Investor Information
Stock Listing
Investor information is available on the Investor
Cboe Global Markets, Inc.’s common stock is listed
Relations section of the Cboe website,
on the Cboe BZX Exchange, Inc. under the ticker
symbol “CBOE.” On December 31, 2021, there were
106,646,498 shares of common stock outstanding.
Annual Meeting
The 2022 Annual Meeting of Stockholders will be
held on Thursday, May 12, 2022, at 9:00 a.m. Central
Time, via a live webcast at
www.virtualshareholdermeeting.com/cboe2022.
http://ir.cboe.com, including SEC filings, quarterly
earnings releases, webcasts and presentations, press
releases, information on corporate governance
and a variety of stockholder resources, including
historical stock information, dividend payments, an
investor FAQ and a list of analysts who cover the
company.
Corporate Social Responsibility Report
Holders of common stock of record at the close of
business on March 17, 2022 are entitled to vote at the
This report provides insight into Cboe’s approach to
ESG with the goal of demonstrating how ESG
Annual Meeting. A notice of meeting, proxy
practices are integrated within our strategy, business
statement and proxy card or voting instructions
processes and culture. You can read the report
were provided to stockholders of record with this
online at https://www.cboe.com/about/corporate-
Form 10-K.
Transfer Agent
online. Log on
Registered stockholders can access their account
to www.shareholder.broadridge.com/cboe to view
share balance, change address, complete certain
transactions and get answers to other stock related
inquiries. You can also write or call the Cboe transfer
agent at:
Broadridge Corporate Issuer Solutions, Inc.
P.O. Box 1342
Brentwood, NY 11717
Telephone: 866-301-8223
720-399-2148 (Outside the U.S.)
Investor Relations
Direct inquiries to:
Investor Relations
Cboe Global Markets, Inc.
433 W. Van Buren Street
Chicago, IL 60607
Phone: 312-786-7559
E-mail: investorrelations@cboe.com
social-responsibility/.
Corporate Information
Cboe Global Markets (Cboe: CBOE), a leading
provider of market infrastructure and tradable
products, delivers cutting-edge trading, clearing and
investment solutions to market participants
around the world. The company is committed to
operating a trusted, inclusive global marketplace,
providing leading products, technology and data
solutions that enable participants to define a
sustainable financial future. Cboe provides trading
solutions and products in multiple asset classes,
including equities, derivatives and FX, across North
America, Europe and Asia Pacific. To learn more,
Independent Auditors for the 2021 Fiscal Year
KPMG LLP
Chicago, IL
Website: www.shareholder.broadridge.com/cboe
visit www.cboe.com.
March 31, 2022
To our Cboe community,
As I write this letter, we are witnessing a global crisis in Ukraine, where citizens are fighting to defend
their freedom and protect their sovereignty amid an unprovoked invasion from Russia. We continue to think
of our colleagues, friends and family in Ukraine, as well as all those affected by this crisis, and hope that
they find safety and peace prevails quickly.
Beyond the tragic humanitarian impact of this war, the Ukraine-Russia conflict introduces new risks
with the potential to destabilize a world economy still recovering from the effects of the COVID-19 pandemic.
Cboe Global Markets is deeply committed to doing our part as a global market infrastructure provider to
help ensure the continued orderly operation and security of our markets. Our exchanges and platforms across
23 markets in North America, Europe and Asia Pacific continue to demonstrate remarkable resiliency
amidst market turbulence, providing a forum for investors to express their views and manage their risk.
Though we are faced with a challenging macro environment ahead, I am encouraged by the significant
progress made in 2021—another unusual year that was at times difficult, but also filled with hope, ingenuity
and growth. At Cboe, we expanded our business, entered new geographies and launched innovative new
products and services to fuel greater participation in our markets. And, as society collectively reimagines the
future of the workplace, we see immense value in this moment—embracing what connects us in the work-
from-home economy and doing our part to help maintain the global financial infrastructure that powers it.
We are living through the largest wealth transfer in modern history with older generations projected to
pass down approximately $70 trillion in assets by 2042(1). But the next-gen investor is different from their
elders. They want to be the engine for their own wealth generation, actively managing their investments and
tailoring their financial decisions to their values(2). As leaders in risk management, Cboe is equipping
these market participants with the information, data and tools they need to navigate today’s markets,
including Environmental, Social and Governance risks and opportunities. We’re also welcoming new
participants to our markets through product innovation and best-in-class educational programs.
The influx of retail trading has opened markets, transforming our industry for the better. Retail investors
today can take ownership of their financial futures like never before and generate potential returns that were
once realized by a smaller segment of market participants. In turn, our trading network grows and becomes
stronger when we welcome more participants with new perspectives and a greater variety of experiences and
points of view. Global investors trading across asset classes and geographies rely on the efficiencies and
consistent experience afforded by our trusted, transparent and regulated marketplaces.
Purpose Driven
Now more than ever, we are guided by our purpose—to operate a trusted, inclusive global marketplace,
providing leading products, technology and data solutions that help all types of market participants define
a sustainable future. Maintaining the trust and integrity of our markets is paramount to growing the number
and diversity of participants in the global economy. We’re working to create connections and reduce
barriers to entry, providing products, technology and data solutions that allow customers to better protect
capital, transfer risk and generate wealth to pursue long-term financial security.
We’ve evolved to address changing market dynamics by broadening our geographic reach and extending
access to our unique set of products and solutions around the globe—all while remaining a leader in capital
markets innovation. Our journey has been powered by robust and innovative organic growth and strategic
M&A, broadening our addressable market across geographies and asset classes and diversifying our revenue
streams across transaction and non-transaction sources.
(1)
(2)
“Older Americans Stockpiled a Record $35 Trillion. The Time Has Come to Give It Away.” Wall Street Journal, July 2, 2021.
“Swipe to invest: the story behind millennials and ESG investing.” MSCI ESG Research LLC, March 2020.
In 2021, Cboe posted a record-breaking year, increasing net revenue by 18 percent and adjusted
earnings per share by 15 percent(3), and laying the groundwork for continued long-term growth. Our results
were driven by higher trading volumes across our businesses, coupled with increased demand for our suite
of data and access solutions.
We remain as optimistic as ever about the opportunity to extend access to global markets, grow our
geographic footprint and breadth of asset classes and diversify our revenue base. At the heart of this
immense progress and growth is our people. We have an incredible, diverse team of associates around the
world delivering on our vision, supporting our clients and reinforcing Cboe’s place as a leader in the global
financial marketplace.
Diversity Fuels Innovation
Diversity is a key growth driver and permeates all aspects of our strategy—from associate engagement
to product development. We believe in a culture of diversity and inclusion that promotes creativity,
collaboration and innovation, which is critical to the success of our business, our markets and our
communities. Our commitment and responsibility start at the top and require everyone’s dedication and
participation—from our board of directors to our summer interns.
As a shareholder, you’re well aware of the benefits of a diverse portfolio—from offsetting exposure to
minimizing risk. And, as a shareholder in our company, you’re aware of the great strides we’ve made to
diversify our business over the past few years—acquiring or announcing plans to acquire nine companies
since 2020. But you cannot successfully diversify without inclusion.
Inclusive Integration Planning Starts with People
We acquire businesses because we believe in the people who run them and their ability to bring new
ideas to Cboe. We also believe in those companies, their track record of success and the promise of an
integrated future. We pursue acquisitions that expand our reach and scale—whether that’s new geographies
that allow us to disrupt incumbent markets through innovation, clearing that enables the launch of derivatives
or a new approach to entering the digital asset marketplace.
It is our integration work that brings us together and our long-term strategic vision that unites us as
one company.
Cboe first acquired LiveVol in 2015, setting a path for a reimagined market data business. Since then,
we have made four additional strategic acquisitions designed to round out our portfolio of products and
services to help our customers through every step of the trading life cycle. Data is the fuel that drives trading
in our markets and products. From the retail customer to institutions executing sophisticated trading
strategies, high-quality data is paramount. As the trading environment becomes increasingly globalized,
customers are seeking more efficiency with fewer touchpoints in the market infrastructure services they
require, from accessing multiple asset classes across numerous geographies, to market data and analytics and
execution services.
Through both acquisitions and organic growth, we have expanded our Data and Access Solutions
business to better serve our global customer base. This team is delivering comprehensive data and market
intelligence solutions worldwide and seeking new ways to reach our global audience with tools that enhance
their trading experience. The launch of Cboe Global Cloud in November was testament to the innovation
made possible by customer-first collaboration. We believe our Data and Access Solutions group has the
ability to further grow our base of recurring non-transaction revenue and we are excited about the continued
evolution of this business.
Since Cboe acquired MATCHNow in August 2020, we have been laser focused on the full integration
of our companies and defining how we can further serve the Canadian market as one team. In February of
this year, we completed the seamless migration of MATCHNow’s platform to Cboe technology so our
(3)
A reconciliation of adjusted earnings to a GAAP measure is provided on page 67 of the Form 10-K and adjusted diluted
earnings per share is defined on page 65.
Canadian customers can benefit from our world-class technology and access Cboe’s diverse markets, asset
classes, data and product suite with greater ease and efficiency.
At the end of 2020, we added BIDS Trading to our roster, which operates one of the largest Alternative
Trading Systems (ATS) by volume in the U.S., facilitating interaction between the buy-side and sell-side for
block trades. Since then, we’ve been able to enhance our existing block trading capabilities and find ways to
expand the BIDS offering globally. In February 2022 as part of the MATCHNow technology migration,
we also launched Cboe BIDS Canada, bringing a new and enhanced block trading offering to the Canadian
equities market. And, in the five years since launch, Cboe BIDS Europe has grown to become one of the
largest block trading platforms in Europe.
We also plan to bring BIDS’ industry-leading block trading capabilities to the Asia Pacific region
through our ownership of Chi-X Asia Pacific, which Cboe acquired in July 2021. Since completing the
acquisition of Chi-X, we’ve been thoughtfully integrating the team and its offerings into Cboe, rebranding
to Cboe Australia and Cboe Japan in February 2022, as well. We see so much potential to expand our global
equities and market data businesses, broaden distribution of our proprietary products and bring other new
trading solutions and services to the Asia Pacific region.
On the European front, our ownership and integration of EuroCCP, the largest pan-European clearing
house, into the Cboe network has been essential to bringing a new derivatives exchange to Europe. The Cboe
Europe and EuroCCP teams worked hand-in-hand on the launch of Cboe Europe Derivatives in the
fall.We built this new exchange motivated by the belief—and driven by many of our customers—that Europe’s
equity derivatives market could be significantly enhanced through the creation of a modern, vibrant, pan-
European trading and clearing offering, which incorporates elements of the U.S. on-screen-based options
market structure. Early participation in the market has supported this belief.
We also believe there is a significant opportunity to enhance the digital asset market through a trusted,
regulated market, which was the motivation behind our pending acquisition of ErisX. With ownership of
ErisX, an operator of a U.S. based digital asset spot market, a regulated futures exchange and a regulated
clearing house, Cboe is entering the digital asset spot and derivatives marketplaces through a digital-first
platform developed with industry partners to focus on robust regulatory compliance, data and transparency
for the benefit of digital asset investors. Together, with the ErisX team and our industry partners serving as
advisors, we plan to leverage the regulatory framework, transparency, valued intermediaries, infrastructure
and data solutions of our trusted markets to further mature and expand digital asset trading to a global scale.
Finally, our planned acquisition of NEO will help allow Cboe to provide a more fulsome Canadian
equities offering, operating the NEO Exchange, the second largest stock exchange in Canada with trading,
listings and other services, in addition to MATCHNow. This strengthened offering is expected to drive more
trading activity on Cboe markets and improve efficiencies and opportunities for investors and capital-
raisers in both Canada and the U.S. With MATCHNow and NEO, Cboe can achieve scale in Canada,
creating efficiencies for our combined customers with familiar technology and consistent market models.
All of these integrations sit atop the foundation of our best-in-class technology, which powers our
global markets, data platforms and investment solutions. Our technology, and the team that builds and
continuously improves it, allows us to operate at an unrivaled efficiency, effectiveness and global scale.
Further, the scalability of our platform enables us to seamlessly integrate acquired companies into Cboe and
fully maximize synergies we are realizing as a result of these acquisitions.
Together We Grow
Our M&A strategy has driven organic growth, truly making the sum of our parts greater than the
whole. As our business scales, we’re also working diligently to expand access to our markets.
Throughout the year, we continued our legacy of innovation, striving to deliver an enhanced trading
experience to all market participants. The launch of Mini-Russell 2000 Index options provided greater
accessibility to the booming small-cap market and our Nanos options product is expected to bring options
trading to a whole new set of investors. Early trading hours on Cboe EDGX Equities made it possible for
more participants to trade on their time, while the launch of extended Global Trading Hours (GTH)
made S&P 500 Index (SPX) and Cboe Volatility Index (VIX) options accessible around the clock.
Additionally, we continued to lead the industry as the fastest growing global ETP exchange, reaching 500 U.S.-
listed ETPs in the summer. Finally, we look forward to ushering in a new era of open outcry with the
expected mid-2022 opening of our new trading floor in Chicago. Our customer-first approach drives us to
make markets better—from our Chicago trading pits to an FX trader in Japan.
As we broaden our global footprint, we have an unmatched opportunity to evolve the Cboe network.
And our recipe for success is simple: Innovate, Integrate and Grow. Cboe’s innovative spirit has led to the
creation of multiple new products and services throughout our history. That drive continues today, as
evidenced by our plans for Nanos options trading, our entrance into the digital asset market, and continued
expansion of our Data and Access Solutions business.
We have a proven track record of seamlessly integrating across our ecosystem for both organic and
inorganic initiatives. We are intentional, folding each of our acquisitions or new products and services into
the Cboe global network. Our inclusive approach creates workflow efficiencies for customers, harmonizing
technology and access points, creating a better experience for them. This strategy also produces operating
efficiencies alongside strong cash flow generation, a hallmark of the exchange business model.
We plan to continue to invest in organic growth initiatives this year, which we expect to contribute to
our organic net revenue growth over the mid-term. Since our IPO, we have also allocated capital inorganically
to help accelerate our strategy while returning capital to shareholders with a singular goal of creating
long-term shareholder value. Cboe shareholders have received a total shareholder return of 502 percent over
the last 10 years, exceeding the S&P 500 return of 363 percent.
We are building on our momentum in 2022, creating connections across borders, through our markets
and within our communities. I thank you for trusting Cboe to deliver on our mission to build one of the
world’s largest global securities and derivatives networks. This work is only possible through the unwavering
commitment of our Board and global associate base—who are all inspired and driven by our purpose.
We are inviting all types of investors to learn about and participate in our markets because we believe that
when we make these connections, the results are exponential. Diversifying our product set and asset class
operations bolsters our business and fosters innovation. Operating our trusted markets in more areas expands
our reach and enables our clients to pursue global growth opportunities. Being inclusive helps us learn and
improve, empowering all of us to contribute to a collective future. I am confident in our ability to provide the
products, technology and data solutions necessary to help all types of market participants define a
sustainable financial future. Together, we go far.
Edward T. Tilly
Chairman, President and Chief Executive Officer
Cautionary Statements Regarding Forward-Looking Information
Certain information contained in this letter may constitute forward-looking statements. We caution readers not to place undue
reliance on any forward-looking statements, which speak only as of the date made and are subject to a number of risks and uncertainties.
More detailed information about risks and uncertainties may be found on page 30 of the Cboe Global Markets, Inc. Annual Report on
Form 10-K for the year ended December 31, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
For the transition period from ____________ to ____________
Commission file number: 001-34774
Cboe Global Markets, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
433 West Van Buren Street
Chicago, Illinois
(Address of principal executive offices)
20-5446972
(I.R.S. Employer
Identification Number)
60607
(Zip Code)
Registrant's telephone number, including area code
(312) 786-5600
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.01 per share
Trading Symbol (s)
CBOE
Name of Exchange on Which Registered
CboeBZX
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2021, the aggregate market value of the Registrant's outstanding voting common equity held by non-affiliates was
approximately $10.4 billion based on the closing price of $119.05 per share of common stock.
The number of outstanding shares of the registrant's common stock as of February 11, 2022 was 106,602,177 shares of common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Cboe Global Market’s Definitive Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31,
2021, are incorporated by reference in Part III.
1
TABLE OF CONTENTS
CBOE GLOBAL MARKETS, INC.
2021 FORM 10-K
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . 58
Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . 139
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
PART III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . 140
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . 140
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
PART IV
Item 15.
Item 16.
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
2
Throughout this document, unless otherwise specified or the context so requires:
CERTAIN DEFINED TERMS
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“Cboe,” “we,” “us,” “our” or “the Company” refers to Cboe Global Markets, Inc. and its subsidiaries.
“ADV” means average daily volume.
“ADNV” means average daily notional value.
“AFM” refers to the Netherlands Authority for the Financial Markets.
“ATS” refers to an alternative trading system.
“Bats Global Markets” and “Bats” refer to our wholly-owned subsidiary Bats Global Markets, Inc., now known as
Cboe Bats, LLC, and its subsidiaries.
“BIDS Trading” refers to BIDS Trading, L.P., a wholly-owned subsidiary of Cboe Global Markets, Inc. The ATS
operated by BIDS Trading is not a registered national securities exchange or a facility thereof.
“BYX” refers to Cboe BYX Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc.
“BZX” refers to Cboe BZX Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc.
“C2” refers to Cboe C2 Exchange, Inc. a wholly-owned subsidiary of Cboe Global Markets, Inc.
“Cboe Australia” refers to Cboe Australia Pty Ltd. (formerly known as Chi-X Australia Pty. Ltd.), a wholly-owned
subsidiary of Cboe Global Markets, Inc.
“Cboe Chi-X Europe” refers to Cboe Chi-X Europe Limited, a wholly-owned subsidiary of Cboe Global Markets,
Inc.
“Cboe Europe Equities and Derivatives” refers to the combined businesses of Cboe Europe and Cboe NL.
“Cboe Europe” refers to Cboe Europe Limited, a wholly-owned subsidiary of Cboe Global Markets, Inc., the UK
operator of our Multilateral Trading Facility (“MTF”), our Regulated Market (“RM”), and our Approved Publication
Arrangement (“APA”) under its Recognized Investment Exchange (“RIE”) status.
“Cboe FX” refers to Cboe FX Markets, LLC, a wholly-owned subsidiary of Cboe Global Markets, Inc.
“Cboe Japan” refers to Cboe Japan Ltd. (formerly known as Chi-X Japan Ltd.), a wholly-owned subsidiary of
Cboe Global Markets, Inc.
“Cboe NL” refers to Cboe Europe BV, a wholly-owned subsidiary of Cboe Global Markets, Inc., the Netherlands
operator of our MTF, RM, and APA.
“Cboe Options” refers to Cboe Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc.
“Cboe SEF” refers to Cboe SEF, LLC, a wholly-owned subsidiary of Cboe Global Markets, Inc.
“Cboe Swiss” refers to Cboe Switzerland GmbH, a wholly-owned subsidiary of Cboe Global Markets, Inc.
“Cboe Trading” refers to Cboe Trading, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc., operated in
the United States.
“Chi-X Asia Pacific” refers to Chi-X Asia Pacific Holdings, Limited, a wholly-owned subsidiary of Cboe Global
Markets, Inc.
“CFE” refers to Cboe Futures Exchange, LLC, a wholly-owned subsidiary of Cboe Global Markets, Inc.
“CFTC” refers to the U.S. Commodity Futures Trading Commission.
“EDGA” refers to Cboe EDGA Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc.
“EDGX” refers to Cboe EDGX Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc.
“ErisX” refers to Eris Digital Holdings, LLC.
“ESMA” refers to the European Securities and Markets Authority.
“EuroCCP” refers to European Central Counterparty N.V., a wholly-owned subsidiary of Cboe Global Markets,
Inc.
“Exchanges” refers to Cboe Options, C2, BZX, BYX, EDGX, and EDGA.
“FASB” refers to the Financial Accounting Standards Board.
“FCA” refers to the UK Financial Conduct Authority.
“FINRA” refers to the Financial Industry Regulatory Authority.
“GAAP” refers to Generally Accepted Accounting Principles in the United States.
“IIROC” refers to the Investment Industry Regulatory Organization of Canada.
“MATCHNow” refers to TriAct Canada Marketplace LP, a wholly-owned subsidiary of Cboe Global Markets, Inc.,
the operator of our Canadian ATS called MATCHNow.
“Merger” refers to our acquisition of Bats Global Markets, completed on February 28, 2017.
“NEO” refers to Aequitas Innovations, Inc.
“OCC” refers to The Options Clearing Corporation.
“OPRA” refers to Options Price Reporting Authority, LLC.
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“SEC” refers to the U.S. Securities and Exchange Commission.
“SPX” refers to our S&P 500 Index exchange-traded options products.
“TPH” refers to either a Trading Permit Holder or a Trading Privilege Holder.
“VIX” refers to our Cboe Volatility Index exchange traded options and futures products.
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TRADEMARK AND OTHER INFORMATION
Cboe®, Cboe Global Markets®, Bats®, BIDS Trading®, BYX®, BZX®, Cboe Volatility Index®, CFE®, EDGA®, EDGX®,
EuroCCP®, Hybrid®, LiveVol®, MATCHNow®, Options Institute®, Silexx®, VIX®, and XSP® are registered trademarks, and
Cboe Futures ExchangeSM, C2SM, f(t)optionsSM, HanweckSM, NANOSM, and Trade AlertSM are service marks of Cboe
Global Markets, Inc. and its subsidiaries. Standard & Poor's®, S&P®, S&P 100®, S&P 500® and SPX® are registered
trademarks of Standard & Poor's Financial Services LLC and have been licensed for use by Cboe Exchange, Inc. Dow
Jones®, Dow Jones Industrial Average®, DJIA® and Dow Jones Indices are registered trademarks or service marks of
Dow Jones Trademark Holdings, LLC, used under license. Russell® and the Russell index names are registered
trademarks of Frank Russell Company, used under license. FTSE® and the FTSE indices are trademarks and service
marks of FTSE International Limited, used under license. All other trademarks and service marks are the property of their
respective owners.
MSCI and the MSCI index names are service marks of MSCI Inc. (“MSCI”) or its affiliates and have been licensed for
use by us. Any derivative indices and any financial products based on the derivative indices (“MCSI-Based Products”) are
not sponsored, guaranteed or endorsed by MSCI, its affiliates or any other party involved in, or related to, making or
compiling such MSCI index. Neither MSCI, its affiliates nor any other party involved in, or related to, making or compiling
any MSCI index makes any representations regarding the advisability of investing in such MSCI-Based Products; makes
any warranty, express or implied; or bears any liability as to the results to be obtained by any person or any entity from
the use of any such MSCI index or any data included therein. No purchaser, seller or holder of any MSCI-Based Product,
or any other person or entity, should use or refer to any MSCI trade name, trademark or service mark to sponsor,
endorse, market or promote any security without first contacting MSCI to determine whether MSCI’s permission is
required.
This Annual Report on Form 10-K includes market share and industry data that we obtained from industry
publications and surveys, reports of governmental agencies and internal company surveys. Industry publications and
surveys generally state that the information they contain has been obtained from sources believed to be reliable, but we
cannot assure you that this information is accurate or complete. We have not independently verified any of the data from
third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to
our market position are based on the most currently available market data. While we are not aware of any misstatements
regarding industry data presented herein, our estimates involve risks and uncertainties and are subject to change based
on various factors. We refer you to the “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and our other
filings with the SEC.
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 that involve a number of risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "might," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," and the negative of these terms and other comparable terminology. All statements that reflect
our expectations, assumptions or projections about the future other than statements of historical fact are forward-looking
statements, including statements in "Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." These forward-looking statements, which are subject to known and unknown risks, uncertainties
and assumptions about us, may include projections of our future financial performance based on our growth strategies
and anticipated trends in our business. These statements are only predictions based on our current expectations and
projections about future events. There are important factors that could cause our actual results, level of activity,
performance or achievements to differ materially from those expressed or implied by the forward-looking statements. In
particular, you should consider the risks and uncertainties described under "Risk Factors" in this Annual Report.
While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Moreover, we
operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time,
and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or
the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained
in any forward-looking statements.
Some factors that could cause actual results to differ include:
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the loss of our right to exclusively list and trade certain index options and futures products;
economic, political and market conditions;
compliance with legal and regulatory obligations;
price competition and consolidation in our industry;
decreases in trading or clearing volumes, market data fees or a shift in the mix of products traded on our
exchanges;
legislative or regulatory changes or changes in tax regimes;
our ability to protect our systems and communication networks from security risks, cybersecurity risks, insider
threats and unauthorized disclosure of confidential information;
our ability to attract and retain skilled management and other personnel;
increasing competition by foreign and domestic entities;
our dependence on and exposure to risk from third parties;
fluctuations to currency exchange rates;
factors that impact the quality and integrity of our indices;
the impact of the novel coronavirus (“COVID-19”) pandemic, including changes to trading behavior broadly in the
market;
our ability to operate our business without violating the intellectual property rights of others and the costs
associated with protecting our intellectual property rights;
our ability to minimize the risks, including our credit and default risks, associated with operating a European
clearinghouse;
our ability to accommodate trading and clearing volume and transaction traffic, including significant increases,
without failure or degradation of performance of our systems;
• misconduct by those who use our markets or our products or for whom we clear transactions;
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challenges to our use of open source software code;
our ability to meet our compliance obligations, including managing potential conflicts between our regulatory
responsibilities and our for-profit status;
our ability to maintain BIDS Trading as an independently managed and operated trading venue, separate from
and not integrated with our registered national securities exchanges;
damage to our reputation;
the ability of our compliance and risk management methods to effectively monitor and manage our risks;
our ability to manage our growth and strategic acquisitions or alliances effectively;
restrictions imposed by our debt obligations and our ability to make payments on or refinance our debt
obligations;
our ability to maintain an investment grade credit rating;
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impairment of our goodwill, long-lived assets, investments or intangible assets;
the accuracy of our estimates and expectations;
litigation risks and other liabilities; and
if the acquisition of ErisX is consummated, operating a digital asset business.
For a detailed discussion of these and other factors that might affect our performance, see Part I, Item 1A of this
Report. We do not undertake, and expressly disclaim, any duty to update any forward-looking statement whether as a
result of new information, future events or otherwise, except as required by law. We caution you not to place undue
reliance on the forward-looking statements, which speak only as of the date of this filing.
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Item 1. Business
PART I
The following description of the business should be read in conjunction with the information included elsewhere in
this Annual Report on Form 10-K for the year ended December 31, 2021. This description contains forward-looking
statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the
forward-looking statements due to the factors set forth in “Risk Factors” and elsewhere in this Annual Report on
Form 10-K.
Overview
Cboe Global Markets, Inc., a leading provider of market infrastructure and tradable products, delivers cutting-edge
trading, clearing and investment solutions to market participants around the world. The Company is committed to
operating a trusted, inclusive global marketplace, and to providing leading products, technology and data solutions that
enable participants to define a sustainable financial future. Cboe provides trading solutions and products in multiple asset
classes, including equities, derivatives and FX, across North America, Europe, and Asia Pacific.
Cboe’s subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In
addition, the Company operates one of the largest stock exchanges by value traded in Europe, and owns EuroCCP, a
leading pan-European equities and derivatives clearinghouse, BIDS Trading, a leading block-trading ATS by volume in
the U.S., MATCHNow, a leading equities ATS in Canada, Cboe Australia, an operator of trading venues in Australia, and
Cboe Japan, an operator of trading venues in Japan. Cboe also is a leading market globally for exchange-traded products
(“ETPs”) listings and trading.
The graphic below provides a brief overview of Cboe’s history:
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Our Business
Cboe Global Markets reports on the following five business segments:
• Options. The Options segment includes options on market indices (“index options”), as well as on the stocks of
individual corporations (“equity options”), and options on ETPs, such as exchange-traded funds (“ETFs”) and
exchange-traded notes (“ETNs”), which are “multi-listed” options and listed on a non-exclusive basis. These
options are eligible to trade on Cboe Options, C2, BZX, EDGX, and other U.S. national security exchanges.
Cboe Options is the Company’s primary options market and offers trading in listed options through a single
system that integrates electronic trading and traditional open outcry trading on the Cboe Options trading floor in
Chicago. C2 Options, BZX Options, and EDGX Options are all-electronic options exchanges, and typically
operate with different market models and fee structures than Cboe Options. The Options segment also includes
applicable market data revenue generated from the consolidated tape plans, the licensing of proprietary options
market data, index licensing, and access and capacity services.
• North American Equities. The North American Equities segment includes listed U.S. equities and ETP
transaction services that occur on fully electronic exchanges owned and operated by BZX, BYX, EDGX, and
EDGA, equities transactions that occur on the BIDS Trading platform, and Canadian equities and other
transaction services that occur on or through the MATCHNow ATS. The North American Equities segment also
includes ETP listings on BZX, the Cboe Global Markets, Inc. common stock listing, applicable market data
revenue generated from the consolidated tape plans, the licensing of proprietary equities market data, routing
services, and access and capacity services.
