What is the main purpose of the new agreement between CME and S&P?

The primary purpose is to amend and restate the existing license agreement, granting CME updated and extended exclusive rights to use S&P stock indexes and related trademarks for creating, trading, and clearing futures and options contracts.

How long will CME have exclusive rights to use S&P indexes?

The exclusivity period varies. For some indexes, it extends through December 31, 2016, and for others, through December 31, 2017. The exclusivity for the S&P 500® Index has specific conditions for retention after December 31, 2008, tied to trading volume.

Does CME have any new rights regarding future S&P indexes?

Yes, under the new agreement, CME retains a right of first refusal for any new stock indexes that S&P develops during the term of the agreement.

Are there any conditions under which S&P can terminate the license or exclusivity?

Yes, S&P retains the right to terminate the license for new S&P stock indexes or terminate the exclusivity of that license if CME fails to launch a product based on the index within one year, though exceptions for regulatory delays are considered.

CME 8-K: Material Agreements

Summary

CME Group Inc. (CME) announced a significant amendment and restatement of its license agreement with Standard & Poor’s (S&P), effective September 20, 2005. This updated agreement governs CME's rights to create, market, trade, and clear futures and options contracts based on S&P stock indexes. The revised terms provide CME with extended exclusive licensing periods through December 31, 2016, and in some cases, through December 31, 2017, subject to certain minimum trading volume requirements or other conditions. This strategic move solidifies CME's access to key S&P indexes, crucial for its product offerings and revenue generation in the derivatives market. Furthermore, the agreement includes provisions for CME's right of first refusal on new S&P indexes and addresses potential termination clauses related to product launches and regulatory delays. Notably, both parties have agreed to forgo any restoration of prior litigation concerning the original 1997 license agreement, indicating a commitment to a cooperative and forward-looking relationship. For investors, this extended exclusivity and resolution of legal disputes are positive indicators for CME's continued market leadership and stability in its index-based product suite.

Key Highlights

1CME Group Inc. entered into a binding term sheet to amend and restate its license agreement with Standard & Poor’s (S&P).
2The agreement grants CME exclusive rights to license S&P stock indexes and related trademarks for futures and options contracts.
3Exclusivity for certain S&P indexes extends through December 31, 2016, and for others through December 31, 2017, with conditions.
4CME's exclusive license for the S&P 500® Index has specific conditions for retention post-2008, including minimum average trading volume.
5The amended agreement grants CME a right of first refusal for new S&P stock indexes developed during the term.
6S&P retains the right to terminate licenses or exclusivity for new indexes if CME fails to launch a product within a specified period, with exceptions.
7Both CME and S&P have agreed not to pursue further litigation related to the previous 1997 license agreement.

CME GROUP INC. 8-K Report, Material Agreement (Sep 23, 2005)

Summary

Key Highlights

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