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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the CME Group Fourth Quarter and Year End 2021 Earnings Call. At this time, I would like to turn the conference over to John Peschier. Please go ahead, sir.
Thank you. Good morning, everyone. And I hope you're all doing well today. I'm going to start with a Safe Harbor language. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, on the final page of the earnings release, you will see a reconciliation between GAAP and non-GAAP measures.
With that I'd like to turn the call over to Terry.
Thanks, John. Let me echo John's comments and hoping that you're all -- you and your family are all safe and healthy. So again, thank you for joining us this morning. We released our executive commentary earlier of today, which provided extensive details on the fourth quarter of 2021. I have John, Sean, Derek, Sunil and Julie Winkler on the call this morning and we all look forward to addressing any questions you have. Before I begin, in addition to John who will discuss the financial results, I'm going to have Sean and Derek make some comments as we did last quarter.
Trading activity was strong during the fourth quarter with average daily volume of 20.5 million contracts per day, up 26% versus fourth quarter last year, and up 15% sequentially. We also added 26% ADV growth during the month of December versus the prior year. We saw a tremendous year-over-year strength in our interest rate business, which was up 56%, including record quarterly SOFR futures ADV.
As we continue to assist clients with the transition from LIBOR, equity index ADV increased 15% and energy ADV rose 16% compared to fourth quarter last year. In addition, options ADV grew 58% to 3.7 million contracts. The strong finish to the year supported record annual ADV in total of 19.6 million contracts, up 3% from last year, as well as record annual non U.S. ADV of 5.5 million contracts or up 4% compared with 2020.
In the four quarter, non U.S. average daily volume was up 24% to 5.7 million contracts per day. We saw 26% growth in Europe, 15% growth in Asia, and 45% growth in Latin America. As always, we continued to launch new innovative products, tools, and services to support customer needs.
We executed on targeted sales campaigns for recent launches during Q4. Micro Ether futures were launched in early December and surpassed 100,000 contracts within the first two weeks. We also began trading E-minis Russel 2000 Monday and Wednesday weekly options contracts, as demand for the more short dated options continues to grow. Additionally, we recently announced our plans to launch a new 20 year U.S. Treasury bond future in early March 2022, which is pending regulatory review.
Over the full year 2021, new products launched since 2010 generated approximately 500 million in revenue or up 30% from 2020. And finally in line with our longstanding history of innovation, we are extremely excited about having signed our 10 year strategic partnership deal with Google Cloud. This will allow us to transform derivative markets to cloud adoption and co-innovation to deliver expanded access, new products and more efficiencies for all more market participants.
As far as activity to date in 2022, we averaged 24.6 million contracts per day in January, up 28% compared with January of 2021, equity index and interest rates continue to lead the way with year-over-year growth of 56% and 33%, respectively. Options ADV growth was also strong, which was up 39%.
With that, let me turn the call over to Sean and then Derek to give you a little more color on each of these areas. Sean?
Thank you, Terry. And thanks again, everyone for joining. While volatility across financial asset classes remained well below normal historical levels in 2021, interest rate and equity index volatility are around the historical mean in the fourth quarter, and FX market volatility generally remained below the 28th percentile. In that somewhat more normal environment in the fourth quarter, as Terry mentioned, we saw strong rates in equity volumes. We saw rates options up 94% year-over-year, equity index options up 68% year-over- year, and FX options up 18%.
In terms of our customer penetration, every financials asset class saw an all-time record average annual number of large open interest holders in 2021, as more customers used more of our financial product than ever before. In addition, we are pleased with our continued progress in the financial product launches, new product adoption and strong commercial results from these new product. From January 24th, new financial products achieved a volume of more than 10.5 million contract making up over 30% of the entire exchange volume that day.
Among our new products, we achieved an ADV record in our Micro equity E-minis in January up 3.7 million contracts, up 64% compared with January of last year. Our newly launched Micro Ether futures achieved an ADV of 21,500 contracts in January. And our Crypto futures in total reached a record 57,900 contract in January up 229% year-over-year equating to 2.87 billion average daily notional traded.
With strong growth in our equity index and crypto futures we initiated a fee adjustment beginning on February 1st. We increased our E-mini and micro E-mini member fees by one penny per contract. And we increased our non-member E-mini and Micro E-mini by a nickel per contract. Likewise, we increased our Bitcoin and our Ether futures member fees by $0.50 per contract and our non-member fees by $1 per contract.
We are also pleased with new product growth in our rates business. Putting our new 20 year U.S. treasury note features announcement into perspective, our ultra 10 year futures achieved a new all-time high annual ADV of 372,000 contracts in 2021. As we progress through the LIBOR transition, our SOFR futures now represent 95% of the average daily volume of all exchange traded SOFR futures and 98% of the open entry.
In January our SOFR futures products -- our SOFR products overall grew exponentially. SOFR futures achieved 731,000 contracts ADV, up 645% year on year. On February 3rd our SOFR futures and options achieved an open interest of 3.4 million contracts up 406% versus a year ago. Adding the open interest from our SOFR linked contract, which is how we refer to our Euro dollar futures and options that reference a LIBOR, which will be finally set after June 30th, 2023 to our SOFR futures and options open interest. The combined open interest is currently running at 17.45 million contracts.
Regarding our term SOFR index, we have already licensed 600 firms across the globe and across the financial banking, manufacturing and other industry.
And with that, I'll hand it over to Derek.
Thanks, Sean. Looking at our commodities portfolio, we drove strong 2021 results across our global benchmarks with particular strength in the fourth quarter energy, which grew 16% year on year. In addition to hitting record agricultural products volumes in Europe and Asia in 2021, we also hit a new record monthly average daily loan in our micro WTI contract in November and set multiple records in our industrial metals portfolio, made up of copper, aluminum and steel.
On the client side, we continue to focus on expanding commercial customer participation and in 2021, these end user open interest orders were our best performing client segment overall. Additionally, to better serve our clients accelerating focus on environmental and sustainability concerns and the emerging risk management needs of these customers, I'm pleased to announce that we have created a new environmental products portfolio.
This portfolio aggregates the full range of our existing and planned environmental and sustainability linked products such as our market leading global emissions offset contracts, biofuels such as ethanol and other renewables and battery metals like cobalt and lithium, and will serve as a catalyst for our continued expansion across asset classes in this rapidly evolving space.
Customer demand is increasing for carbon and environmental products that facilitate broad participation and risk management needs across diverse industries and geographic limits. Our focus is on building tools to effectively manage their environmental risks and achieve their goals through the energy transition.