• Europe and Asia Pacific. The Europe and Asia Pacific segment includes the pan-European listed equities and
derivatives transaction services, ETPs, exchange-traded commodities, and international depository receipts that
are hosted on MTFs operated by Cboe Europe Equities (Cboe Europe and Cboe NL) and Cboe Europe
Derivatives (“CEDX”). It also includes the ETP listings business on RMs and clearing activities of EuroCCP, as
well as the equities transaction services of Cboe Australia and Cboe Japan, each operators of trading venues in
Australia and Japan. This segment was previously referred to as the European Equities segment but was
updated to the Europe segment in the first quarter of 2021 as a result of the launch of Cboe Europe Derivatives,
a pan-European derivatives platform, in September 2021. The segment was subsequently updated to Europe
and Asia Pacific to reflect the acquisition of Chi-X Asia Pacific in July 2021. Cboe Europe operates lit and dark
books, a periodic auctions book, and a Large-in-Scale (“LIS”) trading negotiation facility for UK symbols. Cboe
NL, launched in October 2019 and based in Amsterdam, operates similar business functionality to that offered by
Cboe Europe, and provides for trading only in European Economic Area (“EEA”) symbols. The new Cboe Europe
Derivatives venue offers futures and options based on Cboe Europe equity indices. This segment also includes
Cboe Europe, Cboe NL, CEDX, Cboe Australia and Cboe Japan revenue generated from the licensing of
proprietary market data and from access and capacity services.
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Futures. The Futures segment includes transaction services provided by the Company’s fully electronic futures
exchange, CFE, which includes offerings for trading of VIX futures and other futures products, the licensing of
proprietary market data, as well as access and capacity services.
• Global FX. The Global FX segment includes institutional FX trading services that occur on the Cboe FX fully
electronic trading platform, non-deliverable forward FX transactions (“NDFs”) offered for execution on Cboe SEF
and Cboe Swiss, as well as revenue generated from the licensing of proprietary market data and from access
and capacity services.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 16
(“Segment Reporting”) in the notes to our Consolidated Financial Statements for discussion of revenues and certain
operational and financial metrics, and operating income (or loss) by business segment. Certain activities within our
segments operate globally. For information regarding risks related to our international operations see “Risk Factors.”
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Competitive Strengths
Cboe is a leading provider of market infrastructure and tradable products across cash and spot markets, derivative
markets and data and access solutions. Cboe delivers cutting-edge trading, clearing and investment solutions across the
globe through a comprehensive ecosystem that helps drive innovation and growth.
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Information is as of December 31, 2021.
Key Growth Strategy Initiatives
Our strategy is to build one of the world’s largest global derivatives and securities networks to create value and drive
growth by:
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Innovating to capture growing demand for trading products and data services, globally. We plan to
increase access to data products and trading solutions, provide unrivaled transaction capabilities, have a global
presence in high value markets, and develop indices and products to meet growing environmental, social, and
governance (“ESG”) needs. In 2021, we delivered on this initiative by launching nearly 24x5 trading for VIX and
SPX options, distributing real-time data via Cboe Global Cloud, launching mini-options on the Russell 2000
Index, and preparing to launch in 2022, subject to regulatory approval, Nanos by Cboe, smaller and simpler
options designed for retail traders.
Integrating across ecosystems to increase efficiency and better serve customers. We aim to seamlessly
integrate across ecosystems to increase operating efficiency and better serve our customers. We leverage
industry-leading technology, apply a non-siloed approach for organic and inorganic initiatives and generate
strong free cash flow as we improve operating efficiency. In 2021, we delivered on this initiative by integrating
EuroCCP and its technology to launch pan-European derivatives in 2021, integrating our acquisition of BIDS
Trading and beginning the integration of Chi-X Asia Pacific.
• Growing by accessing untapped addressable markets. We are expanding and diversifying our revenue
opportunity set through both organic investment and merger and acquisition activity. In 2021, we delivered on
this initiative by launching Pan-European Derivatives and expanding into new key markets in the Asia-Pacific
region. In addition, in 2022, we are planning to further expand into Canada by acquiring the NEO exchange,
subject to regulatory approvals and other customary closing conditions, and into the digital asset space by
acquiring ErisX, an operator of a U.S.-based digital asset spot market, subject to regulatory approvals and other
customary closing conditions.
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Proprietary Products
In addition to providing cash and spot markets, derivative markets, and data and access solutions, we also offer for
trading proprietary products and are a leader in the volatility space with our proprietary products. These proprietary
products are built both through our in-house research and development staff of the Data and Access Solutions business
and our strategic relationships and license agreements with index providers, which are both described below in further
detail. Our most frequently traded proprietary products include SPX options and VIX options and futures.
SPX Options
The S&P 500 Index is an index comprised of 500 large-cap U.S. listed companies. It is one of the most commonly
followed indices and is considered a bellwether for the U.S. economy. The SPX options we offer on the S&P 500 Index
are exclusive to Cboe and contribute substantially to our volumes and transaction fees. Because of the S&P 500 Index’s
status as a bellwether, SPX options are used in many different trading strategies by customers with different goals,
including pension funds hedging their equity exposure by buying put options, asset managers seeking enhanced returns
by selling covered call options and hedge funds using risk-managed strategies to capture so-called “risk premia”
embedded in option prices. We also offer SPX Weeklys options, which have settlements on Mondays, Wednesdays,
Fridays and on the last trading day of each month and nearly 24x5 trading in SPX options. We believe these additional
expirations provide customers with more precision when hedging overall portfolio risk.
Volatility Trading
Cboe pioneered the trading of exchange-traded volatility products with its introduction of VIX futures in 2004 and VIX
options in 2006. The VIX Index (as defined below), although not directly tradable, is based on the mid-point of real-time
quotes of SPX options and is designed to reflect investors’ consensus view of future 30-day expected stock market
volatility. The VIX methodology provides the basis for the creation of VIX options and futures. The final settlement value of
VIX derivatives is determined on their expiration date through a Special Opening Quotation (“SOQ”) of the VIX Index. The
SOQ calculation uses opening trade prices of selected options; unless there is no opening price, in which case the
opening price used in the SOQ calculation is the midpoint of the highest bid and lowest offer at the time of the opening.
Since we started offering these products, we have seen trading from a number of different customer segments utilizing a
number of different trading strategies, including hedging extreme stock market declines, also known as “tail risk” hedging,
and risk-managed strategies that seek to capture the relative price changes of expected volatility at different times in the
future. We also offer VIX Weeklys options and futures, mini VIX futures, and nearly 24x5 trading in VIX options and
futures to provide investors with additional tools to trade volatility.
Proprietary Indices
We also calculate and disseminate proprietary indices that are licensed for use by third parties or are used as the
basis for other proprietary products. These proprietary indices are built both through our in-house research and
development staff of the Data and Access Solutions business and our strategic relationships and license agreements with
index providers, which are both described below in further detail. Our proprietary indices include:
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volatility indices based on broad-based market indices, such as the S&P 500 and the Russell 2000,
volatility indices based on ETFs, and
options strategy benchmark indices, such as the Cboe BuyWrite, PutWrite and Collar indices based on the
S&P 500 and Russell 2000, BuyWrite and PutWrite indices based on MSCI EAFE and MSCI Emerging Markets,
and BuyWrite indices based on other broad-based market indices.
In addition to any transaction fee revenue generated on products created based on these indices, we have granted
licenses for third parties to use and sublicense some of these proprietary indices to create third-party indices and
products. Accordingly, we generate revenue from proprietary indices by distributing them for reference purposes, using
them as the basis for proprietary products and licensing them for use for third-party indices and products.
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Strategic Relationships
The Company has long-term business relationships with several providers of market indices. We license their indices,
including on an exclusive basis, as the foundation for indices, index options and other products. The Company also
acquires interests in and agrees to work jointly with key providers to develop new products and services that are expected
to capitalize on our core competencies and diversify our sources of revenue. Of particular note are the following:
• S&P. We have the exclusive right to offer exchange-listed options contracts in the United States on the S&P 500
Index, the S&P 100 Index, the S&P 500 ESG Index, and the S&P Select Sector Indices as a result of a licensing
arrangement with S&P Dow Jones Indices, LLC (“S&P”). Our license from S&P is through December 31, 2033,
with an exclusive license to trade options on the S&P 500 Index through December 31, 2032. We use the market
data from the trading of options on the S&P 500 Index and S&P 100 Index for the creation of Cboe volatility
indices, such as the Cboe Volatility Index (“VIX Index”), and for the creation of tradable products on those
volatility indices.
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FTSE Russell. Under our license agreement with the London Stock Exchange Group’s (“LSEG”) leading global
index franchises, Frank Russell Company and FTSE International Limited (together “FTSE Russell”), we have
the exclusive right in the United States to offer listed options on more than two dozen FTSE Russell indices,
which represent a diverse group of domestic and global equities with international appeal. Our exclusive license
from FTSE Russell is through 2030. We offer options on the Russell 2000, Russell 1000, Russell 1000 Value
and Russell 1000 Growth Indices and mini-options on the Russell 2000 Index.
• MSCI. We have an exclusive license from MSCI Inc. (“MSCI”) until April 1, 2031 to offer U.S.-listed options on
ten of MSCI’s indices including the MSCI EAFA and MSCI Emerging Markets indices. We use market data from
the trading of these options to calculate several versions of BuyWrite and PutWrite strategy indices.
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IHS Markit. Under our licensing agreement with IHS Markit Ltd., we have the worldwide exclusive license
through August 2023 to offer options and futures on indices benchmarked to a diverse array of U.S. corporate
bonds. We currently offer futures on high yield and investment grade corporate bond indices.
• Dow Jones. We have the exclusive right during standard U.S. trading hours to offer listed options contracts on
the Dow Jones Industrial Average (“DJIA”) and Dow 10 Index, and non-exclusive rights to offer listed options on
several other Dow Jones indices including the Dow Jones Utilities Average and Dow Jones Transportation
Average. This licensing arrangement with DJI Opco, LLC extends through December 31, 2033. We use market
data from the trading of options on these indices to create Cboe volatility indices, variance indicators and
BuyWrite indices, and to trade options and other products on these indices.
Data and Access Solutions
The Data and Access Solutions business provides an offering of market data and information solutions products
across multiple asset classes and geographic regions that are designed to suit our customers’ diverse needs. The Data
and Access Solutions business consists of five product groups:
• Market Data and Access Services. Data products include real-time depth of book quotation information,
auction and complex option information, top of book quotes and trades, last sale information, and consolidated
equity feeds. In addition to market data, Access Services include all Access and Capacity products including
connectivity, terminal and other equipment rights, maintenance services, trading floor space and permits for the
opportunity to trade.
• Cboe Global Indices. Services include index creation, calculation, licensing, and data dissemination. In addition
to index data dissemination, through Cboe’s Streaming Market Indices platform, we distribute real-time
cryptocurrency prices and indicative net asset values. See above for additional information regarding our
proprietary indices.
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Financial Risk Analytics. Services include portfolio, margin risk and scenario analytics.
• Data and Market Analytics. Services include aggregated equity and derivative market statistics, theoretical
values, trading indicators, and historical data from Cboe’s markets as well third-party consolidated data.
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Front-End Platforms. Cboe provides multiple trading solutions and services including Cboe Silexx, LiveVol Pro,
FT Options and Trade Alert.
In 2021, we started to provide data services to market participants globally through Cboe Global Cloud with a plan to
disseminate most of Cboe’s real-time market data and analytics products via the cloud as an additional distribution
channel.
U.S. Tape Plans
We also derive a portion of our revenue from market data fees from U.S. tape plans, including Unlisted Trading
Privileges (“UTPs”), the Consolidated Tape Association (“CTA”) and OPRA. Fees, net of plan costs, from UTP, CTA, and
OPRA are allocated and distributed to plan participants like us according to their share of tape fees based on a formula,
required by Regulation NMS, which may take into account both trading and quoting activity.
Our Market Models
We operate a variety of derivatives and cash and spot markets. Our markets use a combination of pricing and market
models to differentiate them from each other and from our competitors.
For our U.S. derivatives options markets, Cboe Options is a hybrid market combining open outcry floor trading with
electronic trading. For multi-listed products, we utilize public customer priority, market turner in certain products,
participation rights and pro-rata allocation market models, combined with the “classic” pricing model. Under the classic
pricing model, professional participants pay transaction fees, public customers generally do not pay transaction fees and
market makers compensate brokers for sending order flow to the exchange (known as payment for order flow). For
proprietary products, we use price-time or pro-rata allocation, sometimes with public customer priority, and market turner
market models, combined with a pricing model where all market participants generally pay fees. Our other three options
markets are fully electronic. BZX options utilizes a price-time market model, combined with a “maker-taker” pricing model.
Under the maker-taker pricing model, market participants who make the market (a “maker”) generally receive a rebate,
while market participants who trade against those markets (a “taker”) pay a transaction fee. EDGX options utilizes
customer priority, participation rights and pro-rata allocation market models, combined with the classic pricing model. C2
options utilizes a pro-rata allocation market model, combined with the maker-taker pricing model.
For our U.S. derivatives futures market, which is fully electronic, CFE utilizes a price-time market model, combined
with a pricing model where all market participants generally pay fees, subject to specified exceptions.
For our cash and spot markets, the U.S. equities exchanges, which are fully electronic, offer various market models.
BZX equities utilizes a price-time market model, combined with the maker-taker pricing model. EDGX equities utilizes a
price-time with retail priority market model, combined with the maker-taker pricing model. BYX equities utilizes a price-
time with price improvement for retail customers market model, combined with the “taker-maker” pricing model. Under the
taker-maker pricing model, market participants who make the market pay a transaction fee, while market participants who
trade against those markets receive a rebate. EDGA equities utilizes a price-time market model, combined with a taker-
maker pricing model. In addition to these market models, each of the U.S. equity exchanges provides numerous specific
order types that are designed to enhance their respective market models.
For our cash and spot markets, MATCHNow, the Canadian equities ATS, which is fully electronic, utilizes a model
that combines frequent call matches and continuous execution opportunities in a confidential trading book. The system
uses real-time quotes for protected transparent Canadian markets, and orders may be firm or conditional. Firm orders
matched within MATCHNow are executed at three levels of price improvement: (1) the mid-point between the Canadian
best bid and offer (the “CBBO”); (2) one price increment better than the CBBO or; (3) at the bid or offer for orders that
meet a specified large threshold. Trading fees are typically calculated as a function of trade volume and share price.
In Europe, following the implementation of the Directive on Markets in Financial Instruments (Directive 2014/65/EU)
(“MiFID II”), for the derivatives and cash and spot markets, rebates are generally available if they are tied to a market
making scheme or specific service.
For our cash and spot markets, BIDS Trading, the U.S. equities ATS market, which is fully electronic, utilizes a
sponsored access model to provide anonymous executions in NMS stocks. BIDS Trading provides numerous order types,
including both firm and conditional orders. All orders matched within BIDS Trading are executed at or better than the
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NBBO. BIDS Trading charges fees based on disclosed, objective criteria: (i) means of access; (ii) the type of order; and
(iii) the total volume of executions during the calendar month.
In Australia, for our derivatives and cash and spot markets, Cboe Australia, a regulated stock exchange, which is fully
electronic, utilizes a model that charges a different ad valorem fee rate depending on whether a participant is making or
taking liquidity. Fee waivers are also provided to participants registered as market makers, but payments for order flow
are prohibited.
In Japan, for our cash and spot markets, Cboe Japan, offers two fully electronic displayed markets, Chi-Alpha, which
utilizes a price-time market model, combined with the “maker-taker” pricing model and Chi-Select, which utilizes a price-
time retail customers focused market model, combined with the “taker-maker” pricing model. Cboe Japan also offers two
fully electronic non-displayed markets, Chi-Match, which matches VWAP orders during pre-market hours and Kai-X,
which utilizes a price-time market model aiming for primary market mid-point trades.
For our FX spot markets, the Cboe FX platform utilizes a price-firmness-time priority market model, combined with a
pricing model where users are charged either a flat or tiered commission rate based upon the notional amount traded on
the platform. For our FX NDF markets, Cboe SEF and Cboe Swiss platforms utilize a price-firmness-time priority market
model and charge a flat commission based upon the notional amount traded on the platform and the capacity in which a
participant is trading.
Our markets also charge fees for the opportunity to trade or access our markets, including fees for trading-related
functionality. To facilitate trading, we also charge fees for certain technology services, terminal and other equipment
rights, maintenance services, trading floor space and telecommunications services.
Listing
Cboe serves as a listing destination for ETPs in the U.S., the UK, Europe and Australia, and its markets are
structured and designed for ETP issuers and their investors. In 2021, Cboe added 121 ETP listings in the U.S. and won
25% of all new U.S. ETP listings. There are now 643 ETPs globally listed on Cboe from 84 different issuers. We offer
fully-automated opening, closing and halt reopening auctions for our listed securities, which are designed to maximize the
efficiency of the price discovery process.
Clearing
Our subsidiary EuroCCP, a European central counterparty (“CCP”), provides post-trade services, including clearing,
to stock exchanges, multilateral trading facilities and for over-the-counter equities trades and derivatives trades. EuroCCP
acts as a central counterparty that, for its clearing participants, becomes the buyer to every seller and the seller to every
buyer. As a result, it guarantees the timely performance of the obligations of buyers and sellers and takes on the risk of
the performance of the transactions that it clears. Additionally, as a critical Financial Market Infrastructure, EuroCCP is
subject to strict business continuity requirements and regulatory oversight. In 2021, EuroCCP provided CCP protection for
an average of €43 billion of cleared value on a daily basis. Through the process of netting, in 2021, EuroCCP eliminated
72%, or €31 billion of the average daily cleared value, leaving an average daily settlement value of €12 billion. In 2020,
EuroCCP provided CCP protection for an average of €41 billion of cleared value on a daily basis. Through the process of
netting, in 2020, EuroCCP eliminated 80%, or €30 billion of the average daily cleared value, leaving an average daily
settlement value of €11 billion.
Customers
Our customers generally include financial institutions, trading platforms, institutional and individual investors, and
professional traders. Our equities and options customers in the United States include trading permit holders and members
of Cboe Options, C2, BZX, BYX, EDGX, and EDGA, which are SEC-registered broker-dealers, and the customers of
those broker-dealers. Our Canadian equities customers include subscribers of MATCHNow, which are Canadian
registered investment dealers, and certain clients of those dealers. Our Australian customers include trading participants
of Cboe Australia, which are Australian registered investment dealers, and certain clients of those dealers. Our Japanese
customers include participants of Chi-Alpha, Chi-Select, Chi-Match and Kai-X, which are Japanese registered broker-
dealers, and certain clients of those dealers. Our ATS equities participants in the United States include subscribers of
BIDS Trading, which are SEC-registered broker-dealers, and certain customers of those broker-dealers. Our futures
customers include banks, futures commission merchants and their customers, hedge funds, asset managers, proprietary
trading firms, and Commodity Trading Advisors. Similarly, our equities’ customers in Europe are European Union (“EU”)
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regulated brokerage and proprietary trading firms, as well as sponsored access clients of these brokerage firms and
certain non-EU regulated and unregulated direct access participants. EuroCCP clears equities, equity like instruments
from 18 European markets and from the United States. EuroCCP also clears equity derivative instruments as traded on
Cboe NL. EuroCCP clearing participants include EEA regulated banks and brokerage trading firms. Our institutional
global FX customers include banks, broker-dealers, hedge funds, asset managers, proprietary trading firms, Commodity
Trading Advisors, and corporates. Access to our markets and trading rights and privileges depend upon the nature of the
customer, such as whether the individual or firm is (or is eligible to become) a trading permit holder, trading privilege
holder, member, participant, or subscriber of one of our markets.
Competition
The industry in which we operate is intensely competitive. We believe we face competition on a number of factors,
including:
•
•
•
•
•
•
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price, quality and speed of our trade and clearing execution;
functionality and ease of use of our trading and clearing platforms;
reliability, integrity, range and functionality of our products and services;
integrity of our marketplaces;
technological innovation and adaption;
our brand awareness; and
our reputation.
We believe that we compete favorably with respect to these factors through a variety of methods, including:
•
•
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offering access to a broad array of products and services, including proprietary products and market data;
offering fee schedules and pricing models that both attract order flow and provide incentives to liquidity
providers;
providing advanced technology that offers broad functionality, low latency, fast execution, ease of use,
scalability, reliability and security;
•
offering efficient, transparent and liquid marketplaces;
•
offering deep and liquid markets with opportunities for price improvement;
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offering broad trading platform access in the EU;
• maintaining close relationships with customers; and
•
providing customers with a comprehensive source of information on options and ETPs as well as extensive
options education.
In our proprietary products, we compete against other futures exchanges and swap execution facilities that offer
similar products, as well as against financial market participants that offer similar over-the-counter derivatives. We also
compete against certain multi-listed options products, such as options on SPY, which may offer similar market exposure
of our proprietary products, such as SPX options.
The multi-listed options industry is extremely competitive. We expect this trend to continue. As of December 31,
2021, we compete with 12 U.S. options exchanges, in large part due to existing exchange holding companies opening
new exchanges that offer different markets and pricing models on existing technology. Most of the equity and ETP options
listed and traded on our exchanges are also listed and traded on the other exchanges. In addition, the options exchanges
that we compete with set fees and rebates to attract multi-listed options business to their exchanges, which has
historically reduced the net revenue per contract that we generate from multi-listed options, and the options exchanges
that we compete with structure their options businesses in partnership with established market participants, such as
consolidators, and other order flow providers, to increase their volume traded.
Our U.S. listed equity securities and listing services and the BIDS Trading ATS compete against 12 other exchanges
as of December 31, 2021, and several other ATSs and single dealer platforms. Market participants have multiple venues
for the execution of orders, including national securities exchanges and numerous off-exchange venues, including other
ATSs and broker-dealers who internalize orders off-exchange. Additionally, issuers have multiple venues for the listing of
their products. In Canada, our equities ATS, MATCHNow, competes with several Canadian exchanges and other ATSs.
In Australia, our exchange, Cboe Australia, competes with other Australian exchanges and ATSs. In Japan, our equities
exchanges and ATSs, compete with several Japanese exchanges and other ATSs.
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The market for execution and clearing services in Europe became more competitive following the introduction of
MiFID II and the Regulation on Markets in Financial Instruments (Regulation (EU) No 600/2014) (“MiFIR”). Furthermore,
MiFID II and MiFIR placed more onerous conditions on trading venues and investment firms and restricted certain types
of trading activity. Our major competitors in Europe include national stock exchanges, other pan-European MTFs,
European clearinghouses, dark pools, and systematic internalizers.
The global FX market remains severely fragmented, with transparent automated marketplaces such as Cboe FX
challenging a small number of similarly situated competitors. While the global FX market has experienced a shift from
competing interbank platforms to ECNs, the electronification of the spot and NDF FX market may encounter resistance
from customers that still prefer to utilize the phone, instant chats, terminals and key banking relationships for price
discovery and trading. Furthermore, electronification of the FX market appears to be experiencing more resistance
outside the United States. The electronic spot FX market is also intensely competitive, with over 10 other venues
competing for market share as of December 31, 2021. Cboe measures and reports on market share against a narrower
set of competitors, included in those venues.
In addition, our data and access solutions face competition from other securities exchanges, technology companies,
third-party market data providers, and information and software vendors, which have their own substantial market data
distribution capabilities that serve as alternative means for receiving open market data feeds instead of connecting directly
to our exchanges or trading venues. The sale of our proprietary data products is also under competitive threat from ATSs
and trading venues that offer similar products. Distributors and consumers of our market data may also use our market
data as an input into a product that competes against one of our traded or cleared products.
Technology
Cboe Trading Technology
The trading platform for our equities, options, and futures markets is developed, owned, and operated in-house and is
designed to optimize reliability, speed, scalability, and versatility. Each of our exchanges provide different market models,
appealing to different user bases, and the trading technologies support all of them. Further, the technologies are designed
to support many specialized features for each of the markets, such as: dark pools, trade reporting facility, systematic
internalizer, Large-in-Scale, smart order routing, FLEX options, 24x5 trading, and hybrid trading (combining electronic and
open outcry). In addition, Cboe and its applicable subsidiaries operate separate trading and/or clearing platforms, as
applicable, for BIDS Trading, MATCHNow, EuroCCP, Global FX, Cboe Australia, and Cboe Japan.
Our trading platforms have experienced very low operational downtime and low latency. The trading platforms use
readily available hardware, thereby minimizing capital outlays required for each new market entry. Also, in order to
continue to implement new enhancements to our trading platforms, new releases of software are generally deployed
routinely in all of the applicable markets.
Disaster Recovery
We operate and maintain geographically diverse disaster recovery facilities for all of our markets. We expect that the
disaster recovery facilities can be up and running in a short period of time and in certain instances we work with our
market participants to try to quickly reopen marketplaces. We regularly test our data center recovery plans and
periodically carry out weekend tests using our back-up data centers, as well as an annual test with our U.S. trading
participants. In Canada, as required by local regulations, MATCHNow conducts internal testing of its disaster recovery
data processing capabilities at least annually, and it participates in the bi-annual testing coordinated by IIROC. In
Australia and Japan, Chi-X Asia Pacific conducts internal testing of its disaster recovery data processing capabilities at
least annually. In Europe, we also regularly test our data center recovery plans and periodically carry out weekend tests
which use our back-up data center, as well as an annual test with our European trading participants. We continue to work
to improve both the availability of our technology and our disaster recovery facilities.
Routing and Clearing
OCC is the sole provider of clearing on all of our U.S. options and futures exchanges. National Securities Clearing
Corporation (“NSCC”), a subsidiary of the Depository Trust and Clearing Corporation (“DTC”), is the sole provider of
clearing on our U.S. listed equity exchanges. The Canadian Depository for Securities (“CDS”) is the sole provider of
clearing on all equities transactions occurring on MATCHNow. With respect to Australian equities and derivatives, Cboe
Australia delivers matched trades of its customers to ASX Clear Pty Ltd and ASX Settlement Pty Ltd. ASX Clear Pty Ltd
acts as a central counterparty on all transactions occurring on Cboe Australia. The Japan Securities Clearing Corporation
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(“JSCC”) is the sole provider of clearing on all equities transactions occurring on Cboe Japan’s Chi-Alpha, Chi-Select,
Chi-Match and Kai-X. BofA Securities, Inc. (“BOA”) is the sole provider of clearing on all equities transactions occurring on
BIDS Trading. Cboe Europe Equities and Derivatives relies on LCH Limited and LCH SA (“LCH”), EuroCCP, which is
described above, and SIX x-clear Ltd (“SIX x-clear”) to clear trades in European listed equity securities and derivatives as
part of an interoperable clearing model.
Cboe Trading is a routing broker-dealer used by our four U.S. equities exchanges and our four U.S. options
exchanges, including the electronic platform portion of Cboe Options. Cboe Trading’s clearings firms are Wedbush
Securities, Inc. (“Wedbush”) and Morgan Stanley & Co. LLC (“Morgan Stanley”).
Regulatory Environment and Compliance
Various aspects of our business are subject to regulation by the SEC, CFTC, FINRA, IIROC, the Ontario Securities
Commission (the “OSC”), the Australian Securities & Investments Commission (“ASIC”), JFSA, JSDA, ESMA, FCA, the
Central Bank of the Netherlands (“DNB”), AFM, and other international regulatory authorities where our exchanges or
EuroCCP may be authorized to act as foreign exchanges or provide clearing services, and market participants may be
subject to regulation by the SEC, CFTC, FINRA, National Futures Association (“NFA”), FCA, Board of Governors of the
Federal Reserve, U.S. Department of the Treasury and/or foreign regulators. The following is a discussion of the more
significant areas of regulation of us by the SEC, the CFTC, and certain European regulators.
Recent Developments
Laws and regulations regarding our business are frequently modified or changed to address perceived problems,
new products, or competition or at the request of market participants. The following is a brief discussion of recent
regulatory developments that may significantly impact our business.
United States
Consolidated Data Plan Order
On May 6, 2020, the SEC issued an order (the “Consolidated Data Plan Order”) that would require U.S. equities
exchanges and FINRA to develop and file a new consolidated data plan (the “Plan”) that would replace the three current
U.S. equities tape data plans and require certain governance provisions, such as changes to the voting structure.
Pursuant to the Consolidated Data Plan Order, we and the other U.S. equities exchanges and FINRA were required to file
the proposed Plan for public comment before the SEC takes any definitive action on such new plan. The proposed Plan
was filed on August 11, 2020 and on August 6, 2021 the SEC approved such Plan. The Plan was subsequently
challenged by exchanges and the courts granted a stay of the Plan. Until a decision is made by the courts, the current
data plans will continue to govern. Our equities exchanges, BZX, BYX, EDGX, and EDGA, may require additional
resources to comply with or challenge the Consolidated Data Plan Order and the Plan may have a material impact on our
business, financial condition and operating results if, for example, there is a negative impact on the applicable market
data revenues that we receive that are generated from such new plan. See “Risk Factors” and “Legal Proceedings” for
more information.
