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Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast.

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Speaker 1: I'm Tracy Alloway.

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Speaker 2: And I'm Joe Wisenthal.

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Speaker 1: Joe, I can't remember did you live in Chicago At

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Speaker 1: one point?

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Speaker 2: I lived in Juliet, Illinois. Oh, jud two to twelve.

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Speaker 3: Oh my gosh.

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Speaker 1: Yeah, that's so funny. So I've lived in Chicago for

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Speaker 1: middle school, so I think, like, yeah, we probably overlapped.

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Speaker 1: It's a great city.

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Speaker 2: I love coming here.

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Speaker 1: And from a finance perspective, it is also an important city.

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Speaker 2: It's an interesting and important city, absolutely, and so obviously, yes,

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Speaker 2: when I think of Chicago, I think of trading and

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Speaker 2: commodities of particular.

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Speaker 1: Yeah, and I feel like there's a lot of trading

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Speaker 1: and financial infrastructure located in Chicago that has a great

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Speaker 1: line of sight over what's happening in the rest of

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Speaker 1: the system and the rest of the country. And so

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Speaker 1: since we are here in Chicago at the ISDA AGM,

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Speaker 1: we would be remiss if we didn't try to understand

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Speaker 1: the perspective of the Chicago sort of trading market and

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Speaker 1: what's going on in finance right now, let's do it

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Speaker 1: all right, So I am very pleased to say that

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Speaker 1: we have the perfect guest for this episode. We are

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Speaker 1: going to be speaking with Terry Duffy, chairman and CEO

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Speaker 1: of CME Group. Terry, thank you so much for coming

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Speaker 1: on all thoughts.

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Speaker 3: I'm Tracy, Joe. Thank you very much for having me.

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Speaker 3: Welcome to Chicago.

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Speaker 1: Thank you appreciate.

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Speaker 3: Welcome back, Joe.

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Speaker 1: Yeah, it's been about twenty years since since I've actually

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Speaker 1: been here. So it's weird because I'm walking around. I

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Speaker 1: see some buildings that I recognize, and other things, like

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Speaker 1: this area where we are right now, are completely new.

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Speaker 1: Why don't we start with some of the things that

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Speaker 1: happen happening in markets recently because there is no shortage

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Speaker 1: of headlines. You have the debt ceiling ongoing, you have

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Speaker 1: the banking crisis, you have the FED raising rates, although

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Speaker 1: maybe it's on pause for a while. Now, let's start

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Speaker 1: with a banking crisis. What's going on there? What do

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Speaker 1: you see from the CME perspective, because of course you

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Speaker 1: deal with interest rate derivatives and hedges, so this is

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Speaker 1: sort of ground zero for some of the asset liability

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Speaker 1: mismatches that we've seen in banking.

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Speaker 3: Yeah, so the I don't know if I want to

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Speaker 3: call it a banking crisis, because a banking crisis is

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Speaker 3: traditionally systemic throughout the whole organization. This is something that's

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Speaker 3: affecting mostly these second and third tier banks. So the

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Speaker 3: other only one that has gone away in recent times

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Speaker 3: is Credit Swiss, which was a major bank, but they, again,

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Speaker 3: Credit Swiss has been, you know, advertisers having issues for

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Speaker 3: many years, so I don't think that was a giant

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Speaker 3: surprise to a lot of participants in the banking world.

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Speaker 3: As far as the third tier banks, especially, well, it's

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Speaker 3: zooming in a couple I guess. You know. One of

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Speaker 3: the couple things that I've said about, especially Silicon Valley SVB,

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Speaker 3: is is it's really amazing to me that the banks

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Speaker 3: who are in the interest rate business in lending business.

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Speaker 3: I'm in the interst rate trading business, hedge risk management

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Speaker 3: business of interest rates, and they're in the business of

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Speaker 3: making loans to participants and deposits for their clients, that

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Speaker 3: they should have a better understanding of the rate market

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Speaker 3: just in general. I mean, the FED has telegraphed here

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Speaker 3: in the United States that we're going to have a

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Speaker 3: prolonged tightening series of events, and we did so we

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Speaker 3: went from essentially zero to just over five percent in

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Speaker 3: the last year or so, and still they hedged long

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Speaker 3: duration on their books with their client money to get

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Speaker 3: a yield, and in return the rates continue to go up.

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Speaker 3: And we know what happened that was an unhedged position.

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Speaker 3: So you would have to ask yourself, you know, where

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Speaker 3: is the risk management associated with some of these banks

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Speaker 3: that are taking money from participants on deposit their fiduciaries.

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Speaker 3: They should have a better understanding of the business that

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Speaker 3: they're in. So I was quite surprised by that. I

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Speaker 3: don't like to see the banks continue to dwindle. We

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Speaker 3: went from roughly thirty thousand banks back in nineteen fifty

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Speaker 3: to less than forty three hundred today, so that's not

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Speaker 3: a good trend for the financial sector. So I don't

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Speaker 3: like to see that activity. So I would hope that

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Speaker 3: they people would continue to manage their risk in a

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Speaker 3: smart way. And I'm not saying that from a self

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Speaker 3: interest proposal. Most second and third tier banks, because of

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Speaker 3: some accounting rules, can't even use futures they but they

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Speaker 3: can use swaps, and I'd like to see them just

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Speaker 3: use the swaps, I said in a meeting earlier today. That.

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Speaker 3: I'm a big believer in the ecosystem, because if the

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Speaker 3: ecosystem continues to grow, then see them will do just

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Speaker 3: finding that ecosystem. So, you know, I'm a little surprised

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Speaker 3: by some of this activity with the banks, and it's

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Speaker 3: frightening the regular participants listen, they're looking just to keep

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Speaker 3: their money in a safe place. And when you lose

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Speaker 3: the faith of the banks, it's a very troubling event.

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Speaker 3: So the bigger ones get bigger, the smaller ones go

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Speaker 3: away and return. You could say that the consumers pay

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Speaker 3: for that.

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Speaker 1: Do you see anything changing in terms of trading volume

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Speaker 1: of some of these interest rate products?

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Speaker 3: Now?

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Speaker 1: Can you see banks starting to react more to this

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Speaker 1: risk here?

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Speaker 3: I think what could happen is back in the seventies,

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Speaker 3: before even before I was in the marketplace, a lot

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Speaker 3: of the agricultural communities, when farmland was really sufferings. Actually

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Speaker 3: just south and west of where you spent some of

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Speaker 3: your early years, Joe, south of Joliette, some great farmland,

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Speaker 3: and you know, mid to southern Illinois was in trouble.

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Speaker 3: And you know, eventually when farmers wanted to borrow money

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Speaker 3: from the banks, the banks said to them that they

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Speaker 3: need to have a hedging program in place in order

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Speaker 3: to get loans from the banks. No, not all, but some.

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Speaker 3: So I think that was something that you know, helped

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Speaker 3: bolster their industry and in return, you know, risk management

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Speaker 3: became more of a popular tool for the agricultural community,

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Speaker 3: like it with financial services. So what does that mean

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Speaker 3: for the banks and the second and third tier banks?

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Speaker 3: You know, I think that they can continue to do

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Speaker 3: the swaps, as I said, and in return, companies like

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Speaker 3: mine can benefit because most of the banks who do

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Speaker 3: the swaps with the second and third tier banks historically

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Speaker 3: do the layoff in derivatives on CMA groups. So for us,

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Speaker 3: it's again, it works for us either way.

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Speaker 2: But did you see And I get that your point

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Speaker 2: is not to advertise or promote seeing me specifically or

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Speaker 2: necessarily out of self interest. But when we had and

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Speaker 2: I guess it started with SVB and people, why did

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Speaker 2: they not take better care of their duration risk? Can

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Speaker 2: you like, if we looked at a chart, could we

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Speaker 2: see or something in the data that other entities woke

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Speaker 2: up to this? I mean, I'm also thinking of some

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Speaker 2: of the deposit moves where it does seem like there

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Speaker 2: was the sort of nonlinear steps, Suddenly people want to

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Speaker 2: be in money market, mutual funds, et cetera. Was there

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Speaker 2: some notable reaction among banks and after the SVB collapse

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Speaker 2: in terms of their hedging activity.

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Speaker 3: I wouldn't be able to see it, as I said,

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Speaker 3: because most of those banks would do swaps, and I

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Speaker 3: don't see the swap activity. I would only see the

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Speaker 3: layoff from the larger dealers, so their activity is always

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Speaker 3: pretty active. Joe so, and I wouldn't see that coming.

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Speaker 1: In since we're just throwing out risks in the market.

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Speaker 1: Let's do the debt ceiling and treasury market and we

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Speaker 1: can get into debt ceiling specifics. But even before this

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Speaker 1: latest showdown, I heard complaints from dealers about liquidity in

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Speaker 1: treasuries and often in treasury futures, which you wouldn't necessarily expect.

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Speaker 1: What's going on there? And is there anything that the

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Speaker 1: CME can do to improve liquidity in that market?

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Speaker 3: Well, here, I think we continually run the largest futures

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Speaker 3: exchange in the world, especially when it comes the raids

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Speaker 3: and the treasury complex. The liquidity in our markets has

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Speaker 3: been outstanding, especially through this entire tightening process. When people

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Speaker 3: talk about liquidity. There's always going to be pockets of illiquidity, Tracy.

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Speaker 3: It's just the nature of any market in the world,

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Speaker 3: including some of the largest. There becomes a situation where

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Speaker 3: the market has a precipitous move because of an unknown

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Speaker 3: event or that happened to pop up that caught everybody

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Speaker 3: off base, where you're going to have pockets of illiquidity.

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Speaker 3: That's called volatility. So I think sometimes people mistake illiquidity

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Speaker 3: with volatility, and that's just what makes markets move at times.

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Speaker 3: So I don't believe that, you know, everything we've done

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Speaker 3: has been proper for the marketplace. We continue to keep

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Speaker 3: our engagement with our clients to see if there's something

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Speaker 3: that they would like us to do differently. And again,

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Speaker 3: I just think it's just a combination of you know,

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Speaker 3: ill liquid times because of events that are happening in

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Speaker 3: the world.

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Speaker 1: This is like illiquidity is another word for a price

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Speaker 1: move that I didn't like pretty much.

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Speaker 3: You said that, not me, But that's sometimes what happens, Tracy.

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Speaker 2: Yes, you know, we the last year we've seen extraordinary

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Speaker 2: high rate volatility in general, and maybe it's come down

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Speaker 2: a little bit. But of course I'm just curious, like

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Speaker 2: obviously seems like volatility across any market is probably going

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Speaker 2: to increase demand from any of the products that are

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Speaker 2: traded on your exchange. You know, how much, like are

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Speaker 2: you able to quantify how much this sort of like

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Speaker 2: high rate vall regime has helped CME's business. And if

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Speaker 2: we were to go to some just sort of like

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Speaker 2: normal I don't know, twenty seventeen some year that we

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Speaker 2: all kind of forget for some reason, like what does

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Speaker 2: that mean for a business like the CMA.

