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CME Group Inc (NASDAQ:CME)
Q4 2020 Earnings Call
Feb 10, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the CME Group Fourth Quarter and Full Year 2020 Earnings Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. John Peschier. Please go ahead.

John PeschierManaging Director of Investor Relations

Good morning, and thank you all for joining us. I’m going to start with the Safe Harbor language, and I’ll turn it over to Terry and John for brief remarks, followed by your questions. Other members of our management team will also participate in the Q&A session.

Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They 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 statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, on the final page of the earnings release, you will see a reconciliation between GAAP and non-GAAP measures.

With that, I would like to turn the call over to Terry.

Terrence A. DuffyChairman and Chief Executive Officer

Thank you, John, and thank you all for joining us this morning. Our comments will be brief, as John said, so we can direct your questions. I hope you and your families are all staying safe and healthy. We released our executive summary this morning, which provides extensive details on the fourth quarter and 2020. As John said, I have John, Sean, Derek, Sunil and Julie Winkler with me this morning, and we look forward to addressing any questions that you may have.

2020 was a challenge with low volatility in several asset classes, including the front end of the rates curve and in our WTI contract for much of the year. We did see some very encouraging signs with some of our higher rate per contract products. Also during 2020, metals had its fifth consecutive year of record annual volume and is off to a strong start in 2021. We saw very strong activity in our agricultural commodities in the fourth quarter, and they continue to rise in the first month of this year, up 36% versus last year. Soybean futures had its second highest quarterly ADV, including record volume on both Europe and Asia.

After the extreme volatility on the first quarter of 2020 as the pandemic began, the volume — the total volume came in at 15.6 million contracts per day in the third quarter and jumped to 16.2 million contracts per day in Q4. During this entire time, we have remained heavily engaged with our global customers. During 2020, our volume from clients outside the United States grew by 7%, reflecting the global relevance of our markets. I am encouraged by the January 2021 volume, which came in at more than 19 million contracts per day.

We are very pleased with the progress we’ve made integrating the NEX business during 2020, including back-up as migrations to support finance and HR systems and the building of an integrated global sales team. Last week, we announced that BrokerTec has migrated to U.S. Treasury benchmarks trading and EU government bond and repo markets on to Globex. With BrokerTec’s dealer-to-dealer platform now fully integrated part of CME Globex, clients have an enhanced suite of government bond trading offerings across listed derivatives, cash and repo markets on a common platform, allowing greater operational and technological efficiencies while managing our risk across cash and futures. We remain excited about the mitigation — or I should say migration, excuse me, of EBS on to Globex by year end and the ability to provide further efficiencies to our global customers in the FX market.

During 2020, in the first quarter of this year, we have continued to innovate with several new products. We will begin trading Global Emission Offset contracts referred to as GEO futures on March 1. And we just launched our new Ether futures earlier as weak. We continue to work closely with our global customer base on solutions to help them manage their risks. These new products, build out globally relevant products we have delivered recently, including SOFR futures, E-mini S&P ESG futures, a South American soybean Cobalt futures, options on our popular Bitcoin futures and the popular Micro products across several of our asset classes.

With that, let me turn it over to John who will discuss the financial results. John?

John W. PietrowiczChief Financial Officer

Thanks, Terry. Throughout 2020, we navigated the difficult operating environment, executed on the integration with NEX, launched new and innovative products and actively managed our expenses. For the year, we delivered $4.9 billion in revenue, up slightly from the prior year. And with a strong focus on expenses, we achieved $6.72 in adjusted diluted EPS.

During the year, we announced our annual variable dividend of $2.50 per share. And we recently announced a regular dividend of $0.90 per share for the first quarter of 2021, a 6% increase compared to the first quarter last year. In terms of fourth quarter revenue, our average rate per contract across the product areas were fairly stable with our micro contracts continuing to perform well across several asset classes. Market data revenue was very strong with an all-time quarterly high of $140 million and was up over 7% compared to Q4 last year.

We were intensely focused on expense management throughout the year. At the beginning of 2020, we provided guidance for adjusted operating expenses, excluding license fees, of between $1.64 billion and $1.65 billion. For the year, we came in approximately $90 million below the midpoint of that range and $80 million below 2019 levels at $1.557 billion.

In terms of synergies, we had initially targeted $110 million in run rate synergies by the end of 2020 related to the NEX acquisition. By year end, we have exceeded that target and achieved a total of $140 million in synergies. This was net of the additional costs that we are carrying to run parallel infrastructures as we continue to work on the migrations to Globex. We remain committed to our target of $200 million of annual run rate synergies by the end of 2021.

Turning to guidance. For 2021, we currently expect full year adjusted operating expenses excluding license fees to increase slightly from the already low 2020 levels to $1.575 billion. For capital expenditures excluding one-time integration costs and net of leasehold improvement allowances, we expect to be in the range of $180 million to $190 million. In addition, we expect our 2021 adjusted effective tax rate to be between 23.2% and 24.2%.

Finally, we are very excited about the recently announced joint venture with IHS Markit and the opportunities that it will provide our clients and our shareholders. The JV will be a leader in trade processing and risk mitigation services and offers the combined clients complementary services across the global OTC marketplace in interest rate, FX, equity and credit asset classes. We don’t anticipate any material change to earnings as a result of the JV. We will provide more information when the transaction closes.

With that short summary, we’d like to open up the call for your questions. Based on the number of analysts covering us, please limit yourself to one question and then feel free to jump back into the queue. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We’ll take our first question from Rich Repetto of Piper Sandler. Please go ahead. Your line is open.

Rich RepettoPiper Sandler — Analyst

Yeah. Good morning, Terry. Good morning, John. And I hope everyone at CME is safe and healthy as well. Hopefully, we’re seeing some light at the end of the tunnel here. So my question is on the expense…

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Rich.

Rich RepettoPiper Sandler — Analyst

Thank you. My question is on the expense side, John. Just trying to understand, you gave out that, I believe it was $30 million, $35 million you expect to have the P&L impact of the synergies in 2021. Can you tell us what the P&L impact, the actual realized synergies in 2020 were? And also, what you’re assuming for COVID expenses or COVID environment, I guess, that expenses in sales and everything stay refrain or restricted throughout that full year? So those are the two questions. Thanks guys.

John W. PietrowiczChief Financial Officer

Great. Thanks, Rich. Thank you very much. Yes, in terms of the synergies, we are anticipating achieving the $200 million run rate synergies by the end of this year. So if you take a look at where we’re at in terms of run rate synergies, we had originally targeted $50 million in the first year, we achieved $64 million. We had targeted a $110 million by the end of this year and achieved $140 million. And we’re planning on achieving the full $200 million by the end of this year.

So if you look at it on a year-by-year basis, we overachieved by — in terms of run rate synergies, by $14 million last year in 2019 — by the end of 2019. Again, overachieved by approximately the same amount this year — we overachieved by about $16 million this year in terms of run rate synergies.

In terms of P&L, we anticipate our synergies being realized in our income statement in 2021 of $35 million. And so that is what we expect to have in our P&L. This is being offset by additional costs that we anticipate having in terms of increased depreciation related to our migrations on to Globex. So the way that works is that we do some programming that goes into work in process and it goes from work in process into production and when it goes into production then that’s amortized over several years.

We also are building out our data center and disaster recovery center on the East Coast. So that’s partially — and that’s partially being offset by the synergy capture. And lastly, in terms of our impacts, we do anticipate having some improved environment in terms of operating environment toward the back half of this year, and we anticipate having about $20 million in additional costs that we didn’t have this year that we are building into the back half of 2021, related primarily to travel, marketing and events. So that’s the story for 2021.

Rich RepettoPiper Sandler — Analyst

Okay. Thanks very much, John.

John W. PietrowiczChief Financial Officer

Thanks, Rich.

Operator

We’ll move on to our next question from Alex Kramm of UBS. Please go ahead. Your line is open.

