News Release

Chicago Mercantile Exchange Holdings Inc. Reports Record Revenues and Profits; Net Income Grew 42 Percent in First-Quarter 2007

Tue Apr 24 2007

CHICAGO, April 24 /PRNewswire-FirstCall/ -- Chicago Mercantile Exchange Holdings Inc. (NYSE: CME)(NASDAQ: CME) today reported a 32 percent increase in total revenues to a record $332 million and a 42 percent increase in net income to a record $130 million for first-quarter 2007 compared with first- quarter 2006. Diluted earnings per share rose 41 percent to a record $3.69 from $2.61.

Average daily volume reached a record 6.5 million contracts during first-quarter 2007, a 30 percent increase from first-quarter 2006. Trading on the CME Globex electronic trading platform grew 40 percent to a record 4.8 million contracts per day in first-quarter 2007 from 3.4 million per day in first-quarter 2006. Electronic volume represented 75 percent of total CME volume in the quarter. Total first-quarter options volume averaged 1.3 million contracts per day, up 20 percent compared with first-quarter 2006. Electronic options volume averaged a record 165,000 contracts per day for the quarter, more than doubling from the same period a year ago. In an effort to build on this record options volume, CME deployed advanced user defined spread functionality and announced a pricing incentive program to encourage electronic trading.

"During the first quarter, we surpassed volume records in all our products lines, leading to the strongest top-line, quarter-over-quarter growth since 2004 and resulting in record earnings and cash flow," said CME Executive Chairman Terry Duffy. "In addition, we processed record volumes for the Chicago Board of Trade and the New York Mercantile Exchange. The energy volume traded on the CME Globex platform for NYMEX surged to a record 584,000 contracts per day during the first quarter, making it the highest quarterly electronic energy volume ever traded on any exchange. NYMEX volume has increased to 637,000 electronic energy contracts per day in April, widening our lead over the next nearest electronic energy competitor."

"In addition to delivering tremendous results in our core business, we are making significant progress on other strategic initiatives designed to meet the unique needs of market users around the world, including expansion into the two largest over-the-counter markets," said CME Chief Executive Officer Craig Donohue. "In March, we successfully launched trading through FXMarketSpace, our joint venture with Reuters, to serve the global OTC foreign exchange market, and next month we plan to launch a new dealer-to-client interest rate swaps platform to serve the U.S. denominated OTC swaps market. Further, in our continuing efforts to provide customers with the most innovative products, we recently announced three new offerings: futures on Lehman Brothers' U.S. Aggregate Index, the pre-eminent benchmark debt index for the U.S. fixed income market; E-mini futures on the FTSE/Xinhua China 25 Index, making CME the first U.S. exchange to list futures on the Chinese equity market; and the first exchange-traded contract on a North American credit derivatives index."

Clearing and transaction fees increased 29 percent to $258 million, up from $201 million for first-quarter 2006, driven by quarterly volume records across all product lines. CME E-mini equity products showed particular strength, growing 40 percent from first-quarter 2006, driven by heightened volatility. FX volume rose 36 percent during the quarter to a record 555,000 contracts per day. In March, CME traded a record $80 billion per day of notional value in foreign exchange.

During the quarter, CME Clearing handled record CBOT volumes of 3.9 million contracts per day, up 24 percent from the same period a year ago. NYMEX energy and metals volume on CME Globex averaged a record 675,000 contracts per day. This record volume drove all time high revenue from processing services, which rose 92 percent to a record $35 million. Additionally, quotation data fees were up 24 percent to $25 million.

Total expenses increased 17 percent to $132 million, driven by increased compensation, technology related and marketing expenses. The incremental expense in the first quarter for CME's non-organic growth initiatives, the CBOT merger, Swapstream, and FXMarketSpace totaled $5.7 million compared to first-quarter 2006. Capital expenditures, including capitalized software development costs, were $15 million in first-quarter 2007, excluding leasehold improvement allowances.

First-quarter income before income taxes was $215 million, an increase of 43 percent from $151 million for the year-ago period. The company's operating margin was a record 60 percent, compared with 55 percent for the same period last year. Operating margin is defined as operating income as a percentage of total revenues.

CME's working capital increased by approximately $90 million during the first quarter, to $1.4 billion at March 31, 2007.

CME will hold a conference call to discuss first-quarter results at 8:30 a.m. Eastern Time today. A live audio Webcast of the call will be available on the Investor Relations section of CME's Web site at http://www.cme.com/ . An archived recording will be available for up to two months after the call.

All references to volume and rate per contract information in the text of this document exclude our non-traditional TRAKRS products, for which CME receives significantly lower clearing fees than other CME products, CME Auction Markets products and Swapstream products.