Turning to our global options business, we delivered strong results again in 2021, up 6% versus 2020, finishing the year with a robust first quarter -- fourth quarter, up 58% as Terry mentioned. Our outstanding fourth quarter results were led by strength in our interest rates, equity index, and FX business lines as macroeconomic uncertainties and rate rise expectations filtered across global financial markets.
Our options growth was again driven by outsize growth outside the U.S. led by APAC, up 23% and EMEA, up 4%. Most importantly, our fastest growing options client segments for commercials and byside customers, which reflects our consistent focus on attracting end user customers to our markets. Our overall options growth was accelerated by the continued global adoption of our electronic front end CME Direct, which hit a new record number of active users in 2021, and drove a record for Globex revenues on this platform. CME Direct continues to be a key driver of our non-US growth, the average daily monthly users, trading booking via the platform in the fourth quarter, increasing 50% in Latin America, 18% in Europe and 10% in Asia versus fourth quarter 2020.
Finally, turning to our international business, having just taken over responsibility for this business in November, I'm excited to optimize this team's structure and mandate to ensure that we can continue to deliver outsized growth outside the U.S. to unlock the next leg of our global growth story. As Terry shared, we reached record annual non-U.S. ADV in 2021, which was bolstered by our strongest fourth quarter ever of 5.7 million contracts.
Given our success in finding and onboarding new global clients, we've specifically invested in new client facing headcounts in Asia to further strengthen the on the ground commercial resources, which will further accelerate this growth. Overall, we are very pleased with the continued success of our non-U.S. business and with 2021 revenues in excess of 1.1 billion, I look forward to generating continued outsized growth in both futures and options as we continue to add resource for this critical part of our global growth story.
With that, I'll turn to John to discuss the financial results.
Thanks, Derek. During the fourth quarter, CME generated more than $1.1 billion in revenue with average daily volume up 26% compared to the same period last year. If you adjust for the impact of the creation of OSTTRA, our joint venture with IHS Markit, our revenue would have been up approximately 11% for the quarter. Market Data revenue was up 2% from last year to $142 million and up 6% for the full-year of 2021. Expenses were very carefully managed and on an adjusted basis, were $429 million for the quarter and $369 million excluding license fees. For the year, CME had adjusted operating expenses, excluding license fees of $1.468 million, which is $32 million below our revised guidance of $1.5 billion.
CME had an adjusted effective tax rate at 22.1%, which resulted in an adjusted net income attributable to CME Group of $607.5 million, up 22% from the fourth quarter last year, and an adjusted EPS attributable to common shareholders of a $1.66. The issuance of the Class G non-voting shares in November in conjunction with our partnership with Google impacted the calculation of EPS attributable to common shares.
These Class G non-voting shares have similar rights to common stock with the exception of voting rights and our convertible to common shares on a one to one basis. Had the Class G shares been converted to common shares at the date of the issuance, the adjusted EPS attributable to common shareholders would have been $1.68. We expect the EPS for the Class G and common shareholders to be the same going forward. Please refer to the financial results page of the executive commentary for further information.
Capital expenditures for fourth quarter were approximately $29 million. CME declared $2.5 billion of dividends during 2021, including the annual variable dividend of $1.2 billion, and cash at the end of the quarter was approximately $2.9 billion.
Turning to guidance for 2022, we expect total adjusted operating expenses excluding license fees, to be approximately $1.45 billion. We are expecting an improving business environment and our guidance 12 reflects that expectation. In addition to our expense guidance, we expect the investment related to the Google partnership and the move to their cloud platform to be in the range of $25 million to $30 million. A portion of these costs may be capitalized and we will update the guidance as the engineering and migration plans finalize.
Capital expenditures, net of leasehold improvement allowances, are expected to be approximately $150 million, and the adjusted effective tax rate should come in between 22.5% and 23.5%.
With that summary, we'd like to open up the call for your questions. Based on the number of analysts covering us, please limit yourself to one question, and then feel free to jump back into the queue. Thank you.
[Operator Instructions] We will take our first question from Dan Fannon from Jeffries. Please go ahead.
Thanks, and good morning. John, I guess first with you on expenses, if you could maybe talk about what drove the delta versus your guidance and or just a conservative kind of start from I guess, where you ended the year in the fourth quarter and versus where you said you’d end up. And then as we think about 2022 and the Google partnership, maybe beyond that, maybe the size of the -- and scope of the investment on a multiyear basis, and how we should think about that scaling or escalating from the numbers you gave in 2022?
Thanks, Dan. Appreciate the question. In terms of the delta from the guidance as you know, we were, as I said, in my prepared remarks, down about $32 million from our revised guidance of $1.5 billion, and that's $60 million below our -- the guidance that we gave at the start of the year, it's -- the difference is by three things. One is that, we achieved our run rate synergies earlier than expected. So our realized synergies were higher and that's about a third of the delta. And if you call last quarter, we announced that we hit our 200 million in run rate synergy target that we had set at the start of the next acquisition.
We still had limited travel and in-person events and our marketing spend was lower, that's another third of the difference. And the balance is really good expense management across the entire organization, including careful use of contingent labor. Also, we did experience some delays in delivery of technology equipment that led to lower technology expense. That's the balance. So that's the difference between the 1.5 billion revised guidance and the $1.468 million that we came in at.
In regards to your question around the Google multiyear investment, based on current trading activity, I would expect to invest on average a net of 30 million per year for the next four years as we look to move to the Google cloud platform, after which we would expect to be in a net positive cash spending position. We're going to update annually as the cost could fluctuate based on the order that applications are moved to the cloud and the speed of the migration.
So if we are moving to the cloud faster, you would see our expenses tick up to -- in order to move quicker to the cloud, which would be a good outcome as we want to move there as quickly as possiblereally to enjoy the benefits that we see of getting onto the cloud platform. So we look forward to bringing in new products to market faster, innovating quicker, and being more flexible and nimble than we are today.
So like I said, that's an annual, that's on average to 30 million. And like I said, it'll fluctuate. Also, it's important to note that, that's a cash outflow, a portion of that is it could potentially be capitalized. I would expect some of it to be capitalized and we'll update that as we get closer each year.
We will now take our next question from Alex Kramm from UBS, please go ahead.
Yeah. Hey, good morning, everyone. Since you are just talking about the Google Cloud partnership on the cost side, maybe you can also talk about it around the revenue side and the opportunity set there, and maybe the excitement there. Like, what new sources of revenue could you theoretically generate or how might may your clients be able to engage with you easier? And then specifically any change for colocation revenues? I mean, that's a nice income stream. So just wondering if anything could change their overtime, given that you're moving to the cloud?