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Speaker 3: Well, I guess what you're trying to ask the question,

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Speaker 3: not trying. What you are asking a question is how

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Speaker 3: much does volatility play into the CME's average daily volume?

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Speaker 3: Is that a fair way to Is that's it? Yeah?

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Speaker 2: I on ironically, I always appreciate what the guests like, and.

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Speaker 1: The guest rephrases the question.

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Speaker 2: In a better way, understand what I'm trying to ask better.

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Speaker 3: S So Joe, No, I mean, it's a great question,

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Speaker 3: and I get it a lot, especially from new investor community.

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Speaker 3: But I tell people, and this has been the historical fact.

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Speaker 3: Volatility is a component of what we do, it's not

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Speaker 3: what we do. So risk management is critically important. Margins

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Speaker 3: are very thin across the board. You need to manage

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Speaker 3: your risk in order to survive in today's world. It's

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Speaker 3: a very competitive world. So people that have interest rate

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Speaker 3: risk are people who have energy risks. Whatever the risk

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Speaker 3: may be associated with the asset classes that I trade.

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Speaker 3: Volatility is only a component of it because volatility never

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Speaker 3: announces itself. You have to remember that this is because

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Speaker 3: the VICS goes up or down, doesn't mean volatility is

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Speaker 3: announcing itself. Volatility shows up when the FED makes a

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Speaker 3: decision that no one saw coming. That's unannounced volatility, right,

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Speaker 3: So you have to be prepared because if you're trying

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Speaker 3: to manage your risk after the event has been announced

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Speaker 3: or disclosed, whatever it may be, you're not going to

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Speaker 3: be able to do so. Joe, So I think that's

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Speaker 3: when people say volatility, you know, seeing me is based

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Speaker 3: on volatility, it's not. It's a component. Risk management is

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Speaker 3: critically important through all times of the cycle, no matter.

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Speaker 1: What what does volatility actually mean for your own risk management?

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Speaker 1: Because I imagine you know there are times you wake

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Speaker 1: up and suddenly you have to start collecting more margin

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Speaker 1: on something and as an exchange, that must be a

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Speaker 1: challenge in the current environment.

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Speaker 3: It is a challenge and it is a critical component

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Speaker 3: to what we do. Since we don't participate in markets, tracy,

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Speaker 3: we manage the risk for others, which makes it a

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Speaker 3: lot easier to do so on margins and other things

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Speaker 3: since we're not involved economically as far as that, so

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Speaker 3: we're agnostic to the market where it goes up or down.

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Speaker 3: Our focus is strictly on managing that, and we have

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Speaker 3: parameters on our margin capabilities of what we will move them,

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Speaker 3: and we go with what we have SPAN and now

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Speaker 3: we have a new system called SPAN two, which is

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Speaker 3: systems that first of all, SPAN was licensed to multiple

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Speaker 3: exchanges around the world for their risk management protocols in

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Speaker 3: order to set margins, and we continue to run that

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Speaker 3: and now are just introducing a more advanced system coming

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Speaker 3: up at the end of this year. So listen, we

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Speaker 3: look at it and we don't deviate from the formula.

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Speaker 3: We don't speculate on the margins. It's thinking, well, this

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Speaker 3: is a good customer, so maybe we'll let that margin

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Speaker 3: go a little bit. So we don't do that. We

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Speaker 3: go right by the letter of the law when it

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Speaker 3: comes to margins. I think sometimes people say that an

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Speaker 3: example being during the Ukraine War. I talked about earlier

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Speaker 3: today on a panel with Scott o'melio, when you looked

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Speaker 3: at what's going on with the price of energy and

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Speaker 3: then ultimately the price of wheat was really affected because

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Speaker 3: of the bread basket and the Baltic there. We raise

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Speaker 3: margins significantly because the price you know you're talking about.

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Speaker 3: You know, roughly a third of the European nations are

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Speaker 3: counting on that wheat for the survival. Most of the

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Speaker 3: African nations are counting on that wheat for this as

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Speaker 3: a staple for their survival, and all of a sudden

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Speaker 3: it's getting trapped or not being allowed to come out

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Speaker 3: of that region. You know, the market really took off

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Speaker 3: on that, and we trade both soft and hard wheat,

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Speaker 3: so we trade the baker's wheat and we also trade

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Speaker 3: to feed wheat. So those are things that we have

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Speaker 3: to be very very careful of because we don't want

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Speaker 3: to get into a situation where we don't have enough

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Speaker 3: margin on deposit or breaches of margin where Tracy, I'm

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Speaker 3: not able to pay you because Joe didn't have the

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Speaker 3: money to pay me to pay you. So we're very

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Speaker 3: careful of that.

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Speaker 2: Since we're talking about your market structure. We talked about

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Speaker 2: this earlier at the is the meeting a CFTC chair Venom.

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Speaker 2: But you know, last year around this time, there was

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Speaker 2: a considerable fight debate over this idea put forward by

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Speaker 2: FTX about changing how futures are regulated and traded in

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Speaker 2: the United States to allow direct access to the exchange.

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Speaker 2: Setting aside what happened with FTX, do you see eventually

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Speaker 2: any merit or possibility that the US will go in

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Speaker 2: something that direction where there is more direct access to

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Speaker 2: the futures exchanges as opposed to having to go through

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Speaker 2: a broker.

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Speaker 3: Well, I don't know the ultimate answer to that, but

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Speaker 3: I do know that if there is going to be

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Speaker 3: a path forward like that, then everybody needs to be

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Speaker 3: involved to make sure that we all understand the process,

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Speaker 3: because the last thing we want to have happen is

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Speaker 3: people who are hedging risks associated with the food in

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Speaker 3: this country don't understand the risk management of it. So

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Speaker 3: it all sounds great when we talk about crypto bec

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Speaker 3: who cares, right, But when you're talking about if you're

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Speaker 3: going to eat or not, or what the price of

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Speaker 3: that product is, all of a sudden we care when

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Speaker 3: we talk about not allowing energy companies to manage their risk,

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Speaker 3: are not understanding how their risk is managed. Then all

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Speaker 3: of a sudden we care because ultimately, when the markets

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Speaker 3: become inefficient, that the cost does not born by the

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Speaker 3: trader or the exchange that is born by the or

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Speaker 3: by the consumer. The consumer absorbs those costs associated with

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Speaker 3: inefficiencies in the marketplace. So I think whatever the whatever

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Speaker 3: is going to be going forward, whether it's a direct

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Speaker 3: model or something else, needs to make sure everybody understands.

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Speaker 3: We bring all sectors along and we write rules associated

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Speaker 3: with to make sure that people understand the rules of

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Speaker 3: the road.

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Speaker 2: I mean that definitely makes sense. But just to push

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Speaker 2: on this a little bit further, like if we were

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Speaker 2: to go in that direction in this country, like it's

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Speaker 2: how would the CME adapt to such a model or

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Speaker 2: what does that mean? What would that mean potentially.

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Speaker 3: For ye you're asking me to speculate, Joe, on what

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Speaker 3: the CME would do, and I won't do that. We're

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Speaker 3: just not going to speculate on a what if scenario.

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Speaker 3: I'm prepared for any outcomes that may or may not arise,

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Speaker 3: and that's just good prudent risk management. In our part

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Speaker 3: to make sure we were ready for those. But again,

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Speaker 3: we're not going to comment on what our strategy would

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Speaker 3: or would that be.

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Speaker 1: I have a bunch of crypto questions that I.

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Speaker 3: Want to What about the dee you guys you talked

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Speaker 3: about it.

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Speaker 1: Wait, wait, wait, I want to ask one other thing,

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Speaker 1: just on commodities, because I had dinner with a bunch

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Speaker 1: of commodities traders last week and I said, I was

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Speaker 1: going to interview you. What should I ask? And yeah,

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Speaker 1: they had a bunch of unprintable stuff to ask.

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Speaker 3: But but the one those are good friends.

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Speaker 1: One question that I thought was really good is one

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Speaker 1: of them asked, why aren't you more active in LEM

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Speaker 1: style commodities management? You know, the LEMY has had a

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Speaker 1: series of scandals at this point, a lot of traders

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Speaker 1: have lost trust in that business. Isn't this a giant

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Speaker 1: market opportunity for the CME.

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Speaker 3: Again, I think we look at markets, and I said

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Speaker 3: this earlier, I'm not rooting for anybody to have problems

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Speaker 3: like Lam has had. I don't believe in growing my

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Speaker 3: business as someone else's despair, because that despair costs participants

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Speaker 3: money and that's not healthy for markets in general. So

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Speaker 3: I don't like that we are competing with l ME.

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Speaker 3: I don't mind good old fashioned competition. We are competing

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Speaker 3: with them in aluminum and some other products. But the

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Speaker 3: product you're referring to is nichol is a much smaller market.

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Speaker 3: It's also has a host of warehouses that are associated

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Speaker 3: with that market that you would have to replicate it.

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Speaker 3: It's not just let's list nickel and not have the

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Speaker 3: facilities to make certain that the deliveries on a nickel

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Speaker 3: are facilitated properly so someone doesn't get delivery of a

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Speaker 3: box of rocks, which actually happened versus nickel. So again,

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Speaker 3: I think from our standpoint, I don't like seeing what's

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Speaker 3: going on with l and ME. But at the same time,

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Speaker 3: we're going to continue to be competitive in areas that

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Speaker 3: we think we can do well at and I've already

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Speaker 3: said that right now we're in a strong position on

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Speaker 3: some of these metals products that we're competing in. Nichola

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Speaker 3: is something that I have said that I am not

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Speaker 3: looking to list at this moment. You never say never,

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Speaker 3: but at this moment, I'm not looking to list it.

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Speaker 3: I think it's got a lot of issues in and

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Speaker 3: of itself. So we'll have to see how that market progresses.

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Speaker 3: But again, it's a much smaller market than some of

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Speaker 3: the other ones they have.

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Speaker 2: Actually, I was going to go into the dead shot,

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Speaker 2: but now I'm curious, like, what is it about Nickel

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Speaker 2: specifically when you say, oh, it definitely has issues.

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Speaker 3: But got it? Well, it has issues because I don't

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Speaker 3: know if it's the warehouse system. I don't know if

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Speaker 3: it's the cash market associated with it. There's a whole

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Speaker 3: host of things that maybe we need to modernize in

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Speaker 3: cash markets to make the derivative much more efficient as well.

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Speaker 3: Sometimes we're trying to have the derivative make the cash

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Speaker 3: more efficient. You need to have a strong cash market

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Speaker 3: if in fact you're going to have a strong derivative market.

