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CME GROUP INC.
DIRECTOR CONFLICT OF INTEREST POLICY
[Adopted November 7, 2002; Revised September 11, 2007]
1. PURPOSE OF CONFLICT OF INTEREST POLICY.
The Board of Directors of CME Group Inc. ("CME Group") has developed this Conflict of Interest policy to ensure that any corporate action of the Board of CME Group and/or the Boards of Chicago Mercantile Exchange Inc. ("CME") and Board of Trade of the City of Chicago, Inc. ("CBOT") that might confer a private benefit on a director is understood in advance by the relevant decision makers and that all decisions of the Board or a committee of the Board are made in the interests of the shareholders of CME Group. A director may not use his* position, or confidential corporate information, to benefit himself or another person or entity.
CME Group, CME and CBOT are Delaware corporations and are subject to the laws of that state with respect to a director's fiduciary duties, including the duty of loyalty. This Policy is intended to provide guidance with respect to common potential conflicts of interest, but is not intended to address all possible conflicts. Consequently, this Policy is intended to supplement but not replace any applicable laws or regulations governing conflicts of interest. In all instances where a potential conflict arises between this policy and applicable Delaware or other law, or a conflict is not covered by this policy, CME Group will comply with its legal requirements.
*The use of the masculine pronoun is for convenience of drafting only and includes the feminine and plural.
2. Definitions.
2.1 Immediate family member. "Immediate family member" includes a person's spouse, parents, stepparents, children, stepchildren, siblings, mothers-and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person's home (other than a tenant or employee).
2.2 Financial Interest. A person has a "financial interest" if the person will benefit in some way from an action taken by CME Group, including if he or she has, directly or indirectly, through business, investment or an immediate family member:
(a) An existing or potential ownership or investment interest in any entity with which CME Group has a transaction, contract, or other arrangement, or
(b) A compensation arrangement with any entity or individual with which CME Group has a transaction, contract, or other arrangement, or
(c) An existing or potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the CME Group is negotiating a transaction, contract, or other arrangement, or
(d) An existing or potential ownership or investment interest in, or compensation arrangement with, any entity whose business or operation has been or will be directly affected by a decision or action of the CME Group.
2.3 Interested Director. "Interested director" shall mean any director who has a material financial interest, as defined herein, or who serves as a director or officer of any entity with which CME Group has a material transaction, contract, or other arrangement. A director will not be considered an "interested director" solely as a result of a transaction in connection with such director acting as a floor broker, floor trader, employee or officer of a futures commission merchant, clearing member firm or other similarly situated person that intermediates transactions in or otherwise uses CME or CBOT products or services; provided such transactions are made in the ordinary course of business of CME Group on terms consistent with those prevailing at the time for corresponding transactions by similarly situated, unrelated third parties and provided further that such transactions are not subject to specific Board approval.
2.4 Material Financial Interest. A "financial interest" is a "material financial interest" if the effect on a person, his immediate family member or a company or firm in which he has a financial interest, is significant in light of his personal financial condition or the financial condition of the company, firm or immediate family member. For example, a director who trades CME or CBOT products or has an interest in a CME or CBOT firm shall not be deemed to have a "material financial interest" in a proposal to raise or lower trading fees or beneficially modify ex-pit or electronic trading policies vis-à-vis pit trading policies if the change does not have a material effect on his or the firm's income. If a director is not in a membership class affected by a decision, he generally will not be deemed to have a material financial interest in the action.
3. Role of General Counsel.
3.1 The General Counsel shall administer and monitor compliance with this Policy and report to the Governance Committee on at least an annual basis regarding compliance.
4. Voting.
4.1 In the event of any potential or actual conflict of interest involving a board member, including a director having a material financial interest in a matter to be considered by the Board of Directors, the Board, after consultation with the General Counsel and outside legal counsel if necessary, shall determine the appropriate action to be taken. As a general matter, CME Group believes it is appropriate for a director to abstain from voting on a matter in which he has a material financial interest.
4.2 In the event a director abstains because of a conflict of interest, the abstention shall be noted in the minutes of the meeting.
5. Disclosure by Directors.
5.1 With respect to any matter pending before the Board of CME Group, CME or CBOT, each director shall disclose to the Board or the General Counsel any matter, relationship or other factor, not previously disclosed in accordance with paragraph 4.2, that could reasonably be considered to make the director an interested director.
6. Procedures in Connection with Proposed Transactions and Arrangements.
6.1 Scope. This section applies to any proposed rule, transaction, contract, or arrangement in which a director has a material financial interest.
6.2 Duty to Disclose. In connection with any proposed rule change, transaction, contract, or arrangement, an interested director must disclose the existence and nature of his material financial interest, not previously disclosed in accordance with this Policy, to the General Counsel or the Board prior to the consideration of the proposed rule, transaction, contract, or arrangement by the Board, any Committee of the Board, or the person authorized to make the decision.
6.3 Determining Whether a Conflict of Interest Exists. After disclosure of the financial interest, a determination shall be made by the Board of Directors, after consultation with the General Counsel and outside legal counsel, if necessary, as to whether a conflict of interest exists. A decision is not required if the interested director abstains from participation in the vote respecting the proposed rule, transaction, contract, or arrangement.
7. Violations of Conflict of Interest Policy.
7.1 If the General Counsel has reasonable cause to believe that a director has failed to disclose an actual or possible conflict of interest, he shall inform the director of the basis for such belief and afford the director an opportunity to explain the alleged failure to disclose.
7.2 If, after hearing the response of the director and making such further investigation as may be warranted in the circumstances, the General Counsel determines that the director has failed to disclose an actual or possible conflict of interest, he shall consult with the Governance Committee and the Governance Committee shall recommend to the Board of Directors appropriate corrective action.
8. Compensation Committee—Director Compensation and Fees.
A member of the Compensation Committee may participate in decisions respecting director compensation and fees to the extent that the decision applies equally to all directors. Directors may approve directors' compensation and fee levels of general application, but shall abstain from decisions relating to fees and compensation relating particularly to them.
9. Annual Statements.
Each director shall annually sign a statement which affirms that such person:
(a) Has received a copy of the Conflict of Interest policy;
(b) Has read and understands the Policy; and
(c) Has agreed to comply with the Policy.
10. Periodic Reviews.
The Governance Committee shall periodically consider whether and how this Conflict of Interest Policy should be revised or amended to better meet CME Group's objectives.