Trends in the World Oil Markets

2nd International Conference Exchange and OTC Petroleum Product Market in RussiaMoscow, October 1, 2010

Daniel Brusstar, Director, Energy Research

Agenda

• CME Group after NYMEX-merger

• OTC Oil Market Trends

• Tighter Government Controls on the Market

• Recent Developments

• Volume trends

• CME Clearing: Looking to the Future

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CME Group Overview

• Largest futures exchange in the U.S. and globally by volume

• Strong record of growth, both organically and through acquisitions

– CBOT Holdings (2007)

– NYMEX Holdings (2008)

• Deep liquidity in futures and options

– Execution and clearing services for interest rates, equities, energy, commodities, FX, metals

• Worldwide distribution through CME Globex

• Proven CME/NYMEX Clearing– Listed futures and options

– OTC products via CME ClearPort

1. In this presentation, pro forma results for CME Group assume the acquisitions of CBOT and NYMEX were completed as of the beginning of the period presented. See the CME Group Inc. Reconciliation of GAAP to Pro Forma Non-GAAP Measures available on our Web site under the Investor Relations section for detail related to the adjustments made to reach the pro forma results.

Futures and Clearing of OTC Deals

• Futures are traded on regulated Exchanges

• Exchanges do not trade, influence or set prices.

• Price discovery occurs at the exchange either electronically or via “open outcry” in

trading pits

• The U.S. Commodity Futures Trading Commission (CFTC) regulates futures

industry and provides oversight of Clearing services

• Transactions processed and guaranteed by centralized Clearing House

• Over-the-Counter (OTC) Oil and Refined Products (Physical Deals, Financial

Swaps, and Options) are Cleared with Full Credit Protection of a Regulated

Clearing House

• Clearing house requires performance bonds, i.e., Margin, from Clearing Members

to secure each transaction

• Futures and OTC Deals are “marked-to-market” daily (traders pay losses and

collect profits daily in cash)

CME ClearPort Clearing Overview

A comprehensive set of flexible clearing services for the OTC market

•To significantly mitigate your counterparty risk

•To achieve capital efficiencies

•To access the advantages of security, efficiency and confidence while still trading off-exchange via brokers or directly with counterparties

ClearPort provides clearing services across multiple markets

•Launched in 2002 to provide centralized clearing for Oil and Natural Gas markets

•Since then, product breadth, volume and liquidity have grown substantially across Europe, Russia, and Asia

Clearing = Full Credit Protection

OTC Oil Market Trends

Price Volatility in the Oil Markets Followed by Major Credit Market Problems

• Due to economic crisis, our energy customers have been forced to change trading and hedging habits

• Increased risk from financial institutions – no counterparty is safe• Cleared Physical Deals• Cleared Financial Swaps and Options

• Clearing of OTC deals through a central counterparty clearing model continues to grow and now dominates energy derivatives markets – increased price transparency and credit mitigation

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Recent Developments in the OTC Oil Markets

• Tighter Government Regulation of Oil Markets in the U.S., Europe, and Russia

• Global OTC energy derivatives markets now predominantly Cleared due to credit concerns

• Global oil markets are moving toward the “Cleared” model

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New U.S. Regulation of the Oil Market

• Mandate for clearing of standardized swaps

• Reporting of ALL cleared and non-cleared swaps

• Minimum capital requirements

• Business conduct standards – New core principals for market participants

• Position limits

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Growth in Clearing of Oil Markets

• Growth in Futures volume for Physical Oil deals

• Global OTC energy swaps markets now predominantly Cleared due to credit concerns

• Global oil markets are moving toward the “Cleared” model

• OTC Clearing of Asian and European Oil contracts grew over 50% in Volume during Past Year

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CME Clearing: Looking to the Future

• Tighter Government Regulation Could Lead to Expanded Clearing of Oil Products

• Trend Towards Expanded Clearing in Asian and Middle East markets

• CME Interested to Offer Clearing to the Russian Petroleum Markets

• Extend Clearing to New product sectors, such as LPGs, Petrochemicals, and Plastics

• Physical Propane, Ethane, Natural Gasoline, and Normal Butane listed on June 14• Physical Ethylene delivered in Mont Belvieu, Texas• Polyethylene and Polypropylene Plastics delivered in Houston, Texas

CME Clearing Services Extended Globally

CME Clearing: Key Benefits

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Mitigate your risk

• CME Clearing guarantees the performance of each transaction

• Counterparty risk is shared among clearing members, providing you with additional security

• Over $100B in margin and financial safeguards*

Access to independent valuations

• Neutral, third-party settlement prices and mark-to-market process enable you to track positions and assess risk

Enhance your efficiency• Replaces significant time and expense of documentation with real-

time trade confirmations and straight-through processing

Know your costs• Cost of margin offset by reduced expenses from credit

assessments and having to manage flow among counterparties

A century of experience

• No CME Group clearing member has failed to meet a performance bond/delivery obligation

• No customer has lost funds as a result of a clearing member firm failure

Note: Financial Safeguards funding reported as of March 31, 2009

Evolution of CME ClearingClearPort Clearing Has Served a Market in Crisis(Growth in Average Daily Volumes Cleared)

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24,137 56,971

139,177

313,128 335,720

467,802

545,799

2003 2004 2005 2006 2007 2008 20092002

(Bar chart illustrates average daily volume in round turns)

510,000

Questions

Daniel BrusstarDaniel.Brusstar@cmegroup.com212-299-2604