Alex KrammUBS Research — Analyst

Yeah. Good morning, everyone. Can you touch on BrokerTec a little bit more now that the migration is complete. Couple of things. One, what should we be expecting from this combination now to drive in terms of that new sort of upside on either side? But then I think, Terry, last quarter you made a comment that as you improve kind of the offering to your clients that obviously you were not compensated for that. So any details on any pricing changes you’re contemplating or anything that should impact the financials more directly outside of more activity? Thank you.

Terrence A. DuffyChairman and Chief Executive Officer

Yeah. Let me go ahead and ask Sean to make some comments on that and then the rest of us may jump in as well, Alex. So Sean?

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Yeah. Thank you, Alex, and thank you, Terry. We are very excited about the migration of BrokerTec over to the Globex platform. I think I’ve spoken about before, but I’ll mention it now. We are very excited, in particular, with the new technology of being able to offer new products and services, in particular, the new RV or relative value curve trading order type. So we’re largely very excited about this.

Curve trade spreads, very popular, especially in this market. And this new order type will allow you to reduce the risk of trading that order type by eliminating the need to leg transactions, one. Two, we are going to reduce the minimum price increment in the spreads relative to the outrights. And then three, we’re going to have the CME Globex implied functionality, which means that when you have a spread order, let’s say, between two year notes and five year notes and you’ve got outright orders in two year notes, that then should theoretically, but not only theoretically actually does on Globex, imply outright orders in five year notes.

So we’re very excited about the new RV technology we’re launching at March. Shortly thereafter, we are also going to be reducing the minimum price increments on three year notes. We’ve got a total of seven different initiatives that we will be taking in order to make that platform more attractive relative to alternatives. And in terms of pricing, I guess, I’m most focused on making sure that the platform is more valuable to our clients. And then you get more volume of our platform, and that’s really our focus.

And Terry, I don’t know if you want to jump in.

Terrence A. DuffyChairman and Chief Executive Officer

No, I think that answered. Alex, did that cover — I didn’t hear the other part of your question, something of me.

Alex KrammUBS Research — Analyst

No, I think you got both of them. Thank you.

Terrence A. DuffyChairman and Chief Executive Officer

Okay, great. Thanks, Alex.

Operator

We’ll now move on to our next question from Dan Fannon of Jefferies. Please go ahead. Your line is open.

Dan FannonJefferies & Company — Analyst

Thanks. Good morning. So market data was an area of strength in 2020. And I think in your prepared remarks you mentioned you had the record sales pipeline kind of exiting the year. So how should we think about growth in 2021 and potential pricing changes as well as the demand side, which is about the build on the success you had this past year?

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Dan. Let me ask Julie Winkler who runs that division to make some comments on market data. Julie?

Julie WinklerChief Commercial Officer

Yeah. Thanks for the question, Dan. Yeah, we did have a record year in data services, our revenue being up 5% year-on-year. Yeah, I think that work from home environment kind of further highlighted that need for real-time data access really across our global client base as well as the need for historical data, right, as we evaluated really the impacts of the volatile market conditions that we saw in Q2.

We also made some investments in our business last year. And so bringing that data business closer to our commercial capabilities, we established a data sales team and we also supported a number of new products and services. And so that’s where we really feel kind of that continued investment is certainly helping to grow the data business and positioning us well as we head into 2021.

Those solid trends we continue to see in the professional subscriber device count was strong throughout the quarter. And in Q4, our revenue was up 7% compared to where we were in Q4 2019. So I think it’s a strong definitely global demand as well as things on the drive data front that are really kind of propelling the business. And this is just that longer term trend that we’ve talked about on other calls of customers use of technology and their trading strategies is increasing the need for our data through a number of these non-display use cases.

So we did have some minor fee adjustments that are being made in 2021 to really reflect how our customers are utilizing our data now and also the value of the data that we offer and the services that we have and how our market data customers are really receiving and expecting to receive that data. So there was a $5 increase to our real-time data from $105 to $110 per DCM per month. That goes into effect in April. And then we also had some pricing changes on the non-display and historical redistribution side. And those will kind of trickle in throughout the years since there is certainly some licensing and implementation that will need to be done between ourselves and our customers. But we feel well that we’re in a good position. And as we onboard those customers and that we’re really going to be able to position to continue to grow the business going forward.

Dan FannonJefferies & Company — Analyst

Great. Thank you.

Terrence A. DuffyChairman and Chief Executive Officer

Thank you.

Operator

We’ll now move on to our next question from Brian Bedell of Deutsche Bank. Please go ahead. Your line is open.

Brian BedellDeutsche Bank Securities — Analyst

Great, thanks. Good morning, folks. Hope everyone is well as well. The question is on retail participation. Obviously, we’re seeing that increase in the market, especially in equities and options, but also in futures. Schwab talked about leveraging Ameritrade capabilities in futures to the Schwab client base. Maybe if you could just give us some perspective on either the portion of ADV or revenue that you think is coming from retail now and some initiatives where you think that might be going in ’21 and initiatives that you’re working on in terms of conversations with retail providers with online brokers and also obviously you’ve been developing the micro complex, maybe if you can talk about other product extensions across the micro complex that could help that as well.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Brian. And let me ask Julie to comment and then I will comment as well as it relates to what we think is going to go on a go-forward basis. But you can give an idea of some of the flows, Julie.

Julie WinklerChief Commercial Officer

Yeah, sure. Thanks, Terry. And a lot of questions in there, so I will start and hand it back to Terry. So I really think, and you mentioned a couple of our broker partners in your question, and it’s really because of that strong broker distribution network, the vast educational programs and really the content that we support, the diverse product mix that we were in a really good position to be able to take advantage of the increase in overall retail trading in 2020. We saw record levels of participation in revenue globally. And the number of retail traders that were active at CME Group last year increased over 50%.

And so the biggest gains were definitely on the equity index products side where the volatility there really led to a lot of increased trading opportunities. And we also saw great year-on-year gains in metals that were up over 20%, FX as well as ag. And that really speaks to again the diverse product mix and the fact that people are looking for different opportunities. We have been investing quite a bit in our sales and marketing staff overseas both in APAC and EMEA. And those are playing also a large role as we’ve grown the business globally on the retail side. So we saw both APAC and EMEA retail business was up double-digits. Countries with strong growth continue to be Korea, Taiwan and Singapore and then Germany and Switzerland in Europe.

So I think the work from home environment has allowed I think the potential right for even more retail customers become active. And our digital outreach I think was also just a real positive trend last year because we’re able to just reach more retail on active traders than ever before. And so the efforts through our education helped us reach over 2.5 million new active individual traders throughout the broker partner digital events that we have that were focused specifically on CME Group products.

The largest growth in Asia — we had events — the number of events increased over 65% over 2019, so well over 400 events. And by going digital, we’ve reached 15 times more active traders than we have in the past when more of those events were in-person. And also, we’re seeing similar strong trends in North America where the firms there were growing their webinar output by 225%. So we feel that this continued investment is leading us to have well educated retail traders, and that really kind of helps position us for continued success.

And with that, I’ll maybe turn it over to Terry.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Julie. You answered a lot of the questions, but let me just add a little bit and then I’m going to ask John to comment little bit on the cost of some of these products too. It’s really hard for us to predict, Brian, what we think 2021 future volumes are for any particular constituent or the market participant going forward. But it doesn’t take the last several weeks for us to think about the growth in retail trading. So I don’t — that’s not the reason why we talk about retail trading. As you know, we’ve been building on this business for a number of years. But it’s becoming more and more clear that, in my opinion, that retail traders want to have a — participate in all different forms of markets. We are looking at all different ways to allow them to come into our markets. As Julie referenced, education is key though.

