CME Group (NASDAQ: CME)

Financial Institutions Group Analysts: Laura Bozzo, Uv Sandhu, Aly Dayani, Emily Li, Apaar Vijay, Jack Karpinski Researchers: David Xie, Luca Ferrara, Michael Zhang, Rebecca Russo October 28th, 2020 Disclaimer

The analyses and conclusions of the Western Investment Club (“WIC") contained in this presentation are based on publicly available information. WIC recognizes that there may be confidential information in the possession of the companies discussed in the presentation that could lead these companies to disagree with WIC’s conclusions. This presentation and the information contained herein is not a recommendation or solicitation to buy or sell any securities.

The analyses provided may include certain statements, estimates and projections prepared with respect to, among other things, the historical and anticipated operating performance of the companies, access to capital markets and the values of assets and liabilities. Such statements, estimates, and projections reflect various assumptions by WIC concerning anticipated results that are inherently subject to significant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of such statements, estimates or projections or with respect to any other materials herein. Actual results may vary materially from the estimates and projected results contained herein.

The sole responsibility for the content of this publication lies with the authors. Its contents do not reflect the opinion of the University Students’ Council of the University of Western Ontario (“USC”). The USC assumes no responsibility or liability for any error, inaccuracy, omission or comment contained in this publication or for any use that may be made of such information by the reader. Table of Contents

I. Exchange Fundamentals

II. Business Overview

III. External Analysis

IV. Internal Analysis

V. Investment Theses

VI. Risks and Mitigants

VII. Catalysts

VIII. Valuation

IX. Appendix 01 Exchange Fundamentals Exchange Fundamentals Key terms

Derivatives A contract between two parties which derives its value from an underlying asset.

Swaps A type of derivative with a value based on cash flow, as opposed to a specific asset.

Options A financial derivative that gives buyers the right to buy or sell an underlying asset at a specific price and date.

Bid/Ask Spread The amount by which the ask price exceeds the bid price for an asset in the market.

Rate Per Contract Clearing and transaction fees charged per contract.

Clearing House An intermediary between a buyer and a seller in a financial market..

OTC Markets A decentralized market in which market participants trade instruments without a central exchange or broker.

Cash Markets A marketplace in which the commodities or securities purchased are paid for and received at the point of sale.

Liquidity Characterized by a high level of trading activity resulting in small spreads between the bid and offer.

ADV Average Daily Volume of derivative contracts traded on CME. Exchanges Overview CME is uniquely positioned as a derivatives exchange amongst the world’s major trading platforms

Exchange Type Major Players

▪ Owners of shares can transact directly with potential buyers ▪ Once the sale of a share is Equities complete, the buyer now maintains ownership of the share itself ▪ Stock exchanges offer companies easier access to public investors and thereby earn listing fees

▪ Contracts are traded based on the performance of underlying assets ▪ Derivatives exchanges are used to mitigate risk and assume risk (for Derivatives hedgers and speculators) ▪ Lock derivatives bind the parties to terms, whereas options derivatives offer the holder the right (but not the obligation) to terms

CME’s Unique Position: Leading derivatives exchange offering high level of liquidity, diversity of products, price transparency, and technological capabilities 02

Business Overview Business Overview CME is the world’s largest derivatives exchange

CME Overview Key Financial Metrics Ticker NASDAQ: CME ▪ CME is a financial exchange company, providing clients with the ability to trade futures, options, cash markets, and Current Share Price $149.56 OTC markets, while also selling data and analytics software 52-Week Range $131.80 - $225.36 ▪ Derivatives Exchange & Clearing House (81% of Market Capitalization $53.6B revenue): operates the CME, CBOT, COMEX, and NYMEX exchanges Enterprise Value $56.2B ▪ Data & Analytics (19% of revenue): real-time & historical NTM EV/EBITDA 17.7x market data for CME Group exchanges and portfolio & analytics software NTM P/E 22.7x

Transactional Revenue Drivers Additional Information

FX Swaps ▪ CME customers consist of professional traders, financial Metals 4% 2% 6% institutions, individual and institutional investors, major corporations, manufacturers, producers, governments, and Agricultural Commodities Interest Rates central banks 12% 32% ▪ CME processes nearly 18 million daily trades on average through its electronic trading platform (CME Globex) Cash Markets ▪ Market participants include hedgers, who use derivatives to 12% avoid risk, and speculators, who assume risk Energy ▪ CME's 2017 EBITDA margin was 69% Equity Indexes 17% 15%

Company Filings Business Overview CME’s two primary revenue drivers are trading/clearing fees and data aggregation

Revenue Sources ▪ Fees are charged per contract traded (RPC), for CME’s products - RPC is high quality Revenue 81% of revenue as the RPC cost for traders is only a small piece of the pie – traders have to consider the bid/ask spreads, market depth, and liquidity as well Trading/Clearing ▪ If fees are marginally higher, but spreads, liquidity and market depth are excellent, a nonzero sum is created ― CME benefits from revenue generated, and clients benefit from more efficient

markets that have lower total transaction costs 19% of Revenue of 19% ▪ Users pay a flat monthly fee for each screen or device displaying CME’s market information, which include real-time, delayed, and end-of-day quotations, trade and summary data Data Analytics ▪ Alternatively, customers can subscribe to market data provided on a limited group of products which is also a flat rate per month ▪ Pricing is based on the value of the service provided and price of comparable services

Operating Leverage

▪ CME has steady recurring revenue – their margins are similar to that of a mature SaaS company, as a marginal transaction costs an infinitesimally small amount for CME to process ▪ Sales and marketing costs are low, primarily consisting of salary and travel spend – The cost structure is almost completely fixed

Company Filings Historic Stock Performance

April 29, 2020: CME June 2, 2020: CME announces reports strong Q1 continued COVID-19 impact on earnings report farmer sentiment $225 8M July 14, 2020: CME announces launch of Micro E-minis options

$195 6M

September 23, 2019: CME March 13, 2020: Group announces bitcoin Correlation-related sell- option launch Q1 2020 off begins $165 4M

September 16, 2020: Fed signals to keep U.S. interest rates near 0% $135 until 2023 2M

$105 0M Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20

Capital IQ, Company Filings Product Overview CME boasts a wide array of future and options products for various asset classes ADV

Interest Rates: US Treasuries, Eurodollars, Fed Funds, SOFR, Swaps 10.3M

Equities Indexes: S&P 500, Nasdaq, Russell, Dow Jones, International 3.5M Indices

Energy: Crude and Refined, Natural Gas, Coal 2.3M

Agriculture: Grains, Oilseeds, Livestock, Dairy, Fertilizer, Lumber 1.5M

FX: G10, Emerging Markets 0.9M

Metals: Precious Metals, Base Metals, Ferrous Metals 0.7M

Cash Markets: US Treasuries and FX Spot N/A

Company Filings 03

External Analysis External Analysis The increasing fragility of financial markets benefit CME

Shifting Regulatory Climate Dealers Issues

▪ Recent modifications of the Volcker Rule enable banking ▪ Volatility increases at a faster pace today on account of entities to engage in proprietary trading, which drives dealers’ gamma positions volume towards CME clearing houses ▪ If dealers are long gamma (net long volatility), then dealer ▪ The Dodd-Frank Act regulates over-the-counter (OTC) hedging lowers volatility derivatives and market participants, which are affected by ▪ However, when dealers end up short gamma, which occurs mandatory clearing when an external event hits, then volatility can rise sharply – Uncleared margin rules can achieve cost and capital ― Dealers sell more of the index into a falling market efficiencies by substituting OTC exposures with to hedge their exposure resulting in a negative interest rate and FX futures feedback loop Central Bank Intervention Electronification Across Financial Products

▪ Since 2008, financial markets have experienced volatility suppression by central banks, which has led to fragile 80% 80% 70% 70% 65% markets with fatter tails distributions 60% 60% 55% ▪ Central bank intervention will not decrease any time soon, 45% 40% leading to an even more fragile financial system 35% – Fragility drives volatility, which in turn drives CME’s 20% volumes, as clients seek to hedge and speculate more

UST FX Swaps IRS FX Spot

2012 2015 2018

Logica Funds, Wall Street Journal External Analysis Understanding various market participants’ actions

Indexing/Passive

Fed suppresses Investors forced Passive / Indexed Active Mandates rates to take risk Mandates

Increased investor Excessive Risk confidence Taking

Recruitment Channel

Momentum- Price Taking Driven Flows

Fed backstops Market Crash Reduced Liquidity liquidity

Fed Policy Liquidity Cascade

Newfound Research External Analysis Tailwinds in multiple asset classes are not correlated with low volatility in interest rate futures trading

Interest Rates Derivatives Short-term vs. Long-term Interest Rates

▪ Interest rate trading represented a 450bp headwind to 10 80 growth due to the Fed’s suppression of short-term rates 8 76 ▪ The Fed’s adoption of a 2% average inflation target means 6 72 that they will not pre-emptively raise interest rates to 4 68

counter perceived inflation risk, and intends to keep rates Volatility ADV (Millions) ADV at near-zero through at least FY23 2 64

▪ Growing preference for longer-dated US Treasuries lead to 0 60 more demand for hedging and risk management Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 STIR LTIR Interest Rate Volume Index Equities Derivatives Commodities Derivatives

