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FALL 2008 A MAGAZI NE PUBLI SHED BY CME GROUP, A CME/CHI CAGO BOARD OF TRADE/NYMEX COMPANY

TONY BLAIR SPEAKS OUT p 18



THE GLOBAL CREDIT CRUNCH: A CRISIS OF CONFIDENCE p 12
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Change is happening
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FALL 2008
Issue 12
TONY BLAIR
FORMER U.K. PRIME MINISTER
ON THE COVER
Since stepping down as U.K. Prime Minister,
Tony Blair has been more active than ever
from serving as a Middle East envoy to
providing his unique perspective on global
issues at CME Groups Global Financial
Leadership Conference in September.
To read CME Group Magazine online, visit us at
www.cmegroup.com/magazine
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FALL 2008 5
FALL 2008
Issue 12
8 Economic Outlook
Volckers Views
Former Federal Reserve System
Chairman Paul Volcker calls for
action on the U.S. credit crisis,
economy and ination
12 Global Insight
The Global Credit Crunch:
A Crisis of Condence
The U.S. subprime mortgage market
meltdown has triggered a crisis of
condence in U.S. and global markets
18 Ideas That Change
the World
The Interconnected World of Tony Blair
Former U.K. Prime Minister Tony Blair
speaks out on the future of nancial
markets, political hotspots and a fast-
globalizing world
24 Commodity Viewpoint
Energized Commodities
A panel of experts sees rising
demand from less developed countries,
technological innovation and politics
among the trends affecting agricultural
and energy markets
28 Emerging Opportunities
Building BRIC by BRIC
Many emerging market economies
such as the BRIC countries of Brazil,
Russia, India and China have shown
surprising resiliency despite the
slumping U.S. economy
6 From the Top
A letter from CME Group
Executive Chairman and CEO
16 Financial Focus
A Central Bank
View of Global FX
Trading volumes and global
participation have grown
exponentially in the foreign
exchange market over
the past decade
32 Investing Efciencies
A 360-Degree
View of Indexing
Indexing is on the rise and
spread across all asset classes
37 Current Pulse
z Innovation is Key
z Rise Above the Risk
z Quote Me on It
z A European Accent
z Sound of Silver
z Osaka Rising
FEATURES CONTENTS
Craig Donohue (left) and Terry Duffy (right)
6 CME GROUP MAGAZINE
TERRENCE A. DUFFY
Executive Chairman
CRAIG S. DONOHUE
Chief Executive Ofcer
FROM THE TOP
FALL 2008 7
These have been some of the most tumultuous and difcult times that we have ever seen in nancial
markets. Credit problems created by the subprime real estate debacle, resulting in the worst
nancial crisis in recent history, have spilled over into virtually every other facet of our global
nancial system and economy.
During this period of unprecedented uncertainty, CME Group offers the assurance of our
$7 billion nancial safeguards system, which protects against systemic risk. Regardless of the
events of the day, our central counterparty model has continued to provide our customers with
transparency and liquidity in all asset classes equities, interest rates, foreign exchange, energy,
agricultural commodities and metals. Soon we hope to extend the benets of this model to the
troubled credit-default swaps market through a fully integrated trading and clearing solution.
Against this backdrop, on September 15-17, we hosted our rst-ever Global Financial
Leadership Conference, where participants had an opportunity to interact with some of the worlds
leaders in business, nance and politics to discuss emerging geopolitical trends and debate critical
economic issues. We were privileged to have former U.K. Prime Minister Tony Blair and former
Federal Reserve Chairman Paul Volcker as our keynote speakers. The conference could not have
been more timely or relevant.
This issue of our magazine includes much of the rich content that was presented and
discussed at our conference and also explores a number of critical, current topics, including:
The global credit crisis and its implications. z
Commodity market trends. z
Central bankers views on the foreign exchange market. z
Opportunities and challenges in the BRIC countries. z
We greatly appreciate our customers and speakers who were able to join us during
this pivotal time in the global nancial marketplace. As events continue to unfold, we pledge to
continue seeking improved ways to provide the security our customers need as they manage risk
in todays volatile markets.
8 CME GROUP MAGAZINE
FALL 2008 9
Former Federal Reserve System Chairman Paul Volcker calls
for action on the U.S. credit crisis, the economy and ination.
Volcker achieved a relatively speedy decline in
ination by tightening the money supply and
raising interest rates, despite concerns about
a recession and high unemployment. The con-
sumer price index increased just 3.8 percent in
1982 and 4.4 percent in 1987, the year Volcker
stepped down as Federal Reserve chairman.
He is now serving as an economic advisor to
U.S. presidential candidate Barack Obama.
HOW DID WE GET HERE?
Volcker believes that todays situation was
triggered by the very complexity that fueled
strong economic growth over the past 25
years a level of prosperity comparable to the
boom years of the 1950s and 1960s.
Twenty-ve years ago, banks were the
dominant operators in the credit markets, with
about a 60 percent market share in the United
States and much more in other countries. Today,
banks have just 30 percent of the credit market.
Compared with 25 years ago, a much higher
percentage of real estate credit and other loans
are securitized and sold to non-bank nancial
institutions promptly after origination.
Before the nancial crisis began in mid-
2007, this arbitrage appeared to spread credit
risk, encourage pricing consistency and im-
prove market efciency. The increasingly ob-
vious bad news is that a lender did not need
to be as concerned about creditworthiness if
a loan was not staying on its books. Further-
more, secondary market purchasers may not
have been able to assess credit or maturity
risk accurately, despite internal due diligence
or credit agency ratings.
Instead of spreading the risk, in some ways
todays market seems to have concentrated risk,
Volcker said. Its very complexity has made the
system more opaque, not more transparent.
The mother of all nancial crises is how for-
mer Federal Reserve System Chairman Paul
Volcker described the current situation in the
United States.
What weve been seeing is a really
wrenching reversal of exuberance that only
a few years ago sent stock markets and then
residential values through the roof to precari-
ous levels, said Volcker, the rst-day keynote
speaker at CME Groups Global Financial Lead-
ership Conference. Its not uncharacteristic
of nancial markets to move from exuberance
to fear, from greed to fear and its the fear
thats driving values today.
Volcker knows a crisis when he sees
one. He identied ination as the nations
number-one problem during the 1979 Senate
Banking Committee hearing that conrmed
him as Federal Reserve chairman. That year
the Consumer Price Index rose 13.3 percent.
ECONOMIC OUTLOOK
10 CME GROUP MAGAZINE
When the crisis broke, enormous uncertainty un-
raveled mutual trust among market participants
and contributed to the market breakdown. We
have a failed nancial structure.
When the excesses of the subprime mort-
gage were exposed, doubts about nancial
values spread and painful adjustments were
forced on the U.S. economy, said Volcker in
an April 2008 speech to the Economic Club
of New York. At that time he stated, Finan-