Financial Transaction Taxes
A number of federal, state and local jurisdictions in the U.S. and EU Member States have considered a financial
transaction tax, but many details remain to be discussed and agreed, including how to assess the tax. Additionally,
legislation has been proposed from time to time on a federal level that would introduce in the U.S. mark-to-market tax
treatment for all derivatives contracts and require gains and losses be taxed at ordinary income tax rates. Implementation
of such taxes could result in a reduction in volumes and liquidity, which would have a negative impact on our operations.
See “Risk Factors” for more information.
Market Data Infrastructure Rule
On December 9, 2020, the SEC issued a Market Data Infrastructure Final Rule, which makes significant additions to
the content available on the Securities Information Processors (“SIPs”) and replaces the exclusive processors with a
competing consolidator model. The implementation of the new rules could cause Cboe’s equities exchanges, BZX, BYX,
EDGX, and EDGA, to require additional resources to comply with or to challenge the new rules and they may have a
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material impact on our business, financial condition and operating results if, for example, there are lower SIP plan
revenues or we must reduce the fees we charge for market data. See “Risk Factors” and “Legal Proceedings” for more
information.
Europe
Capital Markets Union
The European Council (“E.C.”) has highlighted one of its top priorities as being the establishment of a fully
functioning, well-regulated Capital Markets Union (“CMU”). An Action Plan of concrete steps was set out in
September 2015, and an update of the list of initiatives was published in September 2016. In November 2019, the E.C.
set up a High Level Forum on CMU, resulting in a final report published in June 2020. On September 24, 2020, the E.C.
published a new CMU Action Plan, and on November 25, 2021, published a set of legislative proposals in furtherance of
the CMU, including proposals to amend the Markets in Financial Instruments Regulation (“MiFIR”) described in the EU
Transparency Rules section below. This therefore remains an ongoing project for the E.C., which may result in additional
regulation or legislation. In November 2021 the EU Commission published an update regarding progress against the CMU
Action Plan alongside a number of new legislative proposals designed to contribute to the objectives of CMU. These
included proposals to:
• Create a European Single Access Point (“ESAP”) which will be a common source of public, free information
about EU companies and investment products, regardless of where in the EU they are located or originated.
• Amendments to the ELTIF framework to promote long-term investments through European Long-Term
Investment Funds (“ELTIFs”).
• Making funding more diversified for companies by reviewing the Alternative Investment Fund Managers Directive
(“AIFMD”).
• Enhancing market transparency by reviewing the Markets in Financial Instruments Regulation (“MiFIR”).
OTC Derivatives, Central Counterparties and Trade Repositories
Regulation (EU) No 648/2012 of the European Parliament and of the Council of July 4, 2012 on OTC derivatives,
central counterparties and trade repositories (the “European Market Infrastructure Regulation” or “EMIR”) sets out rules
relating to over-the-counter (“OTC”) derivatives markets, central counterparties and trade repositories. The rules introduce
a reporting obligation for OTC derivatives markets, a clearing obligation for eligible OTC derivatives markets, measures to
reduce counterparty credit and operational risk for bilateral OTC derivatives markets, CCPs, and trade repositories, and
rules on the establishment of interoperability between CCPs. EMIR was enhanced and amended in June 2019. In
addition, regulation governing the authorization and supervision of Central Securities Depositories (“CSDR”) was
approved in September 2014, with the publication of most “Level 2” Regulatory Technical Standards in March 2017, with
implementation in March 2019. CSDR may result in the introduction of mandatory buy-ins for OTC business in 2022
although recent communications from ESMA and the EU Commission have indicated that the intended implementation
date of February 1, 2022 will be postponed pending a further review of those proposals by the EU Commission during
2022. Rules in relation to the calculation and collection of cash penalties are expected to come in to force in
February 2022. The Central Counterparty Recovery and Resolution Regulation (“R&R Regulation”) was published in the
Official Journal of the EU on January 22, 2021, which may, among other things, increase the amount of prefunded capital
EuroCCP is required to maintain. This additional prefunded capital may be required to be drawn before any recovery
measures can be taken by the CCP. On July 12, 2021, and November 18, 2021, ESMA proposed a set of level 2 and
level 3 guidance pursuant to the R&R Regulation. As European authorities finalize and potentially adopt level 2 and 3
guidance, the final R&R Regulation may have a material adverse effect on our clearing business, financial condition and
operating results.
EU Transparency Rules
On November 11, 2021, the European Council (“E.C.”) published its proposal for a review of EU market structure
legislation, including proposed amendments to Markets in Financial Instruments Regulation (“MiFiR”) and Directive
2014/65/EU on markets in financial instruments (“MiFID II”). The proposal includes, among other provisions, provision for
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a consolidated tape for the EU and changes to the transparency regime for equities. These proposals are expected to be
implemented in late 2023 or early 2024.
In addition, the European Securities and Markets Authority (“ESMA”) also published its proposal for a review of EU
transparency rules. The proposal includes, among other provisions, provision for increased pre-trade transparency for
periodic auctions and post-trade flagging. These proposals may be implemented in the second half of 2022 although they
may also be incorporated into the wider MiFiR review.
As proposed, these proposals may have a material adverse effect on our business, financial condition and operating
results. See “Risk Factors” for more information.
Compliance
U.S. Securities Industry
Federal securities laws have established a two-tiered system for the regulation of securities exchanges and market
participants. The first tier consists of the SEC, which has primary responsibility for enforcing federal securities laws. The
second tier consists of self-regulatory organizations (“SROs”), which are non-governmental entities that must register with
and are regulated by the SEC. The Exchanges are SROs, each registered under Section 6 of the Exchange Act of 1934,
as amended (“Exchange Act”) as a “national securities exchange,” and are subject to oversight by the SEC.
SROs are an essential component of the regulatory scheme of the Exchange Act for providing fair and orderly
markets and protecting investors. To be registered as a national securities exchange, an exchange must successfully
undergo an application and review process with the SEC prior to beginning operations. Among other things, the SEC
must determine that the SRO has the ability to comply with the Exchange Act and to enforce compliance by its members
and persons associated with its members with the provisions of the Exchange Act, the rules and regulations thereunder
and the rules of the exchange.
In general, an exchange SRO is responsible for operating its trading platforms consistent with its rules, and regulating
its members through the adoption and enforcement of rules governing the business conduct of its members. The rules of
the exchange must also assure fair representation of its members in the selection of its directors and administration of its
affairs and, among other things, provide that one or more directors be representative of issuers or investors and not be
associated with a member of the exchange or with a broker or dealer. Additionally, the rules of the exchange must be
adequate to ensure fair dealing and to protect investors and may not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act.
As registered national securities exchanges, virtually all facets of our Exchange operations are subject to the SEC’s
oversight, as prescribed by the Exchange Act. The Exchange Act and the rules thereunder impose on us many regulatory
and operational responsibilities, including record keeping and the day-to-day responsibilities for market operations and
broker-dealer oversight. Furthermore, as SROs, the Exchanges are potentially subject to regulatory or legal action by the
SEC or other interested parties. The SEC also has broad enforcement powers to censure, fine, issue cease-and-desist
orders, prohibit us from engaging in some of our businesses, suspend or revoke our designation as a registered securities
exchange or remove or censure any of our officers or directors who violate applicable laws or regulations. For example, in
2013, Cboe Options and C2 and, in 2015, EDGX and EDGA, entered into consent orders with the SEC, under which they
were censured, ordered to cease and desist from violating certain sections of the Exchange Act, paid fines and agreed to
complete certain undertakings. We have certified to the completion of these undertakings and are no longer required to
certify.
As part of its regulatory oversight, the SEC conducts periodic reviews and inspections of exchanges, and the
Exchanges have been subject to such routine reviews and inspections. To the extent such reviews and inspections result
in regulatory or other changes, we may be required to modify the manner in which we conduct our business, which may
adversely affect our business. We collect certain fees to cover Section 31 fees charged to the Exchanges by the SEC and
certain fees derived from our regulatory function and fines in connection with our disciplinary proceedings. The
Exchanges are responsible for the ultimate payment of Section 31 fess to the SEC. Additionally, under the rules of each
of our exchanges, as required by the SEC, any revenue derived from the regulatory fees and fines cannot be used for
non-regulatory purposes.
Section 19 of the Exchange Act also provides that we must submit to the SEC proposed changes to any of the
Exchanges’ rules, including revisions of their certificates of incorporation, bylaws, or other governing documents of the
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SROs or their parent companies. The SEC will typically publish the proposal for public comment, following which the SEC
may approve or disapprove the proposal, as it deems appropriate. Certain categories of rule changes, like fee changes,
can be effective on filing, but the SEC retains the ability to suspend or reject such filings within a prescribed period of
time.
Canadian Securities Industry
MATCHNow is subject to comprehensive regulation and oversight by its primary provincial securities regulatory
authority, the OSC, and by IIROC. The regulations applicable to MATCHNow cover a wide array of areas, including, but
not limited to, marketplace operations (which include corporate governance, fair access, systems compliance and
integrity, and conflict management requirements), trading rules, electronic trading risk management, and financial viability.
Australian Securities Industry
Cboe Australia is subject to comprehensive regulation and oversight by the ASIC. The regulations applicable to Cboe
Australia cover a wide array of areas, including, but not limited to, marketplace operations (which include corporate
governance, fair access, systems compliance and integrity, and conflict management requirements), trading rules,
electronic trading risk management, and financial viability.
Japanese Securities Industry
Cboe Japan is subject to comprehensive regulation and oversight by the JFSA and the JSDA. The regulations
applicable to Cboe Japan cover a wide array of areas, including, but not limited to, marketplace operations (which include
corporate governance, fair access, systems compliance and integrity, and conflict management requirements), trading
rules, electronic trading risk management, and financial viability.
Futures and Swaps Industry-CFE and Cboe SEF
The operations of each of CFE and Cboe SEF are subject to regulation by the CFTC under the Commodity Exchange
Act. The Commodity Exchange Act generally requires that futures trading in the United States be conducted on a
designated contract market and, in some cases, requires swaps trading to be conducted on swap execution facility
(“SEF”) or designated contract market (“DCM”). The Commodity Exchange Act and CFTC regulations establish criteria for
an exchange to be designated as a contract market on which futures and futures options contracts may be traded, and for
a trading platform to be designated as a swap execution facility on which certain swaps may be traded. Designation as a
contract market or swap execution facility for the trading of specified futures or swaps contracts is non-exclusive. This
means that the CFTC may permit additional exchanges or trading platforms to be contract markets or swap execution
facilities for trading the same or similar contracts.
CFE is a designated contract market, and Cboe SEF is a swap execution facility, each of which is subject to the
oversight of the CFTC and to a variety of ongoing regulatory and reporting responsibilities under the Commodity
Exchange Act. As a designated contract market, CFE is required to comply with the applicable core principles and
regulations under the Commodity Exchange Act, as is Cboe SEF as a swap execution facility. Each of CFE and Cboe
SEF has surveillance and regulatory operations and procedures to monitor and enforce compliance by trading privilege
holders with CFE rules, and by participants with Cboe SEF rules, as applicable. If CFE or Cboe SEF fails to comply with
applicable laws, rules or regulations, it may be subject to censure, fines, cease-and-desist orders, suspension of its
business, removal of personnel or other sanctions, including revocation of CFE’s designation as a contract market or
Cboe SEF’s designation as a swap execution facility.
Europe
Cboe Europe is located in London and is subject to regulation in the UK and to certain European regulations. The
current UK regulatory system was established by the Financial Services Act 2012 (“FSA12”), which amended the
Financial Services and Markets Act 2000. The legislation replaced the previous financial services regulator, the Financial
Services Authority, with three new bodies: The Financial Policy Committee (“FPC”), The Prudential Regulation Authority,
and the FCA. Financial conduct of markets, including activity on, and the operation of, markets is regulated by the FCA,
which is an independent non-governmental body, given statutory powers by the FSA12. The FCA has three statutory
objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK
financial system; and to promote effective competition in the interests of consumers in the markets for financial services.
The FCA is accountable to Her Majesty’s Treasury Ministers and, through them, to Parliament.
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EuroCCP and Cboe NL are located in Amsterdam and subject to Dutch law and regulation. The current Dutch
regulatory system was established by the Act on Financial Supervision. Financial conduct of markets, including activity
on, and the operation of, markets is regulated by the AFM. Financial conduct of CCPs, including clearing activity is
regulated by the AFM and DNB. The AFM is an independent non-governmental body, given statutory powers by the Act
on Financial Supervision. The AFM has three strategic objectives: to promote the fair and conscientious provision of
financial services, to promote the fair and efficient operation of the capital markets and to contribute to the stability of the
financial system. The AFM is accountable to the Minister of Finance. The DNB is the Dutch central bank, financial sector
supervisor and resolution authority. The DNB is committed to a stable financial system: stable prices, solid financial
institutions and properly functioning payment transfers.
Much of the UK and Dutch financial services regulation originates from the EU. Such regulation includes
organizational requirements, capital resources requirements and the specific requirements for RMs and MTFs and are
applicable to both Cboe Europe and Cboe NL. MiFID II and MiFIR set out requirements for RMs and MTFs with respect to
the establishment of transparent and non-discretionary rules and procedures governing access and for fair and orderly
trading and the efficient execution of orders, as well as to facilitate the efficient settlement of transactions conducted on
RMs and MTFs and monitoring compliance with the rules. EMIR governs the CCPs operating in the EU and requires them
to meet common risk management, governance and capital adequacy standards. The regulatory functions required of
Cboe Europe Equities and Derivatives, including EuroCCP, by MiFID II, MiFIR, EMIR and other relevant legislation and
regulations are performed by in-house staff. Cboe Europe Equities and Derivatives utilizes the same state-of-the-art, real-
time surveillance system is used on the U.S. to monitor trading and market activities on BZX, BYX, EDGA, and EDGX.
EuroCCP utilizes proprietary risk management software to monitor settlement and funding flows.
Global FX
While the global institutional spot FX market remains largely unregulated, the enactment of the Dodd Frank Act and
its related regulations in the United States and the ongoing implementation of MiFID II and MiFIR in Europe have
impacted the regulatory landscape for currency derivative products. For example, certain standardized currency derivative
products are required to trade on an organized trading venue such as a SEF or DCM in the United States or on an MTF or
organized trading facility in Europe. Moreover, even in the largely unregulated spot FX market, this movement towards
additional trading standards and norms is highlighted by the publication of the FX Global Code in 2017 by the Global
Foreign Exchange Committee, reflecting principles of good conduct for the wholesale FX market, and whose publication
may lead to additional oversight in the global FX market. Cboe FX issued a Statement of Commitment declaring its
commitment to conduct its FX market activities in a manner consistent with the principles of the FX Global Code.
Following the publication of the FX Global Code regulators are taking a new look at the spot FX market, and any decision
to impose new regulations may affect our spot FX business line.
Broker-Dealer
Cboe Trading and BIDS Trading are registered broker-dealers regulated by the SEC, FINRA, other SROs of which
they are members and various state securities regulators. Cboe Trading currently operates as a routing broker-dealer for
sending orders from the Exchanges to other venues for execution, including routing orders among the Exchanges. Cboe
Trading is considered a facility of each of the Exchanges and is subject to the rules of the Exchanges. The Exchanges are
responsible for enforcing Cboe Trading’s compliance with their rules, including to ensure Cboe Trading is not given
preferential treatment. BIDS Trading currently operates an ATS, which is designed to bring counterparties together to
anonymously trade large blocks of U.S. equities. BIDS Trading is not a member of any of the U.S. national securities
exchanges and is not subject to exchange rules.
Cboe Trading and BIDS Trading are subject to SEC and SRO rules, as applicable, and, as registered broker-dealers,
regulations concerning all aspects of their businesses, including trading practices, order handling, best execution, anti-
money laundering, handling of material non-public information, safeguarding data, reporting, capital adequacy, record
retention, market access and the conduct of their officers, employees and other associated persons. The SEC, SROs and
state securities commissions may conduct proceedings which can result in injunctions or other sanctions, censures, fines,
the issuance of cease and desist orders or the suspension or expulsion of a broker-dealer, its officers or employees. The
SEC and FINRA impose certain minimum capital requirement rules that require notification when a broker-dealer’s net
capital falls below certain predefined criteria, dictate the ratio of debt to equity in the regulatory capital composition of a
broker-dealer, constrain the ability of a broker-dealer to expand its business under certain circumstances and impose
certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital.
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In addition, the ATS operated by BIDS Trading is not a registered national securities exchange or a facility thereof, as
such, Cboe intends to maintain the BIDS ATS as an independently managed and operated trading venue, separate from
and not integrated with the Exchanges. The Chief Executive Officer of BIDS Trading is expected to lead BIDS Trading as
an independent business within Cboe, reporting into an independent committee of the board of Cboe Global Markets.
Further, Cboe Trading will not route orders to BIDS Trading on behalf of the Exchanges.
Cboe Global Markets
Certain aspects of Cboe Global Markets are also subject to SEC, FCA and AFM oversight, including certain
ownership and voting restrictions on its stockholders. The focus of the SEC’s regulation of Cboe Global Markets is to
assure fair representation of members in the selection of the directors of the Exchanges, public participation in the
governance of the Exchanges and that the Exchanges can satisfy their regulatory responsibilities under the Exchange
Act. Furthermore, the SEC requires that Cboe Global Markets give due regard to the preservation of the independence of
the self-regulatory function of the Exchanges and to Cboe Global Markets’ obligations to investors and the general public.
The SEC also requires that Cboe Global Markets not take any actions that would interfere with the effectuation of any
decisions by the Board of Directors of any of the Exchanges relating to its regulatory functions or the structure of the
market that it regulates or that would interfere with the ability of such Exchange to carry out its responsibilities under the
Exchange Act. To the extent that Cboe Global Markets’ business activities involve or relate to the Exchanges, the officers
and directors of Cboe Global Markets may be deemed to be officers and directors of the exchanges for purposes of and
subject to oversight under the federal securities laws. Accordingly, the SEC may exercise direct supervision and
disciplinary authority over certain Cboe Global Markets’ activities and those activities may be subject to SEC approval
and, in some cases, public notice and comment.
In addition, Cboe Global Markets indirectly holds all of the issued share capital and voting rights in Cboe Europe and
its wholly owned subsidiaries, Cboe Chi-X Europe and Cboe NL. As a result, we and any person who holds, or has voting
power with respect to, 10% or more of the outstanding shares of Cboe Global Markets common stock may be subject to
certain regulatory requirements under UK and Dutch law.
U.S. Regulatory Responsibilities
Our U.S.-based exchanges are responsible for assessing the compliance of their TPHs or members, including Cboe
Trading, with the respective exchange’s rules and the applicable rules of the SEC and/or CFTC. The main activities that
the exchanges, as applicable, are required to monitor for the purpose of compliance with these rules include:
•
•
•
•
•
surveillance designed to detect violations of exchange trading rules;
surveillance designed to detect violations of SEC and/or CFTC rules;
investigation of matters involving potential rule violations;
the investigation of complaints about possible rule violations brought by customers, TPHs, members or other
SROs; and
the examination of TPHs or members for compliance with rules such as those related to net capital, books and
records, market access and other matters related to the TPHs’ or members’ exchange business functions.
In order to ensure market integrity, we regulate and monitor our TPHs’ and members’ trading activities by using both
our employees and third parties under regulatory services agreements (“RSAs”). See “Regulatory Agreements” below.
Providing effective regulation is important for attracting and retaining the confidence and participation of market-makers,
broker-dealers and institutional and retail investors.
We expend considerable time, financial resources and effort to ensure that the exchanges’ rules and regulations
conform to regulatory best practices within the securities and futures exchange industries and within the regulatory regime
overseen by the SEC and CFTC, our primary regulators. In order to support our efforts and those of our market
participants to comply with applicable law and our exchange rules, we developed a regulatory program to monitor market
activity on our exchanges.
All of our Exchanges and CFE are participants in the Intermarket Surveillance Group (“ISG”). ISG is an international
information-sharing cooperative governed by a written agreement that provides for a comprehensive surveillance sharing
arrangement. In addition to the agreement for confidential information sharing, the ISG provides a framework for the
coordination of regulatory efforts among exchanges trading securities, commodity futures and related products to address
potential intermarket manipulations and trading abuses.
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As part of the regulatory program, each of our Exchanges and CFE have rules pertaining to their respective
disciplinary processes.
U.S. Regulatory Agreements
The Exchanges and CFE have entered into agreements under which third parties have agreed to perform regulatory
functions on behalf of our markets (e.g., RSAs). As discussed below, in addition, in certain other instances for our
Exchanges, a third party has been allocated the regulatory responsibility under Rule 17d-1 or Rule 17d-2 under the
Exchange Act, while in others, we retain the regulatory responsibility for the activities.
Regulatory Services Agreement with FINRA
The Exchanges have entered into agreements with FINRA under which FINRA has agreed to provide regulatory
services to the Exchanges. Under these agreements, FINRA performs certain regulatory functions on behalf of the
Exchanges and, to avoid any potential conflicts of interest concerning the regulation and oversight of Cboe Trading,
certain regulatory services specific to Cboe Trading. The Exchanges remain responsible for the regulation of their TPHs,
members and marketplaces, and retain the authority for bringing disciplinary actions against their TPHs and members,
although FINRA performs certain disciplinary-related functions on behalf of the Exchanges. Over the course of 2019
through 2021, certain regulatory and disciplinary-related functions that FINRA had performed on behalf of the Exchanges
have been moved back in-house from FINRA.
Regulatory Services Agreements with NFA and OCC
Through December 31, 2020, the NFA performed regulatory functions on behalf of CFE pursuant to an RSA with
CFE. The RSA has been terminated and, starting January 1, 2021, these regulatory functions were moved in-house from
the NFA. In addition, OCC has also performed and continues to perform certain regulatory functions on behalf of CFE
pursuant to an RSA with CFE. CFE also performs other regulatory and disciplinary-related functions in-house. Whether
performed under an RSA or in-house, CFE retains overall responsibility for the regulation of its marketplace and for
bringing disciplinary actions. CFE is also a party to cooperative and regulatory information sharing agreements with other
SROs and is a member of the ISG, described above.
Rule 17d-1 Designations and Rule 17d-2 Agreements
Section 17(d) of the Exchange Act and the related Exchange Act rules permit SROs to allocate certain regulatory
responsibilities to avoid duplicative oversight and regulation. Under Exchange Act Rule 17d-1, the SEC designates one
SRO to be the designated examining authority (“DEA”) for each broker-dealer that is a member of more than one SRO.
The DEA is responsible for the regulatory oversight of applicable financial responsibility rules pertaining to that broker-
dealer. Cboe Options is the DEA for several of its TPHs. Cboe Trading’s assigned DEA is FINRA.
Exchange Act Rule 17d-2 permits SROs to enter into agreements, commonly called Rule 17d-2 agreements, which
are approved by the SEC and concern the allocation of regulatory responsibility for rules applicable to TPHs and
members that those SROs have in common. The Exchanges have entered into certain bi-lateral Rule 17d-2 agreements
under which FINRA is allocated responsibility for enforcing certain federal securities laws and certain exchange rules that
are common with FINRA rules. The Exchanges have entered into certain other multi-party Rule 17d-2 agreements that
allocate responsibility among the participating SROs, which may include the Exchanges, for oversight of their allocated
common members compliance with certain rules governing, among other items, options related sales practices, options
related market surveillance, insider trading, NMS and consolidated audit trail NMS plan (“CAT”) compliance.
National Market System Plans
We are member participants of several NMS plans including, but not limited to, the following: Cboe Options, C2, BZX,
and EDGX are member exchanges in OPRA, which is the designated securities information processor for market
information that is generated through the trading of exchange-listed securities options in the United States, and it
disseminates certain core trading information, such as last sale reports and quotations. Cboe Options, BZX, BYX, EDGA,
and EDGX also participate in the CTA/CQ and the UTP Plans, which perform analogous services for the U.S. equities
market. Securities Information Automation Corporation (“SIAC”) acts as the “processor” for OPRA and the CTA/QC Plans.
Nasdaq Stock Market, LLC acts as the processor for the Nasdaq Unlisted Trading Privileges Plan. Also, see “Regulatory
Environment and Compliance - Recent Developments - United States - Consolidated Data Plan Order”, “Risk Factors”
and “Legal Proceedings” for more information regarding the Consolidated Data Plan Order and the Plan.
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Cboe Options, C2, BZX, and EDGX are also parties to the Options Order Protection and Locked/Crossed Market
Plan, which is designed to prohibit trade-throughs and avoid locked/crossed markets. Cboe Options, C2, BZX, and EDGX
are also parties to the Options Listing Procedures Plan, which sets forth the procedures that the options exchanges must
follow to list new options. Cboe Options, BZX, BYX, EDGA, and EDGX are also parties to the NMS plan for the selection
and reservation of securities symbols.
Under the Options Regulatory Surveillance Authority Plan (“ORSA Plan”), U.S. securities options exchanges are
permitted to act jointly in the administration, operation and maintenance of a regulatory system for the surveillance,
investigation and detection of the unlawful use of undisclosed, material information in trading in one or more of their
markets. The ORSA Plan is intended to enhance the effectiveness and efficiency with which the exchanges regulate their
respective markets and to avoid duplication of certain regulatory efforts. FINRA operates the ORSA Plan facility for
options insider trading.
The CAT involves the creation of a comprehensive audit trail that strives to enhance regulators’ ability to monitor
trading activity in the U.S. securities markets through a phased implementation. Upon final implementation of the
provisions of the CAT, data will be required to be reported to a central repository the following day by each SRO (a “Plan
Participant”) and broker-dealer (an “Industry Member”). On November 15, 2016, the SEC approved the CAT. The first of
various phases of CAT were originally required to begin in November 2017; however, there have been some delays. In
2017, Thesys CAT LLC (“Thesys”), a subsidiary of Thesys Technologies, LLC, was selected as the plan processor with
the responsibility to build and operate the CAT. The first phase of CAT ultimately went live in November 2018, at which
time we and other SROs/Plan Participants began initial reporting to the CAT. In 2019, Thesys was replaced by a new plan
processor, FINRA CAT, LLC, a subsidiary of FINRA. The second phase for Industry Member order and trade file
submissions is now live and began in June 2020 (for equities), June/July 2020 (for options), and additional sub-phases
related to order and trade file submissions were implemented through December 2021. The final implementation sub-
phase, related to broker-dealer customer and account information submissions by Industry Members, is now scheduled to
go live in July 2022 (or by a subsequent date in the event the current deadline is extended). While the funding of the CAT
is ultimately expected to be provided by both the SROs/Plan Participants (which includes our U.S.-based securities
exchanges) and Industry Members, until fee filings associated with the funding model are effective with or approved by
the SEC, the funding to date has solely been provided by the SROs/Plan Participants. The funding by the SROs/Plan
Participants has been done in exchange for promissory notes expected to be repaid once such Industry Member fees are
collected. Until those fees are collected, the SROs/Plan Participants may continue to incur additional significant costs,
including as a result of replacing the plan processor, or result in the uncollectibility of promissory notes related to the
funding of the implementation and operation of the CAT. See Note 8 (“Credit Losses”) and Note 9 (“Other Assets, Net”)
for further information. In addition, on February 14, 2021, Consolidated Audit Trail, LLC, formed by SRO Plan Participants
to implement the CAT requirements, filed motions to stay all or portions of two exemptive orders the SEC issued on
December 16, 2020 related to the implementation of the CAT. On February 16, 2021, Consolidated Audit Trail, LLC also
petitioned the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) for judicial review of the two
exemptive orders, asserting that the orders are unlawful. On April 7, 2021, the D.C. Circuit ordered the case to remain in
abeyance, directed the filing of status reports every 60 days and ordered the parties “to file motions to govern future
proceedings within 30 days after the discussions between the parties and the agency proceedings are completed.”
Intellectual Property
We own or have rights to a number of intellectual property assets, including trademarks, service marks, domain
names, trade names, copyrights, trade secrets and patents. While the majority of our intellectual property is protected
under U.S. law, we have many intellectual property assets protected by laws in Europe, Asia and other parts of the world.
We license some intellectual property assets to other entities. We attempt to protect our intellectual property rights, while
respecting the legitimate intellectual property rights of others.
Human Capital Management
Cboe has a robust human capital management program in place focused on equal opportunities including diversity,
equity and inclusion (“DEI”), performance and career development, health and well-being, comprehensive benefits,
training, talent acquisition, and succession planning. Additional information on our approach to human capital and ESG
issues can be found in the Cboe Global Markets, Inc. Environmental, Social and Governance Report located in the
Corporate Social Responsibility section of our website at https://markets.cboe.com/about/corporate-social-responsibility,
which does not form a part of this Form 10-K.
