Given the record growth in our industry, which regions and asset classes will lead in 2025 and beyond?
In my more than 40 years in this industry, the need for risk management has never been more important – in every market and every corner of the world. Geopolitical and economic risks continue to accelerate. And, as a result, clients turned to our futures and options markets in all-time record numbers last year.
Looking ahead, it’s hard to speculate about which asset class will lead the most because they are all so interconnected. I believe each and every asset class will be critically important to managing risk. The risk outlook looks particularly acute in interest rates because inflation remains relatively high. The US and other governments are running large deficits, and with new political administrations coming into office here and around the world, we will have to wait and see the impact any potentially changing policies will have on markets. Energy is also a major theme as we see geopolitics affecting demand, supply chains and the differing speed of energy transition in various regions.
Additionally, the rise of self-directed retail traders, our fastest growing client segment, is a trend that is reshaping markets. Retail investors are increasingly sophisticated, with easier access to data and analytics, and a greater willingness to move into new areas of investing.
Smaller contract sizes that make derivatives more accessible to these clients have led to a higher growth potential within this segment.
What do you see as the biggest risk to continued growth in trading volume?
Markets like certainty. At times, participants can choose to sit on the sidelines to see how a particular issue or regulatory change turns out before they put on new positions. While that “wait and see” behaviour can have an impact on volumes, I think it’s more likely true that uncertainty will be a tailwind for volume growth. Our clients have to plan for the unexpected at all times, making risk management an imperative to operating a successful business.
Have regulators struck the appropriate balance between addressing risk and promoting innovation?
I think so. We sometimes see this balance swing back and forth. But, overall, we’ve always worked to cultivate a constructive partnership with regulators around the world. That approach is important to make sure we can continue to innovate at the same time we work to provide market efficiencies wherever possible.
And thinking about innovation, which technology advances offer the most opportunity looking forward?
Enthusiasm for artificial intelligence may be driving equity market valuations currently and, given the potential, it should. Likewise, there is still so much opportunity yet to be unlocked from the cloud. CME Group is working with Google Cloud to expand access to our markets through cloud technology, creating efficiencies that will benefit clients and attract new participants.
Most recently, we announced that we are building a new, industry-first specialised platform that will offer ultra-low latency capabilities for our futures and options markets – and we’re doing so with minimal disruption to our clients’ existing operations. I think that will be truly transformative.
What is the biggest challenge ahead for your exchange or for the industry as a whole?
Every client we work with faces capital constraints. As a regulated marketplace, we strive to enhance the efficiencies we can provide. For example, we offer an average of $20 billion in average daily margin savings in interest rates alone. Those are huge benefits that market participants around the world depend on to hedge and pursue opportunities.
Given the rapid pace of new products introduced in 2024, which three excite you most?
It’s hard to pick just three. Crypto has certainly captured everyone’s attention and interest and is worth a mention. And, in my opinion, products and services that create efficiencies should always be at the top of the list.
When we acquired NEX Group in 2018, our focus was to unlock new value by bringing together cash and futures markets. This year, we will launch FXSpot+, an all-to-all spot marketplace connecting cash and futures liquidity – bringing the fragmented FX market together like never before.
Our interest rate products also produce unparalleled margin efficiencies. We’ve launched new products both on the data side, like Term ESTR, and with listed products such as our ESTR futures and options. These products complement our SOFR, Fed Funds and US Treasury futures and options which, together, create a lot of value for clients all along the yield curve.
I think retail also is a big opportunity for us. We’ve been focused on introducing smaller-sized products that allow clients to customise their trading strategies with precision.
These also make our markets more accessible to the active retail traders who are increasingly adding futures and options to their portfolios, which also brings more new traders into our industry. One ounce gold and micro products – on everything from WTI to agriculture to bitcoin and ether – are very promising.
What is critically important is that we stay focused on innovation and new products in addition to what I just listed.
What more can the industry do to improve diversity in financial markets?
Our clients are diverse with diverse needs. We know that the more perspectives and experiences we bring to the table, the stronger the company will be. To that end, we have an increasingly qualified, diverse workforce that continues to evolve. We certainly don’t look like the same company we were ten years ago. There are more women and employees of colour within our teams. We encourage inclusion and continue to support employee resource groups within the company to provide internal networks for employees with various interests.
We also participate in a number of efforts to broaden the pools of talent we can bring in, including our own CME Group Foundation scholars programme that provides financial support and professional development opportunities to college students who are historically underrepresented in the fields of finance and technology. The programme also supports the recruitment of these students into internships and full time roles at CME Group.
What was the most interesting film or play you saw in 2024? What was the best book you read in 2024?
In my role, I really don’t have a lot of time for movies or books. But I did get the chance to catch a few new TV shows last year. Slow Horses is a favorite. My wife and I loved Vince Vaughn’s Bad Monkey and The Perfect Couple featuring Nicole Kidman, who is a close friend of our family.
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