cial crises have been a recurrent feature of
free and open capital markets, not least in
the United States. Those past 40 years of
relative tranquility were the exception, not the
norm. Any return to heavily regulated, bank-
dominated, nationally insulated markets is
pure nostalgia, not possible in this world of
sophisticated nancial techniques made pos-
sible by the wonders of electronic technology.
WHERE DO WE GO FROM HERE?
Daily and even hourly headlines attest to the
rapidly unfolding nature of the U.S. credit crisis.
Some of this was not a complete surprise. For
example, editorial writers have expressed anxi-
ety for years if not decades about Fannie Mae
and Freddie Mac. These agencies were created
by the U.S. government in part to nance afford-
able housing, and are able to borrow at rates
lower than their competitors. It is not altogether
a surprise that we are now being asked to make
good on this implied U.S. government backing.
It is the blue-chip names in the headlines
that are truly astonishing. A year or even six
months ago, who would have predicted the
demise of Bear Stearns or Lehman Brothers?
Or the fact that Goldman Sachs and Morgan
Stanley would voluntarily transform them-
selves into Federal Reserve-regulated bank
holding companies?
Our failed nancial structure has been held
together in recent months only by really, truly
extraordinary ofcial actions, actions without
any precedent and going right to the edge of
their legal responsibilities, said Volcker. While
he characterizes those actions by the Federal
Reserve and Treasury Department as neces-
sary, Volcker has called for clarication of the
Feds role as both regulator and lender of last
resort. Among his concerns is that the Fed may
be perceived to favor particular institutions or
politically sensitive constituencies when exer-
cising its sweeping emergency powers.
To restore market condence and a sense
of reasonable valuations, Volcker also sug-
gests that the government establish a tempo-
rary entity with broader powers than currently
given to the Fed and Treasury. Precedents
include the Resolution Trust Corp. in the early
1990s after the savings and loan crisis, and
the Reconstruction Finance Corp. during the
Great Depression in the 1930s. In this vein,
the U.S. Treasury-administered Troubled Asset
Relief Program (TARP) went into effect in early
October. TARP has authority to buy residential
and commercial mortgage loans, credit card
securitizations, auto loans and other nancial
assets for which there is no current market.
Volcker is not the only one calling for ac-
tion, as todays pendulum swings from less
regulation to more regulation. In recent years,
the rationale was that heavy-handed regula-
tions would damage the competitive position
of nancial institutions operating in interna-
tional markets. Today, the loudest calls are
for more regulation to address the systemic
failures that led to todays crisis.
In the long run, we have to rebuild a stron-
ger system, a system thats innovative, competi-
tive, but also more secure a system better able
to stand on its own feet without the expectation
of ofcial support, concluded Volcker.
DONT FORGET ABOUT INFLATION
Not reassuringly, Volcker sees numerous
similarities between todays situation and the
early 1970s. In both cases, he cites the fear of
a recession, skyrocketing oil prices, fast-rising
commodity prices and a weak dollar. Any move
by the Federal Reserve to cut short-term inter-
est rates and increase credit at its reserve
banks to address the credit crisis could ex-
acerbate inationary pressures and further
weaken the U.S. dollar.
I think we have the opportunity to get the
ination rate back at a very low level that we like
to see, Volcker added. The other side of that
coin is that the typical wage earner is losing real
income right now, with the ination rate up
I expect a higher level of unemployment and
very slow growth at best. The pressure will be
to keep costs down and keep wages down.
However, the credit crisis itself will affect
prices, as demand drops for everything from
houses to luxury goods. In this nancial crisis,
both individuals and businesses are nding it
more difcult to borrow and are likely to worry
about too much debt. Lower U.S. demand
already has led to a dramatic decline in the
price of oil, which reached a high of more than
$147.00 a barrel in mid-July before touching a
seven-month low of $91.54 a barrel in mid-Sep-
tember 2008. Volcker noted that our economy
can make up for somewhat slower domestic
consumption by ramping up exports which
comprise a much larger share of the U.S. econ-
omy than the housing industry as a whole.
The real economy the economy apart
from the nancial and housing markets so far
has not been severely impacted, said Volcker.
It is a tribute to the relatively good shape of
most companies that actually produce things.
Instead of spreading
the risk, in some ways
todays market seems
to have concentrated
risk. Its very complexity
has made the system
more opaque, not more
transparent. When the
crisis broke, enormous
uncertainty unraveled
mutual trust among
market participants
and contributed to the
market breakdown.
We have a failed
nancial structure.
Former Federal Reserve System Chairman Paul Volcker
delivered his keynote speech on the rst day of CME Groups
Global Financial Leadership Conference, September 2008
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12 CME GROUP MAGAZINE
Call it the deleveraging of the United States. Ready or not, individuals
and businesses have no choice but to cut back on debt. It is creating
a domino effect, bringing down companies ranging from small, regional
banks to global nancial institutions.
This is a painful contrast to the past decade of easy credit, which
prompted massive spending and borrowing on Main Street, on Wall
Street and by governments. Between 2002 and 2006, U.S. household
borrowing grew at an average annual rate of 11 percent, while nancial
institution borrowing rose an average of 10 percent annually. In short,
borrowing far exceeded the U.S. economys overall rate of growth.
Today, many of those borrowers cant pay back their loans, affecting
everything from the subprime mortgage and auto loan industries to the
credit-default swaps markets. Even nations have felt the impact of the
credit crisis. According to data from CMA Datavision, U.S. sovereign debt
has never been riskier, with the ve-year probability of default reaching
a historic high of 2.8 percent on October 6, compared to 1.3 percent for
Norway and 2.2 percent for Germany. CMA is a subsidiary of CME Group.
The housing market is where it all started. According to the Standard &
Poors/Case-Shiller home price indexes, housing prices rose 85 percent in
real terms from 1997 to 2006. That represented the biggest housing price
boom since 1890. One reason people could buy more expensive homes
was that their mortgages could be bundled into nancial instruments
such as mortgage-backed securities, which were sold to banks, Wall Street
rms and sovereign wealth funds, among others. Rising demand for hous-
ing and housing-related securities fueled the growth of risky subprime
mortgages. The bubble burst as subprime borrowers began defaulting on
their mortgages, and the crisis spread to other markets.
Condence remains low as the steady drumbeat of dismal headlines
continues around the world.
We are clearly at a credit gridlock right now and theres some
selling in the marketplace that has nothing to do with the fundamen-
tals, says Phil Falcone, senior managing director of Harbinger Capital