24
Equal Opportunity, Diversity, and Pay Equity
Cboe believes in a culture of diversity and inclusion that promotes creativity, collaboration and innovation, which is
critical to the success of our business and defining the markets of tomorrow. Cboe is an equal opportunity employer and
provides equal employment opportunities to all qualified persons without regard to sex, race, color, ethnicity, creed,
religion, national origin, ancestry, citizenship status, age, veteran or military status, disability, marital status, domestic
partnership or civil union status, pregnancy, sexual orientation, genetic status, gender identity or expression, and any
other characteristic protected by law (a “Protected Characteristic”). Cboe is committed to applying our Equal Employment
Opportunity Policy to all employment practices that impact the terms and conditions of employment including, but not
limited to, hiring, evaluation, discipline, promotion, training, compensation, transfer, and termination. Actively nurturing
and maintaining a diverse and inclusive culture at Cboe is a core imperative. We believe that our collective and unique
perspectives fuel our capabilities, enhance our team spirit and enable us to attract and retain top talent as we define the
markets of the future. Our commitment and responsibility in this regard starts at the top, with leadership and support from
the full Cboe Board of Directors and executive team.
One of the most compelling examples of our pledge to equality, diversity and inclusion throughout our Company is
the completion of our first pay equity study in 2019. In 2020, we finalized the implementation of the findings of our
inaugural study. To maintain and strengthen our efforts in this area, we also review the critical touchpoints across the
employee journey with Cboe to keep a level playing field, from the talent selection, promotion, leadership development
and succession planning processes and make adjustments, as necessary, to ensure opportunity parity across the
Company. Our goal is to ensure that equal pay and equal opportunity for all that results in a collaborative, high performing
organization bringing new innovations to market and providing superior service to our customers.
The Cboe Women’s Initiative works toward its mission: to increase representation, strengthen voices, and build a
culture of opportunity and advancement for the women of Cboe. The Women’s Initiative is led by an associate board and
engages women throughout the Company on a variety of programs. More specifically, the Women’s Initiative is comprised
of three committees that target areas where its membership strives to promote change, such as networking events,
building a formal mentorship program and an advocacy group aimed at gathering input on topics of importance for its
membership. This outreach helps shape the planning and focus for the Initiative. Networking events include the
“Trailblazers” events where senior women share their success stories through personal accounts of career growth and
impact and speakers on Male Allyship in the workplace. In its first year, the mentorship program paired over 45 mentors
with mentees across the Company.
We are also proud to share that Cboe recently formed an employee Diversity Leadership Council in 2020 focused on
unlocking the potential of a variety of perspectives, capabilities and cultural experiences. We believe in a culture of
diversity and inclusion that promotes creativity, collaboration and innovation, which is critical to the success of our
business and defining the markets of tomorrow. To reinforce this belief, this council is a collective voice on how Cboe
strives to create a diverse workforce that reflects the world in which we operate. Further, they are charged with oversight
on how we build an inclusive culture where every employee feels welcome, safe and empowered. In 2021, we also
created a new DEI leadership position within our human resources organization to be accountable for helping to establish
the strategy and execution of our DEI approach to attract develop and retain top diverse talent while fostering a
community of belonging and inclusion.
To reinforce our commitment to organizational wide education and commitment to diversity and inclusion we provided
a full-day Unconscious Bias training through third-party experts for all managers around the globe in 2020 with the
commitment to continue the rollout of this program for all employees.
In addition, in 2021, we launched Cboe Empowers and Cboe’s Veterans Initiative. Cboe Empowers is a community
engagement program that provides mentorship, scholarship and guidance to under-resourced students throughout their
educational journey through access to Cboe's associates, resources, work environment and other learning and
experience opportunities. Initially launched in Chicago, the vision for Cboe Empowers is to support students through all
stages of education from elementary or primary school to career by providing mentorship, learning and experience
opportunities, professional development and scholarships to students within the Chicago Public School system and
graduates pursuing higher education. Cboe Empowers expects to supplement its own programs by collaborating with
local partners, including the Greenwood Project and Working in the Schools, to help create maximum impact for its
participants. The Cboe Veterans Initiative is an Associate Resource Group that operates based on four main pillars:
recruiting, mentorship, service, and networking. The vision for the Cboe Veterans Initiative is to actively seek Veteran
talent, provide mentorship to veterans within and outside of the Company, commit to giving back to the Veteran
community through financial and non-monetary support, and encourage outreach to Cboe Veterans.
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Performance and Career Development
Cboe expects employees to perform their duties to the best of their ability and to develop their competencies for
career growth. We recognize the need to provide ongoing, timely, and constructive performance feedback. Cboe has
designed a Performance Management Program that drives the professional development of our employees while also
providing fair and equitable rewards and recognition.
The principles of performance management include:
•
•
•
•
align performance expectations with strategy and goals of the business,
ongoing open dialogue regarding performance and development,
foster accountability for behaviors and actions which contribute to a positive culture, and
commitment to deliver results which drive our business.
To help promote employee career development, we started in 2021 and are planning to launch in 2022, SCOUT,
which is an AI powered talent management tool that will help us deliver internal mobility and career development
opportunities for our employees.
Employee Health and Well-Being and Comprehensive Benefits Program
Cboe’s vision is to support the overall wellness of employees and their families through education and activities that
encourage a healthy lifestyle, resulting in improved health and productivity. Our programs and benefit plans provide a
corporate atmosphere of collective well-being that incorporate strategies for physical, emotional, mental and financial
wellness. Our programs focused on enhanced employee assistance programs, wellness programs and challenges, that
include both mental and physical wellbeing, and webinars and classes through our retirement vendor to support the
financial health of our employees.
To further these efforts, we launched the CboeFit program that creates an opportunity to elevate these programs and
strengthen employee engagement as we execute against our wellness vision and strategies. With the global pandemic in
2020 and 2021, there was further focus on our Employee Assistance program that was strengthened across the globe
with a diverse set of mental health resources aimed at supporting our employees during a unique and challenging time.
Employee Engagement and Pulse Surveys, Town Halls and an Open-Door Policy
In 2021, Cboe conducted our fourth annual employee engagement survey and has implemented career, leadership,
and culture focused programs in response to the survey findings. Our participation rate exceeds standard benchmarks
and a significant majority of our employees would recommend Cboe as a great place to work. To further cement our
commitment to Diversity and Inclusion, we added new, enhanced questions in this area. Our Diversity Leadership Council
hosted a special focus group to review these specific results to listen to the voices of our diverse population, prioritize
their feedback and ideas, and create commitments for actionable improvements.
Our senior management team continues to hold the commitment to an open-door policy and encourages the free
flow of information and communication in furtherance of active transparency. With the global pandemic, our ability to tap
into the voice of our employees was critically important. We conducted regular pulse surveys to gauge sentiment in
making critical decisions. Our CEO also issues weekly letters to help connect with our employees. Human Resources also
provided ongoing regular resources and tips to help support the variety of challenges from the new reality of fully remote
work to childcare and elder care that our employees faced throughout 2021.
Cboe also continues to create an open and frank atmosphere in which any grievance, complaint, suggestion or
question receives a timely response. Cboe offers a whistleblower hotline for complaints, which can be made
anonymously. Additionally, employees can raise questions and suggestions to the Cboe Human Resources team either
in-person or via a group email address and are either responded to individually or addressed at our Global Town Hall
meetings. The objective of these town halls is to provide employees an update on Company news, share updates from
major business lines, as well as provide a forum to ask questions and offer feedback. Town halls can include updates on
anything from legislation that may impact our business to ESG topics. Employees are encouraged to participate in free
26
flow of information and communication and to offer positive and constructive feedback in furtherance of active
transparency.
To further reinforce our commitment to employee engagement as a result of changing work styles due to COVID-19,
we began in late 2021 a future-of-work study with a third party to help determine where Cboe employees might be best
suited to work from in the future, whether it is in the office, remotely, or a hybrid mix.
Training and Succession Planning
We believe that the development of all Cboe employees helps drive our collective success. Through skill and
competency development we signal our investment in all while also enabling enhanced productivity. Through our tuition
reimbursement program, our employees receive financial support in their pursuit of specialized university courses and
degrees. In addition to our ongoing offering of online courses on diverse topics through our corporate university, CboeU,
employees can participate in the CboeLearns hybrid program focused on virtual classroom instruction combined with work
application and CboeLive, which is focused on business topics to foster organizational-wide knowledge sharing and
education.
Leadership is another critical element to our success at Cboe. People managers globally participated in a two-day
training focused on the “4 Essential Roles of Leadership” (1. Inspire Trust; 2. Create Vision; 3. Execute Strategy; 4. Coach
Potential). We expanded on our leadership training through the design and launch of a bespoke 8-week program,
CboeLeads, expanding on the development of our high potential leaders further strengthening the leadership bench and
accelerating readiness of this key talent pool. The senior management team participated in an additional one-day
workshop focused on their roles that was also accompanied by Leadership toolkits to guide an enhanced approach to
coaching and career conversations.
Cboe has held several succession planning discussions with the Compensation Committee and Board of Directors to
plan for the fulfillment of essential roles, such as the CEO and other senior officers. This process includes investments in
advanced development planning for targeted successors to accelerate their readiness through key internal projects and
assignments as well as tailored training. Diversity and inclusion are a formal part of Cboe's succession planning process
as we work to identify and advance internal diverse talent and, in parallel, continually scan external talent pools for
successors.
Employees
As of December 31, 2021, we employed 1,196 individuals, 820 of whom are based in the United States, 128 of whom
are located in London, England, 9 of whom are located in Belfast, Northern Ireland, 9 of whom are located in the Greater
Toronto Area, Ontario, Canada, 18 of whom are located in Calgary, Alberta, Canada, 1 of whom are located in Coquitlam,
British Columbia, 86 of whom are located in Amsterdam, Netherlands, 35 of whom are located in Sydney, Australia, 17 of
whom are located in Tokyo, Japan, 51 of whom are located in Manila, Philippines, 15 of whom are located in Hong Kong,
5 of whom are located in Singapore, and 2 of whom are located in Switzerland. Of these employees, 447 were involved in
technology or operations and 123 were involved in direct support of trading operations. The remaining 626 employees
provide business development, financial, regulation, human resources, compliance, legal, planning and research,
administrative, and managerial support.
We have 6 building engineers that are covered by a collective bargaining agreement, which expires on May 31, 2022,
with the International Union of Operating Engineers Local 399, AFL-CIO. Management believes that we have strong
relationships with our employees, and we have never experienced a work stoppage.
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Information about our Executive Officers
Set forth below is information regarding our executive officers:
Name
Edward T. Tilly . . . . . . . . . .
Christopher A. Isaacson . .
Brian N. Schell . . . . . . . . . .
Catherine R. Clay. . . . . . . .
John F. Deters . . . . . . . . . .
David Howson . . . . . . . . . .
Patrick Sexton . . . . . . . . . .
Jill M. Griebenow . . . . . . . .
Age
58
43
56
54
51
45
57
42
Position
Chairman of the Board, President and Chief Executive Officer
Executive Vice President and Chief Operating Officer
Executive Vice President, Chief Financial Officer and Treasurer
Executive Vice President, Data and Access Solutions
Executive Vice President, Chief Strategy Officer
Executive Vice President, President Europe and Asia Pacific
Executive Vice President, General Counsel and Corporate Secretary
Senior Vice President, Chief Accounting Officer
Edward T. Tilly. Mr. Tilly is our Chairman, President and Chief Executive Officer. Mr. Tilly has served as our
President since January 2019, Chairman since February 2017 and as CEO and director since May 2013. Prior to
becoming CEO, Mr. Tilly served as President and Chief Operating Officer from November 2011, and Executive Vice
Chairman from August 2006 until November 2011. He was a member of CBOE from 1989 until 2006, and served as
Member Vice Chairman from 2004 through July 2006. He holds a B.A. degree in Economics from Northwestern
University.
Christopher A. Isaacson. Mr. Isaacson is our Executive Vice President and Chief Operating Officer, a position he has
held since January 2019. Previously he was our Executive Vice President and Chief Information Officer, a position he was
appointed to upon the Company’s acquisition of Bats. Prior to that, he served as Bats' Executive Vice President and
Global Chief Information Officer since February 2014, he served as Bats' Senior Vice President and Chief Operation
Officer from 2007 to 2014 and he has held other various senior leadership positions since 2005. Prior to being one of the
founders of Bats, Mr. Isaacson was a software developer at Tradebot Systems, Inc. from 2003 to 2005. Mr. Isaacson
serves on the Boards of Directors of Cboe Japan and Cboe Australia, as the Chairman of the Board of Directors of CFE
and SEF and previously served on the Board of Directors of OCC. Mr. Isaacson holds a B.S. degree in information
systems with a minor in math from Nebraska Wesleyan University and an M.B.A. degree from the University of Nebraska-
Lincoln.
Brian N. Schell. Mr. Schell is our Executive Vice President, Chief Financial Officer and Treasurer, a position he has
held since January 2018. Mr. Schell is also currently serving as interim Chief Human Resources Officer. Previously, he
was Deputy Chief Financial Officer of the Company’s subsidiary Cboe Exchange, Inc., a position he was appointed to
upon the Company’s acquisition of Bats. Prior to that, he served as Chief Financial Officer of Bats since March 2011. Prior
to joining Bats, he held various senior leadership positions at H&R Block Inc., as well as various positions at the FDIC,
KPMG and JP Morgan. Mr. Schell holds a B.B.A. degree with an emphasis in finance from the University of Notre Dame
and an M.B.A. degree from The George Washington University.
Catherine R. Clay. Ms. Clay is our Executive Vice President, Data and Access Solutions, a position she has held
since March 2021. Previously, she was Senior Vice President, Global Head of Information Solutions of the Company’s
subsidiary Cboe Exchange, Inc. from February 2019 to March 2021 and she has held other various senior leadership
positions since 2015, including Vice President Business Development, a position she was appointed to upon the
Company’s acquisition of Livevol, Inc. Prior to that, she served as Chief Executive Officer of Livevol, Inc. from 2013 to
2015 and as its Chief Strategy Officer from 2010 to 2013. Prior to that, she served as Founder of Thales LLC from 2006
through 2010. Ms. Clay holds a B.S. degree from University of Colorado-Boulder.
John F. Deters. Mr. Deters is our Executive Vice President, Chief Strategy Officer, a position he has held since 2018.
He has previously served as our Head of Multi-Asset Solutions from 2018 to 2019 and as Chief Strategy Officer from
2013 to 2018. Prior to joining Cboe in 2013, Mr. Deters was most recently a Vice President and Investment Banker of
Financial Institutions Group, Investment Banking at Barclays from 2008 to 2013. Mr. Deters holds a B.A. degree from
Wheaton College, an M.B.A. degree from the University of Chicago, and a J.D./M.S. dual degree from Georgetown
University Law Center.
David Howson. Mr. Howson is our Executive Vice President, President Europe and Asia Pacific, a position he has
held since July 2021. Previously, he was our Executive Vice President, President Europe from January 2020 to July 2021
and Chief Operating Officer of Cboe Europe from 2013 to 2019. Prior to that, he served as Founder, Chief Technology
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Officer of Equiduct from April 2006 through June 2013. Mr. Howson holds a First Class Honours bachelor's degree from
the University of Newcastle-upon-Tyne.
Patrick Sexton. Mr. Sexton is our Executive Vice President, General Counsel and Corporate Secretary, a position he
has held since March 2018. Previously, he was Deputy General Counsel of the Company’s subsidiary Cboe Exchange,
Inc. He served in that capacity from July 2013 to March 2018 and has acted as legal, regulatory and compliance counsel
with increasing responsibility and oversight since joining the Company in 1997. Mr. Sexton holds a B.A. degree from the
University of Notre Dame and a J.D. degree with honors from Notre Dame Law School.
Jill M. Griebenow. Ms. Griebenow is our Senior Vice President, Chief Accounting Officer, a position she has held
since August 2018. Previously, she served as Chief Financial Officer, Europe of the Company's subsidiary Cboe Europe,
a position she was appointed to upon the Company’s acquisition of Bats. She also previously served as Chief Financial
Officer, Europe of Bats’ subsidiary Bats Europe Limited since February 2014 and was employed by Bats in the financial
area since 2011. Prior to that, she held various positions at Ernst & Young LLP. Ms. Griebenow is a certified public
accountant and holds a bachelor's degree in accounting from the University of Northern Iowa.
Corporate Social Responsibility
The Company recognizes that operating in a socially responsible manner helps promote the long-term interests of
our stockholders, organization, associates, industry and community. Our guiding principles help us deliver on our
corporate mission and strategy, including good citizenship.
• Active Transparency – A commitment to proactively sharing information and knowledge.
• Creative Collaboration – An enthusiasm for working with our customers and partners to advance innovation.
• Competitive Spirit – A will to succeed and be the best.
• Superior Service – A drive to understand needs and exceed expectations.
• Good Citizenship – A dedication to the betterment of our markets, workplace and community.
We believe that being a good citizen means that we hold ourselves accountable for the integrity of the markets and to
the communities we serve, seek to help resolve conflicts and build consensus, inform those impacted before taking
action, lead by example and serve as part of the solution. We also seek to be good citizens to the communities we serve
by being committed to being environmentally conscious. Additionally, being good citizens also means that we strive to
support our associates and better serve our industry and community through our human capital development,
volunteerism and policies. See “Human Capital Management” subsection above for more information.
Additional information on our approach to ESG can be found in the 2021 Cboe Global Markets, Inc. Environmental,
Social and Governance Report located in the Corporate Social Responsibility section of our website at
http://www.Cboe.com/aboutCboe, which does not form a part of this Form 10-K.
Available Information
Our website is www.cboe.com. The Company files annual, quarterly and current reports, proxy statements and other
information with the SEC under the Exchange Act. The Company makes available, free of charge, on its website its
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after
such reports are electronically filed with, or furnished to, the SEC. The Company's reports filed with, or furnished to, the
SEC are also available on the SEC's website at www.sec.gov.
In addition, we have posted on our website the charters for our (i) Audit Committee, (ii) Compensation Committee,
and (iii) Nominating and Governance Committee, as well as our Code of Business Conduct and Ethics and Corporate
Governance Guidelines. We will provide a copy of these documents without charge to stockholders upon written request
to Investor Relations, Cboe Global Markets, Inc., 433 West Van Buren Street, Chicago, Illinois 60607. Our website and
information included in or linked to our website are not part of this Form 10-K.
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Item 1A. Risk Factors.
The risks and uncertainties described below are those that we believe are material at this time relating to our
business. These risks and uncertainties, however, are not the only risks and uncertainties that we face. Additional risks
and uncertainties not currently known to us or that we currently deem to be immaterial may also significantly impact us.
Any of these risks and uncertainties may materially and adversely affect our business, financial condition or results of
operations, liquidity, and cash flows.
Summary of Risk Factors
The following is a summary of the key risks and uncertainties described below that we believe are material to us at
this time:
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•
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the loss of our right to exclusively list and trade certain index options and futures products;
economic, political and market conditions; compliance with legal and regulatory obligations;
price competition and consolidation in our industry;
decreases in trading or clearing volumes, market data fees or a shift in the mix of products traded on our
exchanges;
legislative or regulatory changes or changes in tax regimes;
our ability to protect our systems and communication networks from security risks, cybersecurity risks, insider
threats and unauthorized disclosure of confidential information;
our ability to attract and retain skilled management and other personnel;
increasing competition by foreign and domestic entities;
our dependence on and exposure to risk from third parties;
fluctuations to currency exchange rates;
factors that impact the quality and integrity of our indices;
the impact of the COVID-19 pandemic, including changes to trading behavior broadly in the market;
our ability to operate our business without violating the intellectual property rights of others and the costs
associated with protecting our intellectual property rights;
our ability to minimize the risks, including our credit and default risks, associated with operating a European
clearinghouse;
our ability to accommodate trading and clearing volume and transaction traffic, including significant increases,
without failure or degradation of performance of our systems;
• misconduct by those who use our markets or our products or for whom we clear transactions;
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challenges to our use of open source software code;
our ability to meet our compliance obligations, including managing potential conflicts between our regulatory
responsibilities and our for-profit status;
our ability to maintain BIDS Trading as an independently managed and operated trading venue, separate from
and not integrated with our registered national securities exchanges;
damage to our reputation;
the ability of our compliance and risk management methods to effectively monitor and manage our risks;
our ability to manage our growth and strategic acquisitions or alliances effectively;
restrictions imposed by our debt obligations and our ability to make payments on or refinance our debt
obligations;
our ability to maintain an investment grade credit rating;
impairment of our goodwill, long-lived assets, investments or intangible assets;
litigation risks and other liabilities; and
if the acquisition of ErisX is consummated, operating a digital asset business.
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Risks Relating to Our Business
Loss of our right to exclusively list and trade certain index options and futures could have a material adverse
effect on our financial performance.
We hold exclusive licenses to list securities index options on the S&P 500 Index, the Russell 2000 Index, as well as
others, granted to us by the owners of such indices, and additionally hold exclusive rights to our proprietary VIX
methodology that provides the basis for VIX options and futures. In 2021, approximately 53.2% of our net transaction and
clearing fees (defined below) were generated by futures and index options, the overwhelming majority of which were
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generated by our exclusively-licensed products (e.g., SPX options) and products based on our proprietary VIX
methodology (e.g., VIX options and futures). The bulk of this revenue is attributable to our SPX options and VIX options
and futures. As a result, our revenues less cost of revenues are dependent in large part on the exclusive licenses we hold
for these products and our ability to maintain our exclusive proprietary rights in the VIX methodology and related products
and indices.
There is a risk, with respect to each of our current exclusive licenses, that the owner of the index may not renew the
license with us on an exclusive basis or at all. In the first event, we would be subject to multiple listing in the trading of
what is now an index product traded by us on an exclusive basis, which could result in a loss of market share and
negatively impact our profitability. In the second event, we could lose the right to list the index product entirely. The loss or
limited use of any of our exclusive index licenses, especially for the S&P 500 Index, for any reason could have a material
adverse effect on our business and profitability.
In addition to the risks related to our exclusive licenses, if we are unable to retain exclusive proprietary rights in the
VIX methodology and related products and indices, our volatility products could be subject to multiple listing which could
have a material adverse effect on us.
The EU has adopted legislation affecting providers and users of benchmark indices in the EU. MiFIR requires
benchmarks used to value a financial instrument in the EU to be made available on a non-discriminatory basis to all EU
trading venues and central counterparty clearinghouses for the purposes of trading and clearing. As a result, owners of
such benchmarks must provide licenses on fair, reasonable and non-discriminatory terms. While similar legislation to
MiFIR has not been proposed in the U.S., if it were passed, it could cause us to lose our exclusive rights to list and trade
proprietary and licensed index products. Further, in 2018, the EU implemented the EU Benchmark Regulation, which
regulates users, data providers and calculators of benchmarks (“administrators”) in the EU, and among other things,
prohibits use of benchmarks provided by administrators outside the EU in connection with EU financial instrument unless
the administrator is deemed to be subject to an EU equivalent regulatory regime and the benchmark is registered in an
EU member state. These regulations and other emerging regulatory regimes around the world may impact international
customers’ interest in or ability to trade index-based products listed on our U.S. exchanges, as well as impact our
expansion into foreign trading of our index-based products and our ability to license proprietary indices for use outside of
the U.S.
Furthermore, our competitors may succeed in developing, offering and providing a market for the trading of index-
based or volatility products that are economically similar to those that we offer and they may become successful and take
away volume from our products. It is also possible that a third party may offer trading in index-based products that are the
same as those that are the subject of one of our exclusive licenses, but in a jurisdiction in which the index owner cannot
require a license or in a manner otherwise not limited by our exclusive license.
The value of our licenses to exclusively list securities index options and futures also depends on the continued ability
of index owners to require licenses for the trading of options and futures based on their indices. Although we and other
index owners have prevailed in legal actions seeking to challenge our rights to exclusively license indices, we may be
subject to changes in the law or other actions taken in the future that might impede our ability to exclusively offer trading
in certain index options and futures.
General economic conditions and other factors beyond our control could significantly reduce demand for our
products and services and harm our business.
The volume of trading and clearing transactions and the demand for our products and services are directly affected
by economic, political and market conditions in the U.S., Europe and elsewhere in the world that are beyond our control,
including:
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economic, political and geopolitical market conditions;
broad trends in business and finance;
concerns over inflation and wavering institutional or retail confidence levels;
government or central bank actions, such as changes in government fiscal and monetary policy and foreign
currency exchange rates;
other legislative and regulatory changes;
the availability of short-term and long-term funding and capital;
the perceived attractiveness of the U.S., European, Canadian, Australian or Japanese capital markets;
the availability of alternative investment opportunities;
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changes in the level of trading activity in underlying instruments;
changes and volatility in the prices of securities;
changes in the volume of foreign currency transactions;
changes in supply and demand for currencies;
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• movements in currency exchange rates;
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the level and volatility of interest rates;
changes in the financial strength of market participants;
consolidation among market participants and market data subscribers;
unforeseen market closures, suspensions of open outcry trading or other disruptions in trading and clearing; and
disruptions due to terrorism, war, extreme weather events, pandemics or other catastrophes.
Any of these factors, individually or collectively, could have a material adverse effect on our business, financial
condition and operating results by causing a substantial decline in the financial services markets and reducing trading and
clearing volumes and demand for market data.
Our business may be adversely affected by price competition.
The securities industry is characterized by intense price competition, especially with respect to transaction fees. We
may be required to adjust pricing to respond to actions by new or existing competitors, which could adversely impact our
business, financial condition and operating results. We also compete with respect to the pricing of market data and value-
added market data, such as historical market data.
In our options segment, the pricing model for trade execution has changed in response to competitive market
conditions, and our competitors have adjusted transaction fees and fee structures accordingly, including by opening new
exchanges, which allow them to offer multiple pricing models that can appeal to different segments of market participants.
These changes have resulted in significant pricing pressures on us, especially on transaction fees and incentives for
multi-listed products. As a result of these pricing pressures, our average rate per multi-listed options contract may
decrease. It is likely that this pressure will continue and even intensify as our competitors continue to seek to increase
their share of trading by further reducing their transaction fees or by offering other financial incentives to order providers
and liquidity providers to induce them to direct orders to their markets.
In addition, one or more competitors may engage in aggressive pricing strategies and significantly decrease or
completely eliminate their profit margin for a period of time in order to capture a greater share of trading volume. Some
order-providing firms on our exchanges have taken ownership positions in options exchanges that compete with us and
such exchanges have given those firms added economic incentives to direct orders to them.
With respect to our proprietary products, we compete with futures exchanges and swap execution facilities that offer
similar products and other financial market participants that offer over-the-counter derivatives. We also compete against
certain multi-listed options products, such as SPY, which offer some of the features of our proprietary products, such as
SPX.
To attract market share, we may offer “inverted” pricing specials or no-transaction fee trading from time to time, per
various fee schedules across our equities exchanges. These forms of promotions, along with other supplemental liquidity
programs, may adversely affect our profitability.
Further, regulatory and legal developments could also impact our ability to adjust pricing to respond to actions by new
or existing competitors. In the U.S., we are generally required to file with the SEC any changes to the fees that we charge
and in recent years the SEC has more heavily scrutinized pricing changes.
If we are unable to compete successfully with respect to the pricing of our services and products, our business,
financial condition and operating results may be materially and adversely affected. We could lose a substantial
percentage of our share of trading if we are unable to price transactions in a competitive manner. Also, our profits could
decline if competitive pressures or regulatory changes force us to reduce fees.
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A significant portion of our operating revenues is generated by our transaction and clearing-based business. If
the amount of trading volume on our markets or clearing volume decreases, or the product mix shifts to lower
revenue products, our revenues from transaction and clearing fees will most likely decrease.
In 2021, approximately 64.7% of our revenues less cost of revenues were generated by our transaction and clearing-
based business. This business is dependent on our ability to attract and maintain order flow, both in absolute terms and
relative to other market centers. If the amount of trading volume on our Exchanges, CFE, BIDS Trading, and MATCHNow,
notional value traded on Cboe FX, Cboe SEF, Cboe Europe Equities and Derivatives, Cboe Australia, and Cboe Japan or
clearing volumes at EuroCCP decreases, we are likely to see a decrease in fees.
Our total trading or clearing volumes could decline if our market participants reduce their trading or clearing activity
for any reason, such as:
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heightened capital requirements;
transaction tax;
regulatory or legislative actions;
reduced need to trade due to changes in volatility and/or passive investment trends;
reduced access to capital required to fund trading activities;
consolidation among market participants;
suspensions of open outcry trading; or
significant market disruptions.
Over the past few years, a number of legislative actions have been taken, both domestically and internationally, that
may cause market participants to be subject to increased capital requirements and additional compliance burdens. These
actions, including the Collins Amendment to Dodd-Frank, MiFID II and MiFIR, may cause market participants to reduce
trading activity on our markets.
In addition, the transaction fees generated are different based on type of product and other factors, including the type
of customer and certain volume discounts. If the amount of our trading volume decreases, the mix traded shifts to our
lower revenue per contract products, our revenues from transaction fees will most likely decrease. We can offer no
assurance that we would be able to reduce our costs to match the amount of any such decrease.
