turn it over to Brian to talk about some of the volume flows that we are seeing that are driving the high rate of growth there.

With the respect to the efforts in Greater China and Hong Kong, and specifically, we are seeing revenues that are up about 51%, 56% growth in our volume that’s been driven by energy, equities as well as some of our interest rate products. Within the segments, the growth is really coming crops, a growing number of private hedge funds and asset managers have also evolved. We are working very closely with our intermediaries to help bring that business into our markets. We are seeing some good traction in terms of liberalization of central state owned enterprises. For example, SOEs were permissioned up until about two years ago, 31, now it’s about 112 or in that areas, so we are seeing that as additional opportunity. Sovereign wealth funds and asset managers are increasingly growing their business with us and again, we are focusing in that area and really building on opportunities to work with corporates, particularly insurance companies. We see more Chinese banks that are enquiring about trading our products and also looking to build their efforts enquiring about OTC clearing with us, which is a very good sign. Within Taiwan, year-to-date volume and revenue was up about 40% and 36% respectively. The main drivers in those areas were equities, FX energy and interest rates. The main participants are banks, asset managers and again, we are seeing good opportunities with insurance companies. There has been some progress within Taiwan in terms of allowing securities firms to offer global futures that we are working very closely with our intermediaries to bring that business into our group. Within Japan, we have seen a consistent growth of about 7%, revenues are up about 32%. You got to keep in mind, Japan is the second biggest holder of US debt, so there is great opportunities there. Main drivers have been from banks and we are seeing some nice growth coming from asset managers. Gill alluded to Korea, we continue to see very nice growth coming out of Korea. It was two years ago that there were no Korean FCMs that had an average monthly volume of about 100,000 contracts. Today, we are happy to say that we have eight firms that are providing at least 100,000 sites per month which is great progress. And the drivers in that area are equities, rates, foreign currency and energy. Singapore is up about 18%. Coming out of that region, we are seeing some nice growth coming from the banks in particular as well as proprietary firms and corporates and commercials. Another area that we are very excited about is Australia, we really haven’t mentioned. Our volume this year in Australia was up 12% and our revenues are up I think approximately 50% if I my memory serves me correctly. The top three products are interest rates, ags, equities. Ags are up about 27%, foreign currencies are up about 39%. Our main focus in working with Australia again is within the asset management community, hedge funds and the banks.

We will take our next question from Chris Harris with Wells Fargo. Please go ahead. Your line is open.

Thanks. Hey guys. A question on your margins. I mean a great margin quarter, 65%, I mean I think that’s one of the best results you guys have ever had. If we think kind of bigger picture and you guys keep delivering double-digit volume growth and 90% incremental margin, your margin is going to move up fast in a hurry. So just wondering is there a limit where you guys are really comfortable about taking the margin to before we start seeing a fairly sizable increase in the expenses or is that really nothing for us to be focused on at this point in time?

Thanks. This is John. Yes, we are limited by 100% is our limit. But in all seriousness, we are - we continue to run the business as efficiently as possible. As you can see from the amount of volume we have been able to handle without any issues, we have been able to handle that this quarter without any incidents. So I think for us we do have natural increases to our cost and over time and that will be inflationary things, salaries, wages and the like. But we are - we provide a tremendous amount of value to our clients and so as more liquidity comes into the marketplace, there is more trading that occurs, which is tremendous benefit to our business and the amount of volume that we are able to handle, we have been proven out to be able to handle that. Other things that kind of impact the margin is also license we pay on equity contracts primarily. So there is some share that impacts kind of our margin level. But there is nothing artificial out there that prevents that from going higher.

Chris, this is Gill, I’d like to just add to what John said, John is spot on with respect to the current operating structure that we have and product as we continue to innovate across the asset classes. But as we roll out new and innovative products or services in response to what our client needs are and in conjunction with the capital efficiency goal that we have for our clients, the repo clearing service is one such thing and that’s a separate infrastructure from what we currently have. John has fine-tuned the current infrastructure to hum like you're seeing it now and within that construct the operating margin can absolutely grow. But as we introduced more things for our client base you may see a slight reduction depending upon the success of the products and services that we rollout.

Our next question comes from Ken Hill with Barclays. Please go ahead, your line is open.

Good morning, everyone. I just wanted to follow up on the market data specifically those customers who are rationalizing their behavior and I guess choosing to turn that service off. Are those guys who may be didn't need it to begin with and just realized that were paying for it or did this actually just get to be too high a price for them to pay? And I guess if it is that latter part, is there any flexibility within the service to really tailor market data for what a customer needs over time? Potentially could you be rolling out new products that might meet some of these people's need to have gone away recently?

This is Gill, I think as John alluded to in his remark and in response to one of the questions, a large chunk of that is coming from the layout at that we see the banks are undergoing with respect to pricing pressure being too high. If you compare our market data fees to the exchanges that we compete against, you’ll see that we are lacking behind them in terms of price but terminal and price, so we don't think that the issue we think is firms rationalizing their needs all the time. Bryan, you might want to add?

No, I mean you certainly hit it, as the full fair came into play we did expect that there might be some drop off from individuals that may be using a particular screen and not really utilize for trading quite frankly but observing the markets. Those level of users have been pretty small, I mean the biggest impact as Gill had referenced is the rationalization that we’re seeing from firms that have been consolidating their operations and making those decisions with the respect of reduction in staffing and layoffs.

Our next question comes from Kyle Voigt with KBW. Please go ahead, your line is open.

