Rate per contract.

In plain English

Rate per contract is the average fee an exchange collects each time a contract changes hands. It is an average, not a price anyone pays. CME Group's annual report says its average rate per contract is determined by dividing total clearing and transaction fees by total contract volume. Behind that average sit many different fees: each product has its own, members and non-members pay different fees, a tiered pricing structure applies, and incentive programs change what some customers pay. CME lists exactly those things, the mix of products traded, the trading venue and the mix of customers, as what moves its rate per contract. Because the fee is charged per contract rather than as a share of the contract's value, a busy day earns the exchange more than a day when prices move a lot on light trading.

01Why it matters

It is half of the arithmetic behind how a futures exchange makes money. Multiply the rate per contract by the number of contracts traded and you have most of the exchange's revenue. It also explains a puzzle in the reports: the average can fall even when no fee was cut, simply because more of the trading happened in cheaper products.

02The math, step by step

Say an exchange collects $70 million in clearing and transaction fees in a month in which 100 million contracts trade. Its average rate per contract is $70 million divided by 100 million, or $0.70. Next month the fees stay the same, but more of the trading shifts into a product charged $0.50. The average drops below $0.70 even though no individual fee changed.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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