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Speaker 1: We're going to have to do an episode on commodities

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Speaker 1: collateral management soon, and I think I have the perfect

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Speaker 1: guest for that.

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Speaker 2: I'm looking forward to that one. Right to the dead ceiling.

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Speaker 2: How big of a deal would it be if the

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Speaker 2: US were to miss a coupon payment in your opinion, Well.

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Speaker 3: Here I don't again speculation.

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Speaker 2: You're you're the one who said bring it back to

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Speaker 2: the death.

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Speaker 3: Well, the only reason I said that is because you

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Speaker 3: said I wrote down markets dead selling fed FTX, and

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Speaker 3: you hopscotched over two of them.

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Speaker 1: So we're getting to them. We're not going in a

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Speaker 1: linear rom I'm sorry.

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Speaker 3: I'm sorry. Most people go in order, they say they're

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Speaker 3: going to go in but that's what jo and Tracy Bloomberg. Sorry,

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Speaker 3: so I got it. So I'm teasing you. So anyway,

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Speaker 3: So I the dead ceiling here, I think talking about

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Speaker 3: a potential default and what it would mean, I think

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Speaker 3: you'd have to be hard pressed because I think that

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Speaker 3: that could be catastrophic, to say the least, because it's

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Speaker 3: not just the US, which is a huge obviously participants

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Speaker 3: in the United States that could if we had a default,

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Speaker 3: Because it's not just the treasuries. It could be a

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Speaker 3: default or slowing a payment on Social Security, it could

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Speaker 3: be slowing a payment on veterans affairs, which they need

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Speaker 3: that money to survive. These are veterans that fought for

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Speaker 3: our country. There's a whole host of things that payments

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Speaker 3: need to go out to do so, not just the

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Speaker 3: treasury market. So you also look at probably sixty other

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Speaker 3: countries that are holding US debt. And I'm not referring

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Speaker 3: to just China, because the easiest thing to say is China.

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Speaker 3: Sometimes I think China wouldn't even care of the US defaulted,

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Speaker 3: because that would only maybe bolster their long term view

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Speaker 3: about where they put themselves in the financial system. And again,

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Speaker 3: their view is in hundreds of years. Ours is in nanoseconds.

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Speaker 3: So you've got to remember the difference between how they

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Speaker 3: think about it. What I am very concerned about, and

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Speaker 3: I hope our government unsands there's a lot of smaller nations,

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Speaker 3: especially European nations, who own US debt that if it

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Speaker 3: ever deful they could put them into a world of hurt,

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Speaker 3: So not just the US, So that's a big concern here.

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Speaker 3: I don't believe we'll see a default in the United States.

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Speaker 3: I think we'll see a lot of frightening aspects to it.

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Speaker 3: I mean, you got to remember it took US fifteen

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Speaker 3: rounds to elect the Speaker of the House from its

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Speaker 3: own party ago, and I think that was a bit

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Speaker 3: of a proxy to show what's going on right now.

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Speaker 3: People kept extracting what they believe they wanted in order

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Speaker 3: to give the vote to then now Speaker McCarthy. So

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Speaker 3: when you're looking at that, you have to say to yourself,

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Speaker 3: what are people looking at to extract on cost cutting

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Speaker 3: measures from an administration that's got not just this one,

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Speaker 3: but prior administrations, that has the United States of America

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Speaker 3: thirty one point five trillion dollars in debt. How do

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Speaker 3: we start to address it? And then some of these

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Speaker 3: fringe participants of either party might say, this is a

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Speaker 3: great opportunity or a horrible opportunity, let's borrow more. The

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Speaker 3: point is they don't have the votes right now for

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Speaker 3: a debt thing, and so there'll be multiple rounds of this.

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Speaker 3: You saw just two weeks ago the House passed the

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Speaker 3: bill by five votes, still raise the debt SLENE by

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Speaker 3: one and a half trillion, but in return or the

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Speaker 3: cuts they asked for over ten years were pretty dramatic,

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Speaker 3: and obviously the President and the Senate wouldn't even discuss

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Speaker 3: that particular piece of legislation. So they met yesterday, they're

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Speaker 3: going to continue, They're going to meet again Friday, and

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Speaker 3: we'll have to see where it goes. Secretary of Ellen says,

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Speaker 3: we have enough to pay our bills to June first.

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Speaker 3: I think people believe that's a bit of a fudge.

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Speaker 3: And really we'll probably get into August before we're really

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Speaker 3: going to have some major concerns. And listen, I saw

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Speaker 3: the debt ceiling go in twenty eleven down to the

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Speaker 3: eleventh hour, literally eleventh hour, with President Obama and then

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Speaker 3: Speaker John Bayner, And we're talking about some pretty rational

436
00:22:51,640 --> 00:22:54,440
Speaker 3: people back then in twenty eleven, you would have to say,

437
00:22:54,480 --> 00:22:57,119
Speaker 3: what are we dealing with today? And so could it

438
00:22:57,160 --> 00:22:59,800
Speaker 3: go longer? What does it look like? I think you

439
00:22:59,800 --> 00:23:02,199
Speaker 3: can see some delays on some of these payments, but

440
00:23:02,240 --> 00:23:05,359
Speaker 3: not a default. So you can see delays on some

441
00:23:05,480 --> 00:23:08,240
Speaker 3: of the coupons that are expiring this summer or maybe

442
00:23:08,240 --> 00:23:10,000
Speaker 3: even the fall, So you could see some delays on

443
00:23:10,040 --> 00:23:13,280
Speaker 3: the payments. You could see some delays on Social Security

444
00:23:13,480 --> 00:23:16,160
Speaker 3: and other benefits. But if that's the case, what does

445
00:23:16,160 --> 00:23:18,000
Speaker 3: that do to the marketplace? So I can tie this

446
00:23:18,119 --> 00:23:21,840
Speaker 3: all back in to we could be in for you know, again,

447
00:23:22,280 --> 00:23:25,159
Speaker 3: when I talk about volatility and it doesn't introduce itself,

448
00:23:25,160 --> 00:23:27,639
Speaker 3: here's a situation where you better pay attention because this

449
00:23:27,720 --> 00:23:31,399
Speaker 3: could introduce itself in a very ugly way. And that

450
00:23:31,560 --> 00:23:34,199
Speaker 3: is something that people need to pay attention to, because

451
00:23:34,240 --> 00:23:37,440
Speaker 3: if in fact, we have someone make the reference that

452
00:23:37,720 --> 00:23:39,719
Speaker 3: the payment that you were supposed to get on Tuesday

453
00:23:39,760 --> 00:23:42,280
Speaker 3: will be here the following Tuesday. People will take that

454
00:23:42,320 --> 00:23:44,520
Speaker 3: as it's never coming, and the markets will take that

455
00:23:44,600 --> 00:23:47,119
Speaker 3: as it's never coming. Not that that's the case, but

456
00:23:47,160 --> 00:23:49,280
Speaker 3: that's how markets anticipate. And then it happens all of

457
00:23:49,320 --> 00:23:52,359
Speaker 3: a sudden, and now we go into liquidity issues, Tracy,

458
00:23:52,359 --> 00:23:56,280
Speaker 3: that you referenced earlier, because of an event of volatility.

459
00:23:56,600 --> 00:23:59,280
Speaker 3: Then we have illiquidity what it appears to be because

460
00:23:59,280 --> 00:23:59,760
Speaker 3: of the event.

461
00:24:00,160 --> 00:24:02,080
Speaker 1: This is exactly what I wanted to ask you, which is,

462
00:24:02,119 --> 00:24:04,960
Speaker 1: are there technicalities that the CME is now on the

463
00:24:05,000 --> 00:24:08,280
Speaker 1: lookout for in terms of missed coupon payments and things

464
00:24:08,359 --> 00:24:08,680
Speaker 1: like that.

465
00:24:08,960 --> 00:24:11,960
Speaker 3: We are We just did a presentation and I can't

466
00:24:11,960 --> 00:24:14,359
Speaker 3: share all the information that I gave to my produciers,

467
00:24:14,359 --> 00:24:17,240
Speaker 3: my board of directors, with my team last week here

468
00:24:17,240 --> 00:24:20,600
Speaker 3: in Chicago about what it would look like in lieu

469
00:24:20,600 --> 00:24:23,000
Speaker 3: of maybe a technical default and where we stand from

470
00:24:23,040 --> 00:24:25,480
Speaker 3: our makeup of margin. You got to remember, we're holding

471
00:24:25,480 --> 00:24:27,920
Speaker 3: two hundred and fifty billion dollars that we passed through

472
00:24:27,960 --> 00:24:31,120
Speaker 3: into the either the federal reserve on our cash because

473
00:24:31,119 --> 00:24:32,600
Speaker 3: we have the ability to do that as a SIF

474
00:24:32,600 --> 00:24:36,679
Speaker 3: move or we're holding treasuries. We hold roughly ten to

475
00:24:36,720 --> 00:24:39,680
Speaker 3: twenty percent of other colaudalo, whether it's Gold, Warrens corporates

476
00:24:39,760 --> 00:24:43,560
Speaker 3: or others small. But we haircut things dramatically already, even

477
00:24:43,680 --> 00:24:46,000
Speaker 3: including government debts. So the only thing we don't haircut

478
00:24:46,040 --> 00:24:49,240
Speaker 3: is cash, and so we are in a strong position.

479
00:24:49,240 --> 00:24:52,000
Speaker 3: We're holding roughly over one hundred and thirty billion dollars

480
00:24:52,080 --> 00:24:55,440
Speaker 3: today in cash against our margin positions, so roughly almost

481
00:24:55,520 --> 00:24:58,639
Speaker 3: half in cash. So we're in a strong position right now.

482
00:24:58,680 --> 00:25:02,119
Speaker 3: But we do have some treasuries. The only ones we

483
00:25:02,160 --> 00:25:04,199
Speaker 3: would need to worry about are the durations that are

484
00:25:04,240 --> 00:25:07,119
Speaker 3: expiring in a period that we think could be an issue,

485
00:25:07,119 --> 00:25:09,919
Speaker 3: which is, you know, maybe that August through October period,

486
00:25:10,480 --> 00:25:12,520
Speaker 3: And again that's a very small portion of the margin

487
00:25:12,520 --> 00:25:13,240
Speaker 3: we're holding today.

488
00:25:13,840 --> 00:25:17,080
Speaker 1: I'm scared to deviate from our list of talking.

489
00:25:18,720 --> 00:25:21,600
Speaker 3: And I didn't get anything ahead of time. I just

490
00:25:21,640 --> 00:25:23,600
Speaker 3: got my little sheet here that I wrote down.