You talked a little bit about the micros and the growth in them. We are looking at other ways to continually work with our partners to bring in more and more retail participants. It’s just one of those things that’s not going away. I don’t believe it’s going away. And I don’t say that because of what happened with the run-up in some recent equities or even in what they perceive as running up in the silver. You can talk about fundamental stories that are in silver versus not fundamental stories of some of the other products that had runs on them. But there’s no question about it that the proliferation of social media, the proliferation of access to marketplaces is allowing people to participate more and more, and they want to do that.

And I think it’s extremely encouraging for more and more young field to had interest in financial services and financial markets. So we want to advantage of that with them and bring them along in a very thoughtful smart way, as Julie outlined. So it’s not only micro products that we have working in retail, we’re looking at new and innovative ways to continue to move forward with this growing constituency of clients.

So we are excited by the growth of that. At the same time, [Indecipherable] to think that we’re just putting all of our — everything in one basket such as retail, because we’re not. I mean the institutional clients of this company are critically important. The commercials are critically important. So all the different parts that go into making a trade work are very important as we continue to move forward and grow that business. But — and we do not want to deny the access to the retail participant a good thoughtful smart way.

And then we’ll talk a little bit about couple of some of the fee changes associated with some of these micro products, and maybe I can ask John to do that.

John W. PietrowiczChief Financial Officer

Thanks, Terry. Yeah. As everybody here knows, the micro has been a tremendous success, not just in equities, but also in metals as well. Taking only the equity micros, you’ve seen our RPC steadily increase over time. It was at $0.114 around churn in Q4 of 2019 and it hit approximately 2 million contracts a day in Q4 of 2020 and RPC increased to $0.14. This year we’re taking a very targeted approach to pricing. And we really were focused on changes to the non-member fees in our micro products with increases in Micro Equities of $0.05 per side, Micro Gold of $0.20 per side and Micro Silver of $0.40 per side, and those are for non-member fees.

So I think we’re continuing to add value in that product whether it’s increasing liquidity, working with our intermediary partners through education and also launching new products with the options on our equity products for the micros. So those are some changes that we’ll be rolling through beginning in February.

Terrence A. DuffyChairman and Chief Executive Officer

Hopefully, that gives you a little color of where we’re at with it, Brian?

Brian BedellDeutsche Bank Securities — Analyst

Yeah. Thank you so much. That’s super comprehensive. Thank you.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Brian.

Operator

We will now move on to our next question from Ari Ghosh of Credit Suisse. Please go ahead. Your line is open.

Ari GhoshCredit Suisse — Analyst

Hey, good morning, everyone. Just a quick one on the joint venture with IHS on post-trade. I was hoping to talk about the market opportunity here. [Indecipherable] and any thoughts around potential size and growth of this business just given the scale benefits that you’ll enjoy in the stagnant market? And then any color on the joint customer base, the level of client overlap versus perhaps more of the complementary portion of that would be additive to your overall client profile? So any high level comments would be great. Thanks.

Terrence A. DuffyChairman and Chief Executive Officer

Go ahead, John.

John W. PietrowiczChief Financial Officer

Hi, Ari. Thank you for the question. Yeah, we’re extremely excited about the joint venture with IHS Markit for the customers and our shareholders. It will be a leader in the trade processing and post-trade services and it will benefit customers by providing a more efficient access to services. And we think it will be a great platform to launch new solutions across a broad set of asset classes, including interest rates, FX, equity and credit. This will allow us to innovate and bring to market analytics, workflow tools and solutions that allow clients to manage their risk and process more efficiently.

So when you look at the client base, there is a substantial overlap in terms of large global banks utilizing the services both of MarkitSERV and our optimization businesses, but they’re all across complimentary asset classes. So the strengths of MarkitSERV are very complementary to the strengths of our optimization businesses. So what does that mean for clients? That means a much more efficient way for them to access those services via the lot of the information going to those platforms are very similar and by providing one kind of point of access for that information. It will provide a lot of efficiencies for the clients and also reduce the amount of errors that could potentially occur as processes could potentially break down as you’re accessing multiple platforms across multiple businesses. So very, very excited about that.

So like I said, the added value I think that we’re going to be able to provide, which I think will be very compelling for the clients, is around additional analytics, additional workflow tools and additional solutions that we’re going to be able to offer clients because we are going to be in a place where we would be able to provide our clients a window into a lot of their trade processing and post-trade services across all those asset classes. So — and we think it’s going to be pretty exciting.

Just a couple of quick points on it. It is going to be a 50-50 joint venture. So we will be using the equity method of accounting and it will not be consolidated at CME Group. So it will be — so you will see a shift in the geography of our income statement. The revenue and expenses will be embedded in the equity and unconsolidated subsidiary line of our income statement, similar to our indexing joint venture with S&P Global. And as I mentioned, we don’t anticipate any material changes to our earnings.

One other point just from a financial perspective is, between now and close, we will be categorizing the optimization businesses as a held-for-sale asset in our 2021 financial statements. So this will mainly impact balance sheet presentation and will be minimal impact on our pro forma operating results. So some change in geography, but most importantly, very positive change for the business, and I think a real positive for our clients.

Ari GhoshCredit Suisse — Analyst

Appreciate all your time. Thanks so much.

John W. PietrowiczChief Financial Officer

Yeah. Thanks, Ari.

Operator

We will take our next question from Mike Carrier of Bank of America. Please go ahead. Your line is open.

Michael CarrierBank of America Merrill Lynch — Analyst

Good morning. Thanks for taking the question. Just given some of the pressure that you guys saw in short rates in WTI futures, yet in an improving economic and inflation outlook for piece of back half of this year and into ’22, just curious if you’re seeing signs of the increased traction in some of these various either in conversations with clients, more participants or nuances in the trading activity that you’re seeing?

Terrence A. DuffyChairman and Chief Executive Officer

Derek, do you want to take that?

Derek SammannSenior Managing Director, Global Head of Commodities & Options Products

Yeah. Thanks, Mike. I appreciate the question. Yeah, we’ve seen a lot of action actually just in the last six weeks. If you look at the run-up of the activity over the last six weeks, you’ve seen crude recover, you’ve seen WTI and Brent actually move up in a lockstep. There are a number of fundamental drivers as to what’s going on. The markets in general responding to the increased expectation for economic activity with the vaccines rolling out. You’ve got significantly reduced stocks in Cushing. If you actually look at the drop in barrels, we’ve seen about a 40% reduction in the existing stock in Cushing. So a reduction of about 14%.

When you look the what’s actually driving the uncertainty around U.S. energy policy in the Biden administration and the increased flow of export in U.S., they’re actually seeing the energy curve in WTI right now in what’s called backwardation where the front end of the curve is more expensive than the back end of the curve. And why is that important? That’s hugely important because that actually feeds into the narrative that we’re seeing more broadly play out in both metals, in particularly, in ag with an overall price rising cycle. What that means is, you’ve got folks hiving in on increased expectation for growth in pricing.

What impact does it have in the business? Actually we saw one of our biggest days in WTI yesterday. We traded about 1.3 million contracts. If you look at our February ADV, it’s about 1.1 million, that’s up from 784,000 on Q4 of last year. The reason that’s important is that that’s actually driven us back to open interest levels that we haven’t seen for over two and a half years. We’re about 2.45 million contracts open interest versus where Brent does at about, right about 2.6 million.

So as you’ve heard us talk about, Mike, as increasing economic activity takes place that represented itself in the form of use of our crude benchmark globally. A Y on the rise, institutional investments flowing in and there is broader talk of the overall commodity cycle resuming. You’ve got soybeans at $30.5, you’ve got corn at $5 and you’ve oil at highs in over a year now. So if the market is playing for economic recovery, you’re seeing that reflect in both just below record levels of WTI alike and record amounts of ag and metals product going into the franchise as well. So I think that’s — this is a place people are playing in that global reflation trade and that’s where you’re looking at loan yields in WTI at 8%. So institutional investors are looking for yield. This is the place to get in this market right now.