▪ Equity derivatives grew 48% and 47% respectively in 1Q20 ▪ Energy volumes benefitted from a spike in volatility early and 2Q20, benefitting from the rise in volatility during the in 2020, but faced headwinds from the oil sector pandemic – OPEC+ compliance to production quotas has ▪ Longer-term, equity derivative volumes are expected to dampened volatility in oil prices grow at a faster pace than cash equities, driven by product ▪ Agriculture commodity volumes are tied to the US innovation, secular trends towards financial risk agriculture product cycle and operate relatively management, and growth in retail volumes through independent of financial market conditions improving access and technologies ▪ In metals, given the safe-haven appeal of gold, volumes are often countercyclical to other business lines

Bloomberg, CME Group, Equity Research 04

Internal Analysis Internal Analysis CME management focuses on returning immense value to shareholders

Capital Allocation Data & Analytics Segment

▪ CME pays a regular dividend and an annual variable ▪ CME provides market data services for the futures, dividend to distribute excess cash to shareholders – key equities, and cleared swaps markets, including independent investor focus during a market downturn pricing information for cash and OTC markets – In 2019, CME paid out $1,697M in dividends ▪ Segment revenue grew to 19% of total sales in 2019 – Average annual dividend yield from 2012-2019 was compared to 15% in 2018 4.5%, whereas peers’ average was ~2% – Attributable to the increase in market data ▪ CME maintains $700M of cash on its balance sheet and subscribers and distributors from the cash markets utilizes the remaining amount for dividend payout segment following the NEX Acquisition in 2018

Dividends & NEX Acquisition Comparable Dividends

$7 NEX Acquisition $4 100% $6 80% $3 $5 60% $4 $2 $3 40% $2 $1

Dividends Per Share Per Dividends 20% $1 $0 $0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 NASDAQ ICE CBOE DB LSE CME

Annual Dividend Special Dividend Dividend Per Share Payout Ratio

Company Filings, Avg dividend yield from CME includes special dividend Q3 Earnings Summary CME shares closed down 6.21% after reporting Q3 2020 earnings

Overview of Results

▪ CME missed on top-line estimates by 2.11%, but beat on expenses, as TTM Adj. EBITDA Margins have expanded back to 66.9% ▪ Management cleared up concerns about the energy business and noted a very strong quarter for the data segment – “The reality is we've got a superior distribution out into the financial players of the energy market, whether it's the specifically, the hedge funds, buy-side asset managers, [large] retail clients” – “Natural gas is a market where that's really the strength of our portfolio. If you look at this business, not only is it up, this is the high RPC business that we have. It's $1.15 RPC in futures. It's $1.52 RPC on the options side” – Volume YTD: “Henry Hub futures are up 26%. Our options business is up 56%, with Asian growth at 116%, and European at 69%” Revenue Expectations Miss Again Market Movements

1.60 2.37% 1.67% 3% ▪ CME shares traded sharply down at the open today, and hit 1.14% an intraday low of $147.32 (-7.5%) before briefly rallying -1.02% 2% 1.40 to finish the end of the day at $149.56 (-6.21%) -0.17% -0.91% -1.25% 1% -2.11% ▪ ICE finished down 3.78% 1.20 0% ▪ CBOE finished down 3.48% (1%) 1.00 ▪ Nasdaq finished down 2.69% (2%)

0.80 (3%) Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20

Actual Estimates Delta

Company Filings, Bloomberg 05

Investment Theses Investment Recommendation We recommend buying CME at $149.56 per share

▪ Market is extrapolating that the Fed is going to continue to suppress interest rate volatility ― This has led to a de-rating of CME’s business, as interest rates are a key segment ― It is now a priced in risk; long-term horizons indicate a positive outlook The Opportunity ▪ Market is maintaining a bearish position on CME but failing to consider other factors driving growth; much better suited to withstand fed policy than last time it traded at a discount ▪ Longer-term, the set-up for multiple years of significant acceleration in volumes is being put in place, based on the predicted growing stock of Treasury bonds

▪ Short-term headwinds provide an attractive entry point into a wide-moat business that can sustainably produce high returns on capital and return value to shareholders ▪ CME is an excellent capital allocator and innovator; they maintain a strict balance sheet policy Thesis Overview of $700M of cash and excess cash is distributed to shareholders by an annual variable dividend ▪ CME has flexibility to create intricate products to help their clients speculate and hedge ▪ CME has a history of successful product development, which drives volume growth as much as volatility does

▪ CME is a great portfolio hedge for inflation risk – any pickup in inflation will lead to volatility, leading to volume growth for interest rate and oil products ― Inflation will also drive greater activity in their agricultural commodities and metals products Portfolio Fit ▪ The greatest risk to any investor's portfolio is for inflation and real yields to rise; if inflation rose, growth stocks would sell off concentration significantly, bringing the market down with them due to index ― In this case, CME would outperform Investment Thesis I: Leading Derivatives Exchange CME has a highly defensible position with monopolistic features within its derivative products

High Barriers to Entry Strategic Pricing

▪ CME has a wide moat resulting from its position as the ▪ CME is uniquely positioned across different asset classes to dominant venue for multiple asset classes, but its role as an strategically price RPC based on different market drivers integrated clearinghouse greatly enhances network effects ▪ Often incentivize customers to do more and more by ▪ More than 50% of all interest rate futures globally are giving them access to lower fees on a progressive tier basis – as this becomes successful, CME can then increase RPC traded on CME – 97% in North America ▪ Ex: Agricultural volume decreased 10% YoY, CME raised ▪ As trading volume has grown, CME has been able to headline fees by 15%, revenue decreased by only 4% decrease minimum tick size for prices on contracts, (meanwhile, metals volume and revenue up 13% due to allowing for narrower bid-ask spreads pricing decisions based on a tier basis to offset lower RPC)

Intangible Assets Most Valuable Brand Among Leading Exchanges(1)

▪ CME benefits from substantial intangible assets, $2,149M particularly as a result of its 27% ownership stake in S&P/Dow Jones Indexes $1,336M ▪ This ownership stake particularly ensures that CME is the $1,003M

exclusive exchange to buy and sell S&P e-Mini futures $949M Brand Value ▪ The deep liquid markets in S&P futures likely contributed $402M to CME’s ability to attract additional equity index futures license agreements for NASDAQ and Russell 2000 CME NYSE ICE NASDAQ CBOE

(1) Measured by ISO Certified consultancy advising branded organizations with substantial intangible assets

Company Filings, Morningstar Investment Thesis I: Leading Derivatives Exchange CME’s product innovation and strategic execution are an underappreciated competitive advantage

Moving into the Right Products Strategic Expansion

▪ Given the highly uncertain macroeconomic backdrop, ▪ CME acquired NEX Group for $5.5B in 2018 to build out CME is well placed as a venue to allow market participants a complementary cash markets business while leveraging to manage risk their existing market infrastructure to drive cost synergies ▪ In the last 10 years, CME has introduced 11 interest rates ▪ Pending approval for cross-margining of US cash products, 14 equities products, 5 FX products, and 4 OTC treasuries with derivatives in partnership with the DTCC products. will create significant benefits for clients – Eurodollar Mid-Curve Options (2010-2013, 2018) ― NEX Group generates stable cash flow for CME – Bitcoin Futures & Options (2017, 2020) ― The cash and optimization businesses acquired provides additional diversity to CME’s revenue mix International Expansion Non-US ADV Growth

▪ CME is focused on driving growth by increasing 3M participation from non-US customers ▪ In 1H2020, non-US ADV grew 21% to 6.1 million 2M contracts

▪ Equity index ADV grew 111% to 1.6 million contracts; 1M energy and metals rose by 12% and 22%, respectively

▪ By increasing global trading volume, CME deepens open 0M interest and liquidity on the exchange, which further Interest Equities FX Energy Agricultural Metals Rates enhances the network effects and offsets short term volume headwinds 1H19 1H20

Credit Suisse, Company Filings, Atlantic Equities Investment Thesis II: Short-Term Narrative History repeats itself, short-term fluctuations drive negative sentiment and share price dislocation

2013 2020

The high level of short-term visibility for volume growth drives the street’s short-term narrative, providing an asymmetric opportunity to build a position in a monopoly-like business

Credit Suisse, J.P. Morgan, The Economist, Wells Fargo Investment Thesis II: Short-Term Narrative Analyst upgrades and model revisions provide upside for CME

Sell-Side Estimates UST Volatility Has Troughed

▪ Sell-side analysts have high visibility into CME’s short-term ▪ The dominant narrative about interest rate volatility is a EPS, as daily volume data is published. In turn, the sell-side farce. After recent breakouts, the MOVE index is near the extrapolates out short-term EPS to value CME and does 5-year average not look at intrinsic value ▪ Over the past 5-years, CME grew their rates segment at a ▪ CME’s standard deviation of ADV has increased, making it 9% CAGR while volatility remained muted harder to forecast revenue beyond 1-2 quarters ▪ CME interest rate volumes have bounced off trough levels ▪ The best time to buy CME is when sell-side models extrapolate trough levels of volume, which is occurring and have inflected positive over the past month now

The MOVE Index Has Broken Out

150

130

110

Source: Bloomberg Investment Thesis II: Short-Term Narrative After today’s market sell off, CME is trading at levels that have historically presented a great buying opportunity Interest Rate Green Shoots Buying at the Trough – Positioning to Beat

▪ Interest rate volumes further out on the curve are starting ▪ CME is now trading at trough forward P/E multiples to see green shoots ▪ CME is now set up for: ▪ In October, different 10-year interest rate products have seen 3-20% volume growth – EPS estimates to be raised on a breakout in interest rate volatility, and continued strength in volumes ▪ “So we are starting to see, as we would expect, further out elsewhere the curve, increases in activity relative to this environment, that should, over time, move down the curve” – CME’s P/E reverting to the mean leading to share ▪ Buy CME now, positioned for this inflection price appreciation - downside risk ($130-$140) is now significantly limited