Partners, at CME Groups Global Financial Leadership Conference.
I think that there will continue to be some pretty decent opportunities,
The meltdown in the U.S. subprime mortgage market that
began last year has triggered a crisis of condence in U.S. markets
and the ramications are global.
THE GLOBAL
CREDIT CRUNCH:
A C R I S I S O F
C O N F I D E N C E
FALL 2008 13
probably more in the equity markets than in the credit markets. Youre
talking about some really good companies that are trading at levels we
havent seen in quite some time. But we also have uncertainty about
what the Feds going to do, what the Treasurys going to do I think its
keeping people out of the marketplace.
CNBC reporter Maria Bartiromo, who also participated in the Sep-
tember conference, says, You look at the environment and you recognize
that these truly are extraordinary times. I have this front-row seat and the
amazing fortune to be able to sit down with some of the players on the
front lines. It seems that were going to see a further deterioration of the
economy, with all of these layoffs and with the nancial system continu-
ing to weaken. She adds, One executive I spoke with today said to me,
I wasnt here in 1929, but I cant imagine that the destruction of wealth is
any different.
Opportunities for managing risk
Yale University economics professor Robert Shiller sees the crisis as an
opportunity for innovation, especially when it comes to managing risk.
Its when theres a crisis like this that we can get new and im-
portant things done, Shiller says. Ill remind you the last big housing
crisis was in the 1930s. Both the private and public sector made major
changes and as a result, this country emerged far stronger from the De-
pression crisis. Other countries in the world at the time didnt respond
as constructively and their outcome was not as good. Many of these
countries are belatedly imitating some of our institutions that were
invented in the 1930s.
As co-founder of Case Shiller Weiss Research Group (now part of
Fiserv) and of MacroMarkets LLC, Shiller has developed several innovative
risk-management products, including futures and options on the S&P/
Case-Shiller home price and composite indexes. Shiller thinks new prod-
ucts could help manage risk and restore stability to the housing market. He
suggests home equity insurance and continuous workout mortgages that
would essentially ensure that a homeowner wouldnt lose all home equity
in a declining market. These new products could be hedged in the futures
markets, where improved price discovery also could help temper future real
estate bubbles.
What were doing is after-the-fact bailouts, Shiller says. To make the
longer-term situation more stable, I think its really fundamental to create
new hedging markets. Fannie Mae and Freddie Mac could have hedged their
real estate risk if we had had a big and active hedging market for real estate.
Such a market could prevent the need, somewhat, for this kind of bailout to
occur in the future.
To Shiller, the futures markets are an example of the democratization of
nance. He says that making nancial services more available and transpar-
ent to all would be a highly desirable outcome to the current credit crisis.
A few big institutions on their own account have been creating all kinds
of products that are then vulnerable to the counterparty risk of those insti-
tutions, he says. We have been living in a world where its just our exces-
sive faith in the institutions that supports everything. Thats the world were
leaving. With clearinghouse sponsorship of products, the counterparty risk
is gone a futures market is an example of a more democratized nancial
institution, and thats whats going to come.
In many respects, CME Group is like an insurance company. It offers hedging and
risk management products that allow investors, borrowers, lenders and commercial
companies to protect against price risks in interest rates, equities, foreign exchange,
commodities, energy and other instruments.
Central counterparty clearing is one mechanism that helps CME Group
customers manage risk backed by CME Clearings $7 billion nancial safeguard
system, which guarantees the performance of every transaction on the exchange.
No customer has ever suffered losses as the result of a clearing member default at
CME Group. The central counterparty model provides full transparency of market
activity, prices and exposures. It also provides the added benet of marking
positions to market twice daily to transparent prices, so market participants and
clearing rms know where the positions stand throughout the trading day. This
concept could help stabilize the $55 trillion credit-default swaps (CDS) market, says
CME Group Chief Executive Ofcer Craig Donohue. Donohue presented his view
on this market at a recent Council of Institutional Investors meeting in Chicago.
Credit-default swaps allow investors to either bet on the chance of a debt
default, or protect themselves from that risk if they own the underlying corporate
bonds. Essentially, one party pays an annual fee to another in exchange for a prom-
ise of compensation in a default. Credit risk is therefore syndicated out among nu-
merous investors, rather than concentrated in the hands of xed income investors.
The CDS market was severely challenged as billions of dollars worth of con-
tracts on now-defaulted derivatives on Fannie Mae, Freddie Mac, Lehman Brothers
and Washington Mutual were settled. Because this market is so opaque, it was
unclear for weeks how many contracts were to be settled and whether payouts on
the defaulted contracts were concentrated with any particular nancial institutions
or market participants.
To restore condence in the over-the-counter derivatives markets, Donohue
recommends greater product standardization, price transparency, central coun-
terparty clearing, independent and objectively determined prices as marked to
market by a clearinghouse, automated trade processing and greater customer
protections. In short, he recommends that the OTC markets function more like
the regulated futures markets.
I believe we are about to enter a new era in U.S. nancial markets where
transparency, market integrity and central counterparty clearing safeguards will
take on greater importance, says Donohue. We have a unique opportunity ahead
to play a key role in reshaping nancial markets and regulation for the 21st century.
RESTORING CONFIDENCE
THROUGH CENTRALIZED CLEARING
14 CME GROUP MAGAZINE
GLOBAL INSIGHT
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16 CME GROUP MAGAZINE
FALL 2008 17
FINANCIAL FOCUS
Central bankers have witnessed a sea change
in the global foreign exchange (FX) market
over the past decade, as trading volumes have
exploded and the market has expanded in
geography and participants, according to a panel
of experts at CME Groups Global Financial
Leadership Conference in September.
It has been a huge transformation over
the last 10 to 15 years, says George Pickering,
chief advisor, nancial markets for the Bank of
Canada. While the biggest change has been the
number and scope of market participants, he
also cites an increase in national representa-
tion, with countries using their large levels of
cash reserves, as well as an expansion in trad-
ing FX from nancial institutions.
You have also seen an expansion of the
market into the professional trading com-
munity, players like hedge funds, commodity
trading advisors, institutions, mutual funds,
pension funds who have currency overlay
strategies. And nally, you have the retail