491
00:25:23,960 --> 00:25:26,600
Speaker 1: Can I pivot slightly to AI, which is like the

492
00:25:26,600 --> 00:25:29,320
Speaker 1: big talking point at the moment, and it feels like

493
00:25:29,400 --> 00:25:33,119
Speaker 1: everyone's freaking out over the possibility of losing their jobs.

494
00:25:33,200 --> 00:25:35,800
Speaker 1: Joe and I have joked that chat GPT could easily

495
00:25:35,880 --> 00:25:39,480
Speaker 1: replicate one of these episodes with a guest, and I

496
00:25:39,520 --> 00:25:43,280
Speaker 1: would love to hear. Never replicate, Terry. I would love

497
00:25:43,320 --> 00:25:45,719
Speaker 1: to hear from your perspective, though, the CME is an

498
00:25:45,880 --> 00:25:50,600
Speaker 1: entity that has gone through significant rounds of technological change.

499
00:25:50,720 --> 00:25:54,439
Speaker 1: We all remember, you know, open outcry pit trading. You

500
00:25:54,560 --> 00:25:58,200
Speaker 1: had human traders actually shouting out their trades and things

501
00:25:58,280 --> 00:26:00,920
Speaker 1: like that that went away. So how are you thinking

502
00:26:00,960 --> 00:26:03,679
Speaker 1: about AI now and what advice do you have for

503
00:26:03,800 --> 00:26:07,040
Speaker 1: people who might be grappling with the potential of this

504
00:26:07,080 --> 00:26:07,800
Speaker 1: new technology.

505
00:26:08,000 --> 00:26:11,000
Speaker 3: I don't know about the markets so much, but boy,

506
00:26:11,040 --> 00:26:13,879
Speaker 3: Michael Bloomberg's got to be just really thinking close about

507
00:26:13,880 --> 00:26:16,320
Speaker 3: this AI. You guys, are you guys are replaceable? You

508
00:26:16,320 --> 00:26:16,680
Speaker 3: know that?

509
00:26:16,920 --> 00:26:17,280
Speaker 1: Thank you.

510
00:26:17,600 --> 00:26:20,880
Speaker 3: I'm sorry, I'm tasing. Sorry listeners.

511
00:26:21,080 --> 00:26:23,840
Speaker 1: We'll do a chat GPT generated version of this interview

512
00:26:23,960 --> 00:26:25,159
Speaker 1: and you see how it does.

513
00:26:25,720 --> 00:26:29,480
Speaker 3: Yeah, you guys all rig that. Remember the information that

514
00:26:29,560 --> 00:26:32,200
Speaker 3: chat GBT has is only up through twenty twenty one,

515
00:26:32,240 --> 00:26:32,760
Speaker 3: so we.

516
00:26:32,800 --> 00:26:35,600
Speaker 2: Have like two years ahead of it.

517
00:26:37,040 --> 00:26:41,200
Speaker 3: I think that the mark there's always pain and there's

518
00:26:41,280 --> 00:26:45,480
Speaker 3: always gain as we progress. So, Tracy, you gave the

519
00:26:45,520 --> 00:26:50,040
Speaker 3: analogy of markets as open out transitioning to markets electronic.

520
00:26:50,560 --> 00:26:53,400
Speaker 3: There was a tremendous amount of pain for people who

521
00:26:53,400 --> 00:26:57,080
Speaker 3: could not make that transition from the floor traded model

522
00:26:57,200 --> 00:26:59,840
Speaker 3: to the electronic model. Now, the electronic model could not

523
00:27:00,000 --> 00:27:04,520
Speaker 3: distribute markets around the world like the electronic model can,

524
00:27:04,600 --> 00:27:07,760
Speaker 3: so there were so many more benefits the efficiencies that

525
00:27:07,840 --> 00:27:11,200
Speaker 3: the electronic model created. Now, a lot of people were

526
00:27:11,280 --> 00:27:14,720
Speaker 3: able to adapt to the new model, and there was

527
00:27:14,760 --> 00:27:16,959
Speaker 3: some that couldn't. So that's the pain part of it,

528
00:27:17,000 --> 00:27:19,760
Speaker 3: because you can't bring everybody along. The gain part of

529
00:27:19,800 --> 00:27:22,679
Speaker 3: it was the market got much much larger due to

530
00:27:22,720 --> 00:27:27,320
Speaker 3: the technology that the markets now used today and continue

531
00:27:27,359 --> 00:27:29,239
Speaker 3: to evolve in each and every day. So when you

532
00:27:29,280 --> 00:27:33,200
Speaker 3: look at artificial intelligence, you know there might be some

533
00:27:33,720 --> 00:27:36,800
Speaker 3: short term pain, but I think that long term there

534
00:27:36,880 --> 00:27:40,280
Speaker 3: could be a tremendous amount of activity. You know, I

535
00:27:40,359 --> 00:27:42,760
Speaker 3: teased a moment ago Chersey about you and Joe, But

536
00:27:42,800 --> 00:27:46,719
Speaker 3: I think that there's many opportunities for all fields as

537
00:27:46,760 --> 00:27:50,439
Speaker 3: it relates to artificial intelligence, And the question is we

538
00:27:50,560 --> 00:27:52,800
Speaker 3: just got to make sure we don't deploy it in

539
00:27:52,840 --> 00:27:55,000
Speaker 3: a way that no one understands it. I'll go back

540
00:27:55,000 --> 00:27:58,560
Speaker 3: to my crypto answer. It is long as the rules

541
00:27:58,560 --> 00:28:01,520
Speaker 3: of the road are well understood by all participants. We

542
00:28:01,560 --> 00:28:06,600
Speaker 3: have an opportunity to participate in new technology, including artificial intelligence.

543
00:28:06,640 --> 00:28:09,760
Speaker 3: So that being said, I hope that it increases the

544
00:28:09,840 --> 00:28:12,480
Speaker 3: job market, not decreases it in the long run. But

545
00:28:12,880 --> 00:28:15,120
Speaker 3: in the short term it could have an impact where

546
00:28:15,160 --> 00:28:17,439
Speaker 3: people see this as a major cost savings to you

547
00:28:17,480 --> 00:28:21,240
Speaker 3: know what. You referenced it as displacing people from their jobs.

548
00:28:21,280 --> 00:28:22,680
Speaker 3: I think ultimately creates jobs.

549
00:28:22,920 --> 00:28:25,560
Speaker 2: Since you mentioned and since in the context of no

550
00:28:25,640 --> 00:28:29,159
Speaker 2: longer having that physical trading floor, I'm curious about like

551
00:28:29,800 --> 00:28:32,480
Speaker 2: the future of Chicago and your role here, and we

552
00:28:32,560 --> 00:28:35,680
Speaker 2: have seen some financial firms leave, like a Citadel. I

553
00:28:35,680 --> 00:28:37,640
Speaker 2: don't know if I assume they still have some offices

554
00:28:37,640 --> 00:28:42,720
Speaker 2: here they do. I'm not sure. City elected a new

555
00:28:42,720 --> 00:28:46,760
Speaker 2: progressive mayor who has talked at times about higher tax

556
00:28:46,800 --> 00:28:50,360
Speaker 2: on hotels, a higher tax for large employers, and even

557
00:28:50,360 --> 00:28:53,120
Speaker 2: a financial transaction tax, which I imagine goes straight to

558
00:28:53,160 --> 00:28:55,440
Speaker 2: the heart of your business. Have you talked to the

559
00:28:56,160 --> 00:28:56,720
Speaker 2: mayor elect?

560
00:28:57,040 --> 00:28:58,280
Speaker 3: No, I have not spoken to him.

561
00:28:58,480 --> 00:29:01,400
Speaker 2: How much of a you know, were some of these

562
00:29:01,880 --> 00:29:05,560
Speaker 2: proposals to go through? How much would that you know?

563
00:29:05,600 --> 00:29:07,479
Speaker 2: What do you what would that mean for the CME

564
00:29:07,680 --> 00:29:10,800
Speaker 2: and how committed would you Is there a future in

565
00:29:10,800 --> 00:29:12,400
Speaker 2: which the CMEME isn't in Chicago.

566
00:29:13,000 --> 00:29:16,760
Speaker 3: First of all, I think that there's a huge difference

567
00:29:16,800 --> 00:29:22,600
Speaker 3: between a campaign, the rhetoric associated with campaigns, and once

568
00:29:23,000 --> 00:29:26,360
Speaker 3: somebody assumes in office, whether it's Mayor of Chicago, whether

569
00:29:26,400 --> 00:29:28,640
Speaker 3: it's President of the United States. A lot of people

570
00:29:28,720 --> 00:29:31,400
Speaker 3: say a lot of things during an election process. Now

571
00:29:31,440 --> 00:29:35,280
Speaker 3: what they can do and get accomplished are two different things.

572
00:29:35,520 --> 00:29:38,120
Speaker 3: I got to imagine that if you run for President

573
00:29:38,120 --> 00:29:41,080
Speaker 3: of the United States, the day you walk into that

574
00:29:41,160 --> 00:29:46,000
Speaker 3: White House, it's got to be absolutely the most awesome

575
00:29:46,880 --> 00:29:49,200
Speaker 3: experience in your life, and it's also got to be

576
00:29:50,000 --> 00:29:52,160
Speaker 3: the biggest burden you've ever seen in your entire life,

577
00:29:52,240 --> 00:29:54,520
Speaker 3: saying you are the leader of the free world. What

578
00:29:54,640 --> 00:29:58,000
Speaker 3: I said on a campaign trail, now, okay, that was interesting,

579
00:29:58,040 --> 00:29:59,800
Speaker 3: But now I'm sitting here, now I got to make

580
00:29:59,800 --> 00:30:03,200
Speaker 3: this on behalf of three hundred and thirty five million people.

