8-KMaterial Agreements

CME GROUP INC. 8-K Report, Material Agreement (Sep 14, 2007)

Filed September 14, 2007For Securities:CME

Summary

CME Group Inc. (CME), through its wholly-owned subsidiary Board of Trade of the City of Chicago, Inc. (CBOT), has entered into a significant new index license agreement with Dow Jones & Company, Inc. This agreement, effective September 11, 2007, grants CBOT the rights to use several key Dow Jones stock indexes, including the Dow Jones Industrial Average, Dow Jones Transportation Average, and Dow Jones Utility Average, on an exclusive basis. The license also includes non-exclusive rights for the Dow Jones U.S. Real Estate Index. This strategic move positions CME Group to create, market, and trade futures and options contracts based on these widely recognized indexes. The agreement is set to commence on January 1, 2008, succeeding an existing agreement that expires at the end of 2007. The pact includes a seven-year initial term with renewal options, a guaranteed minimum annual fee, and an upfront payment, indicating a substantial financial commitment and a long-term outlook for expanding its product offerings.

Key Highlights

  • 1CME Group Inc.'s subsidiary, CBOT, has secured an index license agreement with Dow Jones & Company, Inc.
  • 2The agreement grants CBOT the exclusive rights to license and trade futures and options on key Dow Jones stock indexes, including the Dow Jones Industrial Average.
  • 3The new license, effective January 1, 2008, replaces an existing agreement and runs for an initial term of seven years.
  • 4CBOT also has a right of first refusal for new Dow Jones indexes developed before the end of 2010.
  • 5The agreement includes provisions for termination under specific circumstances, such as material breach or regulatory issues.
  • 6Financial terms include a per-trade fee, guaranteed annual minimum license fee, and an upfront payment.

Frequently Asked Questions

The primary purpose is for CME Group's subsidiary, CBOT, to obtain the rights to license and trade futures and options contracts based on prominent Dow Jones stock indexes. This allows CME to expand its product offerings and leverage well-known market benchmarks.

The new license agreement becomes effective on January 1, 2008, and has an initial term running through December 31, 2014 (seven years). It includes provisions for automatic renewal thereafter.

CME Group will have exclusive rights to the Dow Jones Composite Index, Dow Jones Industrial Average Index, Dow Jones Transportation Average Index, and Dow Jones Utility Average Index. The Dow Jones U.S. Real Estate Index will be licensed on a non-exclusive basis.

CME Group will pay Dow Jones a per-trade fee, a guaranteed minimum annual license fee, and an upfront fee payable in January 2008. This signifies a significant financial commitment for the usage of these indexes.