VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Wednesday, December 31, 2025
CME Group Inc.
CME · NASDAQ
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
CME Group is a global market operator running major derivatives exchanges (CME, CBOT, NYMEX, COMEX) and a systemically important central counterparty clearing house, with additional cash markets platforms and a meaningful market data business. Its core moat in trading and clearing is liquidity-driven network effects reinforced by CCP clearing and regulatory barriers that support trust and participation at scale. Market data monetization benefits from proprietary rights to exchange-generated data and the role of CME prices in benchmark price discovery, while connectivity and access revenues are supported by venue control and operational switching frictions. Key pressures are liquidity fragmentation, aggressive competitor incentives, regulatory changes (including fee and access scrutiny or transaction taxes), and operational, cyber, or technology-migration execution risk.
Primary segment
Trading and Clearing (Derivatives + Cash Markets Platforms)
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
3 segments · 6 tags
Updated 2025-12-30
Segments
Trading and Clearing (Derivatives + Cash Markets Platforms)
Exchange-traded derivatives (futures and options) trading and central counterparty clearing; plus electronic cash markets matching (U.S. Treasuries/repo, spot FX) tied to CME platforms
Revenue
81.4%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Market Data and Information Services
Licensed distribution of CME Group proprietary market data (real-time, delayed, end-of-day, historical, derived) and related analytics and information services
Revenue
11.6%
Structure
Monopoly
Pricing
moderate
Share
—
Peers
Access, Connectivity and Other Exchange Services
Connectivity, co-location, access and communication services, and other operational services tied to CME Group trading and clearing infrastructure
Revenue
7%
Structure
Monopoly
Pricing
moderate
Share
—
Peers
Moat Claims
Trading and Clearing (Derivatives + Cash Markets Platforms)
Exchange-traded derivatives (futures and options) trading and central counterparty clearing; plus electronic cash markets matching (U.S. Treasuries/repo, spot FX) tied to CME platforms
Revenue share derived from FY2024 total revenues by category: clearing and transaction fees $4,988.2m of total revenues $6,130.1m.
Two Sided Network
Network
Two Sided Network
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Liquidity begets liquidity: a deeper pool of buyers and sellers improves execution quality (tighter spreads, larger size) and attracts more participants, reinforcing volume and open interest across benchmark contracts.
Erosion risks
- Liquidity fragmentation across competing venues or contract substitutes
- Internalization and aggregation reducing displayed liquidity and exchange volumes
- Regulatory or market-structure changes that reduce incentives to concentrate liquidity
Leading indicators
- Average daily volume (ADV) and open interest by major product line
- Bid-ask spreads and order book depth in flagship contracts
- Share of volume in key benchmarks vs closest substitutes
Counterarguments
- Liquidity can migrate faster than expected if a competing contract becomes the new standard
- Large participants can multi-home and shift flow based on pricing and incentives
Clearing Settlement
Network
Clearing Settlement
Strength: 5/5 · Durability: durable · Confidence: 5/5 · 2 evidence
CME Clearing's CCP model mutualizes counterparty credit risk (buyer to every seller and seller to every buyer) and enables margining and netting efficiencies that support participation and liquidity at scale.
Erosion risks
- Regulatory changes increasing CCP capital and liquidity costs or limiting margin practices
- Operational or risk-management failure at the CCP (loss of trust)
- Competitive clearing offerings and cross-margin arrangements elsewhere
Leading indicators
- Default fund size and stress-testing disclosures
- Regulatory findings or actions involving clearing risk management
- Client adoption of cross-margin and portfolio margining programs
Counterarguments
- Clearing is not exclusive: large participants can clear on other CCPs for other contracts
- If clearing costs rise materially, some risk transfer may move OTC or off-platform
Concession License
Legal
Concession License
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Operating regulated futures exchanges and a systemically important clearing house creates significant compliance, governance, and supervisory barriers that deter undercapitalized entrants and supports customer trust.