2 Year Blended P/E and Standard Deviation 5 Year Blended P/E and Standard Deviation

32 32

30 30

28 28

26 26

24 24

22 22

20 20

18 18 Oct-18 Apr-19 Oct-19 Apr-20 Oct-20 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20

Company Filings Investment Thesis II: Short-Term Narrative Interest rate volatility drives short term volume, but not long-term growth

Matching the Thesis with the Time Horizon Rising Debt Levels

▪ In the short-term, CME has been hurt by the Fed $35T suppressing volatility in the interest rate markets $30T ▪ Although this is relevant to trading CME, it is much less $25T relevant to a long-term investment in the company $20T ▪ In the long-term, CME’s interest rate volume is closely tied $15T to the size of the US Treasury market $10T ▪ Long-term investors should look past the current Treasury $5T volume hiccup, as the US National debt will grow, driving

growth for CME’s interest rate business $0T

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Interest Rate Volumes Tied to Size of UST Market Growth Potential

$30T 21K ▪ Growth in CME interest rates volume has substantially r = 0.92 18K outpaced volume growth in the underlying cash market 15K $20T ▪ $3.7T worth of additional treasury bills, notes, and bonds 12K issued this year will need risk managed 9K ▪ Ongoing innovation in the past has resulted in less than $10T 6K 40% of rates volume being on the front end of curve 3K ▪ The first sign of accelerating inflation may catalyse $0T 0K heightened fears of an overshoot, and lead to a significant 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 increase in hedging activity US Treasury Market Interest Rate ADV (000's)

Company Filings Investment Thesis II: Short-Term Narrative CME provides a diversified play on uncertainty

Diversity By Asset Class And Segment Equity Indexes Expansion

▪ Over the past 10 years, transactional revenue from other ▪ The E-Minis futures for the indexes have been a significant asset classes has generated more than double the revenue contributor of growth in volumes over the last year of CME’s interest rates products – Since May 2019, E-Minis has grown from 10% of ▪ Other asset class derivatives, excluding Interest Rates and the equity derivatives mix to over 30% Energy, comprise of 51% of revenue in 2019, allowing – Subsequent high demand for Micro e-Minis by retail CME to manage market uncertainty investors, which is expected to grow by 7% into 2024 ▪ RPC for agricultural and metals derivatives are higher than ▪ New financial products accounted for ~8-10% of interest rates and equities, which drives up average RPC transaction revenue in 2018, which demonstrates high overall for CME’s trading business success rate of CME’s innovation initiatives Growth of Non-Core Transactional Revenue Micro E-Minis Are Strong Drivers of Growth(1)

10,000 10,000 9,000 8,000 8,000 7,000 6,000 6,000 5,000

4,000 4,000 ADV (000's) ADV ADV (100’s) ADV 3,000 2,000 2,000 1,000 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 May-19 Aug-19 Nov-19 Feb-20 May-20 Aug-20

Equity Indexes FX Agricultural Commodities Energy Metals Micro E-Minis Total

(1)Retrieved from Atlantic Equities Report

Company Filings Investment Thesis II: Short-Term Narrative

CME is in an improved position to withstand volatility suppression relative to the last time it was trading at a significant discount to the exchange sector

42x Historical Premium

36x

30x

24x

18x Forward Forward P/ERatio

12x

6x Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19

CME Group Exchange Sector

Notable Information 2009 2020

ADV Attributable to Rates Segment 64% 53%

Shorter-dated Interest Rate Products Majority <40%

Interest Rates, Equities, FX, Interest Rates, Equities, FX, Product Lines Commodities, Energy, Cash Commodities Markets, Metals

Bloomberg, Company Filings 06

Risks Risks and Mitigations The exchange industry is exposed to both monetary and fiscal policy decisions

Data Regulation Aggressive Monetary Policy

▪ Over the past decade, the exchange industry has ▪ The greatest short-term headwind for CME is a pause consolidated due to M&A and peer exchanges have in interest rate volatility. Aggressive policies, like Modern grown their data segment revenues by increasing prices Monetary Policy and Yield Control Curve can also have a on their customers, which has led to headwinds detrimental impact on CME’s business surrounding regulation ▪ Mitigation: Implementation of MMT would lead to ▪ Mitigation: CME is a “pure-play” exchange and has a volume growth for CME’s gold and bitcoin products, smaller exposure to the data business regulations compared which have higher RPCs. The U.S. rates market sets the to exchanges such as ICE and Nasdaq (51% of total global risk-free rate, which results in a baseline amount of revenue for ICE) volume for CME’s rates business

Financial Transaction Tax Risk Overview

▪ Democratic politicians in the U.S. election are considering imposing a financial transaction tax (FTT) on the purchase of financial instruments. The sentiment

around the FTT is to highlight progressivity and to Magnitude discourage unproductive high frequency trading Data Monetary ▪ Mitigation: There has been no observed impact on stock Regulation Policy trading as a result of increases in the FTT altered by Congress in 2001. The fee has always been so small that Transaction chances may not be relevant to what would occur at a Tax higher level Probability

Atlantic Equities 07

Catalysts Catalysts Executing on international growth, attractive macro factors to drive CME’s growth

▪ CME has seen strong growth from its global customers and have indicated their plan is to Mid

continue to develop these client relationships to drive further growth -

Global Volume ― Client engagement is up 66%; 500 cross selling introductions made in Term 2Q20

― 56% of CME sales staff are now located outside of the U.S. ▪ The Fed is suppressing yields, firms need to take on leverage to achieve their return targets Mi

― CME’s business is well-positioned, as it is almost a pure-play on the futures and d -

options space e ZIRP rm ― CME can tailor products to clients’ risk-taking needs, driving further volume growth

▪ Any pickup in inflation, or inflation expectations will lead to significant volume Mid -

Inflation growth for CME’s rates and oil segments Term Optionality ― A rates pick-up would lead to a market re-rating; CME would return to commanding

a premium to peers Long

▪ The Fed trying to suppress asset price volatility is like trying to cheat entropy - by -

Volatility Shift suppression, disorder increases, therefore leading to more sudden high volatility events Term ― The more volatility, the better for CME’s business

Company Filings 08

Valuation Comparable Companies Analysis CME is currently trading at a discount to peers

Company Comparable Analysis - CME Group ($ in millions, except share price) General Trading Multiples Profitability & Growth Share Market Enterprise EV/EBITDA EV/EBIT P/E LTM Growth LTM EBITDA LTM Debt/ Company: Price Cap Value Beta LTM NTM LTM NTM LTM NTM Rev EBITDA Margin EBITDA US Exchanges: Cboe Global Markets, Inc. (BATS:CBOE) $81.72 $8,888 $9,518 0.53 10.7x 12.7x 13.1x 13.3x 20.3x 17.5x 20.4% 12.3% 28.7% 1.1 Intercontinental Exchange, Inc. (NYSE:ICE) 98.95 55,536 63,474 0.63 17.6x 16.4x 20.6x 18.3x 31.8x 22.8x 10.2% 12.2% 62.1% 2.5 MarketAxess Holdings Inc. (NasdaqGS:MKTX) 558.91 21,223 20,892 0.51 57.6x 51.8x 65.0x 57.5x 104.4x 74.1x 32.6% 40.6% 56.9% 0.3 Nasdaq, Inc. (NasdaqGS:NDAQ) 129.12 21,209 24,419 0.82 14.5x 15.8x 17.8x 16.9x 27.3x 21.5x 20.7% 11.2% 27.9% 2.5

European Exchanges: Deutsche Börse AG (XTRA:DB1) 163.06 29,909 32,260 0.57 14.7x 14.6x 15.9x 16.9x 25.3x 22.7x 12.9% 7.9% 50.5% 1.4 Euronext N.V. (ENXTPA:ENX) 110.74 7,704 8,496 0.78 15.1x 14.3x 16.1x 15.9x 25.1x 20.0x 31.5% 30.5% 55.4% 2.9 London Stock Exchange Group plc (LSE:LSE) 110.09 38,634 39,994 0.49 27.1x 22.9x 31.8x 27.3x 61.1x 38.8x 8.8% 7.5% 45.8% 2.1

Data Providers: FactSet Research Systems Inc. (NYSE:FDS) 328.48 12,480 12,751 0.77 22.8x 22.8x 29.0x 24.5x 47.6x 29.8x 4.1% -0.3% 33.3% 1.6 Moody's Corporation (NYSE:MCO) 271.88 51,031 55,915 1.12 20.8x 22.8x 23.6x 25.5x 37.4x 29.8x 15.6% 22.1% 49.4% 2.6 S&P Global Inc. (NYSE:SPGI) 337.43 81,298 85,723 0.99 21.0x 22.6x 22.9x 23.0x 40.7x 31.1x 12.5% 25.3% 55.1% 1.1

Summary Statistics Mean 32,791 35,344 0.721 22.2x 21.7x 25.6x 23.9x 42.1x 30.8x 16.9% 16.9% 46.5% 1.81 Median 25,566 28,340 0.7 19.2x 19.5x 21.8x 20.6x 34.6x 26.3x 14.2% 12.3% 50.0% 1.85