581
00:30:03,360 --> 00:30:05,840
Speaker 3: Make sure we're doing the right thing. And so I

582
00:30:05,880 --> 00:30:08,440
Speaker 3: think that when you look at you know, Mayor elect

583
00:30:08,600 --> 00:30:12,440
Speaker 3: Brandon Johnson. I don't know him. I know he's very

584
00:30:12,480 --> 00:30:14,640
Speaker 3: progressive and he's made a lot of comments as it

585
00:30:14,680 --> 00:30:19,520
Speaker 3: relates to taxes, I'm hopeful that he reaches out the

586
00:30:19,680 --> 00:30:21,720
Speaker 3: folks well, I don't care if it's me or whoever,

587
00:30:22,160 --> 00:30:24,680
Speaker 3: and talks about these things I have. First of all,

588
00:30:24,760 --> 00:30:27,280
Speaker 3: let's make one thing perfectly clear for your listeners, mister

589
00:30:27,360 --> 00:30:31,480
Speaker 3: Johnson has no legal authority to impose a transaction tax

590
00:30:31,520 --> 00:30:34,360
Speaker 3: on my business. He just doesn't have it. The city

591
00:30:34,400 --> 00:30:36,600
Speaker 3: of Chicago doesn't have the ability. It's not him, it's

592
00:30:36,640 --> 00:30:39,400
Speaker 3: the city of Chicago. The State of Illinois is somebody

593
00:30:39,400 --> 00:30:42,880
Speaker 3: that can propose a transaction tax on it, and then

594
00:30:43,480 --> 00:30:45,920
Speaker 3: the federal government are the only two entities that can

595
00:30:45,960 --> 00:30:48,840
Speaker 3: do so. So. On the hotel tax, I'll leave that

596
00:30:48,880 --> 00:30:51,320
Speaker 3: to the people that run this hotel to determine how

597
00:30:51,320 --> 00:30:53,280
Speaker 3: they're going to deal with that. I don't think it's

598
00:30:53,320 --> 00:30:55,520
Speaker 3: healthy for tourism. That's one of the things we rely

599
00:30:55,640 --> 00:30:58,280
Speaker 3: on in this great city is tourism. So you hate

600
00:30:58,280 --> 00:31:02,000
Speaker 3: to chase people away over a silly you'd rather take

601
00:31:02,080 --> 00:31:04,640
Speaker 3: maybe take the Walmart model and bring in more in

602
00:31:04,760 --> 00:31:08,080
Speaker 3: charge less. So I'm hopeful that he deals with some

603
00:31:08,120 --> 00:31:10,719
Speaker 3: of the issues that are of concern, and most of

604
00:31:10,760 --> 00:31:14,600
Speaker 3: those are around crime and safety. So I'm hopeful that

605
00:31:14,640 --> 00:31:17,960
Speaker 3: the new mayor focuses on those issues and doesn't get

606
00:31:17,960 --> 00:31:22,880
Speaker 3: too blogged down on how he's going to short term

607
00:31:22,920 --> 00:31:25,680
Speaker 3: think he's going to raise taxes on certain people in

608
00:31:25,800 --> 00:31:29,440
Speaker 3: order to fit his agenda. We have a problem in Chicago,

609
00:31:29,480 --> 00:31:31,160
Speaker 3: and I think there's other cities here. It's not just

610
00:31:31,200 --> 00:31:34,120
Speaker 3: the crime, it's the community. You need to create community

611
00:31:34,640 --> 00:31:37,440
Speaker 3: amongst your city if you're going to survive in the future.

612
00:31:37,680 --> 00:31:40,240
Speaker 3: Meaning we need to have businesses open, We need to

613
00:31:40,280 --> 00:31:43,600
Speaker 3: have people walking into those businesses. You need to have commerce,

614
00:31:43,640 --> 00:31:45,320
Speaker 3: You need to have people living in here. You can't

615
00:31:45,400 --> 00:31:48,840
Speaker 3: chase everybody away. Everybody is afraid right now because of

616
00:31:48,880 --> 00:31:52,600
Speaker 3: whether it's the crime issue or whatever. So I think

617
00:31:52,680 --> 00:31:55,840
Speaker 3: layering on additional cost as you're trying to fix one

618
00:31:55,880 --> 00:31:59,960
Speaker 3: problem would be a catastrophic mistake as far as seeing

619
00:32:00,000 --> 00:32:03,080
Speaker 3: I mean's future in Chicago. See, I mean, we have

620
00:32:03,240 --> 00:32:06,680
Speaker 3: sold all of our property in the state of Illinois

621
00:32:06,720 --> 00:32:09,120
Speaker 3: and the city of Chicago. We don't own anything any longer.

622
00:32:09,280 --> 00:32:11,760
Speaker 3: We put ourselves into a very strong position many many

623
00:32:11,840 --> 00:32:16,840
Speaker 3: years ago. I actually in our leases, we have language

624
00:32:16,840 --> 00:32:18,960
Speaker 3: in there that says if there's something that's ill conceived

625
00:32:18,960 --> 00:32:21,440
Speaker 3: from the city of the state that our leases are

626
00:32:21,480 --> 00:32:23,840
Speaker 3: null and void. So we're in a really strong position.

627
00:32:23,920 --> 00:32:26,480
Speaker 3: We have options coming up on our long term leases already,

628
00:32:27,120 --> 00:32:30,080
Speaker 3: so that doesn't mean we're leaving. We like Chicago. As

629
00:32:30,120 --> 00:32:32,960
Speaker 3: I said earlier today on a panel. I think Chicago

630
00:32:33,000 --> 00:32:36,040
Speaker 3: has been on his back foot before and it can

631
00:32:36,040 --> 00:32:37,840
Speaker 3: get back on its front foots, but it takes all

632
00:32:37,840 --> 00:32:39,160
Speaker 3: of us to do so. So I want to be

633
00:32:39,160 --> 00:32:41,480
Speaker 3: a part of the solution, not part of the problem.

634
00:32:42,280 --> 00:32:45,080
Speaker 3: And that's how I look at Chicago. So again, we're

635
00:32:45,080 --> 00:32:47,920
Speaker 3: in a strong position from a whole host of reasons,

636
00:32:47,960 --> 00:32:50,120
Speaker 3: from our risk management as I talked about earlier, to

637
00:32:50,360 --> 00:32:53,200
Speaker 3: a real estate and if there's any ill conceived taxes,

638
00:32:53,520 --> 00:32:55,200
Speaker 3: you know, we're in a very strong position. If we

639
00:32:55,240 --> 00:32:56,560
Speaker 3: had to leave, we could leave.

640
00:32:56,840 --> 00:32:59,880
Speaker 1: Yeah, a lot of these dynamics apply to New York

641
00:33:00,080 --> 00:33:04,200
Speaker 1: as well. Does the SEMI feel a responsibility to get

642
00:33:04,240 --> 00:33:06,880
Speaker 1: people back into the office and into the city If

643
00:33:06,880 --> 00:33:09,240
Speaker 1: we're talking about crime, it would help to have people

644
00:33:09,360 --> 00:33:12,440
Speaker 1: walking around and businesses open, as you said, so do

645
00:33:12,480 --> 00:33:13,920
Speaker 1: you feel that you're part of that?

646
00:33:14,280 --> 00:33:18,360
Speaker 3: So, Tracy, that's an excellent question, and it's been an issue,

647
00:33:18,400 --> 00:33:21,760
Speaker 3: as you can all can imagine, everybody has been locked up,

648
00:33:21,920 --> 00:33:24,000
Speaker 3: or they've done things a certain way for three plus

649
00:33:24,120 --> 00:33:27,680
Speaker 3: years and it really gets hard to say, Okay, that's

650
00:33:27,760 --> 00:33:31,120
Speaker 3: over with, now come back to work. Everybody was like, well,

651
00:33:31,200 --> 00:33:33,840
Speaker 3: why I'm doing just fine doing it the way I'm

652
00:33:33,840 --> 00:33:36,920
Speaker 3: doing it now, you know, I think it's up to

653
00:33:37,600 --> 00:33:40,560
Speaker 3: And I said this to our governor. I said to him,

654
00:33:40,600 --> 00:33:42,840
Speaker 3: I said, you know when COVID, when you shut down

655
00:33:42,920 --> 00:33:46,480
Speaker 3: the state of Illinois, and certain businesses had to stay

656
00:33:46,480 --> 00:33:49,800
Speaker 3: open because they were essential to the lives of others.

657
00:33:50,160 --> 00:33:53,640
Speaker 3: Some banks and exchanges were part of that is being essential,

658
00:33:54,040 --> 00:33:56,480
Speaker 3: not just grocery stores, not just big box stores and others,

659
00:33:56,560 --> 00:33:59,680
Speaker 3: but we were essential. Nobody thought about how do we

660
00:33:59,680 --> 00:34:02,520
Speaker 3: get them back now? You know? So why isn't government

661
00:34:02,600 --> 00:34:06,200
Speaker 3: getting involved with saying we need people back, We need

662
00:34:06,240 --> 00:34:09,239
Speaker 3: people back in cities and communities. You know, I'm a

663
00:34:09,280 --> 00:34:11,879
Speaker 3: big believer that if you're a steward or a fiduciary

664
00:34:11,920 --> 00:34:13,840
Speaker 3: of other people's money, that you need to be there,

665
00:34:14,040 --> 00:34:15,640
Speaker 3: to be on top of it, and to sit at

666
00:34:15,680 --> 00:34:18,840
Speaker 3: home and monitor that off a screen, to me is

667
00:34:18,920 --> 00:34:21,800
Speaker 3: not the appropriate thing to do. You should have always

668
00:34:21,840 --> 00:34:25,399
Speaker 3: have somebody you know involved in an office setting as

669
00:34:25,400 --> 00:34:28,080
Speaker 3: you're relying on someone to keep your money safe for you.

670
00:34:28,160 --> 00:34:32,280
Speaker 3: So there's a couple of different ways I'm looking at that, Tracy,

671
00:34:32,360 --> 00:34:35,120
Speaker 3: But I will say that, you know, from our standpoint,

672
00:34:35,239 --> 00:34:38,640
Speaker 3: I've met with my people, I'm not a big fan

673
00:34:38,680 --> 00:34:40,279
Speaker 3: of the hybrid, but at the same time, you have

674
00:34:40,320 --> 00:34:42,279
Speaker 3: to It's a competitive world out there, so you have

675
00:34:42,360 --> 00:34:44,279
Speaker 3: to do what you have to do. I will say

676
00:34:44,320 --> 00:34:47,000
Speaker 3: that my risk in clearing people are in five days

677
00:34:47,040 --> 00:34:49,319
Speaker 3: a week, and that's not negotiable, and they know that,

678
00:34:49,440 --> 00:34:52,160
Speaker 3: and I've had meetings with them and they're comfortable. They

679
00:34:52,239 --> 00:34:56,799
Speaker 3: understand my concerns around risk and clearing. I outline them

680
00:34:56,960 --> 00:35:01,680
Speaker 3: for you all, and sitting here how volatility can come

681
00:35:01,760 --> 00:35:05,000
Speaker 3: up very quickly. So I'm very committed. I understand that

682
00:35:05,080 --> 00:35:07,560
Speaker 3: certain people in finance and legal and other parts of

683
00:35:07,560 --> 00:35:11,080
Speaker 3: my company can hybrid a little bit. But again I'm

684
00:35:11,120 --> 00:35:14,520
Speaker 3: holding everybody accountable. I have shareholders that are holding me accountable.