market, says Pickering.
Financial market globalization is promoting
FX growth as well. The more cross-border trad-
ing there is around the world, the more foreign
exchange risk there is to hedge or to play with,
says Paul Fisher, head of FX and chairman of the
London Joint Standing Committee on Foreign
Exchange for the Bank of England.
Automation of the FX market, which
began with EBS (now owned by ICAP) and
Reuters Dealing (now part of Thomson Reu-
ters) and evolved into ECN-style platforms and
exchange-based trading, has contributed to the
accelerated growth. Also, algorithmic trading
has recently been embraced by the FX market,
says Pickering, adding to trading volumes.
Not every country is ready for full-steam-
ahead FX trading of its currency, however.
Gustavo Franco, former president of the
Central Bank of Brazil, says it is important to
keep in mind that for Brazil in comparison
with Canada, the United Kingdom or the Unit-
ed States FX is new to the market. Foreign
exchange for us has been, over the years, a sort
of a public service conceded in the private sec-
tor. Not a market. He notes that the Brazilian
real is a relatively new currency and its cred-
ibility is dependent upon the governments
reserves. We cannot afford the luxury of not
having international reserves and having a
fully unconstrained exible exchange rate. Its
too early in the game for us, says Franco.
EMERGING ASSET CLASS
The emergence of FX as an asset class and the
rising popularity of electronic trading have
brought new participants into the market and
fueled market growth in recent years. The
result is a global market with $3.2 trillion in
daily turnover, according to the Bank for Inter-
national Settlements 2007 Triennial Survey of
Foreign Exchange. Former Federal Reserve Sys-
tem Chairman Paul Volcker says this amount
cannot be accounted for with legitimate
hedging of trading transactions, technological
change and mathematical algorithms. The
fact is, youve got thousands of hedge funds and
others who are trading in this market because
they want to make a little money, he says.
Franco says that Brazil is almost a lab
experiment in this regard: The moment we
stabilized the Brazilian economy, we started to
see the interbank volumes in foreign exchange
multiply by a factor of three or four, becoming
more like six times the spot transacting in for-
eign exchange. Added to this were derivatives,
which took volumes up to 20 times that of spot.
All of this has caused debate within the coun-
try about speculators driving the currency
price. The price discovery moved into the
derivatives space, and the sensation was that
we lost control of the price-xing mechanism,
says Franco.
Fisher says that a certain amount of specu-
lative activity is necessary to make the market
work. If you look back over history with the ben-
et of hindsight, in most situations where there
have been very large exchange rate movements,
it was almost always economic policy, which
fundamentally was the problem, he says.
Pickering says that Canadas oating ex-
change rate provides the country with exibility
to allow economic adjustment: It allows the ex-
change rate to do its job when commodity prices
are moving around quite a bit, for example.
FX AND MARKET TURMOIL
As of September, the central bankers agreed
that the FX trading ecosystem appears to
have held up well during the credit crisis.
However, Fisher notes that there were some
worrying moments related to sharp currency
movements, when the FX swaps market ap-
peared to seize up. This situation was recti-
ed quickly, and overall, Fisher says the FX
infrastructure including CME Group, the
CLS Bank and SWIFT has worked well over
the past 12 months.
Pickering adds the dominant role of the
U.S. dollar could be changing. I think that
speaks to the expansion of global trade, the
emergence of huge economies like India and
China that would, over time, lead to growth of
volumes and diversify the number of curren-
cies going forward.
The moment we stabilized the
Brazilian economy, we started
to see the interbank volumes
in foreign exchange multiply
by a factor of three or four.
Gustavo Franco, former president,
Central Bank of Brazil
Central bankers weigh in on the global foreign exchange market
at CME Groups 2008 Global Financial Leadership Conference.
18 CME GROUP MAGAZINE
B
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D O W L R
FALL 2008 19
Tony Blair, former U.K. prime minister, takes the stage
at CME Groups Global Financial Leadership Conference,
held in Naples, Florida, in September 2008.
I
n the midst of a global nancial
crisis, geopolitical uncertainty, and
antiquated or broken international
and government institutions, the
21st century will require leadership that takes
on challenges with innovation, alliances and
principles. Such is the message from Tony
Blair, former prime minister of Great Britain
and Northern Ireland, who was a keynote
speaker at CME Groups Global Financial
Leadership Conference in September.
Change is happening so fast today. The
premium is on how to adapt and adjust and
constantly reassess and reevaluate strategy in
the course of that, whether youre a country or
company or an individual, Blair said. You sim-
ply cannot afford to stay in the same place.
Naturally gifted with a personality and
public speaking style that comes across as a
conversation with a trusted friend, Blair dis-
played an underlying mastery of both the is-
sues at hand and the diplomatic and strategic
expertise needed to complete the task.
There is much to learn from Blair, who
served as the United Kingdoms prime minis-
ter from 1997 to 2007, ushering in a relatively
strong period of economic growth and low
ination. While economic conditions were fav-
orable, the political environment was thorny.
Blair brokered a peaceful settlement to the
long-standing Northern Ireland conict in
1998 and committed his country to join the
United States in the aftermath of September
11, 2001 a partnership that did not waver in
the face of popular discontent.
Given his experience, Blair is uniquely
qualied to talk about what needs to be done
in todays global geopolitical and economic
environment. To solve current problems and
challenges, Blair recommends blending the
old with the new using the age-old practice of
strong alliances coupled with new or revamped
diplomacy models to deal with todays most
pressing issues. He said that methodology
should work on nancial market reform, inter-
national trade issues, and political challenges
that pit Western values against a variety of
views, from the Middle East to China.
FINANCIAL ROAD MAP
The nancial crisis that started in the mort-
gage market and spread throughout the
world, has caused many in government to call
for limits on participation in nancial markets.
Some propose more regulation that could
stie markets and exacerbate the problem.
But Blair issued a cautionary note about tak-
ing nancial, economic and political threats as
an opportunity for protectionism and barriers
to globalization.
When we look at the immediate nan-
cial crisis now, we should make sure that our
response is not one of overreaction, Blair
cautioned. Yes, it is important that we analyze
carefully what regulatory changes are neces-
sary. But we dont want to end up creating a
situation where we start to close the creativity
of our economy down.
How we respond is a fundamental po-
litical question, he said. And I favor the open
side of the argument.
Former U.K. Prime Minister Tony Blair was
a keynote speaker at CME Groups Global
Financial Leadership Conference, addressing