CME Group Inc. (NASDAQ: CME) 149.56 53,611 56,212 0.33 16.9x 19.5x 17.7x 21.0x 30.7x 22.7x 11.4% 13.5% 66.3% 1.2 Intrinsic Valuation Discounted cash flow analysis UFCF Build Enterprise Value ` Q3 Q4 2017A 2018A 2019A 2020E 2020E 2021E 2022E 2023E 2024E 2025E NOPAT $4,180 $2,121 $2,294 $565 $717 $2,618 $2,826 $3,013 $3,174 $3,478 Add: D&A $209 $249 $473 $121 $121 $461 $470 $477 $477 $177 Final Year UFCF $3,468 Less: Capital Expenditures ($82) ($117) ($246) ($16) ($18) ($248) ($263) ($166) ($173) ($177) Perpetuity Growth Rate 2.00% Less (Add): Change in NWC $11 ($33) $7 ($11) – $17 ($27) ($24) ($21) ($10) WACC 6.86% Unlevered Free Cash Terminal Value $72,783 Flow $4318 $2220 $2528 $660 $819 $2,849 $3,007 $3,300 $3,458 $3,468 PV Terminal Value $53,108 Discount Factor 1.00x 0.99x 0.95x 0.89x 0.83x 0.78x 0.73x PV UFCFs $14,833 PV of Unlevered Free Cash Flow $657 $812 $2,710 $2,677 $2,749 $2,696 $2,530

Implied Upside Sensitivity WACC Enterprise Value $67,940 WACC Less: Debt $4,063 $0.2 5.9% 6.4% 6.86% 7.4% 7.9% % Debt 7.0% Less: Minority Interest $31 1.0% 26.0% 14.1% 4.2% -4.2% -11.3% % Equity 93.0% Add: Cash $1,494 1.5% 38.4% 23.9% 12.2% 2.5% -5.7% Equity Value $65,339 PGR 2.0% 53.9% 36.0% 21.9% 10.4% 0.8% Cost of Debt 4.7% 2.5% 74.0% 51.3% 33.8% 19.9% 8.5% Tax Rate 21.0% 3.0% 101.2% 71.1% 48.8% 31.6% 17.9% After-Tax Cost of Debt 3.7% Fully Diluted Shares $358,457 Implied Share Price Sensitivity Outstanding WACC Historical Risk Free Rate 3.0% Implied Share Price $182.3 $182.3 5.9% 6.4% 6.86% 7.4% 7.9% Levered Beta 0.42 Current Share Price $149.6 1.0% $188.50 $170.62 $155.79 $143.30 $132.62 Market Risk Premium 6.0% Implied Upside 21.9% 1.5% $206.94 $185.36 $167.80 $153.24 $140.97 Cost of Equity 5.5% PGR 2.0% $230.16 $203.47 $182.28 $165.04 $150.74 2.5% $260.28 $226.28 $200.08 $179.27 $162.34 WACC Matrix Average 6.86% Implied P/E Multiple 21.9x 3.0% $300.94 $255.88 $222.49 $196.76 $176.32 WACC Used 6.86% 5 Year Average P/E 25.4x Indicative Valuation Range Base case of discounted cash flow analysis implies a 21.9% upside

Implied Price Upside / Type Valuation (US$/share) (Downside)

52-Week High/Low 131.80 220.27 $175.64 7.2%

Analyst Coverage 135.00 245.30 $180.15 16.0%

Comparable Companies NTM P/E 120.60 214.30 $181.47 10.7%

DCF Perpetuity Growth 141.70 224.40 $182.30 21.9%

5-Year P/E 127.47 225.36 $176.42 7.7%

Current Price: Target Price: $149.56 $182.30

Recommendation:

Buy CME Group (NASDAQ: CME) at $149.56

Implied Upside: 21.9% 09

Appendix DCF – Bear & Bull

Enterprise Value ` Enterprise Value `

Final Year UFCF $2,667 Final Year UFCF $4,304 Perpetuity Growth Rate 2.00% Perpetuity Growth Rate 2.00% WACC 6.86% WACC 6.86% Terminal Value $55,981 Terminal Value $90,336 PV Terminal Value $40,848 PV Terminal Value $65,916 PV UFCFs $12,556 PV UFCFs $17,137

Enterprise Value $53,404 Enterprise Value $83,053 Less: Debt $4,063 Less: Debt $4,063 Less: Minority Interest $31 Less: Minority Interest $31 Add: Cash $1,494 Add: Cash $1,494 Equity Value $50,803 Equity Value $80,452

Fully Diluted Shares Outstanding $358,457 Fully Diluted Shares Outstanding $358,457 Implied Share Price $141.7 Implied Share Price $224.4 Current Share Price $149.6 Current Share Price $149.6 Implied Upside / (Downside) (5.2%) Implied Upside / (Downside) 50.1%

Implied P/E Multiple 22.0x Implied P/E Multiple 21.8x 5 Year Average P/E 25.4x 5 Year Average P/E 25.4x Leading Derivatives Exchange Nasdaq could not take apart CME’s network effect with lower fees

March 2015 March 2017 December 2018 March 2019

Contracts are deemed to be identical to CME’s

Nasdaq Annual volume Business slows Nasdaq exits launches for NFX grows to only 22M the energy energy futures from 3.5M in 2015 contracts futures (NFX) to 49.1M in 2017 annually business

Notable Facts Key Takeaways

▪ Nasdaq Group launches energy futures contracts (NFX), ▪ Fees are a small piece of the puzzle for traders hoping to undercut CME (WTI) and ICE (Brent) by up to – CME provides a superior WTI contract for bid/ask 50% on fees spreads, market depth and liquidity ▪ The contracts were identical to CME’s and ICE’s contracts, but were settled in cash, whereas CME’s and ▪ The failure of NFX contracts showcases CME’s deep ICE’s are settled by physical delivery competitive moat ▪ Management at Nasdaq plans to re-focus on their data and – The CME’s product execution strategy is geared technology segments, moving away from competing with around maintaining and strengthening their moat CME

Wall Street Journal Analyst Price Targets Average analyst price target of $182, representing 12.63% upside

Target Prices

$250 $200

$150 $100

$50 $0

Analyst Views

“At 24x earnings, CME is no longer commanding a significant premium to the market and the risk/ reward is now much more attractive. We understand that the lower for longer interest rate outlook and subdued open interest have hurt CME's earnings outlook and sentiment, yet we also believe the stock has more than discounted the unfavorable developments and is also overly penalized. It is trading only roughly at par with the market multiple now, versus its ~150% long-term historical average.”

“The evolution of inflation and inflation expectations is of particular relevance to CME Group given gearing its Rates complex carries to any change there. Market expectations reflected in breakeven rates show little concern around inflation, which in turn reinforces a lower for longer expectation for interest rates. If this broad market expectation is wrong and a change in inflation and rate expectations were to materialize, CME’s Rates business would be a significant beneficiary thereof. Based on current expectations, we assert CME’s gearing to inflation is asymmetric on the upside.” Price Target to Price

240

220

200

180

160

140

120

100

40 Feb, 10 Feb, 12 Feb, 14 Feb, 16 Feb, 18 Feb, 20

1 Year Target Price Price EBITDA Margins

71%

70.23% 70%

68.90% 69%

68% 68% 68.10% 67.84%

67% 67.00%

66%

65% 65.29% 64.80% 64% 64.50% 64.40%

63%

62%

61% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Price to Earnings Ratio – CME to S&P 500

1.8

1.6

1.4

1.2

0.8 Oct-15 May-16 Dec-16 Jun-17 Jan-18 Jul-18 Feb-19 Aug-19 Mar-20 Oct-20 Downside Risk Estimates Unlikely for CME to sink below ~$130 per share

Estimating 12 Month Downside Risk

▪ CME will do near $7 in EPS for 2021E – CME’s five-year P/E low of 18.5x was this March during the COVID panic • This implies a low of $129 per share – Of 22 analysts covering the company, the lowest target price is $135 ▪ If there was to be a significant market sell off, downside would be capped around $130-$140 per share` – Implies maximum downside of ~25% for CME ▪ Faith in these downsides estimates as CME has very high earnings visibility

5-Year NTM P/E 5-Year NTM EV/EBITDA

32 27x 30 25x

28 23x

26 21x 19x 24 17x 22 15x 20 13x 18 11x Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 09/15 09/16 09/17 09/18 09/19 09/20

Company Filings Product Innovation Product innovation drives volume growth as much as volatility does

How CME Executes on Growing Volume

First, CME’s sales team offers incentives for firms to begin trading on their platform. The sales team leverages CME’s reputation and experience with other product rollouts to develop relationships with clients.

Trading begins with incentives, until there are tight bid/ask spreads with great liquidity and market depth.

Incentives are rolled back, as clients are now incentivized by their own best interests to use the exchange.

CME begins to receive the full RPC for the new line of business, driving their revenue and margins higher.

CME sales staff creates lock-in effects, as they work with clients to figure out what products are needed to hedge and speculate better.

Sales staff can now cross sell other CME products to their clients, which drives further increases in revenue, with lower sales and marketing payback periods.