Alex, I think you asked a couple different questions around the revenue opportunities associated with Google. So I'm going to ask Sunil and Julie to comment on the colocation, with your final question, I believe John and I can tackle that. Why don’t you start, Sunil?
Thank you. Thank you, Terry. So I think for the first phase, we are aggressively focused on migrating clearing and enterprise business applications to the cloud. And as far as clearing applications are concerned, we are focused on actually moving foundational services to the cloud.
One key service that is client facing that we intend on delivering this year is CME's margin calculator. It complements an online risk engine that we already offer, but this one would be a calculator that would run on the cloud as an app, and it would allow our clients, our service providers, our clearing firms to actually spin up these calculation engines on demand as necessary throughout the day to calculate risk in real time. So, in terms of services, that's what we plan to offer.
I will pass on to Julie to talk about the data side -- on the Market Data side.
Yeah. So as Sunil points out, you know, we have been engaging with customers since the announcement in November and one of the things that they definitely highlighted is the need to manage risk more in real time. And so we're -- we are really allowing our customers to help us prioritize this work.
The second area is really in Market Data and we see significant opportunities to deliver value to our customers in new ways. And, you know, we have an existing service that is live with GCC today with our smart screen product. We have 25 global customers that are in production. We have about 70 more in the pipeline. And so what's really planned next is really an acceleration of the data and products that we've put within that offering.
So, we'll be looking to add real time options data onto that platform, which we know there are a number of customers in the pipeline that have an interest in that. And then also, looking at other ways that we can use Google tools such as BigQuery, to make some of our large and certainly interesting data sets available to our customers through that offering.
So, you know, it's really a blend of both, our data and our intellectual property being used with Google tools and making us really kind of build that solid data foundation to make it easier and adding analytics to that as well. So a lot of that planning is underway now and we're quite excited of working with them.
So Alex, on your last question, around the colocation revenue, which is a very nice revenue source for CME. I think it's a bit premature to judge what that revenue's going to look like one way or another. We have a lot of work ahead of us over the next couple years, as we've already outlined on moving markets to the cloud. So there's a lot to be done between now and then with that revenue potentially impacted.
But I will say, as we did this transaction and I work closely with John on this, we understand that the colocation revenue could be impacted down the road. Saying that, I also believe the savings and efficiencies of moving us into the cloud will well offset any expected revenue coming out to colocation. So I do believe the future is much brighter on this efficiencies and cost associated with the colo business.
So John, you want to add that?
Yeah. To your question, Alex, also what differentiates this relationship with Google versus a client vendor relationship is the innovation framework that we have set up with Google. So, yes, we are moving to the cloud but also, we have a framework set up so that we co-innovate with Google new products and services to deliver to our clients.
It's too early to say, what that is going to be? But we have a framework so that we will develop business plans together. We'll develop products and services together. And we're starting to see a little bit of it. Julie talked about utilizing some of their technology, like BigQuery. Google has invested significantly in obviously in their technology footprint and we get the benefit to leverage that in a way that others can't because it's a partnership versus a client vendor relationship.
We will now take our next question from Rich Repetto from Piper Sandler.
Good morning, Terry. Good morning, John. And congrats to the strong start in January with your volumes. So I guess my question is more about here and now, or not the Google cloud but more 2022. And your stock is the only U.S. exchange stock up year-to-date. And I think everybody's looking at anticipating a bigger tailwind than you've had in regards to the volumes. So I guess, can you add, we all can do our studies on the global financial crisis and interest rate cycles, but I guess Terry, how -- is there anything incremental that you can give us or your investors about this year and the macro environment that gives us more comfort that say, the 24 million, 25 million contract in January is more sustainable this year?
It's really hard to predict future volumes as we've said since day one of taking the company public, Rich. And I know you're aware of that. I will say the following. I don't think any of us have ever seen the way the markets are setting up right now as it relates to pandemics, supply chain controls, inflation, nobody have seen in the last 20 plus years, especially on the inflationary front.
So I think the way our markets are situated, we've been able to continue to invest in different products, as I mentioned in my earlier comments, to generate revenues outside of our core product lines, which have grown this company. But when you look at what's in front of us, I would suspect that our core product should be -- continue to be very active like you saw in January.
Why is that? Because of all the fundamental factors that are not here just in the U.S. but across the globe. So this is something, a set up that I have not seen in my career in a very, very long time. I think the last time I saw something like this, I didn't know what it was, because I was a young trader in the early 80s, but that was the last time I can remember seeing a setup like this where the potential for risk management is going to be extremely critical.
Because I don't -- and Sean -- I'm going to let Sean comment in a moment, because he traded these markets from an interest rate perspective from the bank side. But I don't think we've ever seen a setup like this in modern times, Rich. So I'm -- again, I'm not sure if I'm happy about this or sad, because there's a lot going on in the world right now, but we need to make sure that we're focused on managing the risk to our Clearing division, putting out our data through Julie's division, making sure people have access to markets through our technology and offering efficiencies to our product sets. But I don't think I've ever seen a setup like this going forward. So I can't predict the future. I will say one thing, this is a very dynamic setup for us.
So Sean, you may want to add to that?
Yeah. So thanks, Terry. This is something we've been talking about, I think throughout the entire pandemic, which is that we saw that this cycle was completely different from the previous cycle. The amount of stimulus coming from both fiscal authorities, as well as the monetary authorities was completely unprecedented relative to the size of the problem.
And we've seen it now in the outcome, you've got an unemployment rate at 4%. You've got a record number of open positions in the United States that need to be filled. You've got an inflation rate running at 7%. You've got year-over-year wage growth at 5.7%. And you've got the Federal Reserves still buying securities at 0% or near 0% overnight rate. It's really unprecedented I think, in our history. We've got now 5 tightenings priced into the curve for the coming year. That's the first time I've seen that in a very long time. This reminds me during my trading career of late 1993, and what happened then in 1994 with 300 basis points of the Fed tightened in ’94.
And all havoc, sorry, broke loose in 1994 with some of the largest bankruptcies in U.S. history. So let's see what happens. I think the setup is very strong. I think with 5 tightenings priced in for this year, I think every single fed meeting could be in play. That means that not only do you need the risk management on inflation around the long end treasury futures, not only need -- do you need our long term options, but you're also going to need to manage that FOMC meeting at every FOMC meeting.