Revenues from our market data fees and access and capacity fees may be reduced due to declines in our market
share, trading volumes or regulatory changes.
The occurrence of any event that reduces the amount of market data fees that we receive, whether as a result of fee
reductions, fewer members subscribing to the U.S. tape plans or other market data offerings, declines in market share,
trading volumes, or notional volumes, or regulatory changes may have a direct negative impact on our business, financial
condition, and operating results. For example, if our market share of U.S. listed equities and options or Cboe’s European
equities trading volume were to decline, our share of market data fees could also decline. Moreover, market data fees
could decline as a result of a reduction in the number of market data users, for example because of consolidation among
market data subscribers or due to a decline in professional subscriptions as a result of staff reductions in the financial
services industry or otherwise.
Regulatory and legal developments could also impact the fees we receive from market data and access and capacity,
or our cost in providing such services. In the U.S., we are generally required to file with the SEC any changes to the fees
that we charge for our securities market data products and access and capacity fees. In recent years, certain industry
groups have objected to the ability of exchanges to charge for certain market data products. In addition, the SEC and
some media have scrutinized market data and market access. As discussed above, the implementation of the new Market
Data Infrastructure rules could cause Cboe’s equities exchanges, BZX, BYX, EDGX, and EDGA, to require additional
resources to comply with or to challenge the new rules, which may have a material impact on our business, financial
condition, and operating results, including if, for example, there are lower SIP plan revenues or we must reduce the fees
we charge for market data. See “Legal Proceedings” for more information.
In addition, as discussed above, the SEC approved a Consolidated Data Plan to replace the three equity data plans
that govern the dissemination of real-time, consolidated market data for NMS stocks. Such plan is being challenged, but if
such Consolidated Data Plan were to be implemented, it may have a negative impact on the applicable market data
revenues that we receive that are generated from such new plan. See “Legal Proceedings” for more information.
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We believe Cboe Europe Equities and Derivatives currently offers market data to customers on a non-discriminatory
basis at a reasonable cost. As European regulators determine how market data should be disaggregated and what is a
reasonable commercial basis for providing market data, it could affect our ability to offer market data products in the same
manner that we do today thereby causing an adverse effect on our European market data revenues. While MiFID II and
MiFIR aim to encourage a commercial solution to a consolidated tape in Europe, should this fail to materialize, policy
makers might be encouraged to implement a mandatory solution that could impact our ability to develop our own
commercial offering. As discussed above, the E.C. published provisions for a consolidated tape for the EU, which is
expected to be implemented in late 2023 or early 2024. As proposed, these provisions may have a material impact on our
business, financial condition and operating results if, for example, we must reduce the fees we charge for market data.
The technology upon which we rely, including those of our service providers, may be vulnerable to security
risks, cybersecurity risks, insider threats, unauthorized disclosure of confidential information, operational
disruptions, and other risks and events that could harm our business.
The secure and reliable operation of our technology, including our computer systems and communications networks,
and those of our service providers, market participants and other third-parties, is a critical element of our operations.
These systems and networks may be subject to various cybersecurity incidents, improper or inadvertent access to or
disclosure of confidential, commercially sensitive, or personally identifiable information, data theft, corruption or
destruction, cyber-attack, ransomware, supply chain attack, denial of service attack, malware and other security
problems, as well as acts of terrorism, attacks by threat actors including criminal groups, political activist groups and
nation-state actors, attacks in connection with geopolitical activity such as the recent escalating tensions along the
Russia-Ukraine border, natural disasters, human error, criminal insider activity, employee error, power loss, service
provider, market participant or third-party disruptions or security breaches and other events that are beyond our control.
Our increased adoption of remote working, initially driven by the COVID-19 pandemic, usage of mobile and cloud-based
technologies and amount of newly acquired companies and related integrations may increase our risk for a cybersecurity
incident. Moreover, given our position in the global financial services industry and as critical infrastructure, we may be
more likely than other companies to be a direct target, or an indirect casualty, of such events. While we have experienced
in the past, and we expect to continue to experience, cybersecurity threats and events of varying degrees, we are not
aware of any of these threats or events having a material impact on our business, financial condition or operating results
to date, however we cannot assure you that we will not experience future threats or events that may be material.
We currently maintain policies, procedures and controls designed to reasonably protect the confidentiality, integrity,
availability and reliability of our systems, networks and information more broadly, and to guard against cybersecurity
incidents and unauthorized access. These policies, procedures and controls are subject to periodic monitoring, auditing,
and evaluation practices, pursuant to our enterprise risk management program, which is supported by a three lines of
defense approach, and our other governance practices. Further, we developed and maintain cybersecurity and data
privacy training programs for our employees and our third-party consultants who have access to our systems, which
includes simulations, tabletop exercises, and response readiness tests. Independent third-party cybersecurity penetration
assessments are also routinely performed. Collectively, these safeguards and measures or those of our third-party
providers, including any cloud technologies, may prove inadequate to prevent the attendant risk posed by cybersecurity
incidents, subjecting us to contractual restrictions, liability and damages, loss of business, penalties, unfavorable publicity,
and increased scrutiny by our regulators, and materially impacting our business, financial condition and operating results.
We may be required to expend significant resources in the event of any real or threatened breaches in security or system
failures, including to protect against threatened breaches, to alleviate harm caused by an actual breach, and to address
any reputational harm or litigation or regulatory liability. Despite our cybersecurity measures, it is possible for security
vulnerabilities or breaches to remain undetected for an extended period of time. Such harms also could cause us to lose
market participants, experience lower trading volume, and negatively impact our competitive advantage and business,
financial condition and operating results.
Additionally, as threats continue to evolve and increase, and as the domestic and international regulatory
environment related to information security, data collection and use, and privacy becomes increasingly rigorous, we may
be required to devote significant additional resources to modify and enhance our security controls and to identify and
remediate any security vulnerabilities, which could have an adverse effect on our business, financial condition and
operating results.
If we fail to attract or retain highly skilled management and other employees our business may be harmed.
Our success largely depends on the skills, experience and continued efforts of management and other key
personnel. As a result, to be successful, we must retain and motivate executives and other key employees. However, we
have no assurances that these employees will remain with us. The roles and responsibilities of departing executive
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officers and employees will need to be filled either by existing or new officers and employees, which may require us to
devote time and resources to identifying, hiring and integrating replacements for the departed executives and employees
that could otherwise be used to pursue business opportunities, which could have a material adverse effect on our overall
business, financial condition and operating results.
There is substantial competition for qualified and capable personnel in the technology space, which may make it
difficult for us to retain and recruit qualified employees in sufficient numbers. This competition has become exacerbated
by the increase in employee resignations currently taking place throughout the United States as a result of the COVID-19
pandemic, which is commonly referred to as the “great resignation,” as well as the growth of new asset classes such as
the digital asset space. During this great resignation, we have faced increased challenges in retaining and attracting
qualified employees. If we fail to retain our current employees, it would be difficult and costly to identify, recruit and train
replacements needed to continue to conduct and expand our business. In particular, failure to retain and attract qualified
technology personnel could result in systems failures. Consequently, our reputation may be harmed, we may incur
additional costs and our profitability could decline. There can be no assurance that we will be able to retain and motivate
our employees in the same manner as we have historically done.
Additionally, effective succession planning is also important to our long-term success. Failure to ensure effective
transfer of knowledge and smooth transitions involving our management team and key employees could hinder our
strategic planning and execution.
Intense competition could materially adversely affect our market share and financial performance.
The market for trade execution services, clearing and products is intensely competitive in the asset classes and
geographies in which we operate. Increased competition may result in a decline in our share of trading activity and a
decline in our revenues from transaction and clearing fees and market data fees, thereby materially adversely affecting
our operating results. We compete with a number of entities on several different fronts, including the cost, quality and
speed of our trade execution, functionality and ease of use of our trading and clearing platforms, range of our products
and services, our technological innovation and adaptation and our reputation. In particular, we have seen increased
competition from off-exchange venues, which have increased their share of trading activity. See “Business – Competition”
for more information.
Some of our competitors and potential competitors have greater financial, marketing, technological, personnel and
other resources than we do. These factors may enable them to develop similar or more innovative products, to offer lower
transaction and clearing fees or better execution to their customers or to execute their business strategies more quickly or
efficiently than we can. In addition, our business, financial condition and operating results may be materially adversely
affected if we cannot successfully develop, introduce and/or market new services and products or if we need to adopt
costly and customized technology for our services and products.
Furthermore, new or existing competitors may:
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respond more quickly to competitive pressures;
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develop products that compete with our products or are preferred by our customers;
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offer products and services at prices below ours to gain market share and to promote other businesses;
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develop and expand their technology and service offerings more efficiently;
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provide better, more user-friendly and more reliable technology;
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take greater advantage of acquisitions, alliances and other opportunities;
• market, promote, bundle and sell their products and services more effectively;
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leverage existing relationships with customers and alliance partners more effectively or exploit brand names to
market and sell their services; and
exploit regulatory disparities between traditional, regulated exchanges and alternative markets, including over-
the-counter markets, that benefit from a reduced regulatory burden and lower-cost business model.
•
If our products, markets, services and technology are not competitive or we fail to anticipate or respond adequately to
changes in technology, customer preferences and regulatory requirements or any significant delays in product
development efforts our business, financial condition and operating results could be materially harmed.
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We depend on third-party service providers for certain services that are important to our business. An
interruption, significant increase in fees or cessation or impairment of such service by any third party could have
a material adverse effect on our business, financial condition and operating results.
We depend on a number of service providers, including clearing organizations such as OCC, NSCC, DTC, CDS,
LCH, EuroCCP, our wholly-owned subsidiary, JSCC, ASX Clear Pty Ltd, and SIX x-clear; securities information
processors such as the CTA, UTP Securities Information Processor and OPRA; regulatory and other service providers
such as FINRA and OCC; the hosts of our data and disaster recovery centers; and various vendors of communications
and networking products and services. In addition, we also depend on third party routing and clearing firms that are
involved in processing transactions on our behalf. More specifically:
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If OCC, NSCC, DTC, CDS, LCH, EuroCCP, JSCC, ASX Clear Pty Ltd, and SIX x-clear were unable to perform
clearing services for existing or new products, or their clearing members were unable or unwilling to clear
through them, transactions could likely not occur on our markets or there may be delays, including until clearing
is moved to another clearing agency. In 2021, approximately 53.2% of our net transaction and clearing fees were
generated by options and futures that were cleared through OCC.
• OPRA, UTP Securities Information Processor and the CTA consolidate options and equities market information,
respectively, such as last sale reports and quotations. If any of them were unable to provide this information for a
sustained period of time, we may be unable to offer trading on our options and equities markets.
• We are heavily dependent on technology for our markets, including our data and disaster recovery centers,
some of which are housed by third parties, and certain communications and networking products and services. If
this technology is unavailable, and cannot be replaced in a sufficiently short time period, we may be unable to
operate our markets.
• We utilize a third-party cloud service provider to maintain secondary offsite backups of our and our customers’
data and to distribute real-time data, and we may utilize third-party cloud service providers in the future for
additional services. We do not control the operations of third-party cloud service providers or their facilities and
may be vulnerable to disruptions in our access to the platform as a result of a number of potential causes,
including technical failure, natural disasters, fraud or security attacks that we cannot predict or prevent.
Additionally, any vulnerability of third-party cloud service providers could expose our or our customers’
confidential data, which could result in harm to our business reputation.
FINRA and OCC provide certain regulatory services and functions for our options, equities and futures
exchanges, while we retain regulatory responsibilities for such services. If FINRA or OCC stopped providing
services, or provided inadequate services, we may be subject to action by the SEC or CFTC, or may have
limitations placed upon our markets.
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• We rely on FINRA CAT LLC, a subsidiary of FINRA, to provide services for the implementation of the CAT. If
FINRA CAT LLC stops providing services or provides inadequate services, we and the other execution venues
may incur regulatory liability including enforcement action by the SEC or limitations placed upon our markets. In
addition, until the SEC approves a funding model that shares the cost of the CAT between the SROs and
industry members, the SROs may continue to incur additional significant costs, including as a result of replacing
the plan processor, or result in not being able to collect on the promissory notes related to the funding of the
implementation and operation of the CAT.
• We rely on third party routing and clearing firms to clear trades in U.S. listed equity securities routed by us to
other markets, and to execute trades in options that we route to other markets.
With respect to options, all contracts traded on our exchanges must be cleared through clearing members of OCC. At
December 31, 2021, there were 97 TPHs that are clearing members of OCC. Two clearing members accounted for
approximately 61.5% of transaction and other fees collected through OCC in 2021. The next largest clearing member
accounted for approximately 23.5% of transaction and other fees collected through OCC. Additionally, the two largest
clearing members clear the majority of the market-maker sides of transactions at Cboe Options, C2, BZX, EDGX and at
all of the options exchanges. Should one of these clearing members or liquidity providers exit the business or withdraw
from our options exchanges, impose additional market-maker financial requirements or if market-makers were unable to
transfer to another clearing member or other liquidity providers were unable to provide additional liquidity, this could
create a significant disruption to the options markets, including ours.
We cannot provide assurance that any of these providers will be able to continue to provide these services in an
efficient manner or that they will be able to adequately expand their services to meet our needs. An interruption or
malfunction in or the cessation or impairment of an important service by a third party or disruption of a third party’s
operations could cause us to halt trading in some or all of our products or our services, make us unable to conduct other
aspects of our business, cause us to experience the loss of a significant number of market participants or cause us to
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experience a significant reduction in trading activity on our options and futures markets, each of which could have a
material adverse effect on our business, financial condition and operating results. In addition, our inability to make
alternative arrangements, such as moving clearing to another clearing agency, in a timely manner, or at all, could have a
material adverse impact on our business, financial condition and operating results.
If an index provider from which we have a license or a service provider with respect to proprietary products fails
to maintain the quality and integrity of their indices or fails to perform under our agreements with them, if we fail
to maintain the quality and integrity of our proprietary indices or indices and other values that we calculate as an
index provider, or if customer preferences change, the revenues that are generated from the trading of
proprietary products or the calculation and dissemination of index values may suffer.
We are a party to a number of license agreements that permit us to list tradeable products related to various indices
that are among the most actively traded products on our exchanges. We also enter into agreements pursuant to which we
act as an index provider and calculate and disseminate proprietary indices and other values. We believe that demand for
our products is based in part on market perception of the quality and integrity of these indices. The quality and integrity of
these indices are dependent on the ability of index providers, including us, to maintain the index. Maintenance includes
ongoing index calculation, index rebalancing and dependance on index providers for a number of things, including the
provision of index data. We also rely on index providers to enforce intellectual property rights against unlicensed uses of
the indices and uses of the indices that infringe on our licenses. Some of our agreements concerning our proprietary
products obligate the parties to those agreements to provide important services to us. If any of our index providers,
including us, are unable to maintain the quality and integrity of indices, or if any of the index providers or service
providers, including us, fail to perform their obligations under the agreements, trading in these products, and therefore
transaction fees we receive, may be materially adversely affected or we may not receive the financial benefits of the
agreements that we negotiated.
Differences in the calculations from methodologies described in published materials or incorrect calculations of spot
VIX Index values or our other spot volatility indices, including those instances that we announced on July 30, 2021, or the
failure to implement any planned remedial changes may result in the loss of perceived quality and integrity of our indices,
loss of demand for our products, increased potential for investigations and enforcement proceedings, increased potential
for failure to perform our obligations under agreements concerning our products or in our capacity as an index provider,
and increased exposure to third party claims and related litigation expenses, which could have a material adverse effect
on our business, financial condition and operating results.
The COVID-19 pandemic and its effects have had significant impacts on economies around the world. Further
impacts of the COVID-19 pandemic could have a material adverse effect on our business, financial condition,
operating results and cash flows.
The COVID-19 pandemic has had significant impacts on economies around the world. Governments, public
institutions, and other organizations around the world have taken, and may take additional or reimpose previous,
emergency measures to combat COVID-19’s spread, including vaccination requirements, implementation of travel bans,
stay-at-home orders, border closures, and closures of offices, factories, schools, public buildings and businesses. These
measures may disrupt the supply chain and may interfere with the ability of our employees, vendors, technology
equipment suppliers, data and disaster recovery centers, and other service providers to perform their respective
responsibilities and obligations relative to the conduct of our business. In addition to uncertain expenses and impacts to
our business we may incur due to COVID-19 as part of us providing a safe and healthy work and trading environment,
employees working remotely from different locations and in connection with our return to our offices, we may also be
subject to claims from employees or customers alleging failure to maintain safe premises and restrictions with respect to
protocols relating to COVID-19. Further, changes in trading behavior, impacts to trading behavior due to market
disruptions, additional temporary suspensions of open outcry trading, temporary regulatory measures and other future
developments caused by the effects of COVID-19, including a re-occurrence of cases and the emergence of variants,
could impact trading volumes and the demand for our products, market data and services, which could have a material
adverse effect on our business, financial condition, operating results and cash flows and could heighten many of the other
risks described herein.
Our operations outside of the U.S. expose us to currency risk.
In addition to our operations in the U.S., we have operations in the UK, continental Europe, Canada, Hong Kong,
Australia, Japan, Philippines, and Singapore. We, therefore, have exposure to exchange rate movements between the
British pound, the Euro, the Canadian dollar, the Hong Kong dollar, the Australian dollar, the Japanese Yen, the
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Philippine Peso, and the Singapore dollar against the U.S. dollar. Significant inflation or changes in foreign exchange
rates with respect to one or more of these currencies could occur as a result of general economic or political conditions,
acts of war or terrorism, changes in governmental monetary or tax policy, or changes in local interest rates. These
exchange rate differences would affect the translation of our non-U.S. results of operations and financial condition into
U.S. dollars as part of our consolidated financial statements.
We and our licensors may not be able to protect our respective intellectual property rights.
We rely on patent, trade secret, copyright and trademark laws, the law of the doctrine of misappropriation and
contractual provisions to protect our proprietary technology, proprietary products, index methodologies and other
proprietary rights. In addition, we rely on the intellectual property rights of our licensors in connection with our listing of
exclusively-licensed index options and futures products. We and our licensors may not be able to prevent third parties
from copying, or otherwise obtaining and using, our intellectual property without authorization, listing our proprietary or
exclusively-licensed index products without licenses or otherwise infringing on our rights. We and our licensors may have
to rely on litigation to enforce our intellectual property rights, determine the validity and scope of the proprietary rights of
others or defend against claims of infringement or invalidity. We and our licensors may not be successful in this regard.
Such litigation, whether successful or unsuccessful, could result in substantial costs to us, diversion of our resources or a
reduction in our revenues, any of which could materially adversely affect our business.
Our clearinghouse operations expose us to associated risks, including credit, liquidity, market and other risks
related to the defaults of clearing participants and other counterparties.
We are subject to risks related to operating our clearinghouse, EuroCCP, including the risks of failing to meet strict
business continuity requirements and regulatory oversight, risks of default by clearing participants and counterparties, due
to bankruptcy, lack of liquidity, operational failure or other reasons, and the risks associated with the adequacy of
participants’ margin and default funds. These risks could subject our business to substantial losses, reputational harm,
regulatory consequences, including litigation, fines and enforcement actions, and the inability to operate our business,
including the continued development of the European derivatives buildout.
To mitigate the credit risks related to defaults of clearing participants and other counterparties, including the market
risk that we would only be able to close out a defaulting participant’s positions at a loss, there are minimum participation
criteria to become a clearing participant and clearing participants are required to provide collateral to cover the margin
requirement and default fund contributions. No guarantee can be given that the collateral provided will at all times be
sufficient or provide absolute assurance against us experiencing financial losses from defaults by the participants or
counterparties on their obligations. In addition, although such collateral is preferably held in European central banks and
central securities depositories, there are occasions where commercial banks are used, which can expose us to risk of
default by those banks. In addition, EuroCCP entered into a €1.5 billion committed syndicated multicurrency revolving and
swingline credit facility that is available to be drawn by EuroCCP towards (a) financing unsettled amounts in connection
with the settlement of transactions in securities and other items processed through EuroCCP’s clearing system and
(b) financing any other liability or liquidity requirement of EuroCCP incurred in the operation of its clearing system,
however we can give no assurance that this facility will be sufficient to meet all such obligations or sufficiently mitigate
EuroCCP’s liquidity risk to meet its payment obligations when due. Substantial amounts of the collateral, and any
amounts drawn under this facility, may be at risk if a clearing participant defaults on its obligations to our clearinghouse
and its margin and default fund deposits are insufficient to meet its obligations. This facility is expected to terminate on
June 30, 2022 and we may not be able to enter into a replacement facility on commercially reasonable terms, or at all. We
cannot assure you that the mitigating measures, policies, safeguards and risk management procedures will be sufficient
to detect problems or to protect us from a default or that we will not be materially and adversely affected in the event of a
significant default.
Computer and communications systems failures and capacity constraints could harm our reputation and our
business.
Our business depends on the integrity and performance of our computer and communications systems. If our
systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated
disruptions in service, slower response times and delays in the introduction of new products and services. These
consequences could result in trading outages, lower trading and clearing volumes, financial losses, decreased customer
service and satisfaction and regulatory sanctions and could have a material adverse effect on our ability to conduct our
business. Although we have a back-up plan with respect to our significant trading and key corporate systems, the back-up
systems or disaster recovery plans may prove to be inadequate in the event of a systems failure or cyber-security breach.
Despite having disaster recovery facilities, there can be no guarantees that we will be able to open an efficient,
transparent and liquid marketplace, if we can open at all, following a systems failure. Moreover, with extended trading
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hours, we have to operate our systems longer and have fewer non-trading hours to address any potential concerns with
the systems on which we rely.
Our markets and clearinghouse have experienced occasional systems failures and delays in the past and in the
future our systems may fail, in whole or in part, or may operate slowly, causing one or more of the following:
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unanticipated disruption in service to our participants;
failures or delays during peak trading times or times of unusual market volatility;
slower response times and delays in trade execution, clearing and processing;
incomplete or inaccurate accounting, recording, clearing or processing of trades; and
distribution of inaccurate or untimely market data to participants who rely on this data in their trading activity.
Any of these events may cause:
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a loss in transaction, clearing or other fees due to the inability to provide services for a time;
requests by market participants or others that we reimburse them for financial loss, either within the constraints
of the limited liability provisions of our exchanges’ rules or in excess of those amounts;
trading and clearing volumes to diminish on our markets and clearinghouse due to dissatisfaction with the
platforms; and
one or more of our regulators to investigate or take enforcement action against us.
As a consequence of any of these events, our business, financial condition and results of operations could suffer
materially.
In addition to other measures, we test our systems to confirm whether they will be able to handle anticipated present
and future peak trading and clearing activity or times of unusual market volatility. However, we cannot assure you that our
estimates of future trading or clearing volume will be accurate or that our systems will always be able to accommodate
actual trading or clearing volume without failure or degradation of performance.
We anticipate that we will need to continue to make significant investments in hardware, software and
telecommunications infrastructure to accommodate the increases in traffic. If we cannot increase the capacity and
capabilities of our systems to accommodate increasing trading or clearing activity and to execute our business strategy,
our ability to maintain or expand our businesses would be materially adversely affected.
Our use of open source software code may subject our software to general release or require us to re-engineer
our software, which could harm our business.
Our technology platform uses open source software code. Companies that incorporate open source software into
their products have, from time to time, faced claims challenging the ownership of open source software. As a result, we
could be subject to suits by parties claiming ownership of what we believe to be open source software. In addition, some
open source software licenses require users who distribute open source software as part of their software to publicly
disclose all or part of the source code in their software and make any derivative works of the open source code available
on unfavorable terms or at no cost. Open source license terms may be ambiguous, and many of the risks associated with
usage of open source software cannot be eliminated. We believe that our use of open source software is in compliance
with the relevant open source software licenses and does not require disclosure of any of our source code. However, if we
were found to have inappropriately used open source software, we may be required to release our proprietary source
code, re-engineer or discontinue use of our software or take other remedial action any or all of which could cause
disruptions in, or impose significant costs on, our business.
Damage to our reputation could have a material adverse effect on our business, financial condition and operating
results.
We believe one of our competitive strengths is our strong industry reputation. Various issues may give rise to
reputational risk, including issues relating to:
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the representation of our business in the media;
the quality and benefits of using our proprietary products, including the reliability, integrity and functionality of our
transaction-based business and index calculations and the accuracy of our market data;
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the ability to execute our business plan, key initiatives or new business ventures and the ability to keep up with
changing customer demands and regulatory initiatives;
our regulatory compliance and our enforcement of compliance on our customers;
the accuracy of our financial statements and other financial and statistical information;
the quality of our corporate governance structure;
the quality of our disclosure controls and internal controls over financial reporting, including any failures in
supervision;
the integrity and performance of our computer and communications systems;
the ability to successfully complete technology migrations;
the failure to successfully expand into new asset classes, such as the digital asset space or U.S. Treasuries, or
new geographies;
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security breaches, including any unauthorized delivery of proprietary data to third parties;
• management of our outsourcing relationships, including our relationship with FINRA and NFA;
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any misconduct or fraudulent activity by our employees, especially senior management, or other persons
formerly or currently associated with us;
our listings business and our enforcement of our listing rules; and
any negative publicity surrounding the ETPs that we serve as the listing destination.
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Damage to our reputation could cause a reduction in the trading volume of our proprietary products or on our markets
or cause us to lose customers. This, in turn, may have a material adverse effect on our business, financial condition and
operating results.
Financial or other problems experienced by third parties could have an adverse effect on our business.
We are exposed to credit risk from third parties, including customers, clearing agents and counterparties. For
example, we are exposed to credit risk for transaction fees we bill to customers on a monthly basis in arrears. Our
customers and other third parties may default on their obligations to us due to a lack of liquidity, operational failure,
bankruptcy or other reasons. For additional credit risks related to our clearinghouse operations, see the Risk Factor “Our
clearinghouse operations expose us to associated risks, including credit, liquidity, market and other risks related to the
defaults of clearing participants and other counterparties.”
In addition, with respect to orders Cboe Trading routes to other markets for execution on behalf of our customers,
Cboe Trading is exposed to counterparty credit risk in the case of failure to perform on the part of our routing and clearing
firms that are involved in processing equities and options transactions on our behalf, as well as failure on the part of such
brokers to pass back any transactional rebates. Wedbush and Morgan Stanley guarantee equity trades until one day after
the trade date, after which time NSCC provides a guarantee. Thus, Cboe Trading is potentially exposed to credit risk to
the counterparty to an equity trade routed to another market center between the trade date and one day after the trade
date in the event that Wedbush or Morgan Stanley fails to perform. Additionally, BIDS Trading has counterparty credit risk
exposure to BOA related to clearing until the day following the trade date, after which time NSCC provides a guarantee.
With respect to U.S. listed equity options and futures, we deliver matched trades of our customers to the OCC, which acts
as a central counterparty on all transactions occurring on Cboe Options, C2, BZX, EDGX, and CFE and, as such,
guarantees clearance and settlement of all of our matched options and futures trades. With respect to Canadian equities,
we deliver reports of matched trades of our customers to CDS, which acts as a central counterparty on all transactions
occurring on MATCHNow and, as such, guarantees clearance and settlement of all of our matched Canadian equities
trades. With respect to Australian equities and derivatives, we deliver matched trades of our customers to ASX Clear Pty
Ltd and ASX Settlement Pty Ltd. ASX Clear Pty Ltd acts as a central counterparty on all transactions occurring on Cboe
Australia and, as such, guarantees clearance and settlement on all of our matched trades in Australia. With respect to
Japanese equities, we deliver matched trades of our customers to the JSCC, which acts as a central counterparty on all
transactions occurring on Cboe Japan and, as such, guarantees clearance and settlement on all of our matched trades in
Japan.
With respect to routed U.S. equity transactions, Cboe Trading has counterparty credit risk exposure to Wedbush and
Morgan Stanley related to clearing until the day following the trade date. Cboe Trading uses Wedbush to clear trades
routed through affiliates of Credit Suisse Securities (USA) LLC as well as for trades routed directly to other exchanges
and optionally dark pools. Morgan Stanley clears trades routed through the Morgan Stanley routing brokers and also
clears executions routed to most dark pools. Cboe Trading maintains counterparty credit risk exposure from routing
brokers with respect to rebates earned until completion of the routing brokers next invoice cycle following the execution.
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With respect to U.S. listed equity and exchange traded product options, Cboe Trading is subject to counterparty
credit risk exposure with respect to rebates earned from routing brokers until completion of the routing brokers’ next
invoice cycle has completed for an execution.
Our exposure to credit risk may be further impacted by volatile securities markets that may affect the ability of our
customers, counterparties and other third parties to satisfy their obligations to us. Moreover, we may not be successful in
managing our credit risk through mitigating measures, policies, safeguards and risk management procedures, reporting
and control procedures or by maintaining credit standards. Any losses arising from such defaults or other credit losses
could materially adversely affect our financial condition and operating results.