685
00:35:14,560 --> 00:35:17,000
Speaker 3: So we'll see how this all pans out. But I

686
00:35:17,040 --> 00:35:21,760
Speaker 3: do believe there's a role in not only federal government,

687
00:35:21,800 --> 00:35:25,120
Speaker 3: but state government to help rebuild these cities. And listen,

688
00:35:25,160 --> 00:35:28,680
Speaker 3: we have a massive problem with vacancies in office buildings

689
00:35:28,680 --> 00:35:31,319
Speaker 3: around this country, especially in New York and Chicago in

690
00:35:31,440 --> 00:35:34,560
Speaker 3: LA and that's not healthy. I mean, that's a massive

691
00:35:34,960 --> 00:35:38,480
Speaker 3: shoe to drop because all these buildings are levered up.

692
00:35:38,560 --> 00:35:40,360
Speaker 3: I mean, there's loans against them that are going to

693
00:35:40,400 --> 00:35:42,920
Speaker 3: be refinanced that much higher rates, and there's no occupancy.

694
00:35:43,000 --> 00:35:46,239
Speaker 3: What's going to happen to them? So not an economist,

695
00:35:46,280 --> 00:35:48,840
Speaker 3: I'm a realist. I look out the window and you

696
00:35:48,880 --> 00:35:53,000
Speaker 3: see certain things. And again I think it's upon not

697
00:35:53,080 --> 00:35:57,000
Speaker 3: only executives like myself, but of course people in elected

698
00:35:57,040 --> 00:35:59,920
Speaker 3: offices to make sure that we put these pieces back together.

699
00:36:00,040 --> 00:36:00,720
Speaker 3: And it's hard.

700
00:36:16,440 --> 00:36:19,600
Speaker 2: You mentioned office vacancy's problem. And the other issue that

701
00:36:19,600 --> 00:36:23,439
Speaker 2: a lot of banks have run into, besides their duration risk,

702
00:36:23,680 --> 00:36:26,239
Speaker 2: is this perception that many of them have a significant

703
00:36:26,239 --> 00:36:29,719
Speaker 2: potential losses related to commercial real estate. We talked about

704
00:36:29,719 --> 00:36:32,040
Speaker 2: this on a recent episode. Real estate is one of

705
00:36:32,080 --> 00:36:36,720
Speaker 2: these areas which sort of seems somewhat impervious to robust

706
00:36:36,719 --> 00:36:41,279
Speaker 2: hedging instruments. So are futures related to indicase? Can you

707
00:36:41,320 --> 00:36:45,520
Speaker 2: talk to as as someone in this business of these instruments,

708
00:36:45,760 --> 00:36:48,200
Speaker 2: what is it about real estate or commercial real estate

709
00:36:48,400 --> 00:36:51,560
Speaker 2: that has made it difficult to build instruments that it

710
00:36:51,600 --> 00:36:53,440
Speaker 2: would allow for hedging activity.

711
00:36:54,440 --> 00:36:56,960
Speaker 3: So I think there's a lot of things that are

712
00:36:57,040 --> 00:37:00,319
Speaker 3: really difficult to provide what Tracy talked about earlier, which

713
00:37:00,360 --> 00:37:03,480
Speaker 3: is liquidity for every single instrument. Because everybody who's in

714
00:37:03,520 --> 00:37:05,839
Speaker 3: a certain business believes that they should have a risk

715
00:37:05,880 --> 00:37:08,239
Speaker 3: management tool, there's the other people that don't want to

716
00:37:08,280 --> 00:37:10,880
Speaker 3: participate in it because of whatever that industry may or

717
00:37:10,920 --> 00:37:13,480
Speaker 3: may not look like. You also have to make sure

718
00:37:13,520 --> 00:37:16,560
Speaker 3: that nothing is readily maniputable before you can go forward.

719
00:37:16,600 --> 00:37:18,160
Speaker 3: So you have to have a strong cash market, like

720
00:37:18,200 --> 00:37:22,160
Speaker 3: I referenced earlier. So sometimes the markets are just not

721
00:37:23,600 --> 00:37:27,160
Speaker 3: you know, I don't want to say centralized, but are

722
00:37:27,200 --> 00:37:29,440
Speaker 3: just not customized. That is the word I'm looking for,

723
00:37:29,600 --> 00:37:33,120
Speaker 3: customize enough to have for every single product. So in return,

724
00:37:33,680 --> 00:37:35,440
Speaker 3: you know, when you look at here's a great example

725
00:37:35,480 --> 00:37:37,239
Speaker 3: of jet fuel, you would think, boy, there's a lot

726
00:37:37,239 --> 00:37:39,320
Speaker 3: of people flying. Why don't we have a jet fuel contract?

727
00:37:39,520 --> 00:37:42,160
Speaker 3: Why because they use their West Texas intermedia to manage

728
00:37:42,200 --> 00:37:45,160
Speaker 3: that risk in their jet fuel cost. Why don't we

729
00:37:45,320 --> 00:37:48,120
Speaker 3: have other contracts for other businesses? You know, I mean

730
00:37:48,160 --> 00:37:50,800
Speaker 3: I've had people economies saying, Terry, we've seen this lobster market.

731
00:37:50,800 --> 00:37:53,520
Speaker 3: I might excuse me, the lobster market, and we need

732
00:37:53,560 --> 00:37:55,879
Speaker 3: to have a future's market on lobsters because in Maine

733
00:37:55,960 --> 00:37:58,200
Speaker 3: right now they're rolling. I'm like, oh boy, okay, I

734
00:37:58,200 --> 00:38:00,920
Speaker 3: don't think they care in Kansas, but all right, whatever.

735
00:38:01,640 --> 00:38:03,759
Speaker 3: Uh So you need to make sure that you have

736
00:38:03,800 --> 00:38:05,960
Speaker 3: a natural buyer, natural seller, and a market that's not

737
00:38:06,000 --> 00:38:08,400
Speaker 3: readily inipotable. I'm not saying the real estate market is

738
00:38:08,440 --> 00:38:10,839
Speaker 3: what a commercial market is, but the way you can

739
00:38:10,840 --> 00:38:13,720
Speaker 3: deal with that is through interest rates and interest rate markets,

740
00:38:13,760 --> 00:38:16,239
Speaker 3: so you can hedge those exposures on your cost. You're

741
00:38:16,239 --> 00:38:17,960
Speaker 3: not going to be able to have a pure hedge

742
00:38:18,320 --> 00:38:20,960
Speaker 3: on occupancy the way I look at it. But maybe

743
00:38:20,960 --> 00:38:25,279
Speaker 3: somebody you know, Robert Schiller, as you know, created the

744
00:38:25,360 --> 00:38:28,720
Speaker 3: case Shiller index on the home index, and that seemed

745
00:38:28,719 --> 00:38:31,400
Speaker 3: like a real natural product, right. But it's some futures

746
00:38:31,400 --> 00:38:33,239
Speaker 3: on that there are, and we had them and we

747
00:38:33,600 --> 00:38:37,279
Speaker 3: worked with Profred Doctor Schiller on the contract. But again

748
00:38:37,320 --> 00:38:39,040
Speaker 3: it's not a liquid contract because there's a lot of

749
00:38:39,040 --> 00:38:40,840
Speaker 3: people don't participate in that marketplace.

750
00:38:41,200 --> 00:38:43,440
Speaker 1: Joe I was just thinking this was our opportunity to

751
00:38:43,480 --> 00:38:46,440
Speaker 1: turn this into our long awaited onions.

752
00:38:47,000 --> 00:38:51,280
Speaker 3: Onions only it's one of the only products that's outlawed

753
00:38:51,320 --> 00:38:52,360
Speaker 3: by the United States government.

754
00:38:52,360 --> 00:38:54,919
Speaker 2: We've joked about this for years, but we've never done

755
00:38:54,920 --> 00:38:58,759
Speaker 2: an onion futures and why it's banned and we may

756
00:38:58,800 --> 00:39:00,720
Speaker 2: never do an episode. Keep joking.

757
00:39:00,840 --> 00:39:01,960
Speaker 3: Let me give you a snapshot on it.

758
00:39:02,120 --> 00:39:02,680
Speaker 1: Yeah, do it too.

759
00:39:02,840 --> 00:39:06,600
Speaker 3: The market was cornered on the onions, and they dumped

760
00:39:06,840 --> 00:39:09,840
Speaker 3: the onions in the Chicago River and kept the burlap

761
00:39:09,920 --> 00:39:12,439
Speaker 3: sacks that they're in because of burlap sacks were worth

762
00:39:12,440 --> 00:39:15,200
Speaker 3: more than the onions themselves. And the United States government

763
00:39:15,200 --> 00:39:17,120
Speaker 3: stepped in and said we will not have a futures

764
00:39:17,160 --> 00:39:18,319
Speaker 3: contract on onions ever.

765
00:39:18,400 --> 00:39:21,560
Speaker 1: Again, It's amazing that the US government was so active

766
00:39:21,760 --> 00:39:24,080
Speaker 1: on the onion market in like, what was this, like

767
00:39:24,120 --> 00:39:26,960
Speaker 1: the nineteen twenties or thirties, something like that. Yeah, and

768
00:39:27,080 --> 00:39:29,840
Speaker 1: yet here we are today. Okay, speak speaking of government

769
00:39:29,840 --> 00:39:32,480
Speaker 1: and action. Maybe this is my segue into crypto.

770
00:39:33,520 --> 00:39:35,239
Speaker 2: I was just gonna say, it's impressive how long we

771
00:39:35,280 --> 00:39:37,720
Speaker 2: went without really good Yeah, I'm glad anyway.

772
00:39:37,800 --> 00:39:39,000
Speaker 3: Okay, so we didn't talk about.

773
00:39:38,840 --> 00:39:42,520
Speaker 1: Crypto a little bit with FTX, but let me ask

774
00:39:42,560 --> 00:39:48,000
Speaker 1: the broadest crypto question possible. What is your take on

775
00:39:48,120 --> 00:39:52,120
Speaker 1: crypto at the moment, because you have voice some concerns

776
00:39:52,280 --> 00:39:55,560
Speaker 1: about the way the market functions and how it could

777
00:39:55,600 --> 00:39:57,600
Speaker 1: fit into your business, but at the same time, you

778
00:39:57,640 --> 00:40:01,200
Speaker 1: do have a big and growing suite of crypto offerings.

779
00:40:02,000 --> 00:40:05,960
Speaker 3: So again I don't believe I've ever come out publicly

780
00:40:06,000 --> 00:40:08,880
Speaker 3: and said that I don't believe in crypto, because I

781
00:40:08,920 --> 00:40:11,759
Speaker 3: know I haven't said that. What I have said is

782
00:40:11,880 --> 00:40:15,480
Speaker 3: I do believe that people need to understand what they

783
00:40:15,520 --> 00:40:19,040
Speaker 3: are participating in, and for some reason people get a

784
00:40:19,080 --> 00:40:25,360
Speaker 3: case of fomo, or they get a case of influencers

785
00:40:25,400 --> 00:40:29,480
Speaker 3: who influence them because there are celebrity types or whatever

786
00:40:29,640 --> 00:40:31,759
Speaker 3: that this is something that you got to have. And

787
00:40:31,800 --> 00:40:35,319
Speaker 3: we live in an age of where people follow other

788
00:40:35,400 --> 00:40:38,720
Speaker 3: people and it's just you know, off to the races.