Revenue continues to grow, leading to more cash flow for CME shareholders, distributed by the variable dividend. Company Ownership

Turn of the Float Ownership Breakdown

200,000,000 95.5% 100% Public/Other 190,451,700 100.0% 13%

180,000,000 Individuals/Insiders 160,000,000 80% 1%

140,000,000 127,465,500 67.9% 120,000,000 60% 106,605,500 Insitutional 86% 100,000,000 44.9%

80,000,000 40% Sharholder % of CSO Capital Research and Management Company 16.0% 60,000,000 Vanguard 8.2% BlackRock 7.6% State Street 4.5% 40,000,000 20% Edgewood Management 2.3% T. Rowe Price Group 2.1% 20,921,900 17,450,400 20,000,000 J.P. Morgan Asset Management 1.9% Other 43.7% - Total Institutional 86.3% - 3.8% - Individuals and Insiders 1.27% $135.00 - $155.00 - $175.00 - $195.00 - $215.00 - $235.00 - Public and Other 12.40% $155.00 $175.00 $195.00 $215.00 $235.00 $255.00 Total 100.0% NEX Acquisition Case Study Acquisition allows for new trading opportunities across spot and futures FX products as well as cash, repo and futures products in U.S. Treasuries Transaction Overview Growth Opportunities

▪ NEX shareholders received $6.54 per share in cash and ▪ Expands FX business beyond futures to spot products, and 0.0444 shares of CME in deal valued at $5.5B broadens Treasury offering to include cash products. ▪ The transaction was expected to be immediately accretive ▪ Allows CME to introduce futures to the broad NEX user to adjusted cash earnings per share, with run-rate cost base, particularly in FX trading. synergies of $200 million annually by the end of 2021 ▪ Offers solutions for the full post-trade value chain, and ▪ Expands FX business beyond futures to spot products, and creates opportunities to develop new products and services broadens Treasury offering to include cash products to address the impact of uncleared margin rules ▪ Allows CME to introduce futures to the broad NEX user ▪ Adds recurring, subscription-based revenue to CME base, particularly in FX trading Group transaction-based revenue model CME Stock Performance Market Views

$260 ▪ “Combining the underlying cash securities with the trading of the listed futures would be a first in the exchange $220 industry and…would set a unique precedent” – Sandler O’Neill + Partners $180 ▪ “At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, this $140 1 Acquisition announced acquisition will allow us to create significant value and efficiencies for our clients globally,” $100 10/17 04/18 10/18 04/19 10/19 04/20 – Terry Duffy, CEO of CME Group Substantial Potential Cost Savings Carefully planned integration with expected cost savings of $200M annually by end of 2021

3-Year Net Run-Rate Cost Synergies Phasing of Run-Rate Synergies

$250

Operational Functions, 20% $200

$150 SG&A, 45%

$100

$50 IT Consolidation, 35%

$0 Year 1 Year 2 Year 3

Pro Forma Combined Total Cost Base: $1.6B Management Profile Strong management poised to lead CME forward

C-Suite Executives

John Pietrowicz, CFO Terrence Duffy, CEO Julie Holzrichter, COO

John W. Pietrowicz has servedas Chief Terrence A. Duffy serves as CME’s Julie Holzrichter has served as Chief Financial Officer of CME Group since Chairman and Chief Executive Officer. Operating Officer of CME Group since January 2015.Before assuming his current role, Previously, he served as Executive 2014. She is responsible for leading CME he served as Senior Managing Director, Chairman and President since 2012 and Group's Market Operations including the Corporate Development and Finance, where as Executive Chairman since 2006, Global Command Center, which is the he had day-to-day oversight of and when he became an officer of the first point of contact for customers using responsibility for identifying, negotiating, Company. He served as Chairman of the CME Group's Globex electronic financing and managing ongoing investments board since 2002 and Vice Chairman production systems. She also leads CME in new business opportunities. from 1998 until 2002. Mr. Duffy has Group's Trading Floor Operations and been a member of the Board since 1995. Global Market Solutions. Management Notes CME creates meaningful non-zero sums, driving customer loyalty and recurring business

▪ “In 2020 to date, 55 clients are utilizing portfolio margining between CME Group OTC swaps and interest rate futures, and on average we’ve achieved approximately $5.4 billion worth of margin savings for our clients (all-time high in terms of average for YTD time period).”

▪ “This business is not a zero-sum game… We tend to think about market opportunities not as a zero-sum game of moving into a space by displacing somebody else. We think about it as how can we innovate with product evolution, with electronic markets, getting people actionable on-screen liquidity during their time zones that allow them to trade more, bring more volume and actually manage their risk more effectively.”

▪ “That innovation is on the product side, on the operational efficiency side, on the capital efficiency side, on the market- leading options business we've built. So it's an example of where we can add participants, bring new innovations to market and grow business overall, not on a zero-sum game.”

▪ “New product innovation, focus on that end client, delivering margin capital, execution, total cost efficiencies and more deeply penetrating alternative marketplaces with a more attractiveproduct.” Artemis Capital’s Research At a critical point things become unstable with wild trends and volatility

Passively Aggressive Concerns Commentary

▪ Passive diversification is actually dangerous herding. Low cost comes at a great expense in the long run. ▪ Passive investing is a crowded liquidity momentum trade. When passive investing reaches a certain level, alpha is diminishedwhile volatility increases. ▪ “My simulation generates 25,000 days of equity returns using a supply-demand model randomized according to geometric Brownian motion with a drift factor based on constant percentage passive flows. Active participants become engaged based on varying degrees of intensity depending on whether the market drifts too high (selling pressure) or too low (buying pressure).The active players then impact the market by helping to push prices back into equilibrium.” ▪ Metaphor: Passive investors are the drunks at the bar, and active investors are their sober guide. The drunks try to walk home by following the flow of foot traffic. When the drunk gets off course, the sober guide helps them. The journey is choppy, but the drunk gets home. When the passive dominates, the drunk is so strong that the sober guide can’t move him. The drunk can move faster and is much more likely to get lost. He walks from the bar, follows the traffic, takes a wrong turn up a hill and walks right off a cliff, and dies.

Artemis predicts we are near the modelled peak. Revenue Breakdown CME creates meaningful non-zero sums, driving customer loyalty, and recurring business

8% Other

11% Data Services

81% Transaction and Clearing Fees Transactional Revenue and Expense Breakdowns

Transactional Revenue Breakdown Expense Breakdown

12% Cash Markets 32% Interest Other 39% Compensation Rates 16%

2% Swaps Licensing Fees 6% Metals

D& 17% Energy A 21%

15% Equity Indexes 12% Agricultural 4% Foreign 8% Professional 9% Technology Commodities Exchange Fees Metals Segment ADV Performance

700

600

500

400

300

200

100 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Gold ADV (000)'s Copper ADV Silver ADV Equity Indexes ADV Performance

6,000

5,000

4,000

3,000

2,000

1,000

0 2012 2013 2014 2015 2016 2017 2018 2019 H1 2020

E-mini S&P 500 ADV (000)'s E-mini NASDAQ 100 ADV E-mini Russell 2000 ADV Interest Rate ADV Performance

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Eurodollar Front 8 Futures Eurodollar Back 32 Futures Options U.S. Treasury 2-Year U.S. Treasury 5-Year U.S. Treasury 10-Year U.S. Treasury Bond Foreign Exchange ADV Performance

900

800

700

600

500

400

300

200

100

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Euro Japanese Yen British Pound Australian Dollar Canadian Dollar Agricultural ADV Performance

1,200

1,000

800

600

400

200

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Corn Soybean Wheat Soybean Oil Energy ADV Performance

3,000

2,500

2,000

1,500

1,000

500

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Crude Oil (WTI 2015-) Natural Gas Refined Products Brent Crude Oil Method of Trade Performance

25,000

20,000

15,000

10,000

5,000

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Electronic Open Outcry Privately Negotiated CME ClearPort Exchanges Lead In CFROI Levels

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

CFROI 10 yr Median CFROI Forecast Key Competitor: London Stock Exchange London Stock Exchange Group (LSEG) is a global financial markets infrastructure business

Company Overview Operational Segments Breakdown

▪ A global financial markets infrastructure business and Capital Markets Technology focuses on Information Services, Risk and Balance Sheet 17% Services Management and Capital information 4% ▪ Operates a number of leading businesses serving a global customer base including Information – Services A global multi-asset index business with US$15 Post Trade 39% trillion in AUM and US $765 billion ETF AUM Services 40% benchmarked to our indices – A global OTC clearing house with over $1.2 quadrillion of notional value cleared in 2019 LSEG’s Business Model

– European trading venues with over 435 billion ▪ LSEG operates through three main interconnected pounds average daily value traded in 2019 business divisions (i) Information Services (ii) Post Trade ▪ Differentiates itself through and (iii) Capital Markets ▪ Trading venues enable liquid and transparent markets, – Open Access: provide access to all their markets and generating proprietary multi-asset data products for a wide range of users ▪ Post Trade services enable operational efficiency, risk and – Customer Partnership: Large network of customer balance sheet management relationship maintained around the world ▪ Data and analytics enable trading and investment decisions Key Competitor Analysis: Euronext Euronext N.V. operates securities and derivatives exchanged in Europe

Company Overview Revenue/Services Breakdown

▪ Euronext N.V., together with its subsidiaries, operates Market securities and derivatives exchanges in Continental Europe, Solution and Ireland, and Norway. Others 6% Main Product/Service Offerings include: Post Trade 15% ▪ The company offers a range of exchange and corporate Trading services, including security listings, cash and derivatives 40% trading, and market data dissemination. ▪ Provides listing venues and cash equities trading venues; and various marketplaces, including multilateral trading facilities for investors, broker-dealers, and other market participants ▪ Offers options contracts based on the blue-chip equities listed on Euronext; commodity derivatives; and post- trade services, as well as distributes and sells real-time, historic, and reference data to data vendors, and financial institutions and individual investors. Market Data and Indices ▪ It provides equity, debts, funds, and exchange traded 19% funds listing services; and investors, foreign exchange Investor trading, and advanced data services. Services 1% Listing 19% Key Competitor Analysis: Deutsche Borse AG Deutsche Borse AG is an exchange organization based in Europe

