03.14.2012
By Terry Flanagan

CME Group to Forge Ahead Under Gill

Market participants believe that CME Group, which will switch to a new chief executive at the start of next year, will continue to deliver strong growth.

“I expect CME to continue on the same path that they’ve been on over the past several years,” said a broker-dealer at FIA Boca, the annual futures industry conference in Boca Raton, Florida. “The new CEO will still ultimately report to [chairman] Terry Duffy.”

CME Group announced on Monday that current chief executive Craig Donohue will retire at the end of the year, when his contract is set to expire. He will be replaced by current president Phupinder Gill, who has been at CME for over 20 years. In addition, executive chairman Terrence Duffy will have his role expanded to executive chairman and president.

“Donohue, Duffy and Gill, who have worked together in the office of the CEO for the last eight years, will work together over the next several months to effectuate an orderly leadership transition,” the company said in a statement.

Market observers note that Duffy will remain the chairman of the board of the exchange group, in addition to taking over the president role, and that the leadership of the exchange will stay on course. In addition, Gill in the past had been working closely with Donohue and Duffy on the company’s strategy, and is well versed in the inner workings of CME.

“As a company we are well positioned for the future, and I look forward to working more closely with Terry, the management team and the rest of the organization to further expand the influence of our markets and exploit new growth opportunities globally and in the OTC arena,” said Gill in a statement.

Many onlookers are pointing to the MF Global collapse as one of the main culprits for Donohue’s departure. However, some do not believe that was the deciding factor.

“While the MF Global situation probably weighed on him, this just seems like one of those times when it was time for him to move on to something else,” said one exchange executive at FIA Boca.

Donohue has spent the last 23 years at CME Group, with the last eight as chief executive. The exchange executive noted that he is “ready to explore new challenges” going forward.

Donohue has served on CME’s board of directors, as well as the boards of BM&FBovespa and the World Federation of Exchanges, the trade association of 53 publicly regulated stock, futures and options exchanges around the world.

During his tenure at CME, the exchange group has made more than $20 billion in acquisitions, $1 billion in strategic global investments and made successful extensions into OTC clearing, index services and technology and co-location services. CME has also achieved average annual revenue growth of 26%, average annual net income growth of 32%, average annual earnings per share and free cash flow per share growth of 21%, total average annual shareholder returns of 20% and an increase in market capitalization of 662% since 2004.

Gill, who has been with CME since 1988, has served as president since July 2007 and as president and chief operating officer of its predecessor companies, CME Holdings and CME, since January 2004. From 2000 to 2003, Gill was managing director and president of CME Clearing. He led the implementation of the company’s clearing agreement with the Chicago Board of Trade to provide clearing and processing services for all CBOT products, which ultimately paved the way for CME’s merger with CBOT in 2007. Gill is also president of GFX Corp, a wholly-owned subsidiary of CME Group that provides liquidity in foreign exchange futures, and serves on the board of directors of CME Clearing Europe.

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