CME Group Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CME Group Inc. on June 29, 2012. The filing reports the consummation of a joint venture previously announced in November 2011 between CME Group, The McGraw-Hill Companies, Inc., and CME Group Index Services LLC. The new entity is named S&P/Dow Jones Indices LLC.
Key Financial Metrics
The filing text does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. This report focuses on the execution of material definitive agreements rather than periodic financial performance.
Material Changes and Agreements
- Joint Venture Formation: The S&P/Dow Jones Indices LLC joint venture was officially formed on June 29, 2012.
- S&P License Agreement: Standard & Poor's Financial Services LLC and CME entered into a new license agreement effective June 29, 2012, superseding prior agreements.
- Scope: Grants CME rights to use S&P stock indexes (including the S&P 500) for futures, options, swaps, and derivatives.
- Exclusivity: The S&P 500 license is exclusive for futures and options until one year prior to termination; other S&P indexes are generally exclusive.
- Compensation: CME will pay a quarterly fee based on a percentage of overall equity index product complex profits.
- Term: Continues until the later of December 31, 2017, or one year after CME Group ceases to own at least 5% of the Joint Venture interests. Potential extension of up to ten years exists upon certain events.
- Dow Jones License Agreement: The existing agreement between CBOT and CME Indexes (effective July 1, 2011) was assigned to Dow Jones Opco, LLC, a subsidiary of the Joint Venture.
- Scope: Covers Dow Jones stock indexes (e.g., Dow Jones Industrial Average, Composite, Transportation, Utility). Rights are exclusive for major indexes and non-exclusive for others.
- Compensation: CBOT pays a per-trade license fee.
- Term: Initial term runs through June 30, 2026, with automatic five-year renewals contingent on open interest in products based on the licensed indexes.
Outlook, Risks, and Contingencies
The filing does not contain forward-looking guidance, management commentary on future earnings, or specific risk factors beyond the terms of the agreements. The agreements include termination clauses related to the ownership percentage of CME Group in the Joint Venture and the existence of open interest in Dow Jones products.
Investor Verification Checklist
- Verify the full text of the S&P License Agreement and Dow Jones License Agreement when filed in the next periodic report.
- Confirm the specific percentage of equity index product complex profits payable to the Joint Venture under the S&P License Agreement.
- Monitor CME Group's ownership percentage in the Joint Venture to assess the potential extension of the S&P License Agreement term.
- Review the attached press release (Exhibit 99.1) for additional details on the joint venture's strategic objectives.