Terrence A. DuffyChairman and Chief Executive Officer

And just to continue on with that a little bit, Mike. Let me ask Sean to talk just a little bit about some of the rate products and the sobering yields or maybe he can talk about the back end of the Eurodollars especially. Sean?

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Yeah. Thanks very much, Terry. Really appreciate it. So there is no question we’re seeing a much better market environment in the last couple of months across the rates businesses. A very exciting development and one that we’ve expected, and we are especially seeing that further out the curve. Some examples in terms of the market itself. If you look at the two year versus 30-year spread, that has wind out 1.81% or 181 basis points. We haven’t seen an environment like that since February of 2017. So the market is expecting very strong growth, and that’s a very good indicator of strong growth on a go-forward basis.

Also, just very briefly, in terms of the Treasury Inflation-Protected Securities or TIPS, if you get the 10-year TIPS, they are now implying an inflation rate, a consumer inflation rate in the next decade at 2.21%. That’s the highest level we’ve seen in implied inflation since 2014. If you get the five year TIPS, it’s even more impressive at 2.31% implied by the market for inflation over the next five years. We haven’t seen anything like that since 2013.

How is that impacting our markets? It’s been a very big positive impact, it’s actually not long. And we’ve seen several new records this year in terms of open interest, in terms of our ultra-10-year futures, in particular. We’ve also seen very good growth overall in the long end of the treasury curve. So if you look through January, the ultra-10-year ADV was up 44% year-over-year. The bond futures up 13%. The ultra-bond up about 7%. If you look further out the curve, if you look at, in particular, I guess, if you look at the back 32, the back 32 contracts in our Eurodollar futures, we’ve seen significant growth there in the fourth quarter. This was a very positive results.

And further, I guess, I looked at the detail as the greens and the blues. So what are the greens? The greens are that 2023 Eurodollar futures and the Blues are that 2024 Eurodollar futures. So 2023 Eurodollar futures are running an ADV up of more than 100% this year versus full year last year. And a blue Eurodollar futures likewise up more than 100% this year versus last year.

The last thing I’ll mention maybe on the market side that’s directly impacting it. If you go back to the third quarter of last year, the first implied tightening by marketplace was in December of 2024. If you look at today’s marketplace, they are implying a tightening in December of 2023. So you see the much improved market outlook, the impacts on market pricing and significant impact on our volumes.

Actually I won’t mention, I apologize, one last thing. Large open interest holders have also seen a very nice bounce. Actually since December 1, our rates of large open interest holders have increased by 9%. And it’s recovered half of the losses basically that we saw during the recent crisis. We’re only 9% below the all-time highs in our rates large open interest holders. The first time we reached that peak where we are — sorry, the last time we’ve reached — or the first time I should say, we’ve reached that current levels of LOI age in rates was 2018. So we’re seeing a big recovery here as well. Sorry, Terry.

Terrence A. DuffyChairman and Chief Executive Officer

No, that’s very helpful, Sean. Thank you very much. Thank you, Mike. Hopefully that answered your questions.

Michael CarrierBank of America Merrill Lynch — Analyst

Yeah. No, it’s very — yeah, thanks a lot.

Operator

We will now move on to our next question from Alex Blostein of Goldman Sachs. Please go ahead. Your line is open.

Alexander BlosteinGoldman Sachs — Analyst

Great, thanks. Good morning, everybody. Just one clarification for me. I know you guys provided incremental color around capture rates for E-mini and Gold and on the Micro side. I guess, John, if you think about the current next thing, I know you guys changed pricing on just the non-member side, but assuming the mix volumes, things are roughly the same. Can you give us a sense of what kind of pro forma capture rates for those buckets would look like in ’21 kind of pro forma for the changes in pricing?

John W. PietrowiczChief Financial Officer

Yeah, sure. I think you’re talking about the mix of micros and minis. Is that what you’re asking, Alex?

Alexander BlosteinGoldman Sachs — Analyst

Right, right. Exactly. So like, I know you guys raised pricing on just the non-member side of the equation for growth, I guess, gold and gold micros and mini micros. So I’m trying to get a sense of like what the run rate capture rates there would be for kind of assuming similar mix of volumes.

John W. PietrowiczChief Financial Officer

Got it. Yeah, OK. A couple of points. So one of the things that we’ve been doing over time is making adjustments in some of the incentive plans for micros and also, as I just outlined, we made some fee adjustments. So a couple of things to think about. Number one, the micros have been hugely successful. And I think when you look at the changes that we’re making, I think from an overall company perspective, they’re relatively modest. But when you look at the micros, I think you will see a more meaningful impact in terms of the revenue, and we don’t think this is going to be impacting volume necessarily. We’re providing lot of value for the clients in a product that’s highly liquid. So we think it will be from a volume perspective not as impactful.

When you look at the capture rate, generally speaking, it’s roughly an 80-20 rule. 80% of the volume coming from non-members — members, I’m sorry, and then 20% coming from non-members. So when you think about the capture rate, that’s something to think about. So about 20% of the volume roughly will be impacted by the fee increase on the equity side. In metals, it’s a little bit different. It’s a little bit heavier on the non-member side. It’s a little bit higher than the 80-20 in terms of the non-members.

Alexander BlosteinGoldman Sachs — Analyst

Great. That’s helpful. Thanks.

John W. PietrowiczChief Financial Officer

All right, great. Thanks, Alex.

Operator

We will now take our next question from Owen Lau of Oppenheimer. Please go ahead. Your line is open.

Owen LauOppenheimer — Analyst

Good morning, and thank you for taking my questions. So CME just launched the Ether futures and the volume of the Bitcoin contracts has been quite strong. Could you please talk about the regulatory environment for future assets and how it will impact the CME to launch more products in this space? And then also one more point. What’s the plan to launch something like E-mini or Micro E-mini Bitcoin futures for retail investors? Thank you.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Owen. Yes, we have seen some uptick in our Bitcoin futures contract, obviously, we’re seeing a massive appreciation in the price. I think as of this morning, it’s around $46,000 a coin. So we’re seeing great appreciation there. And of course, interest always follows those type of price movements. Let me ask Sean to talk a little bit not only about crypto, but I think you also referenced E-minis in your question as well. So Sean?

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Yeah. So in terms of the new crypto contracts, in terms of the Ether futures, on the first day, we traded 388 contracts, 35 unique accounts across 15 FMs and 40% of that was customer paper, so good start to that. In terms of the Bitcoin doing more than 11,000 contracts a day, largest transfer platform for Bitcoin in the marketplace. And we’ve got a significant RPC in around $4 contract. So both growing very nicely. We do have several thousand tech-savvies [Phonetic] that are trading a Bitcoin future. So this also brings additional participants for overall market. I don’t know if that answered the question?

Owen LauOppenheimer — Analyst

That’s helpful. Thank you very much.

Terrence A. DuffyChairman and Chief Executive Officer

And Owen, did you have the question about E-minis, I don’t know?

Owen LauOppenheimer — Analyst

Yeah, exactly. Like, any plan to launch E-mini or Micro E-mini I think on futures for retail. Thank you.

Terrence A. DuffyChairman and Chief Executive Officer

Okay. Thank you. So the question was on the Micro, potential Micro E-mini on the Bitcoin contract. So look, I think it’s — right now without saying yes or no, we’ve seen a great appreciation, as I’ve said, in the product of itself appraised. But at the same time, the volume is still being nurtured, it’s still growing. We want to be cautious about how many people are participating in this new asset class or store of products. So I still saw a value.

We need to make sure that we’re comfortable going forward. We’ve always said we’re going to walk before we run when it comes to cryptos. I think with the launch of our new Ether contract and people having the abilities that they want against in there, we want to see how that steps to pan out for the parent trading our spread and trading for other terms. And I think that’s important before we decide we’re going to move forward with a smaller version of a crypto contract.