While neither Cboe FX nor Cboe SEF has direct counterparty risk, Cboe FX or Cboe SEF may suffer a decrease in
transaction volume if a bank or prime broker experiences an event that causes other prime brokers to decrease or revoke
the credit available to the prime broker experiencing the event. Therefore, Cboe FX and Cboe SEF may have risk that is
related to the credit of the banks and prime brokers that trade spot FX on the Cboe FX platform, or NDFs on Cboe SEF.
We may be required to assume ownership of a position in securities in connection with our order routing service,
which could subject us to trading losses when our broker-dealer disposes of that position.
We offer a smart-order routing service through our broker-dealer subsidiary, Cboe Trading, which provides its
customers with access to other market centers when we route their orders to those market centers for execution. In
connection with this service, we may assume ownership of a position in securities. This may occur, for example, when a
market center to which we have routed a customer’s order experiences systemic issues and is unable to determine the
status of that order. When this happens, we may make a business decision to provide a cancellation notice to our
customer, relieving our customer of any liability with respect to the order. We may be informed later, however, that the
order was executed at the market center to which we routed it, in which case Cboe Trading would be required to take
ownership of that securities position. Our third party clearing brokers maintain error accounts on behalf of Cboe Trading
into which such positions settle, and we require the respective clearing broker to trade out of those positions as
expeditiously as possible, which could result in our incurring trading losses.
We may not effectively manage our growth, which could materially harm our business, financial condition and
operating results.
We expect that our business will continue to grow, which may place a significant strain on our management,
personnel, systems and resources. We must continually improve our operational, financial and regulatory systems and
managerial controls and procedures, and may need to continue to expand, train and manage our workforce. We must
also maintain close coordination among our technology, legal, accounting, finance, marketing, sales, regulatory and
compliance functions. If we fail to manage our growth effectively, our business, financial condition and operating results
could be materially harmed. Furthermore, failure to successfully expand into new asset classes, such as the digital asset
space or U.S. Treasuries, or new geographies may materially adversely affect our growth strategy and our future
profitability.
Our continued growth will require increased investment by us in technology, facilities, personnel, and financial and
management systems and controls. It also will require expansion of our procedures for monitoring and assuring our
compliance with applicable regulations, and we will need to integrate, train and manage a growing employee base. The
expansion of our existing businesses, any expansion into new businesses and the resulting growth of our employee base
will increase our need for internal audit and monitoring processes, which may be more extensive and broader in scope
than those we have historically required. We may not be successful in identifying or implementing all of the processes that
are necessary. Further, unless our growth results in an increase in our revenues that is proportionally greater than or
equal to the increase in our costs associated with this growth, our business, financial condition and operating results may
be materially adversely affected.
We selectively explore acquisition opportunities and strategic alliances relating to other businesses, products or
technologies. We may not be successful in integrating other businesses, products or technologies with our
business. Any such transaction also may not produce the results we anticipate, which could materially adversely
affect our business, financial condition and operating results.
We selectively explore and pursue acquisition and other opportunities to strengthen our business and grow our
Company. We may enter into business combination transactions, make acquisitions or enter into strategic partnerships,
joint ventures or alliances, any of which may be material. The market for acquisition targets and strategic alliances is
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highly competitive, which could make it more difficult to find appropriate merger or acquisition opportunities. If we are
required to raise capital by incurring debt or issuing additional equity for any reason in connection with a strategic
acquisition or investment, financing may not be available or the terms of such financing may not be favorable to us and
our stockholders, whose interests may be diluted by the issuance of additional stock.
For example, at the end of 2021, we announced the planned acquisitions of ErisX, an operator of a U.S. based digital
asset spot market, a regulated futures exchange and a regulated clearinghouse, and NEO, a Canadian securities
exchange with a diverse product and services set ranging from corporate listings to cash equity trading. These planned
acquisitions are expected to close in the first half of 2022, subject to regulatory approvals and other customary closing
conditions. Further, in 2021 we purchased Chi-X Asia Pacific, a holding company of alternative market operators in
Australia and Japan, and in 2020, we purchased Hanweck and the assets of FT Options, which are providers of risk
analytics market data, the assets of Trade Alert, a real-time alerts and order flow analysis service provider, EuroCCP, an
operator of a European clearinghouse, and MATCHNow, an operator of an equities ATS in Canada. At the end of 2020,
we also purchased BIDS Trading, a registered broker-dealer and operator of the BIDS ATS in the U.S., which is not a
registered national securities exchange or a facility thereof. Cboe intends to maintain the BIDS ATS as an independently
managed and operated trading venue, separate from and not integrated with the Exchanges.
The process of integration, including in new geographies and asset classes with new regulatory regimes, may expose
us to a number of unforeseen risks and operating difficulties, including risks relating to information technology integration
and security, regulatory issues and employee issues, and may divert the attention of management from the ongoing
operation of our business and harm our reputation. We may not successfully achieve the integration objectives, and we
may not realize the anticipated cost savings, revenue growth and synergies in full or at all, or it may take longer to realize
them than expected, any of which could negatively impact our business, financial condition and operating results.
For additional risks related to our potential consummation of the ErisX acquisition, see the Risk Factors Section
entitled “Risks Relating to Our Business Following Consummation of ErisX Acquisition” below.
Risks Relating to Legal and Regulatory Matters
We operate in a highly regulated industry and may be subject to censures, fines and other legal proceedings if
we fail to comply with legal and regulatory obligations.
Cboe Options, C2, BZX, BYX, EDGX, and EDGA are registered national securities exchanges and SROs, and, as
such, are subject to comprehensive regulation by the SEC. CFE is a DCM and Cboe SEF is a SEF, each registered with
the CFTC and subject to comprehensive regulation by the CFTC. In addition to its other SRO responsibilities, BZX, as a
listing market, also is responsible for evaluating applications submitted by issuers interested in listing their securities on
BZX and monitoring each issuer’s compliance with BZX’s continued listing standards. The Exchanges may be subject to
additional responsibilities in other international jurisdictions where the Exchanges may be authorized to act as foreign
exchanges. Failure to comply with these SRO and other responsibilities could result in potential sanctions or fines and a
negative impact on Cboe’s reputation and/or branding.
Our European businesses are subject to regulatory oversight in the UK by the FCA and in the Netherlands by the
DNB and the AFM, which, through the “passporting” regime, provides authorization to carry on business in other Member
States of the EU and the EEA in accordance with the applicable EU legislation and regulation to which our European
business is subject. MATCHNow is subject to regulatory oversight in Canada by the IIROC and the OSC. Cboe Australia
is subject to regulatory oversight in Australia by the ASIC. Cboe Japan is subject to regulatory oversight in Japan by the
JFSA and the JSDA. BIDS Trading is a registered broker-dealer subject to regulatory oversight in the U.S. by the SEC
and FINRA and is expected to be maintained as an independently managed and operated trading venue, separate from
and not integrated with the SROs. The Chief Executive Officer of BIDS Trading is expected to lead BIDS Trading as an
independent business within Cboe, reporting into an independent committee of the Board of Directors of Cboe Global
Markets. If a regulatory authority makes a finding of non-compliance, conditional fines could be imposed, and our licenses
could be revoked. Any such fine or revocation of a license could have a material adverse effect on our business, financial
condition and operating results.
In addition to the requirements related to operating our U.S. markets imposed by the SEC and the CFTC, we also
have certain responsibilities for regulating the TPHs and members that trade on our Exchanges. While we have entered
into agreements under which FINRA, with respect to our options and equities exchanges provides certain regulatory
services, we retain ultimate responsibility for the regulation of our TPHs and members. We have begun to perform
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internally more of the regulatory services that FINRA used to handle and now perform internally the regulatory functions
that NFA previously handled on behalf of CFE.
Our ability to comply with applicable laws and rules is largely dependent on the establishment and maintenance of
appropriate systems and procedures, our ability to attract and retain qualified personnel, the ability of FINRA and OCC to
perform under their respective RSAs, the ability of FINRA and OCC to transition to us any other potential responsibilities
under their respective RSAs, our ability to complete the new additional responsibilities for regulating our TPHs and
members and our oversight of the work done by FINRA and OCC. The SEC and CFTC have broad powers to audit,
investigate and enforce compliance and to punish noncompliance by, as applicable, SROs, DCMs and SEFs pursuant to
applicable laws, rules and regulations.
If a regulatory authority were to find one of our programs of enforcement or compliance to be deficient, our SROs,
DCM, or SEF could be the subject of investigations and enforcement proceedings that may result in substantial sanctions,
including revocation of registration as a national securities exchange, DCM, or SEF. Any such investigations or
proceedings, whether successful or unsuccessful, could result in substantial costs, the diversion of resources, including
management time, and potential harm to our reputation, which could have a material adverse effect on our business,
financial condition and operating results. In addition, our SROs, DCM, or SEF may be required to modify or restructure
their regulatory functions in response to any changes in the regulatory environment, or they may be required to rely on
third parties to perform regulatory and oversight functions, each of which may require us to incur substantial expenses
and may harm our reputation if our regulatory services are deemed inadequate.
In addition, SROs are required by federal law to perform a variety of regulatory functions. In light of these
responsibilities, some courts have held that SROs are immune to certain private causes of action relating to the
performance of these regulatory functions. There is a risk that some courts may not apply this immunity doctrine to all
claims. There is also a risk that legislative or regulatory developments may change the application of this immunity
doctrine. Limitations on the application of the immunity doctrine could result in an increased exposure to litigation, and
increase liability and/or other legal expenses. Further under the Commodity Exchange Act, CFE and Cboe SEF may be
subject to litigation alleging that they have acted in bad faith. We also could be exposed to liability to regulators or other
governmental authorities even in situations where immunity would bar a civil claim.
Legislative or regulatory changes affecting our markets could have a material adverse effect on our business,
financial condition and operating results.
Changes in regulation by the SEC, CFTC, FCA, Central Bank of the Netherlands (“DNB”), AFM, IIROC, OSC, ASIC,
JFSA, JSDA, other foreign regulators or other government action, including SEC approval of rule filings by other SROs or
entities, including OCC, could materially affect our markets, products and clearinghouse. In recent years, the securities
and derivatives industries have been subject to regulatory changes as a result of increasing government and public
scrutiny of the securities and derivatives industries. We have also experienced, and we may also experience due to
changes in administrations in the U.S. and expansion into other asset classes, such as the digital asset space or U.S.
Treasuries and geographies, an increase in rulemaking and legislation that could affect our business.
Further, Congress, regulators and some media have been increasingly scrutinizing electronic trading, payment for
order flow and other forms of remuneration, and the structure of equity markets in recent years. The SEC continues to
consider various potential market structure changes, which could result in reduced trading volumes, or which could
negatively affect our business. To the extent the SEC adopts regulatory changes, our business, financial condition and
operating results could be negatively impacted. In addition, high frequency trading has been the subject of private
litigation and we are party to one such matter. See Note 23 (“Commitments, Contingencies, and Guarantees—Legal
Proceedings”) for more information. To the extent the SEC adopts additional regulatory changes related to market data
and access and capacity, our business, financial condition and operating results could be negatively impacted.
Under EU and UK regulations, European and UK banks and other European and UK financial institutions become
subject to punitive capital charges if they transact options or futures through a third country central counterparty (“CCP”)
that is not recognized in the applicable jurisdiction. OCC, our clearinghouse for U.S. options and futures, is not currently
recognized as a third country CCP by the EU or the UK. However, the European Commission has issued equivalency
determinations for CCPs regulated by the CFTC and SEC, which includes OCC, and OCC’s application for recognition as
a third country CCP in the EU is pending. The UK has not issued any equivalency determination with respect to U.S.
CCPs, and accordingly OCC has not yet submitted its application for recognition in the UK but is instead operating under
the UK’s temporary recognition regime. As a prerequisite to ultimately achieving recognition in the EU or UK, it is possible
that OCC could be required by the EU or UK to contribute capital to its default waterfall applicable in the event of clearing
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member default. This capital could be required to be drawn before the default fund contributions of non-defaulting clearing
members in the event that a defaulting clearing member’s margin and other contributions were to be exhausted. OCC’s
stockholders, including Cboe Options, could effectively be required to fund this capital. If the EU or UK do not recognize
OCC as a third country CCP, then European or UK market participants that clear through OCC would become subject to
punitive capital charges. As a result, we could experience the loss of a significant number of European or UK market
participants and a significant reduction in trading activity on our options and futures markets, which could have a material
adverse effect on our business, financial condition and operating results.
The implementation of MiFID II and MiFIR in Europe at the beginning of 2018 has encouraged competition among
market centers in Europe. MiFID II and MiFIR have introduced a number of new rules, including enhanced internal
organizational and compliance monitoring requirements, which apply directly to European trading venues such as our
MTF and RM. The impact of MiFID II and MiFIR is significant, and the increased competition among market centers could
reduce trading volumes and trading fees, while increasing our costs of operating in Europe. Additionally, European
authorities are planning to continue to review MiFID in the second half of 2021 as a result of which new rules may come
into effect that could have a material impact on our business.
As discussed above, in 2021 the E.C. and ESMA published proposals for the review of EU market structure, including
provisions for a consolidated tape for the EU, changes to the transparency regime for equities, increased pre-trade
transparency for periodic auctions, and post-trade flagging. These proposals are expected to be implemented from the
middle of 2022 to late 2023 or early 2024. As proposed, these new rules may have a material adverse effect on our
business, financial condition and operating results.
The legislative and regulatory environment in which the spot FX market operates is evolving and has undergone
significant changes in the recent past, and there may be future regulatory changes in the spot FX industry. The FX Global
Code was published in 2017 and sets forth standards of conduct agreed by market participants and central banks on a
global basis to apply to the wholesale FX market, and the effect of its publication on conduct and future regulation
continues to evolve. Cboe FX issued a Statement of Commitment declaring its commitment to conduct its FX market
activities in a manner consistent with the principles of the FX Global Code. Amendments to the FX Global Code, changes
in the interpretation or enforcement of existing laws and regulations by applicable governmental bodies and regulatory
organizations, or the adoption of new legal or regulatory requirements, may also adversely affect our spot FX business.
Further, our FX NDF business may also be adversely affected by proposed regulatory changes to the rules governing
swap execution facilities.
It is also possible that there will be additional legislative and regulatory changes or efforts in the environment in which
we operate, or plan to operate, our businesses. Actions on any of the specific regulatory issues currently under review in
the U.S. or internationally and other proposals could have a material impact on our business.
In addition, U.S. and foreign legislatures and regulators could impose legislative or regulatory changes that could
materially adversely impact the ability of our market participants to use our markets or participate in the securities industry
at all. Any such changes could result in the loss of a significant number of market participants or a reduction in trading
activity on our markets, either of which could have a material adverse effect on our business, financial condition and
operating results. Changes or proposed changes in regulation may also result in additional costs of compliance and
modification of market participants’ trading activity on our Exchanges and markets.
Any infringement by us on intellectual property rights of others could result in litigation and could have a
material adverse effect on our operations.
Our competitors, as well as others, have obtained, or may obtain, patents or may otherwise hold intellectual property
rights that are related to our technology or the types of products and services we offer or plan to offer. We may not be
aware of all intellectual property that may pose a risk of infringement by our products, services or technologies. In
addition, some potential patent applications in the U.S. are confidential until a patent is issued, and therefore we cannot
evaluate the extent to which our products, services or technologies may be covered or asserted to be covered in pending
patent applications. Thus, we cannot be sure that our products, services or technologies do not infringe on the rights of
others or that others will not make claims of infringement against us. Claims of infringement are not uncommon in our
industry, and even if we believe that such claims are without merit, they can be time-consuming and costly to defend and
divert management resources and attention. If one or more of our products, services or technologies were determined to
infringe a patent or other intellectual property right held by another party, we may be required to pay damages, stop using,
developing or marketing those products, services or technologies, obtain a license from the intellectual property rights
holders, or redesign those products, services or technologies to avoid infringement. If we were required to stop using,
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developing or marketing certain products, services or technologies, our business, financial condition and operating results
could be materially harmed. Moreover, if we were unable to obtain required licenses, we may not be able to redesign our
products, services or technologies to avoid infringement, which could materially adversely affect our business, financial
condition and operating results.
Misconduct by our TPHs, members, participants or others could harm us.
We run the risk that our TPHs, members, participants, other persons who use our markets or our products, other
persons for whom we clear transactions, our employees or those with which we have business relationships may engage
in fraud, market or product manipulation, or other misconduct, which could result in regulatory and legal sanctions and
penalties and serious harm to our reputation, especially because we are the parent company of SROs. It is not always
possible to deter misconduct, or market or product manipulation, and the precautions we take to prevent and detect this
activity may not be effective in all cases. In addition, misconduct, or market or product manipulation by, or failures of,
participants on our or other exchanges may discourage trading on our Exchanges or of our products, which could reduce
revenues.
Potential conflicts of interest between our for-profit status and our regulatory responsibilities may adversely
affect our business.
As a for-profit business with regulatory responsibilities, we are responsible for disciplining TPHs and members for
violating our rules, including by imposing fines and sanctions. This may create a conflict of interest between our business
interests and our regulatory responsibilities. Any failure by us to fulfill our regulatory obligations could significantly harm
our reputation, increase regulatory scrutiny or cause the SEC or CFTC to take action against us, all of which could
materially adversely affect our business, results of operations or financial condition.
BIDS Trading’s ability to operate under its current regulatory framework is dependent upon the sufficiency of a
novel operational and governance framework we have developed to govern our relationship with BIDS Trading
and our ability to comply with such framework and if we fail to adhere to such framework or the BIDS Trading
ATS is otherwise deemed a “facility” of our registered national securities exchanges, our business, financial
condition and operating results may be adversely affected.
The U.S. equities ATS operated by BIDS Trading is regulated as a broker-dealer sponsored alternative trading
system and not a registered national securities exchange. Because we acquired BIDS Trading, it is now under common
ownership with our registered national securities exchanges that, in some cases, offer trading in the same securities as
those traded on the BIDS Trading ATS. Absent sufficient separation, this common ownership of an ATS and registered
national securities exchanges offering trading in the same securities presents the potential for the BIDS Trading ATS to
be deemed a “facility” of our registered national securities exchanges. If the BIDS Trading ATS were to be deemed to be
a “facility” of our registered national securities exchanges, certain exchange regulations could be extended to the BIDS
Trading ATS, which could have a material adverse impact on BIDS Trading’s business model. This could reduce the BIDS
Trading ATS’ competitiveness and volumes and could result in a reduction of the value of the BIDS Trading ATS to us.
This could also potentially result in fines or other penalties being assessed against us for our failure to operate the BIDS
Trading ATS as a “facility,” which could have a material adverse effect on our business, financial condition and operating
results.
To mitigate the risk that the BIDS Trading ATS is deemed a “facility” of our registered national securities exchanges,
we have developed and implemented an operational and governance framework for our ownership of BIDS Trading that is
intended to preserve the strategic, technological, business, and operational independence of the BIDS Trading ATS from
our registered national securities exchange businesses, such that the BIDS Trading ATS and our registered national
securities exchanges would not be deemed to be integrated or otherwise linked for “facility” purposes. This framework is
supported by highly detailed policies, procedures and controls. However, because of the lack of precedent for common
ownership of an ATS and registered national security exchanges offering trading in the same securities, there is risk that
our framework and supporting policies, procedures and controls could be deemed to be insufficient to prevent the BIDS
Trading ATS from being deemed to be a “facility” of our registered national securities exchanges. In addition, because of
the comprehensive and highly detailed nature of our framework and supporting policies, procedures and controls, there is
risk that we could inadvertently fail to fully adhere to our operational and governance framework and related policies,
procedures and controls. There is also risk that new legislation or regulation, or changes in existing regulation or other
government action, relating to “facilities” of registered national securities exchanges and/or the common ownership of an
ATS and registered national securities exchanges offering trading in the same securities could materially affect our ability
to own and operate the BIDS Trading ATS under the current operational and governance framework, including without the
BIDS Trading ATS being deemed a “facility” of our registered national securities exchanges. Occurrence of any of the
45
risks described in this paragraph could result in the BIDS Trading ATS being deemed to be a “facility” of our registered
national securities exchanges, which could reduce the BIDS Trading ATS’ competitiveness and volumes and could result
in a reduction of the value of the BIDS Trading ATS to us, and could also potentially result in fines or other penalties being
assessed against us for our failure to operate the BIDS Trading ATS as a “facility,” which could have a material adverse
effect on our business, financial condition and operating results.
If our risk management and compliance methods are not effective, our business, financial condition and
operating results may be adversely affected.
Our ability to comply with applicable laws and rules is largely dependent on our establishment and maintenance of
compliance, risk, audit, and reporting systems and procedures, as well as our ability to attract and retain qualified
compliance, risk and audit management personnel. These systems and procedures may not be fully effective. We face
the risk of intervention by regulatory authorities, including extensive examination and surveillance activity. In the case of
actual or alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or
administrative proceedings that may result in penalties, settlements or civil lawsuits, including by customers, or third
parties, for damages, which may be substantial. For example, the SEC has previously brought actions against exchange
operators, including us, for failing to fulfill their obligations to have an effective regulatory system. Any failure to comply
with applicable laws and rules could materially adversely affect our business, reputation, financial condition and operating
results and, in extreme cases, our ability to conduct our business or portions thereof. As the parent company for SROs,
other markets, and a clearinghouse, we are responsible for maintaining markets that comply with securities and futures
laws, SEC, FCA, AFM, DNB, IIROC, OSC, ASIC, JFSA, JSDA, ESMA, and CFTC regulations and the rules of the
respective exchanges, markets and clearinghouse.
We have methods to identify, monitor and manage our risks. Management of legal, compliance, and regulatory risk,
among other risks, requires policies and procedures to properly monitor and manage risk. If our policies, procedures, and
compliance systems are not effective or we are not successful in monitoring or evaluating the risks to which we are or
may be exposed, our business, reputation, financial condition and operating results could be materially adversely
affected. We cannot provide assurance that our policies and procedures will always be effective, or that our management,
compliance department, risk department and related enterprise risk management program and internal audit department
would be able to identify any such ineffectiveness. If these departments or the enterprise risk program, and related
policies and procedures are not effective, we may be subject to monetary or other penalties by our regulators, and our
insurance policies may not provide adequate coverage.
Our ability to implement or amend rules could be limited or delayed because of regulation, which could
negatively affect our ability to implement needed changes.
Our Exchanges registered with the SEC must submit proposed rule changes to the SEC for its review and, in many
cases, its approval. Even where a proposed rule change may be effective upon filing with the SEC, the SEC retains the
right to suspend and disapprove such a rule change. Also, the CFTC may stay or disapprove rules that we file with it for
CFE or Cboe SEF. The rule review process can be lengthy and can significantly delay the implementation of proposed
rule changes that we believe are necessary to the operation of our markets. If the SEC or CFTC delays, including
because of a government shutdown, or does not allow one of our Exchanges to implement a rule change, this could
negatively affect our ability to make needed changes or implement business activities.
Similarly, the SEC must approve amendments to our exchange subsidiaries’ certificates of incorporation and bylaws
as well as certain amendments to the certificate of incorporation and bylaws of Cboe Global Markets. The SEC may
decide not to approve a proposed amendment or may delay such approval in a manner that could negatively affect our
ability to make a desired change, which could prevent or delay us from improving the operations of our markets or
recognize income from new products.
Changes in the tax laws and regulations affecting us, our products and our market participants could have a
material adverse effect on our business.
Legislation may be proposed, both domestically and internationally, that could add a transaction tax on our products
or change the way that our market participants are taxed on the products they trade on our markets. More recently, a
number of federal, state and local jurisdictions in the U.S. and EU Member States have considered a financial transaction
tax, but many details remain to be discussed and agreed, including how to assess the tax. Additionally, the proposed
Modernization of Derivatives Tax Act of 2021 would introduce in the U.S. mark-to-market tax treatment for all derivatives
contracts and require gains and losses be taxed at ordinary income tax rates. If such proposals were to become law, they
46
could have a negative impact on the securities industry and on us by making transactions more costly to market
participants, which may impact derivatives trading behavior, reduce trading or clearing and could make our markets less
competitive, and they could result in a reduction in volumes and liquidity, which would have a negative impact on our
operations.
In addition to proposed tax changes that could affect our market participants, like other corporations, we are subject
to taxes at federal, state and local levels, as well as in non-U.S. jurisdictions. Changes in tax laws, regulations or policies
or successful claims by tax authorities could result in our having to pay higher taxes, which would in turn reduce our net
income. If this occurs, we may experience a higher effective tax rate.
We are subject to litigation risks and other liabilities.
Many aspects of our business involve substantial risks of litigation and other liabilities. Although under current law we
expect to be immune from private suits arising from conduct within our regulatory authority and from acts and
forbearances incident to the exercise of our regulatory authority, we expect this immunity will only cover certain of our
activities in the U.S., and we could be exposed to liability under foreign, national and local laws, court decisions and rules
and regulations promulgated by regulatory agencies.
Some of our other liability risks arise under the laws and regulations relating to the tax, employment, intellectual
property, anti-money laundering, technology export, cybersecurity, foreign asset controls, foreign corrupt practices,
employee labor and employment areas, including anti-discrimination and fair-pay laws and regulations. Liability could also
result from disputes over the terms of a trade executed on one of our markets, claims that a system failure or delay cost a
customer money, claims we entered into an unauthorized transaction or claims that we provided materially false or
misleading statements in connection with a transaction.
For example, we are subject to on-going legal disputes that could result in the payment of fines, penalties or
damages and could expose us to additional liability in the future. See Item 3 “Legal Proceedings” in this Annual Report for
a general description of our legal proceedings and claims and Note 23 (“Commitments, Contingencies, and Guarantees –
Legal Proceedings”) to the consolidated financial statements and related notes, which are included elsewhere in this
Annual Report, for a summary of specific legal proceedings.
Further, we could incur significant expenses vigorously defending the claims mentioned above (including those found
to be barred due to immunity) and any future claims, even those without merit, which could adversely affect our business,
financial condition and operating results. The outcomes of existing claims and any future claims cannot be determined
and an adverse resolution of any lawsuit or claim against us may require us to pay substantial damages or impose
restrictions on how we conduct business, either of which could adversely affect our business, financial condition and
operating results. In addition, we may have to establish accruals for those matters in circumstances when a loss
contingency is considered probable and the related amount is reasonably estimable. Any such accruals may be adjusted
as circumstances change.
Risks Related to Our Common Stock and Indebtedness
We have outstanding indebtedness, which may decrease our business flexibility and adversely affect our
business, financial condition and operating results.
As of December 31, 2021, we had $159.5 million outstanding under our term loan facility, $646.5 million of senior
unsecured notes due 2027, $493.3 million of senior unsecured notes due 2030, no funds outstanding under our revolving
credit facility and no funds outstanding under the EuroCCP credit facility. The financial and other covenants to which we
have agreed and our indebtedness may have the effect of reducing our flexibility to respond to changing business and
economic conditions, thereby placing us at a competitive disadvantage compared to competitors that have less
indebtedness and making us more vulnerable to general adverse economic and industry conditions. Further, we may
default on our obligations or violate the covenants, in which case, we may be required to seek a waiver of such default or
the debt obligations may be accelerated. A default under any of our indebtedness with cross default provisions could
result in a default on our other indebtedness. Our indebtedness may also increase future borrowing costs, and the
covenants pertaining thereto may also limit our ability to repurchase shares of our common stock, increase dividends or
obtain additional financing to fund working capital, capital expenditures, acquisitions or general corporate requirements.
We are also required to dedicate a larger portion of our cash flow from operations to payments on our indebtedness,
thereby reducing the availability of our cash flow for other purposes, including working capital, capital expenditures and
47
general corporate purposes. Further, a portion of our borrowings are at variable rates of interest, which exposes us to the
risk of increased interest rates unless we enter into offsetting hedging transactions.
Our ability to make payments on and to refinance our debt obligations and to fund planned capital expenditures
depend on our ability to generate cash from our operations. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are beyond our control.
We may not be able to refinance any of our indebtedness on commercially reasonable terms, or at all. If we cannot
service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or
delaying capital expenditures, strategic acquisitions, investments and alliances, any of which could impede the
implementation of our business strategy or prevent us from entering into transactions that would otherwise benefit our
business. Additionally, we may not be able to affect such actions, if necessary, on commercially reasonable terms, or at
all. Any of the foregoing consequences could materially adversely affect our business, financial condition and operating
results.
Deterioration in our credit profile may increase our costs of borrowing money.
As of December 31, 2021, we have investment grade credit ratings from S&P Global Ratings (A-) and Moody’s
Investor Service (A3). Ratings from credit agencies are not recommendations to buy, sell or hold our securities, and each
rating should be evaluated independently of any other rating. There is no assurance that we will maintain such credit
ratings, since credit ratings may be lowered or withdrawn entirely by a rating agency if, in its judgment, the circumstances
warrant. If a rating agency were to downgrade our rating below investment grade, our borrowing costs could increase.