Company Overview Main Product Engagements

▪ Deutsche Börse AG operates as an exchange organization ▪ Electronic trading of derivatives, electricity and gas in Europe, the United States, and the Asia-Pacific. products, emission rights, and foreign exchange ▪ The company operates through nine segments: ▪ Operating Eurex Repo over the counter (OTC) trading – Eurex (Financial Derivatives) platform and electronic clearing architecture ▪ – EEX (Commodities) Operating as a central counterparty for on-and-off exchange derivatives, repo transactions, and OTC and – 360T (Foreign Exchange) exchange-traded derivatives. – Xetra (Securities Trading) ▪ Cash market through Xetra, Börse Frankfurt, and – Clearstream (Post-Trading) Tradegate trading venues – IFS (Investment Fund Services) ▪ Operates as a central counterparty for equities and bonds; and provides listing services. – GSF (Collateral Management) ▪ Custody and settlement services for securities; – Qontigo (index and analytics business) investment fund services; global securities financing – Data (data business). services; collateralized money market transaction services; and repos and securities lending services Summary

2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E Down Base Up Revenue 3,645 4,309 4,868 5,153 4,957 5,261 5,535 5,771 5,887 $5,143 $5,887 $6,678 % Growth 18.2% 13.0% 5.9% -3.8% 6.1% 5.2% 4.3% 2.0% 1.1% 3.9% 6.5%

EBITDA 2,521 2,856 3,061 3,437 3,292 3,546 3,769 3,951 4,013 $3,077 $4,013 $4,981 % Margin 69.2% 66.3% 62.9% 66.7% 66.4% 67.4% 68.1% 68.5% 68.2% 59.8% 68.2% 74.6%

EBIT 2,312 2,608 2,588 2,969 2,831 3,076 3,291 3,474 3,836 $2,923 $3,836 $4,781 % Margin 63.4% 60.5% 53.2% 57.6% 57.1% 58.5% 59.5% 60.2% 65.2% 56.8% 65.2% 71.6%

Net Income 4,063 1,964 2,116 2,470 2,454 2,663 2,850 3,011 3,315 $2,508 $3,315 $4,159 % Margin 111.5% 45.6% 43.5% 47.9% 49.5% 50.6% 51.5% 52.2% 56.3% 48.8% 56.3% 62.3% % Growth -47.9% 16.8% -0.7% 8.5% 7.0% 5.7% 10.1% 3.5% 9.4% 14.5%

FD Shares 343,737 358,239 358,239 358,457 358,457 358,457 358,457 358,457 358,457 358,457 358,457 358,457

EPS $11.94 $5.71 $5.91 $6.89 $6.85 $7.43 $7.95 $8.40 $9.25 $7.00 $9.25 $11.60 Assumptions – Income Statement and Balance Sheet

Income Statement

2019 2020E 2021E 2022E 2023E 2024E 2025E

Other Non Operating Inc % of Investment Inc -60.00% -60.00% -60.00% -60.00% -60.00% -60.00% Effective tax rate 21.00% 21.00% 21.00% 21.00% 21.00% 21.00%

Percent of Cash Expenses Compensation and Benefits 49.74% 49.74% 49.74% 49.74% 49.74% 49.74% 49.74% Technology 11.15% 11.15% 11.15% 11.15% 11.15% 11.15% 11.15% Communications 0% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Tech Support 0% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Professional Fees 9.64% 9.64% 9.64% 9.64% 9.64% 9.64% 9.64% Occupancy and Building Ops 0% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Licensing Fees 9.53% 9.53% 9.53% 9.53% 9.53% 9.53% 9.53% Other 19.95% 19.95% 19.95% 19.95% 19.95% 19.95% 19.95%

Balance Sheet

Growth in Performance Bonds 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Assumptions – Expense Growth

Expense Growth

% Growth in Expense Category Compensation and Benefits -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00%

Technology -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00% Communications -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00%

Tech Support -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00%

Professional Fees -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00%

Occupancy and Building Ops -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00%

Licensing Fees -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00%

Other -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% Low -5.00% -1.00% 5.00% 5.00% 5.00% 5.00% Base -5.00% -3.00% 3.00% 3.00% 3.00% 3.00% High -5.00% -5.00% 1.00% 1.00% 1.00% 1.00% Revenue Build – Clearing and Transaction Fees

Transaction and Clearing Fees

2017A 2018A 2019A Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Interest Rates $995.4 $1,201.0 $1,278.5 $418.3 $221.4 $176.3 $244.8 $1,060.8 $1,007.7 $1,068.2 $1,121.6 $1,177.7 $1,201.2 Equities $497.1 $687.0 $583.8 $248.2 $201.3 $192.0 $211.2 $852.7 $810.1 $858.7 $910.2 $955.7 $984.4 FX $185.6 $187.8 $158.8 $48.2 $35.9 $39.9 $54.2 $178.2 $185.4 $192.8 $200.5 $208.5 $212.7 Agricultural Commodities $436.0 $470.0 $452.4 $117.7 $108.7 $120.6 $116.5 $463.5 $486.7 $511.0 $536.6 $563.4 $574.7 Energy $716.2 $744.2 $683.5 $221.8 $194.0 $158.6 $184.0 $758.4 $720.5 $763.7 $801.9 $834.0 $850.6 Metals $200.2 $223.9 $239.3 $78.8 $49.6 $89.4 $92.8 $310.6 $341.6 $369.0 $394.8 $414.5 $422.8 Swaps $68.1 $61.9 $66.8 $21.4 $16.9 $18.0 $18.0 $74.3 $78.0 $81.9 $86.0 $90.3 $92.1 Cash Markets $0.0 $91.2 $483.0 $124.4 $112.4 $112.0 $118.0 $466.8 $466.8 $466.8 $466.8 $466.8 $466.8

Net Revenue $3,098.6 $3,667.0 $3,946.1 $1,278.8 $940.2 $906.8 $1,039.5 $4,165.3 $4,096.8 $4,312.1 $4,518.4 $4,710.9 $4,805.3 Growth 18.34% 7.61% 5.55% -1.64% 5.25% 4.78% 4.26% 2.00%

Segment Projections Interest Rates 20.7% 6.5% -47.1% -20.4% 38.9% -17.0% -5.00% 6.00% 5.00% 5.00% 2.00% Low -10.00% 2.00% 3.00% 3.00% 1.00% Base -5.00% 6.00% 5.00% 5.00% 2.00% High -2.00% 8.00% 8.00% 8.00% 3.00%

Equities 38.2% -15.0% -18.9% -4.6% 10.0% 46.1% -5.00% 6.00% 6.00% 5.00% 3.00% -10.00% 3.00% 3.00% 3.00% 1.00% -5.00% 6.00% 6.00% 5.00% 3.00% -2.00% 10.00% 9.00% 8.00% 5.00%

FX 1.2% -15.4% -25.5% 11.2% 35.7% 12.24% 4.00% 4.00% 4.00% 4.00% 2.00% Low 2.00% 2.00% 2.00% 2.00% 1.00% Base 4.00% 4.00% 4.00% 4.00% 2.00% High 6.00% 6.00% 6.00% 6.00% 3.00%

Agricultural Commodities 7.8% -3.7% -7.65% 11.0% -3.4% 2.46% 5.00% 5.00% 5.00% 5.00% 2.00% Low 3.00% 3.00% 3.00% 3.00% 1.00% Base 5.00% 5.00% 5.00% 5.00% 2.00% High 8.00% 8.00% 8.00% 8.00% 3.00%

Energy 3.91% -8.16% -12.53% -18.3% 16.0% 10.96% -5.00% 6.00% 5.00% 4.00% 2.00% Low -8.00% 2.00% 2.00% 2.00% 1.00% Base -5.00% 6.00% 5.00% 4.00% 2.00% High -3.00% 6.00% 6.00% 6.00% 3.00%

Metals 11.84% 6.88% -37.06% 80.2% 3.83% 29.79% 10.00% 8.00% 7.00% 5.00% 2.00% Low 7.00% 6.00% 5.00% 5.00% 1.00% Base 10.00% 8.00% 7.00% 5.00% 2.00% High 12.00% 10.00% 9.00% 8.00% 3.00%

Swaps -9.10% 7.92% -21.03% 6.51% 0.00% 11.23% 5.00% 5.00% 5.00% 5.00% 2.00% Low 3.00% 3.00% 3.00% 3.00% 1.00% Base 5.00% 5.00% 5.00% 5.00% 2.00% High 7.00% 7.00% 7.00% 7.00% 3.00%

Cash Markets - 429.61% -9.65% -0.36% 5.36% -3.35% 3.00% 3.00% 3.00% 3.00% 2.00% Low 2.00% 2.00% 2.00% 2.00% 1.00% Base 3.00% 3.00% 3.00% 3.00% 2.00% High 5.00% 5.00% 5.00% 5.00% 3.00% Revenue Build – Market Data, IS, Investment Income

Market Data, IS & Other Revenue

2017A 2018A 2019A Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Data and Information Revenue $391.8 $449.6 $518.5 $131.5 $134.7 $127.0 $145.5 $538.7 $573.5 $646.8 $700.3 $730.2 $744.8 Other Revenue $154.3 $192.8 $403.4 $111.8 $107.4 $115.0 $115.0 $449.2 $286.8 $301.8 $316.3 $329.8 $336.4

Net Revenue $546.1 $642.4 $921.9 $243.3 $242.1 $242.0 $260.5 $987.9 $860.3 $948.7 $1,016.6 $1,060.0 $1,081.2 Growth 18% 44% 7% -13% 10% 7% 4% 2%

Key Metrics

Data & IS Rev as a % of Transaction Rev 12.64% 12.26% 13.14% 10.28% 14.33% 14.01% 14.00% 12.93% 14.0% 15.0% 15.5% 15.5% 15.5% Low 13.00% 14.00% 14.50% 14.50% 14.50% Base 14.00% 15.00% 15.50% 15.50% 15.50% High 16.00% 16.00% 16.00% 16.00% 16.00%