So again, I think this contract is not that old. It’s relatively new. The options were just listed on it, I believe in the last several months. I’m a big believer, you have to get a look what options market along with your futures contract so you can continue to bring it to a broader audience and that broader audience might be you, the people that we referenced in the earlier part of this call, which is more on the retail side. And they will obviously — it’s hard for them to participate in such a high value contract. So a smaller versions or something. Obviously, we’re looking at it, but we have no plans to make any announcements on the launch of something of that nature just at this point.

Owen LauOppenheimer — Analyst

Okay. Thank you very much, Terry.

Terrence A. DuffyChairman and Chief Executive Officer

Thank you.

Operator

We’ll move on to our next question from Chris Harris of Wells Fargo. Please go ahead. Your line is open.

Christopher HarrisWells Fargo Securities — Analyst

Great. So another one related to the growth that’s happening from retail investors. What do you guys think about the potential risk of increased regulatory scrutiny the larger this business becomes? And related to that, are there safeguards in place that prevent novice retail investors from trading futures?

Terrence A. DuffyChairman and Chief Executive Officer

Well, as far as the regulatory scrutiny, we don’t need retail traders to get regulatory scrutiny. You get that with all different participants. And that was one thing that I’ve said forever, which is a benefit to this organization that we are a highly regulated entity. And I believe regulation lends to credibility of any business and allows us to grow globally, and that’s exactly what we’ve been able to do because of good smart regulation.

Now the question might be this, do we invite different types of regulations because of the retail client entering into the marketplace? I don’t believe so only because we’ve got a growth of retail over the years regardless. And I think when people have access to marketplaces, it’s not like the SEC where the SEC’s main mission is to protect the public from manipulation and fraud and other things. We have a global regulator that obviously is looking into those things as well. But I am very convinced that the retail participants will continue to grow, and it doesn’t mean you have to have additional burdens from regulation against them or against the entity that wants to house them as long as your practices are in good housekeeping for lack of a better term from your margin requirements through the money that you have on deposit for at your FCM. So the whole host of things that the smaller clients need to make sure that they have to understand that they still need to have those requirements.

I’ll ask Julie to make some comments on the retail globally and other places as well. Julie, do you want to comment a little bit about that? But I think on the regulation side, Chris, I don’t believe because of growth of these particular group of people that would invite new regulation. I think what you’re seeing right now is a lot of headline regulation being discussed, it doesn’t mean it’s going to happen.

Julie WinklerChief Commercial Officer

Thank you, Terry. I think he makes a very good point about the differences in the market structure between equity markets and futures. The other thing I’d just add is that, this is a critical part of what our broker partners and intermediaries really do to ensure that the retail and active traders that are going to be trading futures are qualified to do so. And so we work with our partners throughout the globe to ensure that.

So just because you’re able to trade in the equity markets, that’s not the same as having a futures account. And so there has to be an intentional opening of that account. Those restrictions are different, varying on countries. But what we see is that typically there is a graduation of retail and active traders from trading the equity markets into trading equity options and then coming into the derivatives marketplace. And so that lends itself to be a more sophisticated retail trader. And that’s part of what we work with our broker partners on the education front as well. So they are well versed in what they’re getting into and opening up accounts because they are ready to trade in our markets because we want to make sure they are well supported and that we have a good customer experience for them and a diverse set of products for them to access.

Terrence A. DuffyChairman and Chief Executive Officer

And so, Chris, what I’ve heard a lot of, and I’m sure you have as well, is some headlines and there’s a whole host of people making different rhetoric as it relates to the recent activity by what possibly some of the retail traders have done. So if you have people talking about transaction taxes, if you have people talking about wealth taxes, you have people talking about high frequency trading, you have people talking about payment for order flow.

Just so we’re all clear, what happened in the marketplace last week could have happened without any of those things being in place at all. So it had nothing to do with it. But people are seeming to pick their favorite regulation leisure or tax leisure to add to what’s going on in the marketplace over the last several weeks as it relates to some of this retail activity, which it has nothing to do with it.

So I’m hopeful that we always have the ability to go voice our opinions as it relates to some of the potential regulatory conversations. There will be a hearing coming up I believe this week or next. And then we will always participate in these to make sure that our voice is heard. But again, I think what you’re hearing right now is mostly headlines from a bunch of pundits about what they believe happen and how they believe they could have stopped it or not had an effort at all.

Christopher HarrisWells Fargo Securities — Analyst

Got it. Thank you both.

Terrence A. DuffyChairman and Chief Executive Officer

Thank you.

Operator

Next we’ll take the question from Ken Worthington with J.P. Morgan.

Kenneth WorthingtonJ.P. Morgan — Analyst

Hey, good morning. I’d love to dig a bit deeper into the FX business in advance of the further integration with EBS. Your FX futures volume and OI growth has been maybe more stagnant over the last six years despite being a global product at a time when you’ve been very successful in building up this global client base. So what’s been weighing on sort of CME FX future trading and OI growth over the — maybe the intermediate term as well as more recently in zero rates? And then I guess maybe more importantly, with the integration of NEX upcoming for FX, how do things change for the FX futures business? And how does the combination sort of jump-start futures for CME?

Terrence A. DuffyChairman and Chief Executive Officer

Sean, do you want to take that?

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Sure. Thanks very much for the question. Greatly appreciate it. We’re very excited actually about the developments and the success we’ve had recently in our FX futures marketplace. We have over the last few years been continuously reducing the minimum price increments, and we did it — done it across nine different instruments. We’re excited actually late last year, we saw an all-time record open interest in our euro versus USD futures, which is really amazing given the fact that volatility has been — has had a tremendous dampening effect on volumes.

If you look at last year across each of the major currency pairs, the volatility ranking was typically in the lowest to decile going back to last 20 years. So in other words, 90% of the time over the last 20 years, volatility was higher in each of the major currency pairs. Nonetheless, even in that environment, we saw a record number of record open interest in those euro versus USD contracts.

In addition to that, the changes we’ve been making in order to make our complex much more attractive, we’ve also seen recently good growth in block trading. So in the month of December, we saw largest ever U.S. dollar versus sterling options block trade, and that was the equivalent of $2 billion in a single trade. So market participants are migrating more of their options activity toward the listed space.

That actually could accelerate through this year, why? It’s something we haven’t spoken about in a while because of this delayed last year relative to COVID. But we do expect there will be 100 new participants, at least 100 new participants that are required this year globally to adhere to the uncleared margin rules, that’s in September of this year. That should drive more products requiring greater efficiencies, and in particular, it could positively impact our FX options.

In the month of January, after we saw the record block size in December in dollar versus sterling, we saw a record block size in Aussie dollars, that was AUD4 billion. So we have seen our FX futures last year actually outperformed the spot marketplaces and we are seeing now some uptick in the option space, particularly in block.

Now in terms of what the team is doing in order to make our customer much more attractive and to take these unique set of assets we have. So we now have the EBS as well as the futures data. So we are looking to use this unique set of assets in order to bring greater analytics, greater tools in the marketplace to cross-sell our products down, in particular, cross-sell the futures down the EBS distribution channel and to show participants the value of using both marketplaces. We have the analytics now that we’ve recently launched that show market participants that you really need to use both the futures as well as the spot liquidity pools in order to optimize your execution and reduce your execution costs.

Some of the new tools that we’ve launched. So we launched the new FX Swap Rate Monitor. We did that now late summer of last year. More than 4,000 views, more than 3,000 users. This is — even our FX Link product. It’s the first time ever there’s a central limit order book to standardized clear lower total cost alternatives to FX swaps available to market participants. We’re seeing some greater uptick there. We are making some enhancements to the technology that will come out later this year that will make it much easier to consume for participants. And we do expect to see significant growth once we — once that technology is released.