789
00:40:38,760 --> 00:40:42,759
Speaker 3: So what I believed with crypto was for an exchange

790
00:40:42,840 --> 00:40:46,719
Speaker 3: like ours, a highly regulated entity that you know, when

791
00:40:46,719 --> 00:40:50,160
Speaker 3: we decided to list bitcoin, it was going to be

792
00:40:50,400 --> 00:40:54,000
Speaker 3: under our comfort level for lack of a better term,

793
00:40:54,520 --> 00:40:57,799
Speaker 3: and we did that. We did it with making sure

794
00:40:57,840 --> 00:40:59,840
Speaker 3: that we have the functionality that we have in all

795
00:41:00,000 --> 00:41:03,359
Speaker 3: where other markets could apply to the bitcoin, such as

796
00:41:03,400 --> 00:41:08,480
Speaker 3: stop logic functionality, velocity logic functionality, meaning if the market

797
00:41:08,560 --> 00:41:11,880
Speaker 3: was to precipitously move so fast it would stop replenished

798
00:41:11,920 --> 00:41:15,319
Speaker 3: liquidity then start again. That's called velocity logic. And then

799
00:41:15,360 --> 00:41:17,920
Speaker 3: we would also make sure that the margins were a

800
00:41:17,960 --> 00:41:20,440
Speaker 3: lot higher than that they were charging in some of

801
00:41:20,480 --> 00:41:23,000
Speaker 3: the cash exchanges like FTX and others, which was just

802
00:41:23,040 --> 00:41:26,240
Speaker 3: a couple percent. We actually went into the high thirties

803
00:41:26,280 --> 00:41:29,680
Speaker 3: low forties when we listed that contract on margin, and

804
00:41:29,719 --> 00:41:33,680
Speaker 3: then we listed in an awful large size contract to

805
00:41:33,760 --> 00:41:37,839
Speaker 3: make certain that we were attracting sophisticated participants. We did

806
00:41:37,880 --> 00:41:42,440
Speaker 3: not want to attract retail participants who still didn't understand

807
00:41:42,480 --> 00:41:45,240
Speaker 3: the product very well. Now we have subsolutely gone into

808
00:41:45,320 --> 00:41:49,120
Speaker 3: smaller contracts on bitcoin udeather, so we have what's called

809
00:41:49,120 --> 00:41:52,080
Speaker 3: micro contracts that trades more for the retail. What I

810
00:41:52,120 --> 00:41:54,600
Speaker 3: will tell you what's interesting about that, and this has

811
00:41:54,640 --> 00:41:57,560
Speaker 3: happened in the last couple of weeks, is our retail

812
00:41:57,600 --> 00:42:04,320
Speaker 3: contracts are actually lower in volume now on a percent basis,

813
00:42:04,920 --> 00:42:07,680
Speaker 3: and our large contract is up in volume on a

814
00:42:07,680 --> 00:42:12,520
Speaker 3: percent basis, which tells me that the larger sophisticated participants

815
00:42:12,560 --> 00:42:15,560
Speaker 3: who will trade the larger contract are in that one

816
00:42:15,560 --> 00:42:18,000
Speaker 3: because it makes economic sense for them to be in

817
00:42:18,040 --> 00:42:21,160
Speaker 3: that and the smaller one. Some of the retail participants

818
00:42:21,239 --> 00:42:25,920
Speaker 3: are not trading that as often. So what is that

819
00:42:26,160 --> 00:42:29,800
Speaker 3: that can tell you as a proxy is retail getting

820
00:42:29,800 --> 00:42:34,160
Speaker 3: a little worn out with the inflation without the stimulus

821
00:42:34,239 --> 00:42:37,560
Speaker 3: money and having to use that money for other costs

822
00:42:37,640 --> 00:42:41,399
Speaker 3: associated with running their households. So not saying that's a

823
00:42:41,440 --> 00:42:44,239
Speaker 3: pure analogy, but I find it quite interesting. So from

824
00:42:44,280 --> 00:42:47,120
Speaker 3: my standpoint, I think crypto, well, you know, you'll have

825
00:42:47,400 --> 00:42:51,399
Speaker 3: a few of these cryptocurrencies going forward, and as long

826
00:42:51,440 --> 00:42:54,920
Speaker 3: as we continue to educate and prove out their use

827
00:42:54,920 --> 00:42:57,600
Speaker 3: cases where people can use them and feel comfortable using

828
00:42:57,600 --> 00:43:01,800
Speaker 3: them and not worry about losing their money to participants

829
00:43:01,960 --> 00:43:05,320
Speaker 3: who are holding that farm. Remember, the bigger issues with

830
00:43:05,480 --> 00:43:08,520
Speaker 3: some of these exchanges is the cold wallet where you

831
00:43:08,560 --> 00:43:11,040
Speaker 3: can get your own but some people just trust that

832
00:43:11,080 --> 00:43:12,920
Speaker 3: the exchange will do it for them, and that's been

833
00:43:12,960 --> 00:43:15,360
Speaker 3: an issue. So I think it's going to continue to

834
00:43:15,440 --> 00:43:18,279
Speaker 3: evolve and you'll have a survivor of one or two

835
00:43:18,280 --> 00:43:21,759
Speaker 3: of these cryptocurrencies, and then you'll have the block chain

836
00:43:22,400 --> 00:43:26,920
Speaker 3: technology being deployed in many other ways outside of just crypto.

837
00:43:26,960 --> 00:43:29,120
Speaker 3: Maybe it's used with the stable coins or used with

838
00:43:29,160 --> 00:43:31,000
Speaker 3: another means.

839
00:43:31,200 --> 00:43:35,160
Speaker 2: Just on crypto. Other one last question, you know, what

840
00:43:35,200 --> 00:43:38,680
Speaker 2: would you look for in terms of other additions. So

841
00:43:38,719 --> 00:43:41,560
Speaker 2: you have bigcoin ether, do you have some I assume

842
00:43:41,600 --> 00:43:43,800
Speaker 2: you have a team that sort of monitors other coins

843
00:43:43,880 --> 00:43:46,360
Speaker 2: and sort of like where the market is going. Do

844
00:43:46,400 --> 00:43:48,080
Speaker 2: you have like sort of like benchmarks or things that

845
00:43:48,080 --> 00:43:49,879
Speaker 2: you would see were like, oh, maybe maybe we'll add

846
00:43:49,920 --> 00:43:51,760
Speaker 2: a third coin, maybe we add a fourth like types

847
00:43:51,800 --> 00:43:54,040
Speaker 2: of things that sort of like, Okay, this is hitting

848
00:43:54,040 --> 00:43:56,879
Speaker 2: a threshold where it might justify having a future's market.

849
00:43:57,160 --> 00:43:59,960
Speaker 3: Yeah, and that's a great question. So we do measure

850
00:44:00,080 --> 00:44:02,440
Speaker 3: or by thresholds on a lot of our products that

851
00:44:02,440 --> 00:44:05,160
Speaker 3: we list on crypto. One of the things that we've

852
00:44:05,160 --> 00:44:08,600
Speaker 3: been successful doing is we have reference rates. And even

853
00:44:08,640 --> 00:44:11,520
Speaker 3: prior to us listing the derivative of bitcoin, we had

854
00:44:11,520 --> 00:44:14,919
Speaker 3: a bitcoin reference rate. Now we have listed several more

855
00:44:15,000 --> 00:44:17,839
Speaker 3: reference rates, and we'll see how those reference rates go

856
00:44:17,920 --> 00:44:20,880
Speaker 3: over the next several months to maybe a year, and

857
00:44:20,920 --> 00:44:22,960
Speaker 3: see if they start to participate more where people are

858
00:44:22,960 --> 00:44:25,040
Speaker 3: actually using them, and then we may decide to go

859
00:44:25,120 --> 00:44:27,680
Speaker 3: from there. So it gives us the ability to have

860
00:44:27,719 --> 00:44:30,399
Speaker 3: a non tradable product on a reference rate that so

861
00:44:30,840 --> 00:44:33,520
Speaker 3: to see how people are looking at it, and then

862
00:44:33,560 --> 00:44:35,600
Speaker 3: if we decide there's enough interest, we could always list

863
00:44:35,600 --> 00:44:36,640
Speaker 3: a futures contract on it.

864
00:44:37,719 --> 00:44:39,960
Speaker 1: Just going back to liquidity real quickly, which is how

865
00:44:39,960 --> 00:44:44,480
Speaker 1: we sort of started this conversation. There does seem to

866
00:44:44,520 --> 00:44:46,640
Speaker 1: be I don't want to say more of a concerted

867
00:44:46,680 --> 00:44:48,759
Speaker 1: effort because it feels kind of disjointed, but there does

868
00:44:48,800 --> 00:44:52,120
Speaker 1: seem to be more noise at the moment about regulating crypto,

869
00:44:52,800 --> 00:44:56,719
Speaker 1: and you have crypto futures, and I guess the question is,

870
00:44:57,600 --> 00:44:59,920
Speaker 1: are you concerned at all that a clamp down on

871
00:45:00,080 --> 00:45:04,960
Speaker 1: crypto in the cash market would affect the future's business because,

872
00:45:05,000 --> 00:45:08,120
Speaker 1: as anyone in financial markets knows, in order to have

873
00:45:08,280 --> 00:45:11,760
Speaker 1: vibrant and healthy futures contracts, you do also need vibrant

874
00:45:11,880 --> 00:45:14,120
Speaker 1: and healthy markets in the underlying.