If our goodwill, long-lived assets, investments in non-consolidated subsidiaries and intangible assets become
impaired, the resulting charge to earnings may be significant.
We are required to assess investments in non-consolidated subsidiaries and intangible assets for impairment at least
annually. Goodwill impairment testing is performed annually in the fiscal fourth quarter or more frequently if conditions
exist that indicate that the asset may be impaired. In the future, we may take charges against earnings resulting from
impairment. Any determination requiring the write-off of a significant portion of our goodwill, long-lived assets, intangible
assets or investments in non-consolidated subsidiaries could materially adversely affect our results of operations and
financial condition.
Any decision to pay dividends on our common stock is at the discretion of our Board of Directors and depends
upon the earnings and cash flow of our operating subsidiaries. Accordingly, there can be no guarantee that we
will pay dividends to our stockholders.
Any decision to pay dividends on our common stock in the future will be at the discretion of our Board of Directors,
which may determine not to declare dividends at all or at a reduced amount. The board’s determination to declare
dividends will depend upon our profitability and financial condition, contractual restrictions, restrictions imposed by
applicable law and the SEC and other factors that the board deems relevant. As a holding company with no significant
business operations of its own, Cboe Global Markets depends entirely on distributions, if any, it may receive from its
subsidiaries to meet its obligations and pay dividends to its stockholders. If these subsidiaries are not profitable, or even if
they are and they determine to retain their profits for use in their businesses, we will be unable to pay dividends to our
stockholders.
Certain provisions in our organizational documents and governing law could prevent or delay a change of
control.
Our organizational documents contain provisions that could block actions that stockholders might find favorable,
including discouraging, delaying or preventing a change of control or any unsolicited acquisition proposals for us. These
include provisions:
•
•
•
prohibiting stockholders from acting by written consent;
requiring advance notice of director nominations and of business to be brought before a meeting of stockholders;
and
limiting the persons who may call special stockholders’ meetings.
48
In addition, our organizational documents include provisions that:
•
•
restrict any person from voting or causing the voting of shares of stock representing more than 20% of our
outstanding voting capital stock; and
restrict any person from beneficially owning shares of stock representing more than 20% of the outstanding
shares of our capital stock.
Furthermore, our Board of Directors has the authority to issue shares of preferred stock in one or more series and to
fix the rights and preferences of these shares without stockholder approval. Any series of our preferred stock is likely to
be senior to our common stock with respect to dividends, liquidation rights and, possibly, voting rights. The ability of the
Board of Directors to issue preferred stock also could have the effect of discouraging unsolicited acquisition proposals,
thus materially adversely affecting the market price of our common stock.
Delaware law makes it difficult for stockholders that have recently acquired a large interest in a corporation to cause
the merger or acquisition of the corporation against the board’s wishes. Under Section 203 of the Delaware General
Corporation Law, a Delaware corporation may not engage in any merger or other business combination with an interested
stockholder for a period of three years following the date that the stockholder became an interested stockholder except in
limited circumstances, including by approval of the corporation’s Board of Directors.
Furthermore, the European countries where we operate regulated entities, such as the UK and Netherlands, may
require prior governmental approval before an investor acquires 10% or more of the outstanding shares of our common
stock.
Risks Relating to Our Business Following Consummation of Pending ErisX Acquisition
We may not realize the expected benefits of our pending acquisition of ErisX and the acquisition introduces
additional risks to our business due to its evolving business model.
We expect to acquire ErisX, a U.S.-based digital asset spot market, a regulated futures exchange and a regulated
clearinghouse, which we plan to rebrand as Cboe Digital following close. This planned acquisition is expected to close in
the first half of 2022, subject to regulatory approvals and other customary closing conditions. Leveraging digital asset data
from ErisX’s and our existing index calculation capabilities, we intend to develop and distribute digital asset indices for
potential use in exchange traded products and other derivative product opportunities. We also plan to develop a robust
market data offering based on actionable bid and offer prices from the ErisX spot crypto market, and ultimately intend to
develop a benchmark to help ErisX’s industry partners and other market participants evaluate the appropriateness of
crypto execution prices and offer digital asset trading to their clients. We expect to have increased financial and
reputational risks if there is a failure to develop and launch one or more of anticipated products resulting from this
potential acquisition, or if the development or launch of a new product is unsuccessful. Also, there can be no assurance
that we will be able to maintain the necessary regulatory approvals or receive support from market participants, industry
partners and users to develop and launch products as planned, that ErisX will continue to operate as anticipated, or that
we will realize the expected return on our investment. Furthermore, our potential investment in ErisX entails numerous
risks, including risks relating to our ability to:
• manage the complexity of its business model to stay current with the industry;
•
•
• maintain required licenses and regulatory approvals for its business.
successfully enter categories and markets in which it may have limited or no prior experience;
successfully develop and integrate products, systems or personnel into its business operations; and
In addition, we expect that certain market participants intend to acquire minority ownership interests in Cboe Digital
and to serve as partners in the growth of the business. If these market participants do not acquire minority ownership
interests or serve as partners in the growth of the business, then we may not be able to realize the expected return on our
investment. Insufficient participation from market participants in ownership and partnership may adversely affect the
ability of ErisX to operate as anticipated or grow, which may have a material adverse effect on our business following the
acquisition.
As digital assets technologies evolve, once under our management, ErisX may add, modify or discontinue certain
aspects of its business model relating to the product mix and service offerings. Future additions and modifications to
ErisX’s business will increase the complexity of its business and may place significant strain on ErisX’s management,
personnel, operations, systems, technical performance, financial resources and internal financial control and reporting
49
functions. We cannot offer any assurance that these or any other additions or modifications will be successful or will not
result in harm to our business following the acquisition. Additionally, sources of ErisX revenue are dependent on digital
assets and the broader blockchain ecosystem. Due to the highly volatile nature of the blockchain ecosystem and the
prices of digital assets, ErisX’s operating results have fluctuated, and may continue to fluctuate, significantly from period
to period in accordance with market sentiments and movements in the broader blockchain ecosystem.
Additionally, the blockchain ecosystem is highly innovative, rapidly evolving and characterized by intense
competition, experimentation and frequent introductions of new products and services, and is subject to uncertain and
evolving industry and regulatory requirements. We expect competition to increase in the future as existing and new
competitors introduce new products or enhance existing products that may compete with ErisX. We have limited
experience in the digital assets space, and ErisX has limited experience applying its digital platform to a global exchange
and clearing infrastructure for digital assets. The creation and operation of a global cryptocurrency spot and derivatives
trading market is subject to potential technical, legal and regulatory constraints. Any problems that we encounter with the
operation of the ErisX systems, including technical, legal and regulatory problems, could negatively impact our business
and plan of operations following the acquisition.
ErisX may be unsuccessful in retaining its key personnel.
The success of ErisX will depend in part on the ability to retain its key employees, while the acquisition is pending
and following our acquisition of ErisX. If ErisX is unable to retain key employees, including management, who are critical
to the successful integration and future operations, we and ErisX could face disruptions in our respective operations, loss
of customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, if
key employees terminate their employment, ErisX’s business activities may be adversely affected and management’s
attention may be diverted from successfully integrating ErisX to hiring suitable replacements, all of which may cause
ErisX’s business to suffer. In addition, hiring qualified and experienced personnel in this specialized technology space is
difficult due to the high level of competition and scarcity of experience. We and ErisX may have difficulty finding, hiring
and integrating qualified employees to fill positions following the acquisition.
The characteristics of digital assets and digital asset platforms have been, and may in the future continue to be,
exploited to facilitate illegal activity such as fraud, money laundering, tax evasion, ransomware scams and other
types of cybercrime, as well as other technical issues, which could adversely affect ErisX.
Digital assets and the digital asset industry are relatively new and, in many cases, lightly regulated or largely
unregulated. Digital asset platforms on which digital assets trade pose special risks, as these platforms are generally new
and the rules governing their activities are unsettled and their activities may be largely unregulated, and may therefore be
more exposed to theft, fraud, and failure than established, regulated exchanges for other products.
Some types of digital assets, particularly cryptocurrencies, have characteristics, such as the speed with which
transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the
ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain transactions and encryption
technology that anonymizes these transactions, that make those assets potentially susceptible to use in illegal activity
such as fraud, money laundering, tax evasion, ransomware scams and other types of cybercrime. Digital asset platforms
have been shut down or experienced losses of assets placed on the platform as a result of cybercrime, and any such
event is likely to result in the complete loss of assets placed on such a platform. Any governmental or regulatory action
against such a digital asset trading platform may cause assets on such platform to become frozen for a substantial period
of time or forfeited, and could result in material opportunity costs or even in the total loss of such assets. In addition,
banks may refuse to process or support wire transfers to or from digital asset trading platforms.
While we believe that ErisX’s risk management and compliance framework is reasonably designed to detect any such
illicit activities, we cannot ensure that we and ErisX will be able to detect such illegal activity in all instances. Because the
speed, irreversibility and anonymity of certain digital asset transactions potentially makes them difficult to track, fraudulent
transactions may be more likely to occur. ErisX may be specifically targeted by individuals seeking to conduct transfers for
fraudulent purposes, and it may be difficult or impossible for us and ErisX to detect and avoid such transactions in certain
circumstances.
Various other technical issues with blockchain networks have also been uncovered from time to time that resulted in
disabled functionality, exposure of certain users’ personal data, theft of users’ assets, and other negative consequences,
and which required resolution with the attention and efforts of their global miner, user and development communities. If
any
50
such risks or other risks materialize, the development and growth of digital assets may be significantly affected and, as a
result, ErisX’s business, operating results and financial condition could be adversely affected.
The acquisition of ErisX may increase regulatory costs and risks, and there can be no assurance that our or
ErisX’s employees or agents will not violate applicable laws and regulations.
Various aspects of the business that ErisX is engaging in, or planning to engage in, are heavily regulated. ErisX's
futures exchange and clearinghouse are regulated by the CFTC, and ErisX's clearinghouse is registered with the
Financial Crimes Enforcement Network and is licensed as a money transmitter in many U.S. states and territories. The
trading, clearance, and settlement of digital asset transactions may be subject to the federal securities laws and regulated
by the SEC if the asset is considered a security. We and ErisX are also subject to federal and state anti-money laundering
and counter-terrorism financing laws and regulations.
We and ErisX currently maintain policies and procedures designed to reasonably help ensure compliance with
applicable laws and regulations, but there can be no assurance that our or ErisX’s employees or agents will not violate
such laws and regulations. A failure by us or ErisX, including the respective employees or agents, to comply with such
laws and regulations and subsequent judgment or settlement against us or ErisX under these laws could subject us or
ErisX to monetary penalties, damages, and/or have a significant reputational impact.
Regulatory or other legislative changes or actions may restrict the use of digital assets in a manner that
adversely affects ErisX’s business, prospects or operations and, consequently, our potential investment in ErisX.
Regulatory or other legislative changes or actions may impact the ability of ErisX to continue to operate, and such
actions could affect the ability of ErisX to continue as a going concern. The regulatory and legislative framework is
unsettled with respect to many forms of digital assets, which means that federal or state regulators or legislators may in
the future curtail or prohibit the acquisition, use or redemption of certain digital assets. Ownership of, holding or trading in
certain digital assets may become subject to sanction. Federal or state regulators or legislators may also take regulatory
or legislative action that may increase the cost and/or subject companies to additional regulations and laws regarding
custody or facilitating the trading of digital assets.
In addition, as ErisX expands its business to new products and services, it will come under the jurisdiction of
additional regulators - both with respect to jurisdiction and subject matter. Any failure or perceived failure to comply with
existing or new laws, regulations, or orders of any governmental authority (including changes to or expansion of the
interpretation of those laws, regulations, or orders), including those discussed in this risk factor, may subject us and ErisX
to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets, and enforcement, result in
additional compliance and licensure requirements, increase regulatory scrutiny of its business, restrict ErisX’s operations,
and force ErisX to change its business practices, make product or operational changes, or delay planned product
launches or improvements. We and ErisX currently maintain policies and procedures designed to reasonably help ensure
compliance with applicable laws and regulations, but there can be no assurance that our or ErisX’s employees,
contractors, or agents will not violate such laws and regulations.
Digital asset custodial solutions and related technology, including ErisX’s systems and custodial arrangements,
are subject to risks related to a loss of funds due to theft of digital assets, employee or vendor sabotage, security
and cybersecurity risks, system failures and other operational issues which could cause damage to our and
ErisX’s reputation and brand.
The secure storage and transmission of digital assets and data over networks is a critical element of ErisX’s
operations. Threats to ErisX’s storage and transmission of digital assets and data may come from external factors such as
governments, organized crime, hackers and other third parties such as outsourced or infrastructure-support providers and
application developers, or may originate internally from an employee or service provider to whom ErisX has granted
access to its systems.
Digital asset transactions may be irrevocable, and stolen or incorrectly transferred digital assets may be irretrievable.
Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of a
digital asset generally will not be reversible, and ErisX may not be capable of seeking compensation for any such transfer
or theft. It is possible that, through computer or human error, or through theft or criminal action, the digital asset could be
transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. Such events would have a
material adverse effect on the ability of ErisX to continue as a going concern, which may have an adverse effect on our
business following the acquisition.
51
While we and ErisX maintain cybersecurity procedures and policies, those procedures and policies may not be
adequate to avoid the potential losses caused by security breaches, and ErisX may lose digital assets without any
recourse. Unlike bank accounts or accounts at some other financial institutions, in the event of loss or loss of utility value,
there is no public insurer, such as the Securities Investor Protection Corporation or the FDIC, to offer recourse to us,
ErisX, or to any investor and the misappropriated digital assets may not easily be traced to the bad actor.
Further, when cryptocurrency custodial solutions (whether involving ErisX systems or others) experience system
failures or other operational issues, such events could result in a reduction in cryptocurrency prices or confidence and
impact the success of ErisX and have a material adverse effect on the ability of ErisX to continue as a going concern,
which may have an adverse effect on our business following the acquisition.
ErisX’s clearinghouse operations are exposed to risks, including credit, liquidity, market and other risks related
to the potential defaults of clearing members and other counterparties.
ErisX is subject to risks related to operating its clearinghouse, Eris Clearing, which is a derivatives clearing
organization (“DCO”), registered with the CFTC. Risks associated with the operation of Eris Clearing include failing to
meet strict business continuity requirements and regulatory oversight, risks of default by clearing members and
counterparties due to bankruptcy, lack of liquidity, operational failure or other reasons, and the risks associated with the
adequacy of participants’ margin and guaranty funds. There is no guarantee the collateral deposited will continue to
maintain its value, and the use of digital assets as collateral may introduce additional volatility in value. Please also refer
to the risk factors above for a discussion of other risks associated with the use of digital assets. These risks could subject
ErisX to substantial losses, reputational harm, regulatory consequences, including litigation, fines and enforcement
actions, and the inability to operate its business.
Item 1B. Unresolved Staff Comments
Not applicable.
52
Item 2.
Properties
The Company is headquartered in Chicago with a network of domestic and global offices across the Americas,
Europe, Asia and Australia, including main hubs in New York, London, Kansas City and Amsterdam. Our principal
properties as of December 31, 2021 are listed in the table below:
Location
Classification
Former global
headquarters and office
space; current trading
floor
New global
headquarters and office
space
Office space
Office space
Planned new trading
floor and office space
Office space
Principal UK office
space
Office space
Owned/Leased
Owned*
Lease Expiration
N/A
Approximate Size
300,000 sq. ft.
Leased
August 2035
185,000 sq. ft.
Leased
Leased
Leased
Leased
Leased
Leased
February 2027, with
two 5 year renewal
options
May 2023
62,000 sq. ft.
18,500 sq. ft.
October 2032
40,000 sq. ft.
April 2024, with one 5
year renewal option
March 2027, with one 5
year renewal option
December 2023
22,000 sq. ft.
21,000 sq. ft.
10,500 sq. ft.
400 South La Salle Street,
Chicago, Illinois
433 W. Van Buren Street,
Chicago, Illinois
8050 Marshall Drive,
Lenexa, Kansas
8050 Marshall Drive,
Lenexa, Kansas
141 W. Jackson Boulevard,
Chicago, Illinois
17 State Street,
New York, New York
11 Monument Street,
London, United Kingdom
Rockwell Business Center
Sheridan, Sheridan Street
Corner United Street,
Highway Hills
Mandaluyong City 1550
Philippines
Strawinskylaan 1847
Amsterdam, Netherlands
Office space
Leased
August 2023
8,000 sq. ft.
*Through our wholly-owned subsidiary, Cboe Building Corporation, we own the building that was previously the global
headquarters. The building is currently classified as held and used.
In addition to the offices listed above, the Company has entered into a lease that will commence in 2022 for a new
principal office space in Amsterdam. See Note 24 (“Leases”) to the consolidated financial statements included herein for
further information.
We believe that our properties are in good operating condition and adequately serve our current business operations.
Generally, our properties are not earmarked for use by a particular segment. Instead, most of our properties are used by
two or more segments. We also anticipate that suitable additional or alternative space will be available at commercially
reasonable terms for future expansion to the extent necessary.
Our disaster recovery sites in the United States are located in Chicago, Illinois, Kansas City, Missouri, and Secaucus,
New Jersey. In addition, we have agreements with a primary data center in Secaucus, New Jersey and a secondary data
center in Chicago, Illinois. In Europe, our primary data center is in Slough, England. The secondary data center for Cboe
Europe is in Park Royal, London. We operate a back-up location for our London operations in the United Kingdom.
See Note 7 (“Property and Equipment, Net”) and Note 24 (“Leases”) to the consolidated financial statements included
herein for further information.
53
Item 3.
Legal Proceedings
Cboe incorporates herein by reference the discussion set forth in Note 21 (“Income Taxes”) and Note 23
(“Commitments, Contingencies, and Guarantees”) of the consolidated financial statements included herein.
CT Plan Order (Continuation of Consolidated Data Plans Proceeding)
On May 6, 2020, the SEC issued an order (the “Consolidated Data Plan Order”) that directed the U.S. equities
exchanges and FINRA to submit a new National Market System (“NMS”) Plan regarding Consolidated Equity Market
Data. The contemplated new NMS Plan is referred to as the “CT Plan” and it will replace three Equity Data Plans that
govern the dissemination of real-time, consolidated market data for NMS stocks. The Consolidated Data Plan Order set
forth certain changes to be included in the proposed CT Plan, including governance structure changes related to voting
rights and a deadline of August 11, 2020 by which the proposed CT Plan had to be filed.
On June 29, 2020, the Company filed a Petition for Review (“PFR”) with the Court of Appeals for the D.C. Circuit
Court (“D.C. Circuit) challenging the Consolidated Data Plan Order. Briefing concluded on March 12, 2021 and oral
argument was held on April 26, 2021. On June 15, 2021, the D.C. Circuit issued an order dismissing the PFR for lack of
jurisdiction, holding that the Consolidated Data Plan Order was not a “final order” because the SEC had not determined
whether the challenged features would make it into the new CT Plan.
On August 6, 2021, the SEC issued an order approving the CT Plan that was previously filed on August 11, 2020 (as
mandated by the Consolidated Data Plan Order) and subject to public comment (“CT Plan Order”). On August 9, 2021,
the Company filed another PFR with the D.C. Circuit challenging the CT Plan Order and the prior Consolidated Data Plan
Order. On September 13, 2021, the Company filed a motion requesting that the D.C. Circuit stay the CT Plan Order
pending resolution of the appeal and also requesting that the D.C. Circuit expedite the appeal. On October 13, 2021, the
D.C. Circuit granted the motion to stay the CT Plan order and to expedite the appeal and established a briefing schedule.
Briefing concluded in January 2022 and oral argument is scheduled for March 24, 2022.
The new CT Plan approved by the SEC may cause the Company’s equities exchanges, BZX, BYX, EDGX, and
EDGA, to require additional resources to comply with or challenge such new consolidated data plan and it may have a
material impact on our business, financial condition and operating results if, for example, there is a negative impact on the
applicable market data revenues that we receive that are generated from such new plan.
Market Data Infrastructure Final Rule
On December 9, 2020, the SEC issued a Market Data Infrastructure Final Rule (“Final Rule”), which makes
significant additions to the content available on the Securities Information Processors (“SIPs”) and replaces the exclusive
processors with a competing consolidator model. The Final Rule is limited to market data disseminated by the equities
SIPs and does not apply to proprietary market data, or the dissemination of options market data through OPRA.
On February 5, 2021, the Company filed a Petition for Review (the “2/5 PFR”) with the Court of Appeals for the D.C.
Circuit challenging the Final Order. Additionally, on February 5, 2021, the Company filed a motion for stay of the Final
Rule with the SEC, which the SEC denied on March 24, 2021.
On March 24, 2021, the SEC filed a Motion to Dismiss (“MTD”) with the D.C. Circuit: (1) arguing that the PFR is not
ripe because the Final Rule had not been published in the Federal Register (“FR”), (2) suggesting (if there is ambiguity)
that the D.C. Circuit clarify whether publication in the FR opens the filing window, and (3) suggesting that the D.C. Circuit
could hold the case in abeyance pending filing of a PFR after publication in the FR.
On April 9, 2021, the Final Rule was published in the FR. On April 13, 2021, the Company filed another PFR (the “4/
PFR””) as a protective measure in the event the D.C. Circuit determined that the time to file a PFR does not commence
until publication of the Final Rule in the FR.
On June 15, 2021, the D.C. Circuit entered an order granting the SEC’s MTD respecting the 2/5 PFR. This order
does not affect the 4/13 PFR, which was filed after publication of the Final Rule in the FR on April 9, 2021. On July 9,
2021, the D.C. Circuit entered a briefing schedule, which concluded in January 2022. Oral argument is scheduled for
March 18, 2022.
The implementation of the Final Rule could cause Cboe’s equities exchanges, BZX, BYX, EDGX, and EDGA, to
require additional resources to comply with or to challenge the new rules and they may have a material impact on our
54
business, financial condition and operating results if, for example, there are lower SIP plan revenues or we must reduce
the fees we charge for market data. The Company intends to litigate the matter vigorously.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Common Stock
The Company’s common stock is listed on Cboe BZX under the trading symbol CBOE. As of January 31, 2022, there
were approximately 123 holders of record of our common stock.
Dividends
Each share of common stock, including restricted stock awards and restricted stock units, is entitled to receive
dividend and dividend equivalents, respectively, if, as and when declared by the Board of Directors of the Company.
The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within
the discretion of the Company's Board of Directors and may be affected by various factors, including our earnings,
financial condition, capital requirements, level of indebtedness and other considerations our Board of Directors deems
relevant. Future debt obligations and statutory provisions, among other things, may limit, or in some cases prohibit, our
ability to pay dividends.
As a holding company, the Company’s ability to declare and continue to pay dividends in the future with respect to its
common stock will also be dependent upon the ability of its subsidiaries to pay dividends to it under applicable corporate
law.
Recent Sales of Unregistered Securities
Not applicable.
Use of Proceeds
Not applicable.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Share Repurchase Program
In 2011, the Board of Directors approved an initial authorization for the Company to repurchase shares of its
outstanding common stock of $100 million and approved additional authorizations of $100 million in each of 2012, 2013,
2014, 2015 and 2016, $250 million in each of 2018, 2019 and 2020, and $200 million in February 2021, for a total
authorization of $1.6 billion. The program permits the Company to purchase shares through a variety of methods,
including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It
does not obligate the Company to make any repurchases at any specific time or situation.
Under the program, for the year ended December 31, 2021, the Company repurchased 822,005 shares of common
stock at an average cost per share of $98.82, totaling $81.3 million. Since inception of the program through December 31,
2021, the Company has repurchased 18,072,129 shares of common stock at an average cost per share of $68.12,
totaling $1.2 billion. As of December 31, 2021, the Company had $318.9 million of availability remaining under its existing
share repurchase authorizations.
55
Purchase of common stock from employees
During the fiscal quarter ended December 31, 2021, we purchased shares from employees in connection with the
settlement of employee tax withholding obligations arising from the vesting of restricted stock units and restricted stock
awards. The table below represents repurchases made by or on behalf of us or any “affiliated purchaser” of our common
stock during the fiscal quarter ended December 31, 2021:
Period
October 1 to October 31, 2021 . . . . . . . .
November 1 to November 30, 2021 . . . .
December 1 to December 31, 2021 . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total number of shares
purchased
Average price paid
per share
$
—
1,525.0
281.0
1,806.0
—
130.22
129.48
56
Stockholder Return Performance Graph
The following graph compares the cumulative total return provided to stockholders on our common stock since
December 31, 2016 against the return of the S&P 500 Index and a customized peer group that includes CME Group Inc.,
Intercontinental Exchange Inc., and Nasdaq, Inc.
An investment of $100, with reinvestment of all dividends, is assumed to have been made in our common stock, the
index and the peer groups on December 31, 2016, and its performance is tracked on an annual basis through
December 31, 2021.
Comparison of Cumulative Total Return of the
Company, Peer Groups, Industry Indices and/or Broad Markets
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Cboe Global Markets, Inc., the S&P 500 Index
and a Peer Group
$300
$250
$200
$150
$100
$50
$0
12/16
12/17
12/18
12/19
12/20
12/21
Cboe Global Markets, Inc.
S&P 500
Peer Group
*$100 invested on 12/31/16 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Data Source: Yahoo Finance, Closing Price(s)
Cboe Global Markets, Inc. . . .
S&P 500 . . . . . . . . . . . . . . . . .
Peer Group . . . . . . . . . . . . . . .
12/16
12/17
12/18
12/19
12/20
100.00
100.00
100.00
170.47
136.40
125.23
135.35
130.42
146.02
168.06
171.49
177.08
132.49
203.04
202.63
12/21
188.43
261.32
277.30
57
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided to
assist the reader in understanding the results of operations, liquidity and capital resources, and critical accounting
estimates and policies through the eyes of our management team. The following discussion should be read in conjunction
with the consolidated financial statements of the Company and the notes thereto included in Item 8 of this Annual Report
on Form 10-K. The following discussion contains forward-looking statements. Actual results could differ materially from
the results discussed in the forward-looking statements. See “Risk Factors” and “Forward-Looking Statements” above.
A detailed comparison of the Company’s 2020 operating results to its 2019 operating results can be found in the
Management’s Discussion and Analysis of Financial Condition and Results of Operations section in the Company’s 2020
Annual Report on Form 10-K filed February 19, 2021 at www.sec.gov.
INTRODUCTION
Management’s Discussion and Analysis of Financial Condition and Results of Operations is organized as follows:
• Executive Summary – Includes an overview of the Company’s business; a description of notable recent
developments, current economic, competitive and regulatory trends relevant to our business; the Company’s
current business strategy; and the Company’s primary sources of operating and non-operating revenues and
expenses.
• Results of Operations – Includes an analysis of the Company’s 2021 and 2020 financial results and a
discussion of any known events or trends which are likely to impact future results.
•
Liquidity and Capital Resources – Includes a discussion of the Company’s future cash requirements, capital
resources, and financing arrangements.
• Critical Accounting Estimates – Provides an explanation of accounting estimates which may have a significant
impact on the Company’s financial results and the judgments, assumptions, and uncertainties associated with
those estimates.
• Recent Accounting Pronouncements – Includes an evaluation of recent accounting pronouncements and the
potential impact of their future adoption on the Company’s financial results.
EXECUTIVE SUMMARY
Overview
Cboe Global Markets, Inc. (“Cboe” or “the Company”), a leading provider of market infrastructure and tradable
products, delivers cutting-edge trading, clearing and investment solutions to market participants around the world. The
Company is committed to operating a trusted, inclusive global marketplace, providing leading products, technology and
data solutions that enable participants to define a sustainable financial future. Cboe provides trading solutions and
products in multiple asset classes, including equities, derivatives and FX, across North America, Europe, and Asia Pacific.
Cboe’s subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In
addition, the Company operates one of the largest stock exchanges by value traded in Europe, and owns EuroCCP, a
leading pan-European equities and derivatives clearinghouse, BIDS Trading, a leading block-trading ATS by volume in
the U.S., MATCHNow, a leading equities ATS in Canada, and Cboe Australia, an operator of trading venues in Australia,
and Cboe Japan, an operator of trading venues in Japan. Cboe also is a leading market globally for exchange-traded
products (“ETPs”) listings and trading.
The Company is headquartered in Chicago with offices in Amsterdam, Belfast, Calgary, Hong Kong, Kansas City,
London, Manila, New York, San Francisco, Sarasota Springs, Singapore, Sydney, Tokyo and Toronto.