In addition to that, we also released the new FX Vol Converter Tool, which takes a lot of our listed FX options and it converts it OTC equivalents. So all OTC participants can see our FX options and futures the same way they look at the OTC markets. We think that’s a part of what drove that record block trade in December and the record block trade in January.

Last thing I’ll mention is our FX market profiles. It’s for the first time, synchronizes the data between EBS spot foreign exchange and our foreign exchange futures to make sure [Indecipherable] offer spread the top of book. So the size available to hit [Indecipherable] in each of the two markets simultaneously and it quantitatively shows participants the benefits of using both marketplaces. So we’re very excited about these new tools. We are distributing it out to the very large tail of clients who use EBS, especially regional banks across Europe and Asia. And we are most excited is, I mentioned earlier, the excitement I have over the migration of BrokerTec over to Globex and how that’s going to allow us to offer new products and services with that greater technology.

Similarly, on the EBS side, they will be migrating EBS over to Globex later this year, which will allow us to offer many new products and services across our platform, number one. Number two, it will also make it much simpler once we move it over for participants to trade on EBS. So we should be able to attract new participants.

Last thing I’ll mention is, we’ve been investing in direct streaming technology. And we do expect to roll that out likewise later this year. We expect to have the state of the art direct streaming platform available for participants in foreign exchange later this year. Once we do that foreign exchange, we will actually also roll that out in U.S. Treasuries.

Kenneth WorthingtonJ.P. Morgan — Analyst

Great. Very comprehensive. Thank you so much.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Ken. Thanks, Sean.

Operator

We’ll now move on to our next question from Simon Clinch of Atlantic Equities. Please go ahead. Your line is open.

Simon ClinchAtlantic Equities — Analyst

Hi, there. Thanks for taking my question. I was wondering if I could get an update please on the agreement with the DTCC regarding cross-margining and whether that’s already been submitted to the SEC? And in terms of timing of when — how long you think it might take something like that to be approved? And when you might actually start to see the real benefits of that in your fundamental numbers?

Terrence A. DuffyChairman and Chief Executive Officer

Really good question, Simon. Let me turn it over to Sunil Cutinho, the President of our Clearing house to address that. Sunil?

Sunil CutinhoPresident, CME Clearing

Thank you, Terry. Very quickly, I think very few participants know this, but we currently have a cross-margining agreement with DTCC. Our effort right now is to improve that cross-margining agreement and enhance the savings. So we are actively working with DTCC. It’s very hard to handicap regulatory approvals. So all we can say is we anticipate completing the operational effort this year. And then the rest depends upon the approval timelines with the SEC and the CFTC.

Terrence A. DuffyChairman and Chief Executive Officer

Right. And just to add to that, Simon. We’re hopeful of that and we’ve been working on this rigorously. But we talk a lot about efficiencies, and this is one of those efficiencies that we are very excited about once it gets [Indecipherable] our global client base trading and they’re raising business. And you heard Sean Tully talk earlier about some of the encouraging sign around our rates business, especially with the widening of the yield curve a little bit and some of the things where this could be a huge benefit for us. So we’re really excited about creating more and more of these efficiencies.

It’s been a pretty much, one of the things that we’ve been focused on over the last several years into bringing client efficiencies, which we think will bring greater growth for our businesses, and this asset class is right for that. So we’re looking forward to getting that agreement done with the DTCC and the SEC. And then going forward with the growth that Sean has already pointed out in these rates businesses that would have a big part of truly. Thank you for your questions, Simon.

Simon ClinchAtlantic Equities — Analyst

Okay, thanks.

Operator

We will now move on to our next question from Jeremy Campbell of Barclays. Please go ahead. Your line is open.

Jeremy CampbellBarclays — Analyst

Hey, thanks, guys. And I know we’re getting into end of your time here. But Terry, maybe just a quick one on the emissions contract. I know we’ve discussed carbon offsets, another other green contract in the past, just kind of wondering, what’s changed on the demand side of the equation that led you guys to launch this contract? And can you characterize the competitive landscape and how big do you think this might be over time?

Terrence A. DuffyChairman and Chief Executive Officer

Yeah, it’s a great question, Jeremy. Let me kick it to Derek who has been working on this and launched this contract for us. So Derek?

Derek SammannSenior Managing Director, Global Head of Commodities & Options Products

Yeah. Thanks, Jeremy. It’s an exciting space. So I think what you’re seeing right now, and you’re absolutely right, there is an absence of mandates globally out there. The existing markets in emissions tend to be very, very regional in nature. Why we’re excited about working with CBL Exchange on this, which is our partner in developing this contract, is that this represents a significant change. In that, these carbon offset futures represent a contract that is an offset versus whatever it is in that underlying product or emitter might be involved in it. Not limited just to the energy markets. Imagine a pharma that wants to manage its carbon footprint. Imagine an aluminum company that wants to adhere to either voluntary standards or regional standards and emissions credits. So this is a product that very capably is able to extend outside of just the traditional space in energy and have an application across a full range of our commodities participants, even non-commodities participants.

The feedback that we’ve gotten both in the validation stage has gone out to the market and a certain interest in this. And actually, since we’ve announced has been bigger and actually more overwhelming than we had anticipated. So this is to remind everybody, this is a voluntary emission offset. It’s based on standards that the market participants are agreeing to. And the competitive space is one that is open right now. If you look at the position that we’re in, in our commodities markets, we are the largest metals market. We are the largest energy market. We’re the largest agricultural products market. So the application of these offset products extend well beyond just in energy space.

So we think this is going to be a process of not just dealing with fossil fuels market in transition. You look at most company charters, right now everybody is trying to adhere to ESG standards that apply to what they feel our carbon footprint needs are. So this is broadly applicable to a lot of different market participants. The feedback we’re getting validates that. We’re excited to get this out. We’ve got a whole host of market makers, end market makers lined up on this, so we’re excited about what this could mean. And this is a slightly different product than what you’re seeing in the existing product slate that we have and others have that are really regionally focused.

So we think this is early days in this. We think this is extensible out to the range of benchmark markets that we run and where we run the majority liquidity in. And so we think this would be a great service to customers looking to extend and fair ESG credentials and manage their carbon footprints in really new and unique and market-oriented ways.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Derek. Thanks, Jeremy.

Jeremy CampbellBarclays — Analyst

Thanks.

Operator

We’ll take our next question from Kyle Voigt of KBW. Please go ahead. Your line is open.

Kyle VoigtKeefe, Bruyette & Woods — Analyst

Hi. Thanks for squeezing me in here. Just wondering if we can get an update on your thoughts around M&A. You are in the final stages of the NEX integration. You’re at your leverage target. And as we look around the exchange sector, many of your global peers have just recently closed large transactions. So I guess are you seeing attractive opportunities out there? And what are you looking for strategically in terms of what that asset might add to CME? Is it improving revenue growth? Living in the different asset classes? Adding non-transaction businesses? Just wondering kind of what the strategic priority is. Thank you.

Terrence A. DuffyChairman and Chief Executive Officer

John?

John W. PietrowiczChief Financial Officer

Hi, Kyle. This is John jumping in. I don’t — there hasn’t been any change in terms of our M&A strategy. We are always looking for opportunities to create shareholder value. And as you’ve heard, across the board here, create efficiencies and opportunities for our clients. So the recently announced joint venture with IHS Markit is a great example of that. We’re taking our assets, combining with assets of a partner of ours and creating value for our clients and ultimately our shareholders by providing more efficiencies for those clients than using that as a platform to provide other services around that. So that’s our primary focus.

I wouldn’t say that we necessarily are looking specifically for a type of revenue whether it’s transactional or subscription. I would say we are more focused on optimizing the revenue and based on the industry that’s — that asset is in. We are very focused on completing the NEX integration. As we mentioned previously, we’re targeting $200 million in run rate synergies by the end of this year. We’re well on track. We’ve exceeded our synergies each of the last two years. And we’re well on track to achieve that $200 million for 2021. So that’s our point of view.

