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CME Group Executive Chairman Terry Duffy on the rules and regulations that could have a negative impact on the markets.
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We were to tell you that there is a company out there that's.
Three times as likely to put cash in your pocket then in the competitions pocket this company also recorded.
Record breaking trading volume last month with all that volatility I -- you remember August after the downgrade of the US credit rating shares hitting -- 52 week.
Low on Monday though with all my goodness about the company what's not all about we bring -- The executive chairman of the CME group Terry Duffy joining me now in Washington DC and Fox Business exclusive I have about a million things I need to talk to you about Terry but.
Let me Begin first with the -- is about your company and we were just looking around at.
The opportunities for cash flow in certain companies and we -- we saw that the CME group has an unbelievable opportunity as far as cash is concerned.
Pay out an opportunity and the CME group is so far away pastor competition what are you doing right.
Well I think you know of the things that we've done -- historically have put us in a place today.
To benefit our shareholders by having -- deepest pools of liquidity having immersed most diverse.
Product mix and you know we've done some -- smart investments so.
You know we are -- dividend paying company we have been since we went public in 2002 we thought it was very important back then.
Maybe when others didn't the other stock hitting a 52 week low is a little bit troublesome obviously.
But unfortunately sometimes you get lumped in with the overall market and that is what it is but I'm a big believer that fundamentals always when not in a marketplace and I like things that we're doing well.
-- -- put -- into perspective what your 52 week low hit just on Monday was around 236 dollars and popped back up by nearly thirty bucks so I mean it's.
And you -- it many came back opt out but -- I look at what you're doing and and specifically you've continued to be able to capitalize.
During the most frightening and volatile times the month of August you average what seventeen point one billion contracts move through traded up sort.
Every single day and without a -- can I sit out.
Without a hitch -- is exactly the the case you know we have.
Right now on the CME's books will roughly about a quadrillion dollars of notional valuable acquisitions on it CME group -- We move you know several billion dollars back and forth to market participants we hold over a hundred billion dollars of capital for our clients and we you know risk management that twice today back and forth so yes it has been without a hitch there are very scary times -- -- moments but.
You know our history and our discipline have served as very well.
Well metals have gone not -- mean up a 131%.
For your volume and trading at a year over year equities up 83%.
Interest rates swaps at 47%.
For -- 21% but -- look at that -- say OK you've managed to capitalize on that but.
You're waiting on the CFTC the Commodity Futures Trading Commission to come out with there.
Their regulations on derivatives and now we hear that that's gonna be deleted them or is that a total negative for your business.
Well I don't see it as a negative for our business was I think that you know the Dodd-Frank act which I thought we needed to have some.
Change in legislation after VO -- -- -- and our.
Have this thing called Dodd-Frank act and regulators are now -- -- rules as it relates to.
The derivative products and the OTC products -- the SEC and CFTC are working together to craft new rules.
I think that the market would certainly enjoys the clarity on what those rules are going to be.
And I think there's also some troubling rule making.
Writing going on right now that the markets don't like either what's the world that what we're most troubling Terry what's the worst well there's a couple things live one of the things is like for position limits OK so.
Still we're gonna accept position limits on on particular products you know they want to give up five times larger position.
Position limit higher for a cash settled product that settles against -- physically deliver product.
You know I I think that it's not good for the marketplace.
And could be disrupted or marketplace very dangerous.
There's a thing called an 85% rule is which means if you don't have 85% of your volume.
Traded on central limit sort of what you have to delist that as the futures contract and listed as a swap -- -- swaps actually -- -- facility.
And then you have to be ineligible contract up a testament to trade so you take away participants in the marketplace so -- them a bunch of different rule making is going on right now is that are a bit troublesome.
You know we had a lot of rules in the first place what but it to -- or not we're talking before this interview what must Terry Duffy of thought.
About the two billion dollars in bad trades at UBS done by one.
-- rogue trader I mean if the existing regulations didn't catch it.
What did you think of that.
Well I mean it's always trouble some when you see something like that happen and you know there's may be a lack of controls or whatever you wanna say.
We've seen it historically happened going back to bearings and other situations list so I guess when you look at this when you wake up in the morning are not overly surprised -- you are concerned so.
That is one of the reasons why we deploy such a strict risk management model at the CME group.
Are you gonna stay in Illinois your headquarters on it has a -- -- -- tax structure so high.
The you know lives -- it is troublesome because right now.
I at the CME group pays the highest amount of state taxes than any other corporation listed in Illinois and that includes some big companies Boeing Caterpillar McDonald's.
We pay 6%.
Of the entire state taxes CME -- -- So I mean isn't this a huge burden on our company so.
I have said when they came forward with this tax back in January that I would entertain looking at other.
Places for CME group to potentially headquarters so we have worked with multiple states including Illinois.
To see if we can come to a fair and equitable place well come to New York Terry and I have perhaps not our New -- -- we have an IMAX New York -- fellow move.
Plainly you're -- and good I think Terry thank you so much.
Thank you as Terry Duffy --