a host of topics, including nancial markets,
political hotspots and a fast-globalizing world.
IDEAS THAT CHANGE THE WORLD
FALL 2008 21
Working together: Blair believes that strong alliances, such
as that between the United States and United Kingdom, are
essential when it comes to tackling challenging issues, such
as Chinas role in the global landscape.
ADDRESSING ISLAM, REACHING FOR PEACE
For Blair, openness in todays increasingly net-
worked and integrated world extends to many
of todays most vexing geopolitical problems,
especially those in the Middle East.
On the day Blair stepped down as prime
minister and member of parliament, he was
appointed ofcial envoy of the so-called
Quartet of the Middle East, representing
the United States, European Union, United
Nations and Russia. In the past year, Blair has
met with key Middle Eastern players with the
goals of dealing with the region more holisti-
cally, and nally securing peace between Israel
and Palestine. For Blair, a peaceful resolution is
part of a larger cultural, political and religious
solution for many of these countries, including
Iran, Iraq, Pakistan and Afghanistan.
The single biggest mistake we can make
is to think we are dealing with a series of iso-
lated problems in that part of the world, when
we are dealing essentially with one challenge
and one problem, Blair said. That challenge
is this: There is, within Islam, a fundamental
struggle taking place. There are two compet-
ing visions.
Blair sees a moderate element in the
Middle East that is striving to bring its culture
and economies more in line with the rest of the
developed worlds economies. The other view
rejects the West and its culture and uses im-
mense wealth or power within those countries
to push a fundamentalist vision of Islam. Ulti-
mately, that is forcing a choice on individuals in
the region, he said, to embrace fundamentalist
Islam or reject it and befriend the West.
If we want to change the way that para-
digm is presented, then we have to have a
complete plan to deal with it, Blair said. That
means empowering more people, reformers
and moderates, to make reform necessary, so
they do indeed modernize their politics and
their culture.
In May 2008, Blair took a personal step
toward supporting the moderate and open
view of the world by launching the Tony Blair
Faith Foundation. The foundations mission is
to encourage different faiths to work together
to promote mutual respect, increase under-
standing and address poverty.
PARTNERS
Geopolitics is no place for isolationism, said
Blair. He advocates alliances, such as the
strong bond between the United States and
United Kingdom. In his view, We wont win in
Afghanistan unless the Europeans stand up
with the Americans. We wont resolve these is-
sues within Islam unless were together.
Strong alliances also are necessary to
deal with what Blair called THE issue of the
21st century China. China and India are
expected to have a disproportionate effect on
the international community in terms of their
impact on food and energy consumption, as
well as on global climate change.
Beyond alliances, Blair said international
organizations are in dire need of updating.
Neither China nor India is represented in the
G-8 countries. Both the U.K. and French gov-
ernments recommend extending that group
to include China and India, as well as Brazil,
Mexico and South Africa. Blair would like to
see changes to the U.N. Security Council,
which currently excludes important countries
such as Japan and India and he would also
like to see an international body dedicated to
environmental issues.
This is a moment of profound change
that really requires different approaches from
the past, Blair said. Political institutions are
hopelessly out of date.
SHARED VALUES
Blairs roadmap to a better world can only be
accomplished if universal values serve as the
foundation of any partnership or agreement.
Without these ideals and principles in place,
the alliances and structural changes Blair
advocates will falter or fail. It is clear that he
rmly believes these critical values are more
than political buzzwords.
Its like anything else an organization, a
business, or anything you will do in your work-
ing lives, Blair noted. An alliance will work on
the basis of shared purpose and shared val-
ues. And as the world develops, we are going to
have to work very hard to show that the values
we believe in are values that are not Western,
American or British, but are universal values
If we are to win the values race, people have to
understand that we are people who believe in
freedom, democracy, and justice and compas-
sion for other people.
22 CME GROUP MAGAZINE
IDEAS THAT CHANGE THE WORLD
Blair called for international organizations to be more inclusive of emerging market countries like Brazil, India and China.
ENERGIZED
COMMODITIES
24 CME GROUP MAGAZINE
We hear all about the drilling debate.
Would more drilling help manage
prices and reduce reliance on foreign
oil? Can we drill in a way that is
environmentally sound?
HALE If you go out 10 years, I think we
have the potential to nd 20 or 30 billion
barrels of oil on our continental shelf so
we can double our reserves. Thats not big
compared to Saudi Arabia, which has 250
billion barrels, but its a lot for the United
States. That would give us somewhat
greater autonomy and somewhat greater
freedom from what is now a dependence
on a lot of foreign oil.
The environmental issue is ongoing,
but our technology is far better than it
was 40 years ago when we had oil spills
off the coast of California that led to these
drilling restrictions. Most people I know
in the industry are condent that we can
handle the environmental risks. So, its
a question of trade-offs. We cant fully
eliminate every single risk, but if we can
make the risks manageable, then we have
to open up the continental shelf and nd
this oil.
HOFMEISTER If you dissect the 21 million
barrels a day that we consume, 14 million
barrels are coming from imports. We pro-
duce about seven. If we increased produc-
tion in this country by two million barrels
a day from all sources, offshore Alaska and
so forth, and you add another two mil-
lion barrels of liquid product in through
ethanol, and you improve efciency in the
use of liquid fuels to the equivalent of two
to three million barrels a day, you can ip
the import/export ratio on its head.
We talk about market prices and
ination. Do we need oil and grain
prices to be higher as a more compel-
ling argument to speed the process
of coming out with new technology?
HOFMEISTER Theres no political will in
this country to have a tough energy policy.
I think the great tragedy of the oil market
is that weve not been willing to impose
upon ourselves much higher energy taxes
to discourage consumption and to encour-
age new kinds of technology. But because
we wont tax ourselves, we have to do it
through supply and demand in the mar-
ketplace which means the kind of price
spike we had three and four months ago
when the price of gasoline averaged over
$4.00 a gallon.
HALE I dont disagree, but I take a somewhat
different approach. We need a short-term,
a medium-term and a long-term plan. I
think we can move beyond hydrocarbons in
rational, reasonable ways, while still having
affordable energy. While I can accept the no-
tion that higher taxes would help move us, I
think incentives would also help.
BLOCK Lets face it. The Congress is never
going to impose much higher energy
taxes. They cant even get ve more cents
to x the roads and bridges. Its just not
going to happen.