And with that, I’ll turn it over to the next question.

Operator

We’ll move on to our next question, which comes from Chris Allen of Compass Point. Please go ahead. Your line is open.

Christopher AllenCompass Point Research — Analyst

Yeah. Good morning, everyone. Just a real quick one for me. You talked about increases — price increases in the market data and on the micros. Have you enacted any other price increases in any other products that we should contemplate for this year?

Terrence A. DuffyChairman and Chief Executive Officer

John?

John W. PietrowiczChief Financial Officer

Yeah. Thanks, Chris. As you recall, in 2020, we made a number of adjustments across all of our asset classes with an expected revenue impact of 1.5% to 2% in futures and options transaction fees. And I’ve reviewed the results of that and we did achieve our objective. Going into this year, we’re being very targeted in our approach, and you hit on all the ones that we’ve announced. We’ve announced adjustments to our — the member fees of the micros. And we made some selective adjustments to our market data business in terms of increasing the screen fees for a real-time data and also the non-display data.

So those are the ones that we’ve announced thus far. I would say this is a year that we’ll be flexible in terms of our approach, and a lot of it really depends on how the year plays out. So we’ll always be looking at creating value for our clients and are charging appropriately for that value that we’re adding.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Chris. Thanks, John.

Operator

We’ll take our next question from Patrick O’Shaughnessy of Raymond James. Please go ahead. Your line is open.

Patrick O’ShaughnessyRaymond James — Analyst

Good morning. What’s your assessment of the competitive landscape in cash U.S. Treasury is trading, particularly in light of the pending sale of NASDAQ fixed income to trade with?

Terrence A. DuffyChairman and Chief Executive Officer

Sean, you want to address that?

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Yeah. So no question we embrace the competition and we’re continuously looking to make our platform and our services far more attractive to participants. As I mentioned earlier, we’re very excited about moving the BrokerTec over to the Globex platform. That improved technology will allow us to create much more attractive products and services like R&D technology. The implied that we have on RV are unmatched by any other technology in the marketplace. And so we are very excited about that. It’s a unique value proposition.

In addition to that, we’ve got a unique data set that nobody else in the world has, which is that — the ability to synchronize our treasury futures data along with our cash treasury data. So in addition to the $100 billion plus of cash treasuries that we trade on BrokerTec every day, recall, we do $400 billion-ish a day in our treasury futures. So we’ve got unique data sets with unique efficiencies that will provide market participants and unique analytics in order to improve their execution.

In addition to that, we are investing in, as I mentioned earlier, BrokerTec Stream. So direct streaming of US Treasuries. And on the benefits of having both the streaming platform as well as a central limit order book. So we have the strongest dealer-to-dealer central limit order book in the world. We are building our direct streaming business dealer-to-dealer. And we’re combining that with the unique data that we have in futures to provide a unique set of analytics and efficiencies that nobody else can offer. So we embraced competition. And as I said earlier, I’m constantly focused on making sure that we have the single most attractive place, the single most attractive platform for any participants in order to execute their risk. I hope that helps.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Sean. Thank you, Patrick.

Operator

We’ll move on to our next question from Alex Kramm of UBS. Please go ahead. Your line is open.

Alex KrammUBS Research — Analyst

Yeah, hey. Just a couple of quick follow-ups here, and I apologize if this has been mentioned before. One, on the other revenue, John, did you mention what drove the strength this quarter? And how do I think about the sustainability of that line item or what seasonally may change here, I guess over the next few quarters? And then just as a quick follow-up to the question just now on the treasury business. I don’t know if you’ve talked about this in the past, but I think it was in the prepared deck, again, the dealer declines, repo offering that you have, I guess, within BrokerTec now or NEX now. Have you talked about this before why you’re doing this? And also, does that mean that you’re maybe willing to play a little bit more on that D2C space, I think historically it’s been really dealer-to-dealer? So any quick comments there will be appreciated. Thanks.

Terrence A. DuffyChairman and Chief Executive Officer

Okay. Let me ask John to comment first and then I’ll turn it to Sean. Before Sean makes a comment, let me reference something about the dealer decline and the dealer-to-dealer, the way our structure is with BrokerTec.

John W. PietrowiczChief Financial Officer

Yeah, thanks. No, we didn’t — we hadn’t cover the other revenues yet, Alex. So when you take a look at our other revenues, you know it’s up about $10 million sequentially between Q3 and Q4, and there are a number of puts and takes. But the primary driver of the increase is our annual adjustment based on exchange activity paid by our partner in Brazil for software that we licensed them. There was also a termination fee related to our agreement with the Korean Exchange. Both these agreements concluded in the fourth quarter of 2020. So you will not see that $10 million step-up between Q3 and Q4 going forward.

Terrence A. DuffyChairman and Chief Executive Officer

Sean, why don’t you address real quickly the dealer-to-client I believe on the repo side and not so much on the BrokerTec dealer-to-dealer platform?

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Yeah. Thanks very much, Terry. So we do see — and thanks for the question. We do see the opportunity and we are executing on a dealer-to-client repo platform, both for Europe and we’ve recently launched it in the United States. We see it as offering huge operational efficiencies to market participants, especially between dealers and customers relative to that transactional handshake.

There are also opportunities then to leverage obviously the dealer-to-dealer platform in combination with the dealer-to-customer platform in repo. In dealer-to-customer space, we are seeing near all-time record European repo volumes on our dealer-to-dealer space recently. So we are engaged in that space. We do believe that we can add electronic operational efficiencies to that space. And we are seeing so far good uptake from our customers.

Terrence A. DuffyChairman and Chief Executive Officer

And again, just to reemphasize, Sean, we have not changed structurally around our dealer-to-dealer platform as it relates to the BrokerTec treasuries just on the repos.

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

That’s absolutely correct, Terry. Thank you for clarifying.

Terrence A. DuffyChairman and Chief Executive Officer

Yeah. Thanks, Alex.

Operator

Thank you. We’ll now move on to our next question from Rich Repetto of Piper Sandler. Please go ahead. Your line is open.

Rich RepettoPiper Sandler — Analyst

Yeah. Thank you. And Terry, first, thanks on that sort of level headed comments on equity market structure. We’ll see whether regulators and lawmakers follow that sort of the level headed thing about it.

Terrence A. DuffyChairman and Chief Executive Officer

We will see.

Rich RepettoPiper Sandler — Analyst

Yeah, we will see on February 18. So I guess following that line and thinking up from a regulatory standpoint, you mentioned or someone asked about the margin efficiencies from DTCC to the CME Clearing House. And I know you bring benefits from a technology side, from a data side, but maybe this is sort of like just top off the whole promise of trading cash and futures on the same platform adding to those other benefits. If there is an offset that that’s clearly, what is the regulatory tying up or process here if there was only cash and you have an offset from a future why — been a long process, but what’s make it more difficult, I guess is the question?

Terrence A. DuffyChairman and Chief Executive Officer

Yeah. Good question, Rich. Let me ask Sunil to comment a little bit. But you are absolutely correct. One the great benefits of the transaction with NEX was the integration of BrokerTec on Globex to create the official to going forward. And we are, as you’ve heard other speakers talk earlier, very excited by that integration being completed. And on to EBS to create new efficiencies. That is really what we’re all about. Let me ask Sunil to comment a little bit on the risk side and the efficiency side on the margins.

Sunil CutinhoPresident, CME Clearing

Thank you, Terry. Rich, just to give you a simple answer, we currently have cross-margining agreement and there are participants who are taking advantage of the offsets between cash and treasury futures. So it is an existing program. We started this in 2003. And we continue to provide that service. What we are doing right now is enhancing that. So we are actively working with DTCC.

