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- [00:00]
A
And I want to go a little bit deeper because I know and you've talked about how you've been courted by many of the without naming names, many of the major like Dexes and perp issuers or perp marketplaces to sort of license your index to them, similar to what The S&P 500 did, et cetera. And I'm sure that it's interesting, potentially appealing to you, but. But you did mention how you were also asked a few, they made a few requests of you that you found very unusual and dare I say concerning. So I'd love for you to just kind of walk us through a couple of those experiences.
- [00:46]
B
Yes. So again, I'm extremely new to the purpose market, so it was great to receive that kind of enthusiasm from perpetuity marketplaces. So almost everybody reached out, have conversations. So my question to them is always, hey, love to this, love to explore. Tell me what should I do? What kind of product that will be interesting enough for your audiences, right? What kind of relationship you're looking for? A few things at least. Odd to me from traditional again market participant point of view from capital markets is one of the things is so bizarre is you ask me, hey Carmen, aside from licensing indices, will you consider become market maker of your own indices? And I thought they were joking, right? Because clearly there's a huge conflict of interest by me treating my own indices that completely roll the neutrality from index provider point of view by them asking I thought they were completely joking and I realized they were not joking. And then I was like, you do realize a big conflict of interest. Are you doing that with any other indices? They were like, yeah, we do that with other indices. Ask them as well. And I said did anyone say no because it's by design, it's not supposed to do so. Right. So it's fascinating to me that was even a discussion to begin with. Right. That is not something I will feel comfortable as a trader to trade a product. I know the index provider also can trade their own products.
- [02:23]
A
Yeah. And maybe just to explain a little bit more, again we have a sophisticated audience here and they're quote unquote like bilingual in terms of crypto and tradfi. But maybe just give like one or two examples for people who perhaps may not understand the significance of you market making on your own index. What are the risks?
- [02:47]
B
How do I explain this? It's almost when I tell my daughter, hey, you can go play. If I decided that my work can be done by 4pm Right. And then I'm the only person decided if I can work by 4pm or 5pm Then her ability to play or not completely rely on my preferences. Right. So for example, if I have a open interest position on my own indices, that's long, right. It'd be really hard. It's the natural incentive for me to set up my indices at a higher price. Right. Because I will benefit from this particular position versus others. Right. Such a huge conflict interest and everybody can say, hey, you know, wait, the trading side is different than my index settlement price. I said, but it doesn't matter. Your incentive as a company to maximize P and L, that's a huge, huge conflict of interest. You can't give the power of deciding settlement prices to the provider while you're training at the same time.
- [03:55]
A
Yeah, yeah, I appreciate that.
- [03:57]
B
And it's, it wasn't even a question, right?
- [04:00]
A
Yeah, I mean it really is. I mean clearly it's in your interest for your next to keep going up and up and up and, and as you're looking to, I mean potentially license to some of these per offerings and many of which I think the vast, vast majority of which are quote unquote, like unregulated and probably geofenced around offering or servicing U.S. clients. At the same point I know that there's, I think there's some ETF issuers that are potentially looking to launch products based on your futures contracts at cme. And I could only imagine the SEC and CFTC having some real big questions about the fairness of those products if theoretically you have the ability to manipulate the price of your index that everything is based off of.
- [04:48]
B
So that's incredibly important for us to make sure that our neutrality stands. Right. That's why we're going through external audit on silicon data, through ICE code compliance, third party lens. Right. We have very strict internal trading policies. Right. Not only you cannot trade my indices obviously, but you have disclosed your other positions, right. For example, you learn Nvidia. Right. That can be a potential conflict interest. Everything taken extremely seriously as silicon data, as index provider, as we said, everything in our world, the skill is just unparalleled compared to adding other product, adding asset classes. That's number one. Number two is, I think it's interesting when I talk to the, the perpetuity market issuers and market participants, another things I was bringing up is how do you make sure the index, you know, obviously they have their choices, right? How do you make sure it's, it's not being manipulated? It's very important, right. When you pick, pick partners and how do you make sure the trader can actually make sense. Some of them suggest that hey by the way we're going to pipe into, pipe your indices and mix with other indices and to me it's all right. So when you're going to move from one industry to the other they have different methodologies and they're actually essentially different products. Right. How can anyone trade if you just anytime can switch from one to the other how are you going to keep your position open and close? Just sounds like again another box of warm just came up. Right. I think the lack of understanding of the GPO markets, the indus index itself, it's a big problem for me to pick the right partners essentially when my product become tradable. At CME we have a suite of institutional player there can't wait to use our industry to hedging. We talk about all the banks, Harper Skillers, neoclouds, big AI companies. We're talking about billions dollar traded at traditional indices, traditional fusion options products. Right. The energy traders and all the basis trading going to be happening and then if they gonna. I'm sure some of them want to have a purpose venue. Right. I don't blame them for that. How can we make sure they're in their, their, their trading in the purpose markets on my indices and also in a regulator in a very similar rigorousness as traditional markets. That's some, that's something I'm looking for. Right. I don't, I can't just publish my indices and that people trade without being able to sort of gar rail that particular venue.
- [07:18]
C
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