The U.S. consumes
21
million barrels of
oil each day
14
million barrels are
coming from imports
Highest average monthly
price of a gallon of gas in
the United States
July 2008
.06 $
4
26 CME GROUP MAGAZINE
COMMODITY VIEWPOINT
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fulll the everchanging
needs of the market
28 CME GROUP MAGAZINE
BUILDING
BRIC BY BRIC
As the nancial crisis grips global nancial markets,
investors have been keeping an eye on BRIC road ahead.
FALL 2008 29
Historically, a sharp downturn in the U.S. market would lead to a
crisis-level market plunge in emerging market countries. But in
recent months, many emerging market economies, such as Brazils,
have shown a surprising resiliency despite the slumping U.S.
economy. One of the main reasons is that many of the BRIC countries
Brazil, Russia, India and China had solid balance sheets head-
ing into the economic slump, along with vibrant domestic econo-
mies that continue to grow in the midst of economic contraction
elsewhere, said a panel of experts at CME Groups Global Financial
Leadership Conference in Naples, Fla. in September.
Its one of the great upside stories, says Kevin Kajiwara, director,
global markets of Eurasia Group, who moderated the panel. You can
actually add other emerging market countries South Korea, Mexico,
Turkey, South Africa to this group. What is most striking ultimately is
the differences between these BRIC countries, and not the similarities.
Brazil, a country blessed with rich natural resources in forestry,
oil, perhaps the worlds most-developed biofuels industry, and strong
grain production, is a country that has mixed sound government with
controlled foreign and domestic investment.
For Brazil, in this crisis which has lasted almost one year,
the real has only gotten stronger except for the past 60 days, says
Gustavo Franco, former president of the Central Bank of Brazil.
Brazil, China and India are large economies. The only price that
has been reacting to the crisis has been the stock exchange, and
thats an impact from globalization.
Brazils BOVESPA Stock Index plunged 38 percent from its May
2008 highs in the wake of the economic turmoil, before bouncing back
almost 10 percent on September 19, when the U.S. government an-
nounced its dramatic bank bailout.
Franco says domestic growth is solid and ination in Brazil is still
under control, with a 4.5 percent rate expected in 2009.
The situation in China also is compelling, explains James
McGregor, chairman and chief executive ofcer of JL McGregor, an in-
dependent research rm based in Beijing. Chinas exports to the United
States represent just 7 percent of its gross domestic product (GDP),
moderating the downside risk of future export declines. The domestic
economy continues to boom, McGregor said, while ination remains
under 5 percent. Real GDP growth is estimated at 9.8 percent in 2008,
a drop-off from its double-digit growth of years past but strong none-
theless, according to gures from Economist Intelligence Unit (EIU).
The Chinese government also has plenty of money to invest in
massive infrastructure projects, which both moves the economy for-
ward and gives China a competitive advantage in the coming months
and years.
China may be the most poised to handle this turmoil, McGregor
says. China is sitting pretty right now as the world kind of tumbles along.
McGregor remains condent of Chinas prospects, despite its
slumping stock market, which plummeted 60 percent over the rst
nine months of 2008. The China Securities Index jumped a record
9.3 percent on September 19.
30 CME GROUP MAGAZINE
EMERGING OPPORTUNITIES
Lets not forget that the stock market went up 90 percent in the
12 to 18 months before that, McGregor says. The Chinese market is
actually coming down to some semi-rational levels. By and large, Chinese
companies have pretty good earnings. Were going to see the market
recover in the next few months.
Meanwhile, Indias growth is forecast to slow to 7.6 percent in
2008, according to EIU gures, down from 9 percent growth over the
past year. However, ination is running at 5.8 percent, EIU reported.
Russias GDP was cruising along at an 8 percent rate, but has been
affected by Russias invasion of Georgia in September. Political troubles
aside, in the Russian equity market, the Micex Index rose a record 28.6
percent on September 19 as Dmitry Medvedev, the Russian president,
pledged $20 billion to end the nations worst nancial crisis since its
1998 default on public and private debt, which led to the devaluation
of the ruble.
POLITICS ARE LOCAL
While BRIC countries have enjoyed the global investment spotlight,
they also have unique political environments that require close scrutiny
and understanding.
Raghuram Rajan, professor of nance at the University of Chi-
cago Graduate School of Business, says the longer-term impact of
the global nancial crisis could affect the political arena in India as
it considers moving more of its economy into a Western-style open
nancial market.
The desire to go to free markets is tempered somewhat by the
feeling that free markets can pose problems like weve seen in the
United States, Rajan observes. The biggest concern we hear are com-
ments like, You want us to move to that kind of nancial system?
Rajan says that economic policy also causes concern within
India. Agricultural production has largely stagnated, he says, which
has led politicians to embrace more populist policies, rather than free
market programs.
From a different perspective, Franco said that Brazil has displayed
political stability by seamlessly moving from one election to another.
Workers Party member Luiz Incio Lula da Silva was elected president
in October 2002. At the time, the election of a left-leaning candidate
roiled markets and sent the Brazilian real downward. Since then, how-
ever, Brazil and its markets have been remarkably steady, allaying many
of the early critics of Lulas election.
Franco said todays nancial market crisis will be a test for Brazils
current government.
We have not had stress since 2002 and that was caused by Lulas
election itself, Franco says. Since then, the economy has been friend-
ly. We dont see the Lula government as a very active government in
terms of reforms or doing anything novel in terms of building a market
economy as the previous government was. The price for that is that if
anything goes wrong, your response is going to be weak.
DECENTRALIZED THOUGHT
Chinas centralized government is in a difcult period as it tries to
maintain centralized control over the worlds largest domestic popula-
tion of 1.3 billion people. McGregors view on the government is that it
will continue to allow more nancial freedom in return for its contin-
ued centralized power. He added that the government has a number
of domestic issues it needs to address, including ongoing corruption in
local governments.
You have a big problem with the haves and have nots, and
unrest in the countryside with corruption, land seizures and pollution,
McGregor notes. So Chinas real challenge over a longer period of time
the next decade is, how do they pluralize their politics somehow
to let people have more of a say? You will not have a liberal democracy
in China any time soon, if ever, but they do need to nd a way to make
government more responsive.
McGregor says that Chinas government has been evolving away
from its highly centralized model for decades. He quotes a Chinese coal
executive who said Chinas leader from 1978 to the early 1990s, Deng
Xiaping, had about 80 percent of the governments decision-making
power while today, Chinas president, Hu Jintao, has about 30 percent.
They now have to work a consensus at the top in order to move
things ahead, McGregor explains. By moving the wealthy into the
party six or seven years ago, the question is, how will they try to roll
back reform and try to slow down foreign investment?
LOOKING AHEAD
With relatively sound economic fundamentals and a push by investors
to nd growth outside Western markets, the panelists expect BRIC
countries to continue creating value and attracting investors. The
political terrain is always a key piece of the equation, but Brazil, India
and China in particular appear to have their economies on solid footing
with incredible potential moving forward.
Rajan says the future is bright indeed for countries such as India.
The ambition is there, Rajan notes. India could be a big part of the
next nancial marketplace.
As of 2008, BRIC countries make up approximately 15 percent of the global GDP. Based on Goldman
Sachs BRIC model projections, China is poised to overtake Germany as the third-largest economy.
PROJECTED BRIC GDP GROWTH
(in millions)
Sources: International Monetary Fund and Goldman Sachs BRIC Model Projections
2007 GDP 2050 GDP (projected)
$1,313,590
$11,366,000
BRAZIL
CHINA
$3,250,827
$70,710,000
INDIA
$1,098,945
$37,668,000
RUSSIA
$1,289,582
$8,580,000
For Jos Aroldo Gallassini, turning risk into opportunity is second nature.