Now given that it is two clearing houses, two separate clearing houses, and the fact that we are regulated by — one is by the CFTC and the other is by the SEC, we just have to work through the process to get any enhancements improved. So that does take time. But we are very confident that we’ll get through that process. It’s just that it’s very hard for us to give you a timeframe when it comes to regulatory approvals. So that’s what we’re saying. So operationally, we continue to work actively in improving the margin efficiencies between our two clearing houses. I hope that helps.

Terrence A. DuffyChairman and Chief Executive Officer

Yeah. And again, Rich, we can’t control the bureaucracy of the SEC or the CFTC. But I will say that I think the clients are really pressuring also because they know the efficiencies that this brings without adding any risk to the system, which is going to be important, and the regulators hopefully are weighing that. In a very margin intense world that we live in, there always have been, especially in this world today of interest rates. So I’m hopeful that we will get this agreement completed and start seeing the benefits go to the clients because that’s exactly what they need to do to continue to run their businesses more efficiently, and I think the governments understand that well.

Rich RepettoPiper Sandler — Analyst

Okay. Got it. Thank you very much.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Rich.

Operator

We will now move on to our final question from Brian Bedell of Deutsche Bank. Please go ahead. Your line is open.

Brian BedellDeutsche Bank Securities — Analyst

Great. Thanks so much for taking my follow-up. Just want to clarify — I just want to follow-up to the retail question I had earlier, if you’re disclosing the proportion of either revenue or ADV that’s coming from retail, I think you did that a while back. And then maybe it’s a question for Sean also on LIBOR for ’21 in terms of how you see that developing for the SOFR, the CME SOFT contracts versus the Eurodollar contracts. Whether you think that transition is really going to take a lot longer, and therefore, that switchover to SOFR will be much more slow — much more gradual?

Terrence A. DuffyChairman and Chief Executive Officer

So Brian, let me ask John and/or Julie to comment on your first question. I’ll make a comment around LIBOR and kick it to Sean to wrap it up.

John W. PietrowiczChief Financial Officer

Yeah, thanks. We don’t and haven’t disclosed the revenue from retail for a while. In general, when you take a look at the retail business, we’re generating in the fourth quarter about 1 million contracts a day from what we call the Retail segment or the Active Trader segment. So it also — we made a comment today around the proportion of member, non-member mix and the adjustments we made to the pricing. So that should help in terms of modeling it out.

So that is — NASDAQ question, I’ll pass it over to Sean on the follow-up question.

Terrence A. DuffyChairman and Chief Executive Officer

And as Sean is getting ready to respond to that, let me just make a comment. One of the things that we have said as it relates to LIBOR and it relates to the transition over, especially over the last year, year and a half is that we believe we’re in a very strong position to benefit from whatever is the outcome as it relates to LIBOR. And I think what you heard from Sean earlier, and I’m sure he will reference this himself, but I didn’t want to — I’d be remiss if I didn’t say it again. When we’re looking at the growth of the back 32 of the Eurodollar contract like we’re seeing today, we’re looking at the growth of the silver futures contract like we’re saying failed. Roughly 94%, 96% of the open interest being held here at CME. We are the beneficiaries of interest of both products growing. And that is something we said is a strong possibility and we’re starting to see that mature in our favor, and we’re very encouraged by that.

So Sean can talk about the timing or the transition from LIBOR to SOFR. And I guess Sean could be a bit speculative, but there are some hard dates that people are talking about and fall backs associated with that. But I would be remiss if I didn’t remind folks that it is important that we have a really strong rate franchise with efficiencies that are almost unmatched anywhere in the world, and we are very excited that we can participate both in SOFR and in Eurodollars. Sean?

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Yeah. So thanks so much, Terry, for that, and thanks for the question. There are several points in there. So again, in terms of the back 32 between the fourth quarter of 2019 and the fourth quarter of 2020 the ADV grew. So it’s in the Eurodollar futures. They grew by 36%. So a very positive result. As I said earlier, we’ve seen very good growth in January in the green and the blues of the 2023 and 2024 contracts. And for that curve, Eurodollar futures is growing very strongly. At the same time, we’ve recently seen a number of records in our SOFR futures.

2020 was a record year for volume in SOFR futures of 51,000 contracts. And so far this year, we’re doing more than 100,000 contracts a day. In January, we also saw an open interest record of 727,000 SOFR futures contracts. We also saw a record number of large open interest holders in our SOFR futures of 175 large open interest holders. And we have more than 500 participants trading in the SOFR futures.

Last thing I’ll mention in terms of SOFR is that if you look at the global SOFR marketplace in terms of futures, we have about 80% of the average daily volume so far this year and we are running 92%, 93% of the global open interest. So we see recently good growth in the back end of the Eurodollar futures, also extremely good growth in our SOFR. They absolutely have somewhat different takes on each Street market and both are useful from a participant standpoint.

We have seen from IBA and the FCA, they recently did launch a survey I guess of where they are potentially looking at whether or not LIBOR should continue to be published post June of 2023. So that’s a long time away. There is a lot of uncertainty. In the meantime, our SOFR futures are growing strongly. The back end of the Eurodollar futures are growing strongly. And I think we’re exactly where we want it to be.

As Terry mentioned, in terms of efficiencies, with the huge open interest in our Eurodollar futures, the bulk of the open interest in SOFR futures, obviously from an execution, clearing standpoint both, the commodity spreads on the execution side as well as then margin offsets between the two futures contracts, no one else can compete with those sets of efficiencies.

In addition to that, we’ve got SOFR interest rate swaps as well as obviously of our LIBOR-based interest rate swaps and the potential for portfolio margin offsets between all of those futures and all of those swaps left. In terms of the portfolio margining, I think I talked about this on last earnings call, but we did offer starting December of last year portfolio margining between Eurodollar options and interest rate swaps. We’ve got more than a handful of participants taking advantage of that and already getting well over $100 billion a day worth of margin efficiencies. So we continue to enhance the efficiencies.

Last thing — I will mention one last thing. Don’t forget, we have the single largest U.S. Treasury Repo platform on the planet. That is where SOFR is created every day to a large extent. So we also are providing the actual transactions that go to making up SOFR every day in addition to our silver futures and silver swaps, and I will end there.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, Sean. Thanks, Brian. Hopefully that gave you a little color.

Brian BedellDeutsche Bank Securities — Analyst

Yeah, super helpful. Thank you so much.

Terrence A. DuffyChairman and Chief Executive Officer

Thank you.

Operator

It appears there are no further questions at this time. I’d like to turn the conference back to management for any closing or additional remarks.

Terrence A. DuffyChairman and Chief Executive Officer

Thanks, John. We appreciate it very much. We appreciate you taking time out of your busy day to participate in our call today. And we wish you and your family continued safety and health. So thank you for attending.

Operator

[Operator Closing Remarks]

Duration: 83 minutes

Call participants:

John PeschierManaging Director of Investor Relations

Terrence A. DuffyChairman and Chief Executive Officer

John W. PietrowiczChief Financial Officer

Sean TullySenior Managing Director, Global Head of Financial and OTC Products

Julie WinklerChief Commercial Officer

Derek SammannSenior Managing Director, Global Head of Commodities & Options Products

Sunil CutinhoPresident, CME Clearing

Rich RepettoPiper Sandler — Analyst

Alex KrammUBS Research — Analyst

Dan FannonJefferies & Company — Analyst

Brian BedellDeutsche Bank Securities — Analyst

Ari GhoshCredit Suisse — Analyst

Michael CarrierBank of America Merrill Lynch — Analyst

Alexander BlosteinGoldman Sachs — Analyst

Owen LauOppenheimer — Analyst

Christopher HarrisWells Fargo Securities — Analyst

Kenneth WorthingtonJ.P. Morgan — Analyst

Simon ClinchAtlantic Equities — Analyst

Jeremy CampbellBarclays — Analyst

Kyle VoigtKeefe, Bruyette & Woods — Analyst

Christopher AllenCompass Point Research — Analyst

Patrick O’ShaughnessyRaymond James — Analyst

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