Other Revenue as % of Transactions 5.0% 5.3% 10.2% 8.7% 11.4% 12.68% 11.06% 10.8% 7.0% 7.0% 7.0% 7.0% 7.0% Low 5.0% 5.0% 5.0% 5.0% 5.0% Base 7.0% 7.0% 7.0% 7.0% 7.0% High 10.0% 10.0% 10.0% 10.0% 10.0%

Investment Income

2017A 2018A 2019A 2020E 2021E 2022E 2023E 2024E 2025E

Investment Income $531.7 $745.1 $637.9 $319.8 $578.6 $590.2 $602.0 $614.0 $626.3 Net Earnings In Unconsolidated Subs $129.2 $152.8 $176.8 $194.5 $208.1 $222.7 $238.2 $254.9 $272.8

Net Revenue $660.9 $897.9 $814.7 $514.3 $786.7 $812.9 $840.2 $869.0 $899.1 Growth 36% -9% -37% 53% 3% 3% 3% 3%

Key Metrics Investment Inc as % of PF&GF 1.20% 1.89% 1.72% 0.85% 1.5% 1.5% 1.5% 1.5% 1.5% Low 1.00% 1.00% 1.00% 1.00% 1.00% Base 1.50% 1.50% 1.50% 1.50% 1.50% High 2.00% 2.00% 2.00% 2.00% 2.00%

Growth in Net Earnings in Unconsolidated Subs 18.3% 15.7% 10.0% 7.0% 7.0% 7.0% 7.0% 7.0% Low 5.0% 5.0% 5.0% 5.0% 5.0% Base 7.0% 7.0% 7.0% 7.0% 7.0% High 10.0% 10.0% 10.0% 10.0% 10.0% Base Case – Income Statement

Income Statement

2017 2018 2019 Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Revenues $3,645 $4,309 $4,868 $1,522 $1,182 $1,149 $1,300 $5,153 $4,957 $5,261 $5,535 $5,771 $5,887 Expenses Compensation and Benefits (563) (672) (899) (208) (217) (215) (215) (854) (828) (853) (879) (905) (932) Technology (117) (202) (48) (49) (47) (47) (191) (186) (191) (197) (203) (209) Communications (24) – – – – – – – – – – – – Tech Support (77) – – – – – – – – – – – – Professional Fees (118) (166) (174) (42) (51) (36) (36) (165) (160) (165) (170) (175) (181) Occupancy and Building Ops (80) – – – – – – – – – – – – Licensing Fees (146) (171) (172) (74) (55) (17) (17) (164) (159) (163) (168) (173) (179) Other (116) (327) (360) (79) (59) (102) (102) (342) (332) (342) (352) (363) (374) Net Cash Expenses (1,124) (1,453) (1,807) (450) (432) (418) (418) (1,717) (1,665) (1,715) (1,766) (1,819) (1,874) EBITDA 2,521 2,856 3,061 1,073 751 731 882 3,437 3,292 3,546 3,769 3,951 4,013 Amortisation of Purchased Intangibles (96) (130) (315) (77) (77) (79) (79) (313) (313) (312) (311) (304) – Depreciation and Amortisation (113) (119) (159) (35) (37) (41) (41) (155) (149) (158) (166) (173) (177) Total Expenses (1,333) (1,702) (2,280) (562) (545) (538) (538) (2,184) (2,126) (2,185) (2,244) (2,297) (2,051) Net Operating Income 2,312 2,608 2,588 960 637 610 762 2,969 2,831 3,076 3,291 3,474 3,836 Non-Operating Income Investment Income 532 745 638 96 32 $96 $96 $320 $579 $590 $602 $614 $626 Interest Expense (117) (158) (178) (41) (42) (41) (41) (165) (163) (163) (163) (163) (163) Equity in Net Earnings on Unconsilidated Subs 129 153 177 51 49 $47 $47 $194 $208 $223 $238 $255 $273 Other Non Operating Income (330) (570) (535) (77) (15) (50) (50) (192) (347) (354) (361) (368) (376) Total Non Operating Income 214 170 102 29 24 52 52 158 276 295 316 337 360 Pre-tax income 2,526 2,778 2,690 989 661 663 814 3,127 3,107 3,371 3,607 3,811 4,196 Taxes 1,537 (814) (574) (223) (158) (138) (138) (657) (652) (708) (757) (800) (881) Net income. Attributable to non-controlling interests Net income $4,063 $1,964 $2,116 $767 $503 $525 $676 $2,470 $2,454 $2,663 $2,850 $3,011 $3,315 Current Price to Earnings Ratio 23.8x 23.9x 22.1x 20.6x 19.5x 17.7x EPS, Basic $12.00 $5.74 $5.92 $2.14 $1.41 $1.47 $1.89 $6.91 $6.86 $7.44 $7.97 $8.42 $9.27 EPS, Diluted $11.94 $5.71 $5.91 $2.14 $1.40 $1.46 $1.89 $6.89 $6.85 $7.43 $7.95 $8.40 $9.25 Base Case – Balance Sheet

Balance Sheet

2017 2018 2019 Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Cash and equivalents $1,904 $1,375 $1,551 $852 $1,405 2,024 2,802 2,802 5,488 8,331 11,467 14,762 18,066 Marketable Securities 90 73 83 78 88 88 88 88 88 88 88 88 88 AR 360 553 492 800 532 546 546 546 526 558 587 612 624 Other Current Assets 368 431 364 316 319 319 319 319 319 319 319 319 319 Performance Bonds and Guaruanty Fund Contributions 44,185 39,456 37,077 100,372 79,441 37,819 37,819 37,819 38,575 39,346 40,133 40,936 41,755 Total CA 46,907 41,887 39,568 102,417 81,786 40,796 41,575 41,575 44,995 48,642 52,595 56,717 60,852 Intangible Assets - Trading Products 17,175 17,175 17,175 17,175 17,175 17,175 17,175 17,175 17,175 17,175 17,175 17,175 17,175 Intangible Assets - Other 2,346 5,500 5,118 4,998 4,932 4,852 4,773 4,773 4,460 4,148 3,837 3,533 3,533 Goodwill 7,569 10,805 10,743 10,743 10,743 10,743 10,743 10,743 10,743 10,743 10,743 10,743 10,743 Property & Other Assets 1,794 2,108 2,612 2,600 2,579 2,554 2,531 2,531 2,630 2,735 2,735 2,735 2,735 Total assets 75,791 77,476 75,215 137,932 117,215 76,120 76,797 76,797 80,004 83,444 87,085 90,903 95,038

Accounts Payable (31) (116) (62) (74) (88) (92) (92) (92) (88) (94) (99) (103) (105) Short-Term Debt – (574) – – – – – – – – – – – Other Current Liabilities (1,456) (1,127) (1,385) (608) (673) (673) (673) (673) (673) (673) (673) (673) (673) Performance Bonds and Guaruanty Fund Contributions (44,185) (39,456) (37,076) (100,372) (79,441) (37,819) (37,819) (37,819) (38,575) (39,346) (40,133) (40,936) (41,755) Total CL (45,673) (41,273) (38,523) (101,054) (80,201) (38,583) (38,583) (38,583) (39,336) (40,113) (40,904) (41,711) (42,532) Long-Term Debt (2,233) (3,827) (3,743) (3,540) (3,441) (3,441) (3,441) (3,441) (3,441) (3,441) (3,441) (3,441) (3,441) Deferred Income Tax Liabilities (4,858) (5,666) (5,635) (5,622) (5,607) (5,607) (5,607) (5,607) (5,607) (5,607) (5,607) (5,607) (5,607) Other Liabilities (616) (745) (1,155) (1,118) (1,126) (1,126) (1,126) (1,126) (1,126) (1,126) (1,126) (1,126) (1,126) Total liabilities (53,379) (51,510) (49,056) (111,334) (90,376) (48,757) (48,757) (48,757) (49,510) (50,287) (51,079) (51,886) (52,707) Class A Common Stock 3 4 4 4 4 4 4 4 4 4 4 4 4 Additional Paid-in Capital 17,897 21,054 21,113 21,120 21,149 21,149 21,149 21,149 21,149 21,149 21,149 21,149 21,149 Retained Earnings 4,497 4,855 5,009 5,470 5,669 6,193 6,869 6,869 9,323 11,986 14,836 17,847 21,161 AOCL 14 5 3 (26) (13) (13) (13) (13) (13) (13) (13) (13) (13) Non-Controlling Interest 47 30 31 31 31 31 31 31 31 31 31 31 Total equity 22,412 25,965 26,159 26,599 26,839 27,364 28,039 28,039 30,494 33,157 36,006 39,017 42,332 L+SE $75,791 $77,476 $75,215 $137,932 $117,215 $76,121 $76,797 $76,797 $80,004 $83,444 $87,085 $90,903 $95,038 Base Case – Cash Flow Statement

Cash Flow Statement

2017 2018 2019 Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Net Income $4,063 $1,964 $2,116 $767 $503 $525 $676 $2,470 $2,454 $2,663 $2,850 $3,011 $3,315 D&A, Impairment Losses 209 249 473 110 116 121 121 467 461 470 477 477 177 Cash Generated From Operations 4,272 2,212 2,589 877 619 645 797 2,938 2,916 3,133 3,327 3,488 3,491 Stock Base Compensation 58 97 73 23 22 – – – – – – – – Deferred Income Tax (2,446) 114 (4) (10) (11) – – – – – – – – Other Non-Cash Income (55) 51 8 164 77 – – – – – – – – Cash Flow before Working Capital 1,829 2,474 2,666 1,054 707 645 797 2,938 2,916 3,133 3,327 3,488 3,491 Change in NWC 11 (33) 7 (297) 281 (11) – – 17 (27) (24) (21) (10) CFO 1,840 2,441 2,673 757 988 635 797 2,938 2,933 3,106 3,302 3,467 3,481