Thanks for taking my question. So I was just wondering if you could comment on competitor energy platform, NFX. It looks like they will begin charging for some fee for trading with the phase in period starting next month. Do you believe the momentum that they have had in building open interest to market share is sustainable after they begin to charge for trading? Are you hearing any feedback or pressure from your clients regarding them being unhappy with trading fees or other services? Thanks.

Hey this is Derek. Thanks for your question. Now I think you see when we look at the status of where our natural gas business is, if you look at the six months prior to FX launches, or we were averaging in natural gas options where they’re making the hard push right now. That 70,000 contract today, if you look at the last six months, our ADV is close to 100,000 contracts. So we’ve grown that business 40% over the course of time that NFX has come into the market and to the extent that we’ve got the fastest growing part of the natural gas options business for us is electronic nature of that business, a record 25% of our natural business is trading electronically, they’re driving that 40% growth. If you look at what NFX is putting up, it’s a block business it’s not electronic and is only on the financially settled side. So, given the fact that we’ve added 30,000 contracts ADV since pre-launch of NFX, the post-launch and they are doing 12,000 to 15,000. We’re not seeing any real feedback from customers asking us to do anything different other than continue to scale infrastructure electronically and grow the business.

Our next question comes from Rob Rutschow with CLSA. Please go ahead your line is open.

Good morning. Just one more follow-up on the market data question. Are you able to size the bank industry in terms of the overall screen count? Does it look similar to the contribution to trading volumes? And then separately, does opening an account at the Fed give you any sort of long-term growth opportunities aside from just picking up the extra spread that that provides? Thanks.

It's Bryan, on the market data side, yes we are able to size across the user base, the profile of user and while we saw a down trend this past quarter with specifically within the bank sector, I can't comment whether or not we're going to see it continue trend going in that direction. What I can say is that we are closely monitoring our performance and have every expectation to continue making a good progress we have with market data.

The opening of the Fed account also give both our customers as well as us additional opportunity.

On the Fed counts in particular for our customers it does allow us to offer them a significantly increased return on their cash. So it should make us a more valuable proposition for them.

And your next question comes from Richard Repetto with Sandler O'Neill. Please go ahead. Your line is open.

Yeah, thanks for the follow-up. Gill, on the presentation you talked about these - and this is page 16, the secular drivers of growth and it being the potential for more futures and options volumes due to capital efficiencies. And I was wondering can you give us an update on cross margining? I figure it was $3 billion or so? And I guess what your expectations here and not having the dealer volume in over the counter interest-rate swaps, what do you think about the potential there of cross margining?

I will start and ask Kim to add here. The capital efficiency title has at least two or three things beneath that that might be helpful for your think about I would say in terms of the opportunities being efficient for client base futurization at the top of that list, so developing products in-house that our customers can use on the more capital efficient basis is one of the things that we have been doing and we will continue to actually do. If you look at the compressions services that we implemented not too long ago up to this point in time we’ve had $21 trillion in notional value that have been compressed over time and then if you look at the performance of the OTC market itself, it has taken an uptick from the fourth quarter of last year. Now this value proposition, this group of value propositions that I just described no one else can provide that. The compression in conjunction with the cross margining and in conjunction with the futurization are opportunity. So I think from that perspective we are quite excited as the interest rate environment continues to shift.

And then I would just add I think this is not something that is exclusive to CME, but CME is working with the industry to try and get better recognition for customer margin in the treatment of capital at the bank level, that will be a very significant element in reducing the cost of doing business.

And our next question comes from Alex Kramm with UBS. Please go ahead. Your line is open.

Hey, hello, again for a follow up I guess. Want to go to your equities business for a minute on that slide that you had on equities I think it is page 10. You mentioned that on the S&P 500 options I guess options on futures you now have - your market share increased relative to CBOE. I don't think you have talked about that business on a competitive basis in the past or in those terms. So just wondering if this is an active focus of yours to kind of look at that market and compete more aggressively and maybe quote away the user base from the securities based options to the futures market. So any color there will be interesting. Thanks.

So we are always focused on the clients and the value that we add to clients and therefore we are also always focused on market share. So in each and every one of our businesses, we are continuously focused on our direct competitors, but also substitute products and making sure that we add the most value. So while we may not have talked about this as actively before, this is certainly something that we look at very closely. In particular, if you look at that business, we are very focused on the ability to cross margin obviously the underlying futures against the options as most efficient platform possible. We are continuously focused on TCA or total cost analysis. We've talked about this across each of our different business lines. If you recall at the beginning of last year, Greenwich Associates did a big study that looked at our interest rate futures as always being the lowest cost relative to the interest rate swaps industry in terms of representing risk. Similarly we have come out last year with something called the big picture and then we did an update this year again with the big picture. But we are showing that as an example, our equity futures far more efficient for investors for giving exposure to the equity market than ETFs. So we are continuing to look at the substitute products both from a customer client value proposition, but also from a market share perspective.

And our next question comes from Patrick O'Shaughnessy with Raymond James. Please go ahead. Your line is open.

So speaking of portfolio margining, wondering if you can comment on the LSE Deutsche Boerse planned merger and whether some of the capital efficiencies that they are proposing would impact you guys competitively I think specifically with regard to your rate clearing business, your rate swap clearing business?

Patrick, this is Gill. I think on the first part of your question you should ask them, willing to talk about the opportunities. On the second part of the question I had to go back to what Sean had said before. The whole focus on the competitive dynamics of what we all do to here and so we believe and as I said we are the best value proposition for our client base and we intend to grow upon that.

And we have no further questions at this time. I'd like to turn the program back to management for closing remarks.

Thank you so much for joining us this morning and we look forward to talking to you in the next quarter. Bye-bye.

And that does conclude today's program. You may disconnect at this time. Thank you and have a great day.