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Phupinder Gill is Leaving the CME Group?

Phupinder Gill of CME Group

Phupinder Gill is retiring at the end of the year, the CME announced. That is the cover story. What the real story is will be more difficult to discover, but this much is clear, this was not the plan.

When I interviewed Gill at a Chicago Executive’s Club luncheon earlier this year we discussed the approach of developing your successor. Gill laid out how the CME had identified a group of CME executives that were all being groomed as successors. To have Terry Duffy named as CEO, and Gill to exit so quickly, smacks of some other kind of decision making.

I suspect there was some kind of confrontation at the board level and an ultimatum. Gill lost. The CME is historic for its rivalries between executives and senior political powers. Terry Duffy won the board battle, and Gill is out.

It will be interesting to see how CME Group may now adjust its strategy, if much at all. The company is heading into much friendlier waters, or so investors believe, with the Trump administration, and its stock is rising dramatically – up to $117.05 yesterday, from $103.07 a week ago, with a market cap of $42.1 billion. The company’s average daily volume so far this year is up 8 percent to 15.4 million contracts, according to its third quarter earnings report held just last week. The CME Group is performing well, with solid growth in volumes coming from Europe, up 20 percent year over year in Q3 and Asia, up 7 percent. While revenues and net income were essentially flat, down 1 percent for the quarter but still solid. It is indeed, a curious move by CME while the company is performing so well on paper.

But this is not a loss for Gill. He won his freedom to retire and enjoy the fruits of a storybook career. He won more time with his teenage son while he is still at home. What will be interesting to see is how many other senior executives will follow Gill out the door in the coming months.

Congratulations to Terry Duffy as the new CME CEO and Bryan Durkin as the new CME president. The CME is in seasoned hands, with a great team behind them. This is your chance to really let your light shine.

(Jim Kharouf contributed to this commentary)

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Lothian is executive chairman of John J. Lothian & Co. and editor of the John Lothian Newsletter. He publishes MarketsWiki.com, MarketsReformWiki.com, MarketsWikiEducation.com, JohnLothianNews.com and several industry newsletters.