Erosion risks
- Policy changes (e.g., transaction taxes) reducing on-exchange activity
- Regulatory interventions affecting fee models, access, or product eligibility
- Supervisory actions or penalties that damage reputation
Leading indicators
- CFTC, SEC, or other regulator rule proposals impacting exchanges and CCPs
- Enforcement actions and consent orders (industry and company-specific)
- Changes to systemic designation requirements and CCP standards
Counterarguments
- Regulation can increase operating costs and constrain innovation and pricing
- Well-capitalized incumbents can still build and gain approvals for competing venues
Scale Economies Unit Cost
Supply
Scale Economies Unit Cost
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 1 evidence
High fixed-cost market infrastructure (matching, clearing, surveillance, tech) creates strong operating leverage: incremental contract volume has low marginal cost, supporting structurally high margins at scale.
Erosion risks
- Sustained volume declines reduce operating leverage
- Rising technology and security spend (e.g., major platform migrations) offsets leverage
- Pricing pressure forces higher incentives and discounting, reducing net yield per contract
Leading indicators
- Operating margin trend and cost per contract
- Technology spend growth vs volume growth
- Net revenue capture per contract (rate per contract after incentives)
Counterarguments
- Large peers can also achieve scale economics; it is not uniquely CME's advantage
- Technology commoditization (cloud and managed services) can lower entry and operating costs for rivals
Benchmark Pricing Power
Financial
Benchmark Pricing Power
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 2 evidence
CME can adjust fee schedules (including volume discounts and tiered pricing) across products and venues, but pricing is constrained by the need to preserve liquidity in benchmark markets.
Erosion risks
- Aggressive competitor pricing and incentive programs
- Customer consolidation increasing bargaining power
- Contract substitution or innovation by rivals lowering willingness-to-pay
Leading indicators
- Average rate per contract and mix shifts (member vs non-member)
- Incentive program intensity (rebates and discount tiers)
- Volume response following fee schedule changes
Counterarguments
- Excess fee increases can trigger volume migration and weaken liquidity-based moats
- Some large participants may negotiate effectively via scale, limiting net pricing power
Market Data and Information Services
Licensed distribution of CME Group proprietary market data (real-time, delayed, end-of-day, historical, derived) and related analytics and information services
Revenue share derived from FY2024 total revenues by category: market data and information services $710.2m of total revenues $6,130.1m.
IP Choke Point
Legal
IP Choke Point
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 2 evidence
CME controls the underlying proprietary market data generated by trading on its venues; licensing terms and enforcement against misuse help preserve monetization of the data stream.
Erosion risks
- Data piracy and uncontrolled redistribution (including via AI ingestion)
- Regulatory intervention in market data fees or access requirements
- Migration to alternative data sources or indicative pricing substitutes
Leading indicators
- Market data revenue growth and device and subscriber counts
- Litigation or enforcement actions related to data misuse
- Regulatory proposals targeting market data pricing and access
Counterarguments
- Clients can often use alternative referential and indicative pricing sources for some use cases
- Large vendors may have leverage in resale economics, limiting CME's effective pricing power
Data Workflow Lockin
Demand
Data Workflow Lockin
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 2 evidence
CME's data is embedded in trading, risk management, and investment workflows (terminals, OMS/EMS, risk systems) and is often licensed per device or screen, creating practical switching frictions once integrated.
Erosion risks
- Customers rationalize data usage (device reductions) in downturns
- Shift toward consolidated feeds or broker-provided data bundles
- Growth of standardized APIs and tools that reduce vendor-specific integration costs
Leading indicators
- Device counts and mix (professional vs non-professional)
- Churn among large vendor and distributor relationships
- Growth of cloud-native delivery and API-based consumption
Counterarguments
- Some firms can substitute with delayed or derived data for certain workflows
- If CME contract trading declines, the need for CME data in workflows can decline as well
De Facto Standard
Network
De Facto Standard
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Prices formed in CME's benchmark futures and cleared markets are widely used as reference prices (price discovery and referential pricing), making CME's data hard to replicate for users who need the authoritative source.
Erosion risks
- Benchmark migration to competing contracts and venues
- Structural decline in trading activity for key benchmark products
- Regulatory changes impacting benchmark administration or pricing publication
Leading indicators
- Open interest and ADV in flagship benchmark contracts
- Adoption of alternative benchmarks and pricing sources by major institutions
- Benchmark administration regulatory actions (where applicable)
Counterarguments
- For some use cases, indicative pricing is good enough, reducing dependence on CME prices
- Large dealers and platforms can generate internal pricing curves that reduce reliance on exchange-derived prices
Benchmark Pricing Power
Financial
Benchmark Pricing Power
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 2 evidence
CME can raise or re-tier certain market data fees, as pricing is based on perceived value and comparable services; however, vendor and customer pushback plus regulatory scrutiny can cap increases.