So across the entire curve, whether it is each of the FOMC meeting results or its CPI releases or its long term inflation expectation, you're going to be needing our products, especially as the fed now reduces its balance sheet and actually starts tightening.
So, Rich, I don't want to belabor the point, because there's a lot in front of us here, but I want to give you one example, which I think is real time. It's not just interest rates, this is the reason why CME’s multiple asset classes are critically important to risk management. When you look literally 20 months ago, April 20th, 2020, the price of West Texas Intermediate was minus 37.50, they were paying you to take the product. Today or yesterday, whatever it was, that market traded upwards of $92, $93 a barrel.
This is how fast it can turn in a cycle that no one's ever seen before. So just put a pen and paper not only to one asset classes, but across the world to multiple asset classes. So that's why I said that what I did at the outside of my comments about I've never seen this set up before, and I think that is the reflection of how volatile things can become from one day to the next.
We will now take our next question from Brian Bedell from Deutsche Bank. Please go ahead.
I have few questions. I'll just ask one right now and get back queue. Maybe start with switching gears to the environmental products portfolio that you talked about. Can you just talk about maybe just if we can sort of carve out that portfolio, and think of the ADV that you're currently generating? And then talk about the potential for product innovation in this range of products, given that there's a lot of obviously new adoption and the profile of U.S. users versus the international users. And -- touches other categories like financials I know you have S&P, U.S. GDP futures for example.
Thanks, Brian. Let me turn it to Derek Sammann who will address those. Derek.
Yeah. Thanks, Brian. Good question. A couple questions, and I'll focus on the environmental piece of that that are specifically addressing sustainability and environmental risk management. And Sean can talk about the reference -- exposure, right --
Brian, you may want to hit your mute button. I think everybody might be in a little feedback off you. But go ahead.
Yeah. And I'll turn it over to Sean to cover the indexes that track the sustainable companies themselves. So you may have seen a press release from us yesterday announcing a new product launch in our global emissions offsets futures products suite called as C-GEO contract that complements our GEO contract launched last year, it’s our global emissions offset contracts. We followed that with a N-GEO, which is our nature based global emissions offset contract. And we announced yesterday our C-GEO contract, and this is our core global emissions offset contract.
This is a contract that actually tracks and aligns with the core carbon principles, which is an emerging set of transparent and consistent standards around the supply chain of carbon credits overseen by the integrity council of the voluntary carbon markets. This is a rapidly evolving space, Brian. What you typically see us do is look at underlying physical or cash markets. And as they get to a point of liquidity, we then asses that and determine now is the point in time to accelerate the growth of that market by overlaying derivatives on top of that.
This market is moving so rapidly based on the commitment that the global companies have made to sustainability and managing carbon footprints that we have partnered exclusively with the largest voluntary carbon offset spot trading market, Expansive CDL, to be the exclusive provider of derivatives contracts on the back of these in the carbon market.
Overall, these products that we've launched last year have been a tremendous success in a market that literally, -- the spot market didn't exist two and a half years ago. This is a different market from the cap and trade programs that you see in Europe and in different states in the U.S., this is a voluntary or free market carbon offset that allows customers to have validated carbon credits that are validated by UN entities to then use those credits to offset risks globally. So think about this as a free market fungible product that can cover risks, whether you're in Europe, Asia, U.S., or otherwise. There's also a vintage associated with these. So these track the viability of those offsets over time.
This is in early stage in the development of this market, as I said, the cash market didn't exist two years ago. So we identified the leader in the space. We wanted to move forward aggressively and make sure that we were the go-to platform to embed environmental products carbon specifically into our markets and our success there has been very strong. When you look at what we've done since launch in 2021, we had over 57 million tons of CO2 equivalent traded between our two contracts that were live, our GEO and N-GEO contract. And over six and a half million offsets were delivered through seven successful cycles.
So this is a physically delivered product. These are emerging needs. We are going to see this become more and more a portion of every global company's risk management tool kit. Right now, it's early days, we're developing these markets. We have a long history of seen opportunities seen around corners and markets, investing in them and making sure that we're the winner.
So with that, we'll turn over and turn over to Julie.
Yeah. Julie, you want to talk about the S&P or Sean, one of the two, you want to comment on that?
Yeah. So this is Sean jumping in on the financial side. CME now hosts the world's largest ESG contract by nominal value, the S&P 500 ESG index futures, which have -- reached an open interest of more than 4 billion in notional value. In January, we had a record volume day on Globex of 7,943 contracts more than 1.5 billion notional traded that day, which was very encouraging.
We will now take our next question from Ken Worthington with JPMorgan.
Over the last four years, we've been in various market environments, various volatility levels, rate environments, futures volumes have been constant in ‘18, ‘19, ‘20 and ‘21 after rising a lot in ’17, what should we think of as the natural growth rate of futures volume when holding all the sort of the macro factors constant? And as we think about CME initiatives from like new products, new customers, what should that add to annual growth to futures volumes over time?
I'll start, and I think Sean and John and others can jump in. But when you say, the volumes have been constant, you're correct in your analysis. But the comment I made earlier is what I -- I truly believe this, is we're setting up for something that a lot of us have never seen before. So what does that mean for the out years going forward as you just pointed out from ‘17, going on to ‘18, ‘19 and ‘20. So I think it's going to be interesting to see if that pattern continues or do we see a whole new pattern of trade between the multiple asset classes for people to manage risk because of the fundamental macro factors that are going on throughout the world. So it's going to be quite interesting.
I will say the following though, Ken, when you look at the efficiencies that CME has been able to effectuate for clients over the years, it's been quite a benefit for the clients to be able to make their capital more efficient for them to manage their risk here. So I anticipate us to continue down that path and to look for greater efficiencies. As you know, we're still finalizing some opportunities with our friends over at a Depository Trust Corporation to get margin offsets with our broker tech platform against our futures. That's out of our hands. We've done all we can from our side, we're waiting for the DTCC to finalize the approvals from the SEC. But that will be another efficiency, that's going to be very effective for clients to manage risk going forward.
So again, liquidity begets liquidity, we think this is another way that we will look at the markets going forward. But I think when you look at just the setup right now, it's very interesting for the out years. And I'll ask some of my colleagues to comment as well.
This is Sean, I’ll jump in. As I started in my prepared remarks, 2021 volatilities across financial asset classes were significantly below normal. If you look at Euro dollar, for example -- the Euro versus dollar for exchange rate, which is the 12 percentile going back to at least 2007. Yen at 14 percentile, Sterling at the 21 percentile. If you look at the S&P 500, it was at the 39 percentile. If you look across our rates complex, it was generally around the 30 percentile going back to 2007.