Chicago Mercantile Exchange Holdings Inc. became the first publicly traded U.S. financial exchange on Dec. 6, 2002. The company was added to the S&P 500® Index on August 10, 2006, and the Russell 1000® Index on July 1, 2003. It is the parent company of Chicago Mercantile Exchange Inc. ( http://www.cme.com/ ), the largest and most diverse financial exchange in the world. As an international marketplace, CME brings together buyers and sellers on its CME Globex electronic trading platform and on its trading floors. CME offers futures and options on futures primarily in interest rates, equities, foreign exchange and commodities.

The Globe Logo, Chicago Mercantile Exchange®, CME®, E-mini®, Globex®, Swapstream® and CME Auction Markets™ are trademarks of CME. Other trade names, service marks, trademarks and registered trademarks that are not proprietary to Chicago Mercantile Exchange Inc. are the property of their respective owners, and are used herein under license. Further information about CME and its products is available on the CME Web site at http://www.cme.com/ .

Statements in this news release 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. Among the factors that might affect our performance are: our ability to obtain the required approvals for our proposed merger with CBOT Holdings, Inc. and our ability to realize the benefits and control the costs of the proposed transaction; increasing competition by foreign and domestic competitors, including new entrants into our markets; our ability to keep pace with rapid technological developments, including our ability to complete the development and implementation of the enhanced functionality required by our customers; our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services; our ability to adjust our fixed costs and expenses if our revenues decline; our ability to continue to realize the benefits of our transaction processing services provided to third parties; our ability to maintain existing customers and attract new ones; our ability to expand and offer our products in foreign jurisdictions; changes in domestic and foreign regulations; changes in government policy, including policies relating to common or directed clearing; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; our ability to generate revenue from our market data that may be reduced or eliminated by the growth of electronic trading; changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure; the ability of our financial safeguards package to adequately protect us from the credit risk of our clearing firms; changes in price levels and volatility in the derivatives markets and in underlying fixed income, equity, foreign exchange and commodities markets; economic, political and market conditions; our ability to accommodate increases in trading volume without failure or degradation of performance of our systems; our ability to execute our growth strategy and maintain our growth effectively; our ability to manage the risks and control the costs associated with our acquisition, investment and alliance strategy; industry and customer consolidation; decreases in trading and clearing activity; the imposition of a transaction tax on futures and options on futures transactions; and seasonality of the derivatives business. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, which is available in the Investor Information section of the CME Web site. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

        Chicago Mercantile Exchange Holdings Inc. and Subsidiaries
                       Consolidated Balance Sheets
                          (dollars in thousands)

                                          March 31, 2007   December 31, 2006

  ASSETS
  Current Assets:
   Cash and cash equivalents                  $1,139,793          $969,504
   Collateral from securities lending          2,112,451         2,130,156
   Marketable securities, including
    pledged securities                           219,282           269,516
   Accounts receivable, net of
    allowance                                    162,081           121,128
   Other current assets                           41,884            37,566
   Cash performance bonds and security
    deposits                                     926,575           521,180
  Total current assets                         4,602,066         4,049,050
  Property, net of accumulated
   depreciation and amortization                 165,506           168,755
  Other assets                                   118,947            88,700
  Total Assets                                $4,886,519        $4,306,505

  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
   Accounts payable                              $30,955           $25,552
   Payable under securities lending
    agreements                                 2,112,451         2,130,156
   Other current liabilities                     147,986            78,466
   Cash performance bonds and security
    deposits                                     926,575           521,180
  Total current liabilities                    3,217,967         2,755,354
  Other liabilities                               39,040            32,059
  Total liabilities                            3,257,007         2,787,413
  Shareholders' equity                         1,629,512         1,519,092
  Total Liabilities and Shareholders'
   Equity                                     $4,886,519        $4,306,505

  Note:  The consolidated balance sheets do not reflect the adoption of
  Financial Accounting Standards Board Interpretation No. 48, "Accounting
  for Uncertain Tax Positions." The adjustment resulting from the adoption
  of this standard is being finalized. The impact, which will affect only
  current liabilities and stockholders' equity, is not expected to be
  material. The adjustment will be reflected in the consolidated balance
  sheets filed with our Quarterly Report on Form 10-Q for the quarter ended
  March 31, 2007.

  Note:  Certain reclassifications have been made to the 2006 financial
  statements to conform to the presentation in 2007.