Erosion risks
- Vendor and device rationalization reduces billable usage
- Regulation or litigation around data fees or fair access
- Competitive alternatives bundled by major terminals and data platforms
Leading indicators
- Market data revenue per device and overall device counts
- Rate-card and incentive program changes
- Regulatory consultations and enforcement on data pricing
Counterarguments
- Pricing power is limited when customers can reduce devices or switch to alternative delivery methods
- Major data vendors may pressure pricing due to their distribution role
Access, Connectivity and Other Exchange Services
Connectivity, co-location, access and communication services, and other operational services tied to CME Group trading and clearing infrastructure
Revenue share derived from FY2024 total revenues by category: other revenue $431.7m of total revenues $6,130.1m; other revenue includes access and communication fees (connectivity and co-location) and related exchange services.
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 2 evidence
CME controls direct access to its venues and monetizes that access via connectivity and communication fees (including co-location) for firms that need reliable, low-latency connectivity to trade CME markets.
Erosion risks
- Customer consolidation reducing number of paid connections
- Regulatory market-structure reforms affecting access charging models
- Volume migration to other venues reducing demand for CME connectivity
Leading indicators
- Access and communication fee revenue trend
- Co-location utilization and connectivity product mix
- Latency and uptime incidents and customer satisfaction signals
Counterarguments
- Firms can multi-home and allocate spend across venues; access fees can become commoditized
- If trading shifts away from CME products, access fees decline regardless of fee schedule
Switching Costs General
Demand
Switching Costs General
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Once trading stacks are engineered around CME connectivity (ports, protocols, co-location, operational processes), switching or meaningfully reducing CME connectivity can be operationally painful for latency-sensitive strategies and risk-management workflows.
Erosion risks
- Standardization of connectivity (reducing differentiation) and broker-managed access
- Customers optimizing costs by reducing direct connections and device footprints
- Cloud migration or architectural changes that alter connectivity economics
Leading indicators
- Trends in connectivity and co-location pricing and product adoption
- Customer footprint changes (connections, cabinets, ports)
- Incidents impacting reliability, latency, or security
Counterarguments
- Connectivity can be re-architected over time; lock-in is meaningful but not permanent
- Some participants access markets indirectly through intermediaries, weakening switching costs
Evidence
Market liquidity ... is key to attracting and retaining customers and contributing to a market's success.
Direct statement that liquidity is central to market success, consistent with a two-sided network effect in exchange markets.
Our clearing house's performance guarantee ... increases the potential liquidity available for each trade.
CME links its clearing guarantee to increased liquidity, strengthening the liquidity flywheel.
We serve as the counterparty to every trade, becoming the buyer to each seller and the seller to each buyer, and limiting counterparty credit risk.
Defines the CCP mechanism that underpins trust and scalable participation.
The guarantee allows for the offsetting of contract positions, increasing the potential liquidity available for each trade.
Links clearing design (offsetting and netting) to liquidity and capital efficiency.
Our operation of our U.S. futures exchanges and our derivatives clearing business are subject to extensive regulation by the CFTC ...
Supports the legal and regulatory barrier-to-entry component for exchange and clearing operations.
Showing 5 of 20 sources.
Risks & Indicators
Erosion risks
- Liquidity fragmentation across competing venues or contract substitutes
- Internalization and aggregation reducing displayed liquidity and exchange volumes
- Regulatory or market-structure changes that reduce incentives to concentrate liquidity
- Regulatory changes increasing CCP capital and liquidity costs or limiting margin practices
- Operational or risk-management failure at the CCP (loss of trust)
- Competitive clearing offerings and cross-margin arrangements elsewhere
Leading indicators
- Average daily volume (ADV) and open interest by major product line
- Bid-ask spreads and order book depth in flagship contracts
- Share of volume in key benchmarks vs closest substitutes
- Default fund size and stress-testing disclosures
- Regulatory findings or actions involving clearing risk management
- Client adoption of cross-margin and portfolio margining programs
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.