So volatilities were extremely suppressed and depressed relative to a zero -- better reserve interest rate policy, overnight rate policy, as well as their purchase of securities. And as I said in my prepared remarks in the fourth quarter, we saw more normalized volatility, in particular closer to normal in both equities and rates. But foreign exchange remained well below historical norms. So I think you have to take the volatility environment into account.
If you look at interest rate policy itself, 2016, 2017, 2018, the federal reserve was tight. So that's why we saw much higher volatilities in those years than we did last year. Hence the reason why our volumes and our revenues remained relatively flat, it was in a much, much lower volatility environment. We did have, on the back of that, as Terry mentioned in his prepared remarks, $500 million last year in that lower volatility environment that came from new product launch since 2010. And so with the growth of large open inter holders, the growth of customers and with a much -- with new product growth as well as a more normalized volatility environment, I would say, the results continue to grow. Julie?
Yeah. And I think adding to that, right, you've heard us talk a lot about the evolution of our commercial model and also our focus on new client acquisition. And so when we look specifically at those new institutional clients that we were able to add to CME Group volume and revenue last year, 10% of those net new institutional clients came to us and were trading crypto, another 16% were trading the Micro suite. And so I think it speaks to that product innovation is helping to attract new customers.
And when we look over both our institutional and our retail new client base, we've generated over a billion dollars over the last five years that is completely net new revenue and new customers that are trading here. And so we believe with our commercial model we can continue to expand that, we're advancing our digital capabilities and personalizing things in ways that other companies are doing as well, but doing it in an accelerated fashion. So I think I'm optimistic about what we continue to do in the future. And John, do you have anything?
Yes. I think two other points. One we didn't really touch on here and that's innovation, right? So, part of the hallmark and one of the things that Terry has really instilled into the business is innovating. And when you take a look at product launch since 2010, we're generating about a $0.5 billion per year in products that had been launched since 2010. So meaningful innovation, that's driving meaningful revenue.
Second point, and Derek touched on it, and that was the globalization of our business. We've invested in sales force as Julie talked about, but that sales force is around the world. And right now we're approaching, we're right -- around 29% of our volume is coming outside of the United States generating close to about 38% of our revenue from -- 28% of our revenue from electronic trading from outside the United States.
Also did want to point out and Sean touched on, and that's pricing. He mentioned in his prepared remarks a couple of points around price increases that we've done in our equity complex. When I take a look at price adjustments we've made, and obviously we take a very targeted approach, all with the eye of not impacting volumes. But we did make pricing adjustments across almost all of our asset classes, and assuming similar trading patterns as last year, we would expect a 1.5% to 2% price adjustment against our revenues.
So the fees go into effect in February, as Sean mentioned, the major, the largest portion of the fee adjustments is in our equity complex and our equity complex is growing at 55% year to -- you so far this quarter, it's up in our Micros where we also made some adjustments, is up over 65% so far this quarter.
We will now take our next question from Simon Finch from Atlantic Equities. Please go ahead.
Hi, everyone. Thanks for taking my question. I'm really interested in your thoughts around I guess, inflation, obviously inflation -- the expectation backdrop is fantastic from a volume perspective to you guys. And I'm curious as to how you're feeding that into I guess, into your operations and your expense expectations through fiscal year ‘22 based on your guidance? Certainly, noting that your compensation and salaries example, I think were held flat last year. So I was wondering what -- I guess how sustainable that guidance for expense in fiscal year ‘22 is, and how we should think about that?
Thanks. We appreciate the question. John, why don't you touch a little bit on our expenses as it relates to inflationary times that we're all dealing with?
Sure. Yes. Yeah. Thanks Simon, for the question. When you take a look at our guidance and you adjust for OSTTRA and you adjust for our synergy capital, when I take a look at our core expense growth rate, our core expenses are growing at approximately a little over 3.5%. That's been at a higher expense growth rate than we've seen historically. We generally have been around the 3% growth rate. So we certainly are seeing some upward pressure on our costs.
Secondly, when you take a look at our guidance for next year, we also included approximately $30 million in costs related to improving business environment. So that would be -- about half of that 30 million is really related to increased travel and in-person events, and we've seen that starting to come through in the first quarter with more conferences, for example, being in person. Also, you know, we're expecting a higher marketing spend in next year.
The second half of that are the other 15 million, is related around growth initiatives that we have, specifically customer facing employees globally. And also, focused on new customer acquisition programs. So those are the two kind of pieces. It's something we certainly are workingdiligently on in terms of managing our costs. Our team has done a wonderful job, you know, across the entire organization in terms of managing our costs over the long run.
In fact, if you take a look at our cost base in 2018, and you adjust for our OSTTRA, you adjust for our -- you adjust for the synergies, the 200 million in run rate synergies that we achieved last quarter. And you assume that we had next for the full year in 2018, our costs have grown on a compound annual growth rate assuming we hit the 1450 in terms of our guidance at less than 3% per year.
So, you know, we've got a long history of being able to manage our costs across the entire organization. The entire team does a great job ensuring that we manage our costs as efficiently as possible.
We will now take our next question from Alex Blostein from Goldman Sachs.
I was hoping to dig into the Market Data a little bit more. The revenue trends have been flat really over the course of most of this year. I know it's a big growth initiative with business. So maybe give us an update on how you're thinking about the growth prospects into 2022? And then, as a sort of related follow-up to that, I guess the discussion around Google with respect to market data and new analytics and tools you're planning to roll out. What's the timeline when you actually think these initiatives could help the revenues?
I think, just a little bit in terms of the performance in Q4 of the Market Data business. As John pointed out, certainly up over Q4 of 2020 but on an annualized basis, up almost 6%. And so in Q4, what you're seeing little bit is some of the true ups that we had from a drive data licensing perspective that hit in Q3. We had a number of agreements that we reached with some banks. And so, that's something that then is built into the baseline, but is not something that we were able to replicate in Q4. So those types of things are just a little bit lumpy as we've talked about in the past with audits.
Our data business is strong, as we look across both the professional data subscribers, which is the 70% of that revenue, continues to be very solid. And a lot of the policy and pricing changes that we have made have driven that uplift in revenue that I talked about. So we feel very good about the direction of the business as well as the innovation we've been able to drive in putting our historical data on the cloud.