        Chicago Mercantile Exchange Holdings Inc. and Subsidiaries
                    Consolidated Statements of Income
                 (in thousands, except per share amounts)

                                                        Quarter Ended
                                                          March 31,
                                                     2007            2006
  Revenues
   Clearing and transaction fees                 $258,241        $200,797
   Processing services                             34,759          18,125
   Quotation data fees                             25,016          20,100
   Access fees                                      5,461           4,878
   Communication fees                               2,016           2,226
   Other                                            6,838           5,591
   Total Revenues                                 332,331         251,717

  Expenses
   Compensation and benefits                       56,400          49,837
   Communications                                   9,079           7,848
   Technology support services                      8,892           7,262
   Professional fees and outside services           9,172           8,131
   Depreciation and amortization                   19,989          17,387
   Occupancy                                        8,827           7,248
   Licensing and other fee agreements               7,035           5,932
   Marketing, advertising and public relations      5,983           3,096
   Other                                            6,347           6,134
   Total Expenses                                 131,724         112,875

  Operating Income                                200,607         138,842

  Non-Operating Income and Expense
   Investment income                               17,305          11,409
   Securities lending interest income              32,890          27,736
   Securities lending interest expense            (32,425)        (27,097)
   Equity in losses of unconsolidated
    subsidiaries                                   (3,020)           (389)
   Total Non-Operating                             14,750          11,659

  Income Before Income Taxes                      215,357         150,501

  Income tax provision                            (85,329)        (59,088)
  Net Income                                     $130,028         $91,413

  Earnings per Common Share:
   Basic                                            $3.73           $2.64
   Diluted                                           3.69            2.61

  Weighted Average Number of Common Shares:
   Basic                                           34,851          34,581
   Diluted                                         35,229          35,044



                                   1Q       2Q        3Q       4Q       1Q
                                 2006     2006      2006     2006     2007
  Trading Days                     62       63        63       63       62


            Average Daily Volume (Round Turns, in Thousands)*

                                     1Q       2Q       3Q      4Q       1Q
                                   2006     2006     2006    2006     2007
  Interest rates                  2,918    3,255    3,148   2,990    3,639
  Equity E-mini                   1,408    1,748    1,564   1,596    1,977
  Equity standard-size              145      173      154     147      190
  Foreign exchange                  407      471      423     508      555
  Commodities                        80       81       78      72       93
    Subtotal                      4,958    5,728    5,367   5,313    6,454
  TRAKRS                            161      419      117     294      143
    Total                         5,119    6,147    5,484   5,607    6,597
  Open outcry                     1,467    1,657    1,517   1,293    1,578
  Electronic(including TRAKRS)    3,595    4,441    3,917   4,261    4,958
  Privately negotiated               57       49       50      53       61
    Total                         5,119    6,147    5,484   5,607    6,597


                     Transaction Fees (in Thousands)*

                        1Q         2Q           3Q         4Q           1Q
                      2006       2006         2006       2006         2007

  Interest rates   $89,194    $97,768      $98,306    $95,741     $110,950
  Equity E-mini     62,183     76,889       70,194     71,111       86,571
  Equity
   standard-size    12,859     15,493       12,947     13,271       16,631
  Foreign
   exchange         31,616     33,212       30,576     34,752       38,176
  Commodities        4,737      4,673        4,597      4,257        5,417
    Subtotal       200,589    228,035      216,620    219,132      257,745
  TRAKRS               208        384          244        344          180
    Total         $200,797   $228,419     $216,864   $219,476     $257,925
  Open outcry      $43,406    $50,067      $45,429    $41,710      $47,841
  Electronic
   (including
   TRAKRS)         144,776    166,741      160,295    165,399      196,377
  Privately
   negotiated       12,615     11,611       11,140     12,367       13,707
    Total         $200,797   $228,419     $216,864   $219,476     $257,925


                     Average Rate Per Contract (RPC)*

                            1Q        2Q         3Q         4Q          1Q
                          2006      2006       2006       2006        2007
  Interest rates        $0.493    $0.477     $0.496     $0.508      $0.492
  Equity E-mini          0.712     0.698      0.712      0.707       0.706
  Equity standard-size   1.431     1.421      1.338      1.430       1.414
  Foreign exchange       1.253     1.119      1.146      1.085       1.109
  Commodities            0.953     0.921      0.939      0.942       0.944
   Average
   (excluding TRAKRS)   $0.652    $0.632     $0.641     $0.655      $0.644
  TRAKRS                 0.021     0.015      0.033      0.019       0.020

  Open outcry           $0.477    $0.480     $0.475     $0.512      $0.489
  Electronic
   (excluding TRAKRS)    0.679     0.657      0.668      0.660       0.657
  Privately negotiated   3.583     3.785      3.545      3.713       3.650

  *Note:  All volume, transaction fee data, and rate per contract
  information exclude CME Auction Markets products and Swapstream products.

  CME-E

SOURCE: Chicago Mercantile Exchange Holdings Inc.

CONTACT: media, Anita Liskey, +1-312-466-4613, or William Parke,
+1-312-930-3467, news@cme.com, or inverstors, John Peschier, +1-312-930-8491,
all of Chicago Mercantile Exchange Holdings Inc.

Web site: http://www.cme.com/

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