As president of Brazils largest agricultural cooperative, he comes to CME Group to
mitigate price volatility and protect his organizations position in the global soybean
market. With complete price transparency, liquidity and central counterparty clearing,
CME Group guarantees the soundness of every trade and serves the needs of
market users worldwide.
By improving the way markets work, CME Group is a vital force in the global
economy, offering futures and options products on interest rates, equity indexes, foreign
exchange, energy, agricultural commodities, metals and alternative investments.
Learn how CME Group can change your world by visiting www.cmegroup.com/info.
I harvest opportunity from risk.
JOS AROLDO GALLASSINI
President,
Coamo Agroindustrial Cooperative
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32 CME GROUP MAGAZINE
Indexing is on
the rise and
spread across
all asset classes.
A 360-DEGREE VIEW
FALL 2008 33
OF
INDEXING
Demand for the passive strategy of indexing is expected to be
anything but passive in the years to come, as many institutional and
individual investors are taking a fresh look at their views on risk,
investment costs and market returns. That was the message from a
panel at CME Groups recent Global Financial Leadership Conference
in Florida.
I dont think weve gone as far as we can go with indexing, says
Dr. David Blitzer, Standard & Poors managing director and chairman
of the companys Index Committee. When I rst started working
in indices, somebody said to me, What are you going to do when
everything in the world is indexed? I think human greed, with the
idea you can beat the market, is even more eternal than indexing. But
I think we will continue to see expansion. We will see it in more and
more asset classes.
Demand for index products has gone up due to their ability to
produce attractive returns without the investment costs of active
management. Economic, legislative and environmental events also will
drive indexing growth, says Jamie Farmer, senior director, global index
operations and head of exchange relationships at Dow Jones Indexes.
Think about changes in tax law which led to the dividend-weighted
index, which was the precursor for fundamentally weighted indexes,
he says. The growth of petrodollars, and really the growth of the Gulf
region, has given rise to Islamic nance as an area for indexes as well.
INVESTING EFFICIENCIES
34 CME GROUP MAGAZINE
The expansion of indexing is potentially huge, according to the
panelists. They expect to see index investments go well beyond
underlying stocks and securities to commodities and to edgling
environmental markets that trade rights for industrial pollution, also
known as the carbon markets. To keep up with this growing demand
for index investments, CME Group offers futures and options on more
than 40 U.S. and international indexes.
THE MOVE TOWARD INDEXED ETFs
The session was moderated by Burton Malkiel, professor of econom-
ics at Princeton University and author of one of the most widely read
books on individual investing, A Random Walk Down Wall Street. Malkiel
notes that his support of indexed exchange-traded funds (ETFs)
puts him at odds with Vanguards John Bogle, whom I agree with 95
percent of the time. Malkiel paraphrases Bogles argument, saying,
Why would anybody want to buy the market at 11:15 in the morning
and then sell it at 2:15 in the afternoon?
John Jacobs, executive vice president of NASDAQ nancial prod-
ucts and its chief marketing ofcer, agrees with Malkiel. The discus-
sion that Ive had with Jack on the same topic is that hes throwing out
the entire baby with the bathwater, he says, adding, There are a lot
of people buying them, holding them, and getting the benets of index
investing at a lower expense ratio with a good tax benet over time.
Adds Farmer, Europe is a nascent and growing market for ETFs:
The obvious trend is that its going to keep growing and growing and
getting more and more penetration.
Blitzer points out that as industry fortunes wax and wane, there
also are possibilities for new indexed ETFs: It may not quite sound like
indexing, but somebody comes along and says, Were looking at the
housing market and so forth. By next spring, Im going to want to have
a big position in homebuilders stocks. They go off and research all of
them and they nd an ETF focused on homebuilders. You can repeat
the same story industry after industry, investing style after investing
style. They get the efciencies, they get diversication within the class
which represent some of the benets of indexing. Maybe they wont
do as well as if they bought the S&P 500 and put it away forever, but
theyll at least have a little bit more entertainment out of it.
The index model whether in mutual funds or ETFs will lend
itself to more diverse retirement products in the future. At Dow
Jones we actually publish a variety of series of indexes just for that
purpose, says Farmer. Theres been recent legislation that allows
products of this sort tied to target-date indexes or hard-to-blend
indexes as a default investment option for retirement accounts. And
so, the idea of not just equity and xed income indexes or products
but tying in real estate, tying in commodities, tying in TIPS for an
ination edge, tying in housing is a very interesting concept. The
idea is to emulate the dened benet space and bring it more into a
dened contribution space.
Burton Malkiel with Vanguard founder John Bogle is regarded
as one of the fathers of the indexed investment movement. His
landmark 1973 book, A Random Walk Down Wall Street, argues
that investors cannot consistently outperform market averages
over time and, therefore, the investor who achieves market perfor-
mance at the lowest cost wins.
Lets say the market gives you 8 percent, Malkiel says. There
are some that have done better, there will be others that have done
worse. But thats in the absence of investment costs. Lets now
assume 80 basis points of investment costs. What that does is shift
the entire distribution to the left so you only get 7.2 percent.
Indexing is the better approach, Malkiel maintains. Indexing
will miss from time to time, but when it misses youll be an
average performer. When it misses, you dont get into the bottom
quartile or the bottom deciles. He adds, I sometimes say that
if the S&P was an athlete, they would probably be testing it for
steroids. Its like going out on the golf course and playing every
round at par. Thats basically what you get with an index fund. Its
not mediocre performance; its better-than-average performance.
Malkiel adds that indexing may actually be more important
in the bond market, particularly the markets in short-term bonds
and Ginnie Mae securities. Its only in the high-yield market
where theres any reasonable percentage 21 percent of active
managers who seem to outperform the index. Most of them are
very much on the left side of the distribution.
What I conclude is that indexing works whether you agree
with me that markets are reasonably efcient or you dont,
concludes Malkiel. It works in a broad set of markets. It certainly
works in the United States, it works in Europe, it works in Japan,
it works in emerging markets. Indexing has proved itself very,
very well, and I believe the use of index funds, ETFs and so forth
will continue to grow.
Why Indexing Wins
The idea of not just equity and xed income indexes
or products but tying in real estate, tying in
commodities, tying in TIPS for an ination edge,
tying in housing is a very interesting concept.
Jamie Farmer, Dow Jones Indexes
($Billions)
S&P INDEXED ASSETS
Source: Standard & Poors
S&P 500
S&P Global Indexes
S&P MidCap 400
S&P SmallCap 600
Other Indexes
YEAR END
Demand for index products has gone up due to their ability to produce
attractive returns without the investment costs of active management.
Expect index investing to continue spreading to more asset classes,
says Dr. David Blitzer, chairman of S&Ps Index Committee.
500
0
1,000
1,500
2,000
2003
$1,463
2005
$1,533
2006
$1,712
2007 2002
$906
2004
$1,231 $1,234
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As part of a global rm managing $600 billion in assets, PIMCOs Sabrina Callin
relies on innovative investment strategies to generate better returns and cover risks
intelligently for PIMCO clients. For more than 20 years, the PIMCO team has turned
to CME Group to access the worlds largest equity index marketplace a broad array
of derivatives based on large-cap, mid-cap and small-cap stock indexes, including
futures contracts based on the S&P 500, NASDAQ-100, DJIA, S&P MidCap 400, S&P
SmallCap 600, Nikkei 225 and MSCI EAFE.
By improving the way markets work, CME Group is a vital force in the global economy,
offering futures and options products on interest rates, equity indexes, foreign exchange,
energy, agricultural commodities, metals and alternative investments. Learn how
CME Group can change your world by visiting www.cmegroup.com/info.
The Globe logo, CME