Your second question on where we will see some of that? I mean, as I mentioned earlier, we hope to be able to get that real time options data on in the JSON format onto that feed in -- within the next six months and are getting close there and believe that will help drive additional clients into that production environment, and utilizing a lot of these other tools with Google. As we mentioned, these are off the shelf tools that Google has today, and it will be relatively easy to put that into use as it relates back to smart stream.
A lot of the innovation that John spoke with earlier is definitely focused on our data and information. So we believe that there are definitely better ways that we can be packaging this data and information, and we'll be working with some of our clients this year for them to preview some of that. And we'll eventually be scaling it out to other customers. So, definitely I would say, a building a year but also something that we will have new products in market in 2022.
We will now take our next question from Owen Lau from Oppenheimer.
So on digital assets, could you please give us an update on your recent traction and conversation with investors for your Bitcoin and Ether futures product in light of the recent trading environment? And then on the new product launch, could you please talk about whether you have any near-term plan to launch more crypto derivatives product? And it'll be great if you can explain a little bit more on the approval process and the typical timeline from say, having a plan to actually launch on the product -- on the new product on the crypto side?
On the digital assets, let me ask both Sean and Julie to make some comments and as it relates to new products, also Julie and Sean. So that's kind of in their domain. So Sean, you want to start?
Yeah. As I said earlier in January, we had an all-time record in our total crypto average daily volumes. We see our Bitcoin futures doing well at 8,900 contracts year-to-date ADV, our Ether futures at over 5,000 contracts, our Micro Bitcoin at over 17,000, and our new Micro Ether actually at over 23,000. So all of these contracts are doing quite well and thriving. In addition to that, as I mentioned earlier in the prepared remarks, we also recently increased our fees on both members and non-members on both our Bitcoin and our Ether futures. That again starts on February 1st.
In addition to that, we are of course planning new product. And we do have a very strong new product pipeline across the financials asset class, and we do have a strong product pipeline within our crypto area. We have not announced any new products recently, but I can assure you, we do have a strong product pipeline as we always do in this asset class as in other asset classes. And we will be announcing those as appropriate.
In terms of the time it takes to get the approval and in particular, in some cases you do need CFTC review, and in some cases you want the CFTC to approve. But I'll hand it over to Julie, to comment on that.
Let me just jump in for a second, because I think your question, Owen, on the approval side is interesting because there's been a lot of noise and rhetoric around the cash side of cryptos with the SEC. Our process, as Sean laid out with the futures is, can either be a self-certification process or a full filing. So those full -- the self-certification process could be done in as little as 10 days to two weeks. The full approval, which the commission would have to find it novel and complex to go down that path of a full, could be several months. But again, they would have -- the clock runs on this unless there's an issue with the commission.
As you saw when we launched crypto currencies with Bitcoin, the first or the second exchange to do so I believe in 2017, that was a self-certification process. So you can kind of see the path that we go down as it relates to the derivative side of the crypto asset classes. So Julie, I'll turn it to you.
Yeah, I'll just zoom out of it. I mean, I think in 2021 we launched over 75 new products, which is very consistent with what we have done in past years. And the success rate for those products just continues to trend higher and higher. And I attribute that, a lot of that to the active engagement we have with our clients before we roll those products out. And I think Ether and the entire Micro suite of new things that we introduced last year with the Micro WTI and Treasury Yield, these were some of the fastest growing products at CME Group, and they have brought new participants to the exchange from around the world that we pointed out.
I mean, the one thing that I think is interesting, specifically as we looked at the crypto activity from the first quarter of 2021 versus through what we saw in January, we're now seeing a double-digit participation on a percentage basis from the buy side. And so we have -- this is a key value proposition of our crypto suite, that we are a highly regulated, margined, cleared, risk managed shop here, and this is attractive to those buy side clients that are looking for access to that asset class. And the numbers here really point that out.
And I also think the whole experience, right, that we're bringing customers -- we are just seeing over 2 million visitors just to our website just to look at what our crypto offerings are. It's driving thousands of new leads for us. We're supplementing that with crypto events, and social posts and digital media, and that's all part of how we're going to continue to grow this business and be relevant to customers in the crypto space.
Owen, hopefully that gives you a little.
We will now take our next question from Kyle Voigt from KBW. Please go ahead.
I have a 2-part question on net investment income. So first part is just on the cash performance bonds, it looks like those increased to $158 billion in the fourth quarter. But if we go back to pre-COVID, so in 4Q '19, they're at $37 billion. So I guess you're over 4x higher today. So I guess as the Fed begins to tighten more meaningfully, should we expect that level of cash collateral to decline meaningfully from the current levels and just trying to get any sense of some normalized level there. And then the second part of the question is just around the net investment income capture rate. And is the last rate cycle still a good proxy to look at where I think you reached roughly 30 basis points in net capture rate at the peak of the rate cycle? Or is there something different to know for this hiking cycle?
Thanks. Let me turn it over to Sunil and give you some color as it relates to that.
Thank you, Terry. So when it comes to cash margin posted at the clearing house, it is a function of both the risk exposure and clients’ choice, right, among all the assets that they can post at the clearing house. We have a very flexible program and clients today choose cash. You're right that the interest rate or the opportunity to earn a return does play a fair role, but it is very hard for us as the clearing house to actually forecast what it's going to be in the future as the Fed changes rate.
When it comes to the capture rate, again, it's very hard for us to give you an indication of how to model that because the rate that we have paid for deposits at the Fed are at the discretion of the Fed. And there is no guarantee that it will track any one of the publicly disclosed rates. So we -- this is one of the reasons we cannot give you a view into what these -- what to expect going forward. But at the moment, what we have is around -- it fluctuates, the cash margin is between $140 billion to $150 billion. That is in U.S. dollar equivalent terms and about 96% of it is at --
Yes. Just to build on that for a moment because you asked about the capture rate. Currently, IOER is at 15 basis points, we rebate back to our clients 10 basis points, and we earn 5 basis points on that -- on those funds.
To your point, we did see an increase in average balances of about $6 billion. We went from about on average in the third quarter of $144 billion to $150 billion on average. So we did see an increase. So the amount of funds we earned from a CME perspective was about $1 million more this quarter than we did last quarter.
Historically, if you look at over time, as the Fed increases rates, we often make adjustments as well in terms of our capture rate. But to Sunil's point, we're always looking at what are the alternatives that our clients have to invest their funds. So we want to be competitive to keep the cash levels up at the clearinghouse because it's: A, it's good for the -- from a risk management perspective, but also we earn on that as well.
Thank you. Kyle, hopefully, that gave you a little flavor.