Business Acquisition 262 21 90 – (1) – – – – – – – – Purchase of Equipment & Other Assets (82) (117) (246) (43) (36) (16) (18) (73) (248) (263) (166) (173) (177) Proceeds/Purchases for AFS Securities (1) 2 3 (0) 1 – – – – – – – – Other Investing Activities – (1,795) – – – – – – – – – – – CFI 180 (1,890) (153) (43) (37) (16) (18) (73) (248) (263) (166) (173) (177) FCF II 2,020 551 2,520 714 951 619 778 2,864 2,685 2,843 3,136 3,294 3,304

Dividends Paid (1,994) (2,150) (1,696) (1,198) (305) – – – – – – – – Issuance of commercial papers – 387 (95) (205) (100) – – – – – – – – Proceeds from Borrowings – 1,185 – – – – – – – – – – – Repayment of other Borrowings – (453) (569) – – – – – – – – – – Proceeds From Derivatives – (30) 16 – – – – – – – – – – Employee Tax on Stock Vesting (31) (35) (37) (19) – – – – – – – – – Other 40 16 38 7 8 – – – – – – – – CFF (1,985) (1,080) (2,344) (1,414) (397) – – – – – – – –

Net Increase in Cash & Equivalents 35 (529) 177 (700) 554 619 778 1,251 2,685 2,843 3,136 3,294 3,304 Cash & Equivalents at beginning of the period 1,869 1,904 1,375 1,551 851 1,406 2,024 1,551 2,803 5,488 8,331 11,468 14,762 Cash and Equivalents at the end of period 1,904 1,375 1,551 851 1,406 2,024 2,803 2,803 5,488 8,331 11,468 14,762 18,066 Performance Metrics – Bear

Performance Metrics 2017A 2018A 2019A Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Growth Revenue 18.2% 13.0% 5.9% -9.4% 3.3% 3.0% 2.6% 0.9% Operating Expenses 27.7% 34.0% -4.2% -1.5% 4.1% 4.1% 3.9% -8.4% EBIT 12.8% -0.8% 14.7% -15.3% 2.6% 2.1% 1.5% 9.4% EBITDA 13.3% 7.2% 12.3% -13.7% 2.3% 1.9% 1.2% -1.7% Net Non-Operating Income -20.6% -40.2% 55.1% 23.6% 6.8% 6.7% 6.5% 6.4% Net Income -51.7% 7.7% 16.8% -13.4% 2.9% 2.4% 1.9% 9.1%

% Sales Operating Expenses 36.6% 39.5% 46.8% 36.9% 46.1% 46.9% 41.4% 42.4% 46.1% 46.5% 47.0% 47.6% 43.2% Net Non Operating Income 5.9% 3.9% 2.1% 1.9% 2.0% 4.6% 4.0% 3.1% 4.2% 4.3% 4.5% 4.6% 4.9% Total D&A 5.7% 5.8% 9.7% 7.4% 9.6% 10.5% 9.3% 9.1% 9.7% 9.5% 9.3% 9.0% 3.0% EBITDA 69.2% 66.3% 62.9% 70.5% 63.5% 63.6% 67.9% 66.7% 63.6% 63.0% 62.3% 61.4% 59.8% EBIT 63.4% 60.5% 53.2% 63.1% 53.9% 53.1% 58.6% 57.6% 53.9% 53.5% 53.0% 52.4% 56.8% Net Income 111.5% 45.6% 43.5% 50.4% 42.6% 45.7% 52.0% 47.9% 45.9% 45.7% 45.4% 45.1% 48.8%

Other FCF Yield 114.70% 49.23% 47.1% 4.37% 4.37% 4.63% 4.69% 4.54%

Effective tax rate -60.8% 29.3% 21.3% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% Performance Metrics – Base

Performance Metrics 2017A 2018A 2019A Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Growth Revenue 18.2% 13.0% 5.9% -3.8% 6.1% 5.2% 4.3% 2.0% Operating Expenses 27.7% 34.0% -4.2% -2.6% 2.8% 2.7% 2.4% -10.7% EBIT 12.8% -0.8% 14.7% -4.7% 8.7% 7.0% 5.5% 10.4% EBITDA 13.3% 7.2% 12.3% -4.2% 7.7% 6.3% 4.9% 1.5% Net Non-Operating Income -20.6% -40.2% 55.1% 74.9% 7.0% 6.9% 6.8% 6.8% Net Income -51.7% 7.7% 16.8% -0.7% 8.5% 7.0% 5.7% 10.1%

% Sales Operating Expenses 36.6% 39.5% 46.8% 36.9% 46.1% 46.9% 41.4% 42.4% 42.9% 41.5% 40.5% 39.8% 34.8% Net Non Operating Income 5.9% 3.9% 2.1% 1.9% 2.0% 4.6% 4.0% 3.1% 5.6% 5.6% 5.7% 5.8% 6.1% Total D&A 5.7% 5.8% 9.7% 7.4% 9.6% 10.5% 9.3% 9.1% 9.3% 8.9% 8.6% 8.3% 3.0% EBITDA 69.2% 66.3% 62.9% 70.5% 63.5% 63.6% 67.9% 66.7% 66.4% 67.4% 68.1% 68.5% 68.2% EBIT 63.4% 60.5% 53.2% 63.1% 53.9% 53.1% 58.6% 57.6% 57.1% 58.5% 59.5% 60.2% 65.2% Net Income 111.5% 45.6% 43.5% 50.4% 42.6% 45.7% 52.0% 47.9% 49.5% 50.6% 51.5% 52.2% 56.3%

Other FCF Yield 114.70% 49.23% 47.1% 4.85% 5.12% 5.62% 5.89% 5.90%

Effective tax rate -60.8% 29.3% 21.3% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% Performance Metrics – Bull

Performance Metrics 2017A 2018A 2019A Q1 2020 Q2 2020 Q3 2020E Q4 2020E 2020E 2021E 2022E 2023E 2024E 2025E

Other FCF Yield 114.70% 49.23% 47.1% 4.37% 4.37% 4.63% 4.69% 4.54%

Effective tax rate -60.8% 29.3% 21.3% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% Beta Calculation

Comparable Companies Unlevered Beta CAP IQ Market Market Debt/ Marginal Unlevered Company Levered Beta Value of Debt Value of Equity Total Cap Tax Rate Beta Cboe Global Markets 0.5 $923 $9,787 9.43% 21% 0.36 Intercontinental Exchange 0.59 8153 55,715 14.63% 21% 0.41 MarketAxess Holdings 0.5 98 16,822 0.58% 21% 0.39 Nasdaq 0.77 3779 20,048 18.85% 21% 0.51

Mean 0.59 10.87% 0.42 Median 0.545 12.03% 0.44

CME Relevered Beta Mean Target Target Unlevered Debt/ Marginal Relevered Beta Total Cap Tax Rate Beta Relevered Beta 0.42 7% 21% 0.44 Capital Structure

Q2 2020 Capital Structure Description Type Principal Due (USD) Coupon Maturity Seniority Secured Currency 15M Fixed Rate Notes Due May 2023, Stated Rate of 4.30% Bonds and Notes 16.5 4.30% May 31 2023 Senior No EUR 2.4B Multi-Currency Revolving Senior Credit Facility Revolving Credit NA NA Nov 21 2022 Senior Yes N/A 364-Day Multi-Currency Revolving Secured Credit Facility Revolving Credit NA NA Apr 29 2020 Senior Yes N/A 500M Fixed Rate Notes Due June 2028, Stated Rate of 3.75% Bonds and Notes 496.6 3.75% Jun 15 2028 Senior No USD 700M Fixed Rate Notes Due June 2048, Stated Rate of 4.15% Bonds and Notes 690.1 4.15% Jun 15 2048 Senior No USD 750M Fixed Rate Notes Due March 2025, Stated Rate of 3.00% Bonds and Notes 746.7 3.00% Mar 1 2025 Senior No USD 750M Fixed Rate Notes Due September 2022, Stated Rate of 3.00% Bonds and Notes 748.1 3.00% Sep 1 2022 Senior No USD 750M Fixed Rate Notes Due September 2043, Stated Rate of 5.30% Bonds and Notes 742.9 5.30% Sep 1 2043 Senior No USD Commercial Paper Commercial Paper NA 1.68% 2022 Senior No USD Finance Lease Liabilities Capital Lease 95.2 3.50% NA Senior Yes USD Operating Lease Liabilities Capital Lease 527.3 4.00% NA Senior Yes USD Total 4063.4 WACC Matrix

WACC Matrix Bloomberg Atlantic Equities Redburn Credit Suisse HOLT 10 YR Avg CME 7% 8.30% 7% 5.51% ICE 6.20% 7.70% - 5.93% Nasdaq 7.20% 7.80% - 6.93% CBOE 6.40% - - 5.28% MarketAxess 6.40% - 7.30% 5.01% Average 6.64% 7.93% 7.15% 5.73%

Matrix Average 6.86% CME Group (NASDAQ: CME)

Financial Institutions Group Analysts: Laura Bozzo, Uv Sandhu, Aly Dayani, Emily Li, Apaar Vijay, Jack Karpinski Researchers: David Xie, Luca Ferrara, Michael Zhang, Rebecca Russo October 28th, 2020