875
00:45:14,480 --> 00:45:17,520
Speaker 3: Yeah, and again Teresy, I appreciate that question. I think

876
00:45:17,560 --> 00:45:20,760
Speaker 3: when you look at the cash market as it relates

877
00:45:20,800 --> 00:45:27,120
Speaker 3: to crypto, it's already been question asked, question answered as

878
00:45:27,160 --> 00:45:30,160
Speaker 3: it relates to bitcoin, that it is a futures contract,

879
00:45:30,200 --> 00:45:33,920
Speaker 3: So there's no argument, I think, as long as that

880
00:45:34,160 --> 00:45:35,920
Speaker 3: we're in that place right now, when we have been

881
00:45:36,000 --> 00:45:39,160
Speaker 3: since we listed a contract, and both the SEC and

882
00:45:39,320 --> 00:45:42,040
Speaker 3: CFTC obviously have agreed that that is the case. So

883
00:45:42,080 --> 00:45:45,840
Speaker 3: I don't think that harms bitcoin. Now let's talk about

884
00:45:45,880 --> 00:45:48,200
Speaker 3: some of the other cryptos. What does it do? There

885
00:45:48,280 --> 00:45:52,120
Speaker 3: is massive uncertainty of what is this security and what

886
00:45:52,239 --> 00:45:55,360
Speaker 3: is the derivative? As you know, both the SEC and

887
00:45:55,440 --> 00:45:59,879
Speaker 3: CFTC have a difference in that definition, and they both

888
00:46:00,080 --> 00:46:05,239
Speaker 3: want to seek regulation of those products. So until there's clarity,

889
00:46:06,080 --> 00:46:09,799
Speaker 3: markets hate uncertainty, and I think we got to get

890
00:46:09,800 --> 00:46:12,960
Speaker 3: clarity between the regulators about who is going to regulate

891
00:46:13,080 --> 00:46:16,279
Speaker 3: some of these other cryptocurrencies and what are going to

892
00:46:16,280 --> 00:46:19,800
Speaker 3: define them. You know, I remember when the Shad Johnson

893
00:46:19,840 --> 00:46:23,600
Speaker 3: the cord was passed, and that is basically saying what

894
00:46:23,600 --> 00:46:26,840
Speaker 3: what devices a broad versus a narrow based index? So

895
00:46:26,920 --> 00:46:29,719
Speaker 3: what can be traded as a future? What can be

896
00:46:29,960 --> 00:46:32,560
Speaker 3: has to be traded as cash. So you know, I

897
00:46:32,560 --> 00:46:35,319
Speaker 3: think it's eleven or under on the products can be

898
00:46:35,440 --> 00:46:38,880
Speaker 3: determined as narrow and eleven or more is a broad

899
00:46:38,920 --> 00:46:41,840
Speaker 3: based index, so you can trade those as the futures

900
00:46:41,880 --> 00:46:43,400
Speaker 3: like the S and P five hundred we trade at

901
00:46:43,440 --> 00:46:48,839
Speaker 3: CME and other security indexes are deemed as futures. I'm

902
00:46:48,840 --> 00:46:50,600
Speaker 3: not saying that's the way they're going to look at crypto,

903
00:46:51,000 --> 00:46:54,759
Speaker 3: but they have to come to a decision one way

904
00:46:54,840 --> 00:46:56,799
Speaker 3: or another if the market is going to have the

905
00:46:56,840 --> 00:47:01,360
Speaker 3: ability to find its footing and grow going forward. But

906
00:47:01,440 --> 00:47:05,239
Speaker 3: I don't believe, Tracy, that it's going to have a

907
00:47:05,280 --> 00:47:10,360
Speaker 3: massive impact on bitcoin and it's liquidity or not. I

908
00:47:10,360 --> 00:47:12,960
Speaker 3: think that'll be like every other product up to what's

909
00:47:13,000 --> 00:47:15,880
Speaker 3: going on in the world today, not the regulators. It

910
00:47:15,880 --> 00:47:17,560
Speaker 3: does what the other products are.

911
00:47:17,760 --> 00:47:21,640
Speaker 1: All right, Well, an absolute treat to be able to

912
00:47:21,640 --> 00:47:24,840
Speaker 1: come back to Chicago after twenty something years and speak

913
00:47:24,880 --> 00:47:27,160
Speaker 1: to Terry Duffy. So thank you so much for coming

914
00:47:27,200 --> 00:47:27,840
Speaker 1: on all blots.

915
00:47:27,840 --> 00:47:31,239
Speaker 3: Appreciate it, Tracy, Joe, thank you very much and appreciate

916
00:47:32,000 --> 00:47:34,439
Speaker 3: the opportunity to speak to you and your listeners. And

917
00:47:34,480 --> 00:47:37,000
Speaker 3: again I hope you enjoy Shaile and say thank you

918
00:47:37,120 --> 00:47:52,359
Speaker 3: so much. Joe.

919
00:47:52,440 --> 00:47:53,840
Speaker 1: I really enjoyed that conversation.

920
00:47:54,040 --> 00:47:56,080
Speaker 2: You know what I want to do. I want to

921
00:47:56,120 --> 00:47:58,680
Speaker 2: have Terry back, but just for one word. It's like

922
00:47:58,840 --> 00:48:01,840
Speaker 2: we throw out like, yeah, different commodity futures and he

923
00:48:01,920 --> 00:48:03,799
Speaker 2: tells he just says something, why do we have jet

924
00:48:03,840 --> 00:48:04,120
Speaker 2: fuel for?

925
00:48:04,360 --> 00:48:04,520
Speaker 3: Yeah?

926
00:48:04,520 --> 00:48:06,360
Speaker 2: I never thought about that before, but that there's already

927
00:48:06,360 --> 00:48:07,600
Speaker 2: an instrument that's like close.

928
00:48:07,520 --> 00:48:11,400
Speaker 1: Enough or just like old war stories from running the

929
00:48:11,480 --> 00:48:15,399
Speaker 1: SAMI because I remember also a few years ago when

930
00:48:15,440 --> 00:48:17,400
Speaker 1: I was sort of like more involved in this coverage.

931
00:48:17,480 --> 00:48:21,680
Speaker 1: I remember there was like a cattle herdsman association that

932
00:48:22,000 --> 00:48:26,480
Speaker 1: like went to Chicago to talk about the cattle futures contract.

933
00:48:26,560 --> 00:48:28,880
Speaker 1: Like there are so many stories he could tell the burlaps.

934
00:48:29,120 --> 00:48:29,719
Speaker 2: I had no idea.

935
00:48:29,840 --> 00:48:32,320
Speaker 1: Yeah, I didn't realize that either, But there were a

936
00:48:32,360 --> 00:48:35,640
Speaker 1: few things that were really interesting to pull out of there.

937
00:48:35,680 --> 00:48:39,040
Speaker 1: I mean, like one to hear how he's thinking about

938
00:48:39,600 --> 00:48:44,719
Speaker 1: crypto liquidity was interesting, and also that they're thinking actively

939
00:48:45,120 --> 00:48:49,200
Speaker 1: about treasury market risk. I mean, I guess that should

940
00:48:49,280 --> 00:48:51,480
Speaker 1: be obvious, but it does feel to me like the

941
00:48:51,560 --> 00:48:54,960
Speaker 1: debt ceiling drama is one of those things that could

942
00:48:55,080 --> 00:48:58,920
Speaker 1: really materialize, Like the risk could be there's some obscure

943
00:48:59,040 --> 00:49:02,839
Speaker 1: contract language about delivery, and so it's interesting that they're

944
00:49:02,920 --> 00:49:04,399
Speaker 1: sort of looking for that at the moment.

945
00:49:04,640 --> 00:49:07,759
Speaker 2: Speaking of contract language, I thought it was interesting that

946
00:49:08,200 --> 00:49:10,920
Speaker 2: he pointed out specifically that in the leases they have

947
00:49:11,320 --> 00:49:14,960
Speaker 2: for their real estate in Chicago there and ID be

948
00:49:15,040 --> 00:49:16,960
Speaker 2: interesting to like talk to like a real estate lawyer,

949
00:49:17,040 --> 00:49:19,719
Speaker 2: like what kind of leases companies have if they want

950
00:49:19,760 --> 00:49:21,839
Speaker 2: to leave or move to Florida and they say, oh,

951
00:49:21,880 --> 00:49:25,400
Speaker 2: it's tied to political choices. What that looks like. And

952
00:49:25,480 --> 00:49:27,600
Speaker 2: the fact that he was like kind of he didn't

953
00:49:27,640 --> 00:49:29,560
Speaker 2: say like, oh, we're gonna leave or anything like that,

954
00:49:29,719 --> 00:49:31,920
Speaker 2: but it's clearly something that like if.

955
00:49:31,840 --> 00:49:36,120
Speaker 1: They I think there was an implicit threat there, it's

956
00:49:36,160 --> 00:49:40,040
Speaker 1: obviously something they have been thinking about. Yeah, all right, well,

957
00:49:40,120 --> 00:49:41,480
Speaker 1: on that note, shall we leave it there?

958
00:49:41,560 --> 00:49:42,160
Speaker 2: Let's leave it there?

959
00:49:42,200 --> 00:49:44,360
Speaker 1: All right, We're going to go off and enjoy Chicago.

960
00:49:44,520 --> 00:49:44,640
Speaker 3: Now.

961
00:49:45,040 --> 00:49:48,000
Speaker 1: This has been another episode of the Lots podcast. I'm

962
00:49:48,040 --> 00:49:51,360
Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway.

963
00:49:51,480 --> 00:49:53,919
Speaker 2: And I'm Joe Wasenthal. You can follow me on Twitter

964
00:49:54,080 --> 00:49:58,120
Speaker 2: at the Stalwart. Follow our producers Carman Rodriguez at Carman

965
00:49:58,320 --> 00:50:01,400
Speaker 2: Arman and Dashill Bennett at Dashbot. For all of the

966
00:50:01,440 --> 00:50:06,000
Speaker 2: Bloomberg podcasts, follow them on Twitter at podcasts. And for

967
00:50:06,120 --> 00:50:09,840
Speaker 2: more Oddlots content, go to Bloomberg dot com slash odd Lots,

968
00:50:10,160 --> 00:50:12,920
Speaker 2: where we blog, we post transcripts. We have a newsletter

969
00:50:13,000 --> 00:50:16,200
Speaker 2: that comes out every Friday, and check out the discord

970
00:50:16,320 --> 00:50:19,920
Speaker 2: Discord dot gg. Slash odd Lots listeners are in there

971
00:50:19,960 --> 00:50:26,120
Speaker 2: twenty four to seven, talk about all of these topics, markets, econ, crypto, water, energy,

972
00:50:26,200 --> 00:50:29,719
Speaker 2: real estate, and more. Super fascinating fun place to hang out.

973
00:50:29,760 --> 00:50:31,640
Speaker 2: I'm spending more and more of my time in there.

974
00:50:32,000 --> 00:50:33,200
Speaker 2: Go there, check it out.

975
00:50:33,440 --> 00:50:35,120
Speaker 1: Is there an Onion Futures You.

976
00:50:35,160 --> 00:50:38,879
Speaker 2: Got to add an Onion Future's room. There's no there's

977
00:50:38,920 --> 00:50:41,279
Speaker 2: no new developments. Maybe we'll get a bot and just

978
00:50:41,440 --> 00:50:44,759
Speaker 2: updates it says Onion futures are still Illegal'll just post

979
00:50:44,800 --> 00:50:47,000
Speaker 2: that once a day and there's no new development. Hey,

980
00:50:47,000 --> 00:50:48,880
Speaker 2: can we never? I want to Let's do that all right,

981
00:50:49,440 --> 00:50:50,200
Speaker 2: Thanks for listening

982
00:51:04,360 --> 00:51:04,400
Speaker 1: In