Yes. I was just -- if I could just follow up real quickly, just on the -- I think I asked about last cycle was around 30 basis points, was the net capture where we reached to. I mean, I guess, has anything changed in terms of what your -- what you want to pass through, I guess, that's essentially the question just because it is such a big line item now. So I just want to make sure that 80%, 90%, is that still a rough guide frame for kind of what you want to pass through to the end clients?
Yes. I would say that that's the case. We haven't changed our point of view in terms of how we're managing that. Again, we are mindful in terms of what our clients can invest elsewhere and that also governs how much we rebate back to our clients. But we haven't changed our point of view in terms of how we manage that.
I think just to add to this and -- about. But John's point earlier about clients have alternatives. We want to make sure from a risk management perspective, we are balancing this in an appropriate way, not just to try to earn an extra $500,000 or $1 million. There's a lot more to it than just that.
We will now take our next question from Chris Allen from Compass Point.
I was wondering if you could provide some color just on plans for deployment around the $1 billion from the Google investment. CapEx this year is $150 million. Obviously, you have a healthy amount of cash generation. Just wondering how you plan on deploying that, whether there's a shift in capital priorities, so given the cash balances where they stand right now?
John?
Yes. Thanks, Chris. As we indicated at the time, we did the transaction with Google, the $1 billion was really going to be used to invest in the business. So part of that investment includes -- part of that investment includes obviously the migration onto the cloud platform, which we're very excited about. I kind of gave some highlights around what that would entail.
Also, we are going to be looking at ways to accelerate the growth of the business through investing in the business. And we don't really have anything to share with you at this point. But we think that the focus is on growth here. And that's what we're intending to do with the cash.
Just a quick follow-up on ways to accelerate, would you consider inorganic or just organic opportunities there?
We're not limited in terms of how we're viewing the opportunity to invest in the business. I've been working with Terry for almost 20 years here now and in terms of M&A, and I don't think our view around inorganic opportunities has changed at all. We are always looking for ways to deploy the capital, whether it's in the business internally, organic growth opportunities or inorganic opportunities. We think about it from the point of view of how can we help our clients. And so we always look at things from our clients -- in our clients' shoes.
Also, when we look at the M&A landscape and our opportunities to deploy capital, we're in a very strong position. We kind of highlighted today why we are pretty optimistic about the future here and we want to -- and so we are in a strong position as we look at opportunities.
We will now take our next question from Craig Siegenthaler from Bank of America.
This is Eli filling in for Craig. So I was wondering, given that Fed funds haven't moved yet, even though they will and energy prices are already up a ton. I just wanted your perspective on the potential lead time between energy volumes and the rates volume curve? Or I guess said differently, do you think energy volumes are going to be peaking well before rates volumes just on timing?
Thanks, Eli. Derek, do you want to talk about the energy?
Yes. Great question. I think there's -- this cycle is a little bit different from previous cycles for a couple of different reasons. Structurally, as the global energy market is in a very different place than it was last time we had changes in rate cycles. If you look at whether it's a combination of, we talked about earlier, greenifying the balance sheets of a lot of companies, companies moving away from or trying to be part of the sustainability initiatives.
It is -- it has promoted a lot of decisions to decrease CapEx in the development of oil infrastructure. So coming out of the pandemic, we have just reached the pre-pandemic levels of demand in crude oil, but yet we have not reached the level of production. So one of the major reasons we're seeing elevated prices here is we're seeing demand outstripping supply. And I think structurally, you're going to see less supply going forward than you had previously.
So I think there's a couple of items going on. Number one, you're seeing crude push out through 1992, you're seeing demand outstrip supply. I think you're also seeing a divided world within energy of seeing what the future of crude oil looks like versus what the future of natural gas looks like. Certainly, the Russian-Ukraine tensions has created a whole new view of what a global benchmark looks like for natural gas and unquestionable, the U.S. as a swing producer in global crude oil market and absolutely in the nat gas market as well. The cap on demand or I should say, access to natural gas right now is a function of the LNG facilities coming online in the Gulf.
There is 3 facilities online right now. There should be 2 more coming online in the next 2 years. The U.S. is pumping at max capacity, liquefying natural gas based on Henry Hub pricing. That's a market we own 80% of. And certainly, in a world in which you're seeing global energy concerns at the forefront of domestic policy in Europe you'll see a greater push to see imports of U.S.-sourced LNG priced on Henry Hub, that market that we're 80% market share of, as a continued demand.
The last piece of this, and this is why it's different from previous years, Europe has actually just deemed both natural gas and nuclear as green fuels. So this will be not only -- the natural gas story isn't just a story of transition to sustainability, that is a long-term part of the overall energy story for a long time to come. So we'll continue to grow and expand our footprint there, and you'll see us continue to accelerate global adoption in our markets.
And your last point, we've seen an acceleration of volumes and participation in Q4 and coming into Q1 in energy. So we're excited about that, we think we're well positioned.
Thanks, Derek. Thanks, Eli. I appreciate the question.
We'll now take our next question from Michael Cyprys from Morgan Stanley.
I wanted to ask about crypto. You guys have Bitcoin and Ether futures and have been successful there. I guess just broadly, how do you think about potentially extending into the underlying physical token market? And to what extent could it make sense for CME on that front, but even potentially opening up your platform to bring retail investors in more directly with your exchange wrapped even with crypto wallets on the physical side, which gets to a broader question around how do you see the market structure developing in crypto versus other asset classes? And what do you think it's going to take to be successful, to be a dominant player within the trading of digital assets?
Well, Michael, that was a lot of questions and comments in one question, but I will say that, listen, the crypto space, and I've said this over the last several years, appears to be here to stay, and we are here to facilitate the risk management of these products.
As Sean referenced a moment ago, we're looking to roll out new products. We have not announced what those crypto products are yet, but we have been successful, as Julie pointed out, in the ones we have to date.
As far as going into the cash side of the business, that's a very crowded field right now, to say the least. In the cash crypto trading, we are a dominant listed on the crypto side in the futures point of view. So we want to maintain our presence in the listed market and the regulated market, so we'll wait and see as it relates to how it shakes out on the cash side.
One of the things that we've been very successful at is to create with our next transaction in marrying cash markets with futures markets and creating efficiencies. This is something that I will have the team continually look at. It's not saying that we're going there, but we will look at the efficiencies and the growth of this market. But it's a very crowded market right now on the cash side.
Again, on the listed side, I think we're doing quite well. And again, we were "a walk before you run" in this asset class has been the way I wanted to approach it. This is a contentious product line. And so we're a highly regulated entity. And reputationally, I want to make sure that we're always doing the right thing. So we are doing everything I believe that we can do at this particular moment with our eyes set at new opportunities going forward.
