In the face of challenges, CME Group achieved strong 2011 results and demonstrated the growing success of long-term initiatives that expand our core business and advance our globalization strategy.

Expanding otc capabilities

In the aftermath of the financial crisis, the relative safety and soundness of central counter-party clearing for OTC instruments has become increasingly important. As a result, we have worked closely with our customers and clearing firms to provide a comprehensive multi-asset class clearing solution that offers operational ease and the capital efficiency that comes with using a single clearing house. To capitalize on this, we have expanded the range of products that can be cleared through CME ClearPort, launched interest rate and credit default swap clearing solutions, and launched CME Clearing Europe.

Specific to CME ClearPort, which generated 2011 revenues of $297 million, we expanded our clearing offerings in FX, agricultural commodities and metals contracts. We also have taken an early lead in OTC clearing in interest rate and credit default swaps in the dealer-to-customer segment. With more than 1,300 customer accounts with open positions, we have cleared more than $366 billion of interest rate swaps and $50 billion of credit default swaps transactions since inception in 2010 through March 2012. Also, in May 2012, we will begin offering portfolio margining of our Eurodollar and Treasury futures and cleared OTC interest rate swap positions for house accounts, which will provide significant capital efficiencies of up to 85 percent to our customers.

We also have seen positive momentum in CME Clearing Europe – our first clearing house outside of the United States. With our initial launch of 150 OTC products in May 2011, we cleared nearly 10,000 contracts by year end. This momentum has continued, with 2012 year-to-date volumes of more than 14,000 contracts. Our next steps include broadening the range of energy and agricultural commodity products we offer, and adding OTC financial derivatives.

Being A Leader in Index Services and Information Products

In 2010, we expanded our index services business through the formation of CME Group Index Services with Dow Jones. This business contributed $91 million in revenue in 2011 and grew at more than 20 percent year-over-year. In November 2011, we announced our agreement to combine portions of this business with McGraw-Hill’s Standard & Poor’s Indices. Pending regulatory approvals, the transaction will give CME Group a 24 percent ownership interest in the combined business. It will further strengthen our position in index services and index products, and allow us to continue to be innovative with product development and co-branding across asset classes.

Focusing on Customers

Contributing to our success has been our focus on providing customers with innovative technology offerings and continued human capital support. In 2011, we completed the development of our co-location services, which went live in January 2012. With more than 100 firms expected to be housed in the co-location facility, we expect it to generate $40 - $45 million in new revenues in 2012. We also anticipate starting the next phase of the build in the second half of 2012, which will allow us to expand capacity and, in time, reach our goal of more than $100 million in annual revenues.

We also have continued to develop our technology offerings to fit customers’ OTC needs. In 2011, we acquired complete ownership of ConfirmHub, LLC. With this, we are now offering our customers ConfirmHub technology to provide straight-through processing in OTC markets using a single connection and a standard format. This valuable service provides brokers with electronic trade affirmation and confirmation sevices, as well as the ability to send trade confirmations directly into trading and risk systems, increasing accuracy and efficiency.

Finally, to provide customers with the most effective service, we restructured our global client development and sales organization. These efforts will better enable us to expand international sales efforts in Asia and Europe, service new and existing customers across multiple asset classes and client segments, and offer customers enhanced educational resources on our products and services.

Looking ahead, we believe CME Group is strategically positioned to maximize results no matter how the macroeconomic scenario plays out. Moreover, our plan to deliver significant free cash flow growth over the long term will continue to be our focus through the recently announced transition in our Office of the Chief Executive Officer. We have the people, products, services and processes needed to help customers manage the changing risks they face in an increasingly interconnected world, and we look forward to our continued success.