, Chicago Mercantile Exchange

and CME Group

are trademarks of Chicago Mercantile Exchange Inc. CBOT

and Chicago Board of Trade

are trademarks of the Boardof Trade of the City of Chicago. NewYork Mercantile Exchange

andNYMEX

are
registered trademarks of the NewYork Mercantile Exchange, Inc. All other trademarks are the property of their respective owners, used with license. S&P500

, S&PMidCap 400

and S&PSmallCap 600

are trademarks of Standard & Poors, a division of the McGraw-


Hill Companies. NASDAQ-100

is a trademark of the The Nasdaq Stock Market, Inc. DJIA


SM
is a service mark of Dow Jones & Company, Inc. Nikkei

and Nikkei 225

are trademarks of Nihon Keizai Shimbun Inc. MSCI



and EAFE

are trademarks of MSCI Inc. Copyright


2008 CME Group. All rights reserved.
Call it return on innovation.
SABRI NA CALLI N
Executive Vice President, PIMCO,
StocksPLUS Product Manager and
Portable Alpha Specialist
FALL 2008 37
CURRENT PULSE
In wake of the credit crunch, CME Group has been reaching out to customers to help them better
manage their risks in the current market environment. A new advertising campaign, Rise Above the
Risk, highlights the safety and transparency of CME Groups markets. The campaign ran in the Wall
Street Journal, Financial Times, Barrons and Chicago Tribune as well as online at Bloomberg.com,
BusinessWeek.com and Marketwatch.com. For more information on how CME Group provides condence
in an uncertain world, please visit cmegroup.com/company/risk.
Innovation is Key
For the fth consecutive year, CME Group has
been named to the InformationWeek 500, the
annual ranking of the most innovative users of
business technology in the United States.
Technology plays a crucial role in our
business, with electronic trading represent-
ing more than 80 percent of our volume, says
CME Group Chief Operating Ofcer Bryan
Durkin. CME Globex, the industry-leading
electronic trading platform, and our clearing
operations were key factors in our success-
ful merger with CBOT in 2007 and our recent
acquisition of NYMEX. The marriage of our
global benchmark products with our Globex
technology has enabled us to increase our
business and to meet the growing needs of
our expanding customer base.
CME Groups commitment to technology
and innovation remains a top priority, says
CME Group Chief Information Ofcer Kevin
Kometer. This award is a direct reection of
our employees commitment and dedication
to offering reliable and diverse technologies.
We will continue to look for ways to build upon
our success as we look at growing our business
through technology in areas such as emerging
markets and over-the-counter business.
Now in its 20th year, the InformationWeek
500 has tracked the technology, strategies,
investments and administrative practices of
Americas best-known companies, highlighting
the power of innovative information technology.
38 CME GROUP MAGAZINE
CURRENT PULSE
A European Accent
CME Group expanded its popular S&P prod-
uct line when it launched the Euro-dominated
E-mini S&P 500 exclusively for trading on the
CME Globex trading platform.
The contract will enable customers to use
a single trading vehicle to access the widely
watched U.S. large-cap stock index, combined
with the exposure to the euro currency.
The denomination of the contract mul-
tiplier in euros increases the relevance of our
U.S. equity index products to our European
customer base, says Robert Ray, managing
director, CME Group international sales, eq-
uity and commodity products. Customers
throughout Europe want efcient exposure
to U.S. equity markets and this product
facilitates that, as well as allowing for new
spreading opportunities between CME Group
products and the listed derivatives traded in
other markets.
The Euro E-mini S&P 500 further ex-
tends the scope of our equity index product
suite, says Scot Warren, managing director,
CME Group equity products. Building on the
success of the E-mini S&P 500, which trades
more than 2.2 million contracts per day, we
Sound of Silver
Olympic swimmer Christine Magnuson rang the opening bell on the CME Group
agriculture trading oor on September 23. Magnuson, a Chicago native, won
two silver medals at the Summer Olympics in Beijing, in the 100-meter buttery
and as a member of the 4x100-meter medley relay. From left, Magnuson with
CME Group Executive Chairman Terry Duffy and Vice Chairman Charles Carey.
Osaka Rising
CME Group and the Osaka Securities Exchange
Co., Ltd. (OSE), the premier Japanese deriva-
tives and securities exchange, signed a memo-
randum of understanding (MOU) to pursue
opportunities to jointly develop products and
services that will benet market users globally.
Under this agreement with OSE, we
expect to create additional trading opportuni-
ties and increase access to more markets for
customers of both organizations, says CME
Group Executive Chairman Terry Duffy.
Through this MOU, we hope to further
extend CME Groups reach into the Asian mar-
ketplace, says CME Group Chief Executive Of-
cer Craig Donohue. By working directly with
OSE, we hope to identify additional opportuni-
ties to create new benets for our customers.
OSE President and Chief Executive Ofcer
Michido Yoneda says, We believe that coop-
eration with CME Group will be benecial to
investors in Japan and around the world. This
new partnership will advance the presence of
the OSE throughout the world. The futures
products on the Nikkei Stock Average, which
are listed on both of our exchanges and well-
established as a benchmark of the Japanese
market, have an intrinsic potential for further
growth through mutual cooperation.
Quote Me on It
CME Group launched the latest version of
E-quotes, a real-time streaming market data
application that offers quotes, charting, ad-
vanced analytics and news on CME Group-
traded products, in October.
E-quotes will enable users to access
prices for all CME Group listings, including in-
terest rates, equity indexes, foreign exchange,
commodities, energy, metals and alternative
investments. In addition, there is also access
to prices for products listed on the Minneapo-
lis Grain Exchange and the Kansas Board of
Trade, which are available for electronic trad-
ing on CME Globex.
The E-quote Basic, Advanced and Pro-
fessional editions enable users to track the
markets with customizable features includ-
ing quote monitors, market depth, advanced
charts, time and sales and more.
E-quotes supports Simplied Chinese,
Russian and Japanese languages and is ex-
pandable to add additional languages.
believe our customers will benet from the
expanded opportunities the euro-denominat-
ed S&P 500 futures will provide.
www.newedgegroup.com
Newedge refers to Newedge Group and all of its worldwide branches and subsidiaries. Only Newedge USA, LLC is a member of FINRA and SIPC (SIPC only pertains to securities-related transactions and positions).
Newedge Group (UK, Frankfurt and Dubai) do not deal with, or for, Retail Clients (as defned by MiFID and Dubai Financial Services Authority). Only Newedge Canada Inc. is a member of the CIPF. Not all products
or services are available from all Newedge organizations or personnel. Consult your local ofce for details.
Global Asset Execution
Global Asset Clearing
Prime Brokerage
Fimat and Calyon Financial have united to create Newedge.
Cutting-edge talent and technologies. Access to 70+ exchanges
across multiple asset classes. Serving institutional clients worldwide.
To support your strategies and help realize your vision.
Global, impartial, innovative, Newedge is the heartbeat
of todays fnancial market.
new force
in the world of brokerage
An innovative
new force
in the world of brokerage
An innovative

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