And as it relates to the retail, our micro contracts are already attracting that retail crowd that you're referencing today that are trading some of the cash platforms that are trading in the futures on the smaller crypto products that we have listed.
So I think the long -- the short answer is, Michael, more to come as it relates to some of our newer products. But again, the only way that I would look at the cash side is if we can create efficiencies against our futures portfolio. So not saying we can or we can't, but that is one thing I'm looking at.
We will now take a follow-up question from Alex Kramm from UBS.
Sorry, I realized we're way into overtime here. But a couple of follow-ups to squeeze in here, and those should be quick. You mentioned the SOFR term license and how many people you've licensed this out to. I would assume this is kind of like a utility kind of benchmark like LIBOR was. But maybe elaborate if you're actually generating revenues on that and if there's opportunity for maybe some analytics products, et cetera? And if you're looking at this as a revenue opportunity?
And then another very quick follow-up to the question earlier on cash deployment. With the S&P Global IHS Markit deal closing here imminently, just wondering if you could estimate how big the check will be that you'll have to write them to keep your stake in the index franchise JV unchanged?
First of all, let me answer the last one first. I don't think anybody announced that we're writing a check for the increase in -- with S&P Global yet. That is something obviously, we'll talk with them as they close their transaction. It's a little premature to make that assumption just yet, Alex. So I'll be careful with assuming that until that deal is closed. I agree it should be closing shortly, but we've been hearing that for quite some time now. So we'll wait until that is done.
We do like the indices businesses. We've been very success with it. We think that the credit indices that are coming in from IHS and S&P Global could be very attractive for CME. And we do like those businesses. So there's no question about it. But again, I want to be -- I don't want to get over in front of us until that deal is closed to talk about what kind of check we may or may not be writing. There's a lot more to it than just that. Let me also revert back to Julie on the first part of the question.
Yes. Thanks for the question, Alex. Yes. As Sean pointed out in his remarks, we have licensed since July, over 600 entities for the term SOFR. And so that's going to apply to licenses across both real-time and historical data. And it is generating 7-digit annualized revenue for us and another almost 400 firms in the pipeline.
So what the opportunity is here is both for direct data revenue as well as we believe cross-sell opportunities. So we're seeing really strong traction with global investment banks, regional banks around the world, both in the U.S. and APAC and also just getting into some new areas with people that CME has not traditionally worked with. So global trade finance, commercial real estate firms, export import and development banks, structured finance.
And so as we are engaging with those customers, specifically to license them, those become the new client opportunities that our sales team will be very actively talking to them about the whole suite of products and services that we here. So we see this as a great opportunity and continues to be a key part of really supporting the growth and transition from LIBOR to SOFR that Sean and his team are working on with us as well.
Okay. Alex, did that address both of your questions?
Fantastic.
We will now take our next follow-up question from Brian Bedell from Deutsche Bank.
Just a quick 2-parter hopefully. Just one, I wanted to just circle back, Derek, on your comments on the environmental. I don't know if you have the ADV from just that environmental products portfolio that you cited maybe just for January, just so we could base growth off of that. I know -- I realize it's very early. So -- and then the second part is just, Sean, if -- we talked a lot about the short end of the curve, but maybe your view on the potential for an increase in supply of hedgeable treasuries into the market after quantitative tightening over the long term.
Thanks, Brian. Go ahead and start, Derek, and we'll go to Sean on the deliverable supply issues or the supply of treasuries.
Thanks, Brian. So when you look at specifically just the carbon products alone, for example, right now, this is a brand-new market. I mean the leading cash market out there, CBL- Xpansiv is trading a couple of hundred million dollars a day equivalent in the spot market and that's the largest market we have. So right now, those volumes just in the carbon market are in the kind of low single hundred digits right now, open interest records around 10,000 right before we closed that at year-end.
So this is a low -- it's going to be a low build, which is why we're saying, this is an investment in making sure that we're locking up the best partners right now plus this energy transition could be decades long. So we're making sure that, as we always do, seeing around corners, seeing how the market's evolving, working with our customers, understand what their needs are so that we can position ourselves as the risk management tool and price discovery center of choice.
We'll start to be presenting that environmental products portfolio view out to differently in the coming months because we're going to be wrapping in their products that have rather substantial volumes right now in the biofuels, ethanol products, alongside battery metals, et cetera. So it's -- we've developed it to be able to manage it as a portfolio. So we'll be able to present that to you a little bit differently as we manage it and grow that globally. But right now, this is a low single hundreds, low single thousands ADVs, and the open interest in the tens of thousands right now. So growing, but it's going to be a slow build.
Thanks, Derek. Sean, on the supply after the Fed decides to tighten up a little bit?
Yes. Thanks, Brian, and thanks, Terry. We are very pleased last year with all-time record volumes in our treasury futures, our ultra 10-year treasury futures normally. In terms of the upcoming potential for quantitative tightening as well as supply, the Treasury did announce a slight reduction in the long-term issuance in the most recent release. However, that will be offset with the expectations of the Federal Reserve in reducing their quantitative easing. And then in the coming year, probably moving towards a quantitative tightening.
So in the very short term, probably it looks like the amount of quantitative easing the Federal Reserve is still may offset the reduction in quantitative easing will offset the reduction in issuance.
Longer term, remember what happened with our volumes in 2018 -- 2017, 2018, that period of time when the Federal Reserve actually started to sell U.S. treasuries. And we do expect in the cycle that, that will happen at some point, and that with the combined record debt record issuance and potential for quantitative tightening that our products will be needed much more than ever before.
As Sean has always said, Brian, that Fed doesn't hedge their balance sheet. When they sell them, the people that buy them, they have no choice but to hedge that balance sheet. So to Sean's point, when you saw the increase of volumes in the time period he referenced, that's a portion where the Fed is not increasing their balance sheet, they're selling treasuries and the folks that are buying them need to hedge those. That's why we do quite well in that scenario. So again, there's no guarantees, but we believe it's setting up in a very similar pattern.
That concludes today's question-and-answer session. I would like to turn the call back to management for any additional or closing remarks.
Well, let me thank all of you for joining us on today's call. We appreciate it very much. Obviously, we're excited by the quarter. We're excited by the beginning of 2022. As I said, the landscape at the way it's setting up, we are in a position to continue to help people manage their risks to these most difficult times that we all live in. So please all stay safe and healthy, and we look forward to seeing you all soon. Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.