58
Recent Developments
Acquisition of BIDS Holdings
On December 31, 2020, the Company completed the acquisition of BIDS Holdings, which is included in the
Company’s North American Equities segment. BIDS Holdings owns BIDS Trading, a registered broker-dealer and the
operator of the BIDS ATS, the largest block-trading ATS by volume in the U.S. The BIDS ATS is not a registered national
securities exchange or a facility thereof. The acquisition follows Cboe and BIDS Trading’s successful partnership in
Europe, which began in 2016 with the creation of Cboe LIS for European equities block-trading. Since its launch, Cboe
LIS has grown to become one of the largest block-trading platforms in Europe. BIDS Trading’s proven block-trading
capability provides the Company a foothold in the off-exchange segment of the U.S. equities market. Additionally, BIDS
Trading’s differentiated network of global buy-side investment managers and sell-side constituents provides the
foundation for Cboe to potentially build more off-exchange products and services in non-U.S. equities or options products
and in geographies beyond the U.S.
Acquisition of Chi-X Asia Pacific
On July 1, 2021, the Company completed the acquisition of Chi-X Asia Pacific Holdings, Ltd., a holding company of
alternative market operators and providers of innovative market solutions. This acquisition provides the Company with a
single point of entry into two key capital markets, Australia and Japan, helps enable it to expand its global equities and
market data business into the Asia Pacific region, bring other products and services to the region, and further expand
access to its unique proprietary product suite in the region. The transaction closed on July 1, 2021 based upon the time
zone of both the acquiree, Chi-X Asia Pacific, and the acquiror, Cboe Worldwide Holdings Limited, a subsidiary of the
Company.
Investment in Trading Technologies
On October 31, 2021, the Company, through a wholly-owned subsidiary, became a limited partner of 7Ridge
Investments 3 LP (“7Ridge Fund”) in connection with 7Ridge Fund’s planned acquisition of Trading Technologies
International, Inc. (“Trading Technologies”). On December 13, 2021, the Company’s subsidiary provided its financial
commitment to 7Ridge Fund, and on December 21, 2021, 7Ridge Fund completed the acquisition of Trading
Technologies. Trading Technologies is a global provider of next-generation professional trading software, connectivity and
data solutions. The Company is strategically aligned with Trading Technologies’ vision of delivering a leading trading,
connectivity and data network to the global trading community.
Planned acquisition of ErisX
On October 20, 2021, the Company announced it entered into a definitive agreement to acquire Eris Digital Holdings,
LLC (“ErisX”). ErisX operates a U.S.-based digital asset spot market, a regulated futures exchange and a regulated
clearinghouse. Ownership of ErisX presents a unique opportunity for the Company to enter the digital asset spot and
derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory
compliance, data and transparency. The transaction is expected to close in the first half of 2022; subject to regulatory
review and other customary closing conditions.
Planned acquisition of NEO
On November 15, 2021, the Company announced it entered into a definitive agreement to acquire Aequitas
Innovations, Inc. (“NEO”). NEO is a fintech organization that is comprised of a fully registered Tier-1 Canadian securities
exchange with a diverse product and services set ranging from corporate listings to cash equity trading. Ownership of
NEO will help allow the Company to provide a more fulsome Canadian equities offering, operating the NEO Exchange, a
national securities exchange with trading, listings, and other services, in addition to MATCHNow, the ATS acquired by the
Company in 2020. The transaction is expected to close in the first half of 2022; subject to regulatory review and other
customary closing conditions.
Business Segments
The Company reports five business segments: Options, North American Equities, Europe and Asia Pacific, Futures,
and Global FX. Segment performance is primarily based on operating income (loss). The Company has aggregated all of
its corporate costs and eliminations, as well as other business ventures, within Corporate Items and Eliminations;
59
however, operating expenses that relate to activities of a specific segment have been allocated to that segment. Our
management allocates resources, assesses performance and manages our business according to these segments:
Options. The Options segment includes options on market indices (“index options”), as well as on the stocks of
individual corporations (“equity options”), and options on ETPs, such as exchange-traded funds (“ETFs”) and exchange-
traded notes (“ETNs”), which are “multi-listed” options and listed on a non-exclusive basis. These options are eligible to
trade on Cboe Options, C2, BZX, EDGX, and other U.S. national security exchanges. Cboe Options is the Company’s
primary options market and offers trading in listed options through a single system that integrates electronic trading and
traditional open outcry trading on the Cboe Options trading floor in Chicago. C2 Options, BZX Options, and EDGX
Options are all-electronic options exchanges, and typically operate with different market models and fee structures than
Cboe Options. The Options segment also includes applicable market data revenue generated from the consolidated tape
plans, the licensing of proprietary options market data, index licensing, and access and capacity services.
North American Equities. The North American Equities segment includes listed U.S. equities and ETP transaction
services that occur on fully electronic exchanges owned and operated by BZX, BYX, EDGX, and EDGA, equities
transactions that occur on the BIDS Trading platform, and Canadian equities and other transaction services that occur on
or through the MATCHNow ATS. The North American Equities segment also includes ETP listings on BZX, the Cboe
Global Markets, Inc. common stock listing, applicable market data revenue generated from the consolidated tape plans,
the licensing of proprietary equities market data, routing services, and access and capacity services.
Europe and Asia Pacific. The Europe and Asia Pacific segment includes the pan-European listed equities and
derivatives transaction services, ETPs, exchange-traded commodities, and international depository receipts that are
hosted on MTFs operated by Cboe Europe Equities (Cboe Europe and Cboe NL) and Cboe Europe Derivatives (“CEDX”).
It also includes the ETP listings business on RMs and clearing activities of EuroCCP, as well as the equities transaction
services of Cboe Australia and Cboe Japan, each operators of trading venues in Australia and Japan. This segment was
previously referred to as the European Equities segment but was updated to the Europe segment in the first quarter of
2021 as a result of the launch of Cboe Europe Derivatives, a pan-European derivatives platform in September 2021. The
segment was subsequently updated to Europe and Asia Pacific to reflect the acquisition of Chi-X Asia Pacific in
July 2021. Cboe Europe operates lit and dark books, a periodic auctions book, and a Large-in-Scale (“LIS”) trading
negotiation facility for UK symbols. Cboe NL, launched in October 2019 and based in Amsterdam, operates similar
business functionality to that offered by Cboe Europe, and provides for trading only in European Economic Area (“EEA”)
symbols. The new Cboe Europe Derivatives venue offers futures and options based on Cboe Europe equity indices. This
segment also includes Cboe Europe, Cboe NL, CEDX, Cboe Australia, and Cboe Japan revenue generated from the
licensing of proprietary market data and from access and capacity services.
Futures. The Futures segment includes transaction services provided by the Company’s fully electronic futures
exchange, CFE, which includes offerings for trading of VIX futures and other futures products, the licensing of proprietary
market data, as well as access and capacity services.
Global FX. The Global FX segment includes institutional FX trading services that occur on the Cboe FX fully
electronic trading platform, non-deliverable forward FX transactions (“NDFs”) offered for execution on Cboe SEF and
Cboe Swiss, as well as revenue generated from the licensing of proprietary market data and from access and capacity
services.
General Factors Affecting Results of Operations
In broad terms, our business performance is impacted by a number of drivers, including macroeconomic events
affecting the risk and return of financial assets, investor sentiment, the regulatory environment for capital markets,
geopolitical events, tax policies, central bank policies and changing technology, particularly in the financial services
industry. We believe our future revenues and net income will continue to be influenced by a number of domestic and
international economic trends, including:
•
•
•
•
trading volumes on our proprietary products such as VIX options and futures and SPX options;
trading volumes in listed equity securities, options, futures, and ETPs in North America, Europe, and Asia
Pacific, clearing volumes in listed equity securities and ETPs in Europe, volumes in listed equity options, and
volumes in institutional FX trading;
the demand for and pricing structure of the U.S. tape plan market data distributed by the Securities Information
Processors (“SIPs”), which determines the pool size of the industry market data revenue we receive based on
our market share;
consolidation and expansion of our customers and competitors in the industry;
60
•
•
•
•
the demand for information about, or access to, our markets and products, which is dependent on the products
we trade, our importance as a liquidity center, quality and integrity of our proprietary indices, and the quality and
pricing of our data and access and capacity services;
continuing pressure in transaction fee pricing due to intense competition in the North American, European, and
Asia Pacific markets;
significant fluctuations in foreign currency translation rates or weakened value of currencies; and
regulatory changes and obligations relating to market structure and increased capital requirements, and those
which affect certain types of instruments, transactions, products, pricing structures, capital market participants or
reporting or compliance requirements.
A number of significant structural, political and monetary issues and the COVID-19 pandemic continue to confront the
global economy, and instability could continue, resulting in an increased or subdued level of inflation, market volatility,
supply chain constraints, changes in trading volumes and greater uncertainty. Inflationary increases in our expenses,
such as compensation inflation, may have an adverse effect on our financial results.
We continue to closely monitor developments around COVID-19 and follow guidance provided by governmental and
public health agencies. In response to COVID-19, we have provided frequent communications to employees, customers,
regulators, critical vendors, technology equipment suppliers, data and disaster recovery centers, and other service
providers and instructed non-essential employees to work from home on a temporary basis, implemented travel
restrictions, and temporarily suspended open outcry trading between March 13, 2020 and June 14, 2020, without any
known significant disruptions to our business or control processes. We expect to continue to take further actions as
necessary in response to addressing COVID-19. Our business and operations could be materially and adversely affected
by the effects of COVID-19, however, the extent to which our results could be affected by COVID-19 largely depends on
future developments which cannot be accurately predicted and are uncertain. Further, changes in trading behavior,
additional suspensions of open outcry trading, market disruptions and other future developments caused by the effects of
COVID-19 could impact trading volumes and the demand for our products, market data, and services, which could have a
material adverse effect on our business, financial condition, operating results and cash flows for fiscal year 2021 and
could be material during any future period impacted either directly or indirectly by this pandemic.
Components of Revenues
Transaction and Clearing Fees
Transaction fees represent fees charged by the Company for the performance obligation of executing a trade on its
markets. These fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are
calculated monthly, the actual discount is recorded on a monthly basis. Transaction fees are recognized across all
segments. Clearing fees, which include settlement fees, are charged by the Company for transactions cleared and settled
by EuroCCP. Clearing fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are
calculated monthly, the actual discount is recorded on a monthly basis. Clearing fees are recognized in the Europe and
Asia Pacific segment. Transaction and clearing fees, as well as any tiered volume discounts, are calculated and billed
monthly in accordance with the Company’s published fee schedules.
Access and Capacity Fees
Access and capacity fees represent fees assessed for the opportunity to trade, including fees for trading-related
functionality across all segments, terminal and other equipment rights, maintenance services, trading floor space and
telecommunications services. Facilities, systems services and other fees are generally monthly fee-based. These fees are
billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the
performance obligation is met. All access and capacity fees associated with the trading floor are recognized in the Options
segment. There is no remaining performance obligation after revenue is recognized.
Market Data Fees
Market data fees represent the fees from the U.S. tape plans and fees from customers for proprietary market data.
Fees from the U.S. tape plans are collected monthly based on published fee schedules and distributed quarterly to the
Exchanges based on a known formula using trading and/or quoting activity. A contract for proprietary market data is
entered into and charged on a monthly basis in accordance with the Company’s published fee schedules as the service is
provided. Both types of market data are satisfied over time, and revenue is recognized on a monthly basis as the
customer receives and consumes the benefit as the Company provides the data. U.S. tape plan market data is
61
recognized in the North American Equities and Options segments. Proprietary market data fees are recognized across all
segments.
Regulatory Fees
Regulatory fees primarily represent fees collected by the Company to cover the Section 31 fees charged to the
Exchanges under the authority of the SEC (Cboe Options, C2, BZX, BYX, EDGX, and EDGA) and are charged by the
SEC. Consistent with industry practice, the fees charged to customers are based on the fee set by the SEC per notional
value of U.S. Equities exchange transactions and per round turn of Options transactions executed on the Company’s U.S.
securities markets. These fees are calculated and billed monthly and are recognized in the North American Equities and
Options segments. As the Exchanges are responsible for the ultimate payment to the SEC, the Exchanges are
considered the principals in these transactions. Regulatory fees also include the options regulatory fee (“ORF”) which
supports the Company’s regulatory oversight function in the Options segment, along with other miscellaneous regulatory
fees, and neither can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the
performance obligation is fulfilled.
Other Revenue
Other revenue primarily consists of revenue from various licensing agreements, interest income from clearing
operations, all fees related to the trade reporting facility operated in the Europe and Asia Pacific segment, and listing fees.
Components of Cost of Revenues
Liquidity Payments
Liquidity payments are directly correlated to the volume of securities traded on our markets. As stated above, we
record the liquidity rebates paid to market participants providing liquidity, in the case of C2, BZX, EDGX, and Cboe
Europe, as cost of revenue. BYX and EDGA offer a pricing model where we rebate liquidity takers for executing against
an order resting on our book, which is also recorded as a cost of revenues.
Routing and Clearing
Various rules require that U.S. options and equities trade executions occur at the NBBO displayed by any exchange.
Linkage order routing consists of the cost incurred to provide a service whereby Cboe equities and options exchanges
deliver orders to other execution venues when there is a potential for obtaining a better execution price or when instructed
to directly route an order to another venue by the order provider. The service affords exchange order flow providers an
opportunity to obtain the best available execution price and may also result in cost benefits to those clients. Such an
offering improves our competitive position and provides an opportunity to attract orders which would otherwise bypass our
exchanges. We utilize third-party brokers or our broker-dealer, Cboe Trading, to facilitate such delivery. Also included
within routing and clearing are the Order Management System and Execution Management System (“OMS” and “EMS”,
respectively) fees incurred for U.S. Equities Off-Exchange order execution, as well as settlement costs incurred for the
settlement process executed by EuroCCP.
Section 31 Fees
Exchanges under the authority of the SEC (Cboe Options, C2, BZX, BYX, EDGX, and EDGA) are assessed fees
pursuant to the Exchange Act designed to recover the costs to the U.S. government of supervision and regulation of
securities markets and securities professionals. We treat these fees as a pass-through charge to customers executing
eligible listed equities and listed equity options trades. Accordingly, we recognize the amount that we are charged under
Section 31 as a cost of revenues and the corresponding amount that we charge our customers as regulatory transaction
fees revenue. Since the regulatory transaction fees recorded in revenues are equal to the Section 31 fees recorded in
cost of revenues, there is no impact on our operating income. CFE, Cboe Europe, Cboe NL, BIDS, MATCHNow, Cboe
FX, Cboe Australia and Cboe Japan are not U.S. national securities exchanges, and accordingly are not charged Section
31 fees.
62
Royalty Fees
Royalty fees primarily consist of license fees paid by us for the use of underlying indices in our proprietary products
usually based on contracts traded. The Company has licenses with the owners of the S&P 500 Index, S&P 100 Index and
certain other S&P indices, FTSE Russell indices, the DJIA, MSCI, and certain other index products. This category also
includes fees related to the dissemination of market data related to S&P indices and other products through Cboe
Streaming Market Indices (“CSMI”).
Other Cost of Revenues
Other cost of revenues primarily consists of interest expense from clearing operations, electronic access permit fees
and other miscellaneous costs associated with other revenue.
Components of Operating Expenses
Compensation and Benefits
Compensation and benefits represent our largest expense category and tend to be driven by our staffing
requirements, financial performance, and the general dynamics of the employment market. Stock-based compensation is
a non-cash expense related to equity awards. Stock-based compensation can vary depending on the quantity and fair
value of the award on the date of grant and the related service period.
Depreciation and Amortization
Depreciation and amortization expense results from the depreciation of long-lived assets purchased, the amortization
of purchased and internally developed software, and the amortization of intangible assets.
Technology Support Services
Technology support services consists primarily of costs related to the maintenance of computer equipment
supporting our system architecture, circuits supporting our wide area network, support for production software, operating
system license and support fees, fees paid to information vendors for displaying data and off-site system hosting fees.
Professional Fees and Outside Services
Professional fees and outside services consist primarily of consulting services, which include supplemental staff
activities primarily related to systems development and maintenance, legal, regulatory and audit, and tax advisory
services.
Travel and Promotional Expenses
Travel and promotional expenses primarily consist of advertising, costs for special events, sponsorship of industry
conferences, options education seminars and travel-related expenses.
Facilities Costs
Facilities costs primarily consist of expenses related to owned and leased properties including rent, maintenance,
utilities, real estate taxes and telecommunications costs.
Acquisition-Related Costs
Acquisition-related costs relate to acquisitions and other strategic opportunities, including the Merger. The
acquisition-related costs include fees for investment banking advisors, lawyers, accountants, tax advisors, public relations
firms, severance and retention costs, impairment of goodwill, capitalized software and facilities, and other external costs
directly related to the mergers and acquisitions.
63
Other Expenses
Other expenses represent costs necessary to support our operations that are not already included in the above
categories.
Non-Operating (Expenses) Income
Income and expenses incurred through activities outside of our core operations are considered non-operating and
are classified as other (expense) income. These activities primarily include interest earned on the investing of excess
cash, interest expense related to outstanding debt facilities, dividend income, income and unrealized gains and losses
related to investments held in a trust for the Company’s non-qualified retirement and benefit plans, and equity earnings or
losses from our investments in other business ventures.
RESULTS OF OPERATIONS
The following are summaries of changes in financial performance and include certain non-GAAP financial measures.
Management uses these non-GAAP measures internally in conjunction with GAAP measures to help evaluate our
performance and to help make financial and operational decisions. These non-GAAP financial measures assist
management in comparing our performance on a consistent basis for purposes of business decision making by removing
the impact of certain items management believes do not reflect our underlying operations.
We believe our presentation of these measures provides investors with greater transparency into financial measures
used by management and is useful to investors for period-to-period comparisons of our ongoing operating performance.
These non-GAAP financial measures are not presented in accordance with, or as an alternative to, GAAP financial
measures and may be calculated differently from non-GAAP measures used by other companies, which reduces their
usefulness as comparative measures. We encourage analysts, investors and other interested parties to use these non-
GAAP measures as supplemental information to the GAAP financial measures included herein, including our consolidated
financial statements, to enhance their analysis and understanding of our performance and in making comparisons. Please
see the footnotes below for definitions, additional information, and reconciliations from the closest GAAP measure.
64
Comparison of Years Ended December 31, 2021 and 2020
Overview
The following summarizes changes in financial performance for the year ended December 31, 2021, compared to the
year ended December 31, 2020:
Total Revenues (in millions)
Revenues Less Cost of Revenues
(in millions)
Net Income (in millions)
$3,494.8
$3,427.1
$1,476.1
$1,254.3
$468.2
$529.0
2021
2020
2021
2020
2021
2020
EBITDA Margin(1)
Adjusted EBITDA Margin(1)
65.7%
68.2%
66.9%
69.7%
2021
2020
2021
2020
Basic Earnings Per Share
Diluted Earnings Per Share
Adjusted Diluted Earnings Per
Share(1)
$4.93
$4.92
$6.05
$4.28
$4.27
$5.27
2021
2020
2021
2020
2021
2020
(1) These are Non-GAAP figures for which reconciliations are provided below (in millions, except percentages, earnings
per share, and as noted below).
Year Ended
December 31,
2021
2020
Increase/
(Decrease)
Percent
Change
$
$
$
3,494.8
2,018.7
1,476.1
670.2
805.9
756.1
227.1
529.0
4.93
4.92
1,393.3
969.2
$
$
65.7 %
$
66.9 %
$
648.8
987.1
$
$
$
3,427.1
2,172.8
1,254.3
592.1
662.2
660.4
192.2
468.2
4.28
4.27
1,254.3
855.3
$
$
68.2 %
$
69.7 %
$
576.5
874.6
44.0 %
107.2
6.05
$
46.0 %
109.3
5.27
$
67.7
(154.1)
221.8
78.1
143.7
95.7
34.9
60.8
0.65
0.65
139.0
113.9
(2.5)%
112.5
(2.8)%
72.3
(2.0)%
(2.1)
0.78
2 %
(7)%
18 %
13 %
22 %
14 %
18 %
13 %
15 %
15 %
11 %
13 %
*
13 %
*
13 %
*
(2)%
15 %
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenues less cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax provision . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organic net revenue (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA margin (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA margin (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted earnings (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted earnings margin (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted weighted average shares outstanding . . . . . . . . . . . . . . . . . .
Adjusted Diluted earnings per share (6) . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
$
$
* Not meaningful
65
(1) Organic net revenue is defined as revenues less cost of revenues excluding revenues less cost of revenues of any
acquisition that has been owned for less than one year. Revenues from acquisitions that have been owned at least
one year are considered organic and are no longer excluded from organic net revenue from either period for
comparative purposes. Organic net revenue does not represent, and should not be considered as, an alternative to
revenues less cost of revenues, or net revenue, as determined in accordance with GAAP. We have presented
organic net revenue because we consider it an important supplemental measure of our performance and we use it as
the basis for monitoring our operating financial performance before the effects of acquisitions. We also believe that it
is frequently used by analysts, investors and other interested parties in the evaluation of companies. We believe that
investors may find this non-GAAP measure useful in evaluating our performance compared to that of peer companies
in our industry. Other companies may calculate organic net revenue differently than we do. Organic net revenue has
limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results
as reported under GAAP.
Revenues less cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Recent acquisitions:
Year Ended
December 31,
2021
1,476.1 $
2020
1,254.3
Acquisition revenues less cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Organic net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(82.8) $
1,393.3 $
—
1,254.3
(2) EBITDA is defined as income before interest, income taxes, depreciation and amortization. Adjusted EBITDA is
defined as EBITDA before acquisition-related costs, provision for notes receivable, bargain purchase gain,
impairment of investment, and change in contingent consideration. EBITDA and adjusted EBITDA do not represent,
and should not be considered as, alternatives to net income as determined in accordance with GAAP. We have
presented EBITDA and adjusted EBITDA because we consider them important supplemental measures of our
performance and believe that they are frequently used by analysts, investors and other interested parties in the
evaluation of companies. In addition, we use adjusted EBITDA as a measure of operating performance for
preparation of our forecasts and evaluating our leverage ratio for the debt to earnings covenant included in our
outstanding credit facility. Other companies may calculate EBITDA and adjusted EBITDA differently than we do.
EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as
substitutes for analysis of our results as reported under GAAP.
(3) EBITDA margin represents EBITDA divided by revenues less cost of revenues.
(4) Adjusted EBITDA margin represents adjusted EBITDA divided by revenues less cost of revenues.
(5) Adjusted earnings is defined as net income adjusted for amortization of purchased intangibles, acquisition-related
costs, provision for notes receivable, bargain purchase gain, impairment of investment, change in contingent
consideration, release of tax reserves, deferred tax re-measurements, and net income allocated to participating
securities, net of the income tax effects of these adjustments. Adjusted earnings does not represent, and should not
be considered as, an alternative to net income, as determined in accordance with GAAP. We have presented
adjusted earnings because we consider it an important supplemental measure of our performance and we use it as
the basis for monitoring our own core operating financial performance relative to other operators of exchanges. We
also believe that it is frequently used by analysts, investors and other interested parties in the evaluation of
companies. We believe that investors may find this non-GAAP measure useful in evaluating our performance
compared to that of peer companies in our industry. Other companies may calculate adjusted earnings differently
than we do. Adjusted earnings has limitations as an analytical tool, and you should not consider it in isolation or as a
substitute for analysis of our results as reported under GAAP.
(6) Adjusted diluted earnings per share represents adjusted earnings divided by diluted weighted average shares
outstanding.
66
The following is a reconciliation of net income (loss) allocated to common stockholders to EBITDA and adjusted
EBITDA (in millions):
Net income (loss) allocated to common
Year Ended December 31,
2021
Options
North
American
Equities
Europe
and Asia
Pacific Futures
Global
FX
Corporate
Total
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 364.7 $ 133.5 $ 18.6 $ 34.9 $ 2.6 $ (27.0) $ 527.3
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . .
—
47.4
Income tax provision (benefit) . . . . . . . . . . . . . . . . 171.3
227.1
Depreciation and amortization . . . . . . . . . . . . . . .
29.4
167.4
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565.4
969.2
0.3
Acquisition-related costs . . . . . . . . . . . . . . . . . . . .
15.6
—
Impairment of investment . . . . . . . . . . . . . . . . . . .
5.0
(2.7)
—
Change in contingent consideration . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . $ 565.7 $ 231.4 $ 94.0 $ 68.7 $ 26.9 $ 0.4 $ 987.1
—
22.1
75.7
231.3
2.8
—
(2.7)
35.0
(23.7)
—
(15.7)
11.1
5.0
—
12.4
26.5
35.1
92.6
1.4
—
—
—
30.9
2.9
68.7
—
—
—
—
—
24.3
26.9
—
—
—
Net income (loss) allocated to common
Year Ended December 31,
2020
Options
North
American
Equities
Europe
and Asia
Pacific Futures
Global
FX
Corporate Total
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 278.6 $ 132.0 $ 46.7 $ 25.4 $ 5.8 $ (21.5) $ 467.0
37.6
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . .
—
192.2
Income tax provision (benefit) . . . . . . . . . . . . . . . . 151.8
158.5
Depreciation and amortization . . . . . . . . . . . . . . .
30.9
855.3
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461.3
45.2
12.9
Acquisition-related costs . . . . . . . . . . . . . . . . . . . .
6.7
1.7
Provision for notes receivable . . . . . . . . . . . . . . . .
Bargain purchase gain . . . . . . . . . . . . . . . . . . . . . .
(32.6)
—
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . $ 475.9 $ 248.1 $ 63.1 $ 56.9 $ 32.4 $ (1.8) $ 874.6
—
27.3
68.7
228.0
15.1
5.0
—
30.7
(27.6)
—
(18.4)
17.2
—
(0.6)
6.9
12.4
29.1
95.1
—
—
(32.0)
—
28.3
3.2
56.9
—
—
—
—
—
26.6
32.4
—
—
—
The following is a reconciliation of net income allocated to common stockholders to adjusted earnings (in millions):
Net income allocated to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bargain purchase gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax effect of adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of tax reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax re-measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income allocated to participating securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
$
2021
527.3 $
126.6
15.6
—
—
5.0
(2.7)
(31.8)
(5.4)
14.6
(0.4)
$
648.8 $
2020
467.0
124.7
45.2
6.7
(32.6)
—
—
(38.0)
—
4.1
(0.6)
576.5
67
The following summarizes changes in certain operational and financial metrics for the year ended December 31,
2021 compared to the year ended December 31, 2020:
Index Options
Multi-Listed Options
U.S. Equities - Exchange
2.0
2.0
)
s
n
o
1.0
11.0
10.0
)
s
n
o
10.1
0.08
2.0
)
s
n
o
0.03
1.8
1.7
i
l
l
i
l
m
n
i
(
e
m
u
o
V
y
l
i
a
D
e
g
a
r
e
v
A
1.5
1.0
)
s
n
o
i
l
l
i
m
n
i
D
A
C
(
l
e
m
u
o
V
y
l
i
a
D
e
g
a
r
e
v
A
55
50
45
40
35
30
25
20
)
s
n
o
i
l
l
i
m
n
i
(
e
m
u
o
V
l
t
n
e
m
e
l
t
t
e
S
t
e
N
12
10
8
6
4
2
1.8
2021
2020
Average Daily Volume
Revenue per contract
Canadian Equities
49.4
43.1
t
c
a
r
t
n
o
c
r
e
p
e
u
n
e
v
e
R
0.8
0.6
12.0
10.0
8.0
6.0
4.0
D
A
C
n
i
,
s
e
r
a
h
s
d
e
h
c
u
o
t
0
0
0
,
0
1
r
e
p
e
r
u
t
p
a
c
t
e
N
i
l
l
i
l
m
n
i
(
e
m
u
o
V
y
l
i
a
D
e
g
a
r
e
v
A
9.0
8.0
7.0
6.0
5.0
)
s
n
o
i
l
l
i
b
n
i
€
(
e
u
l
a
V
l
a
n
o
i
t
a
N
y
l
i
a
D
e
g
a
r
e
v
A
9
8
7
6
5
4
3
t
c
a
r
t
n
o
c
r
e
p
e
u
n
e
v
e
R
8.3
0.06
0.04
i
l
l
i
l
b
n
i
(
e
m
u
o
V
y
l
i
a
D
e
g
a
r
e
v
A
1.5
0.02
s
e
r
a
h
s
d
e
h
c
u
o
t
0
0
1
r
e
p
e
r
u
t
p
a
c
t
e
N
2021
2020
Average Daily Volume
Revenue per contract
0.02
1.0
0.01
2021
2020
Average Daily Volume
Net capture per 100 touched shares
European Equities
EuroCCP - Trades Cleared
0.4
1,400
0.012
7.7
1,244.2
6.9
0.3
0.2
R
U
E
n
i
i
,
s
t
n
o
p
s
i
s
a
b
n
i
e
u
l
a
v
d
e
h
c
t
a
m
e
r
u
t
p
a
c
t
e
N
)
s
n
o
i
l
l
i
m
n
i
(
d
e
r
a
e
l
C
s
e
d
a
r
T
1,200
1,000
800
600
0.011
R
U
E
n
i
,
d
e
r
a
e
l
c
e
d
a
r
t
r
e
p
e
e
F
545.5
0.1
400
0.010
2021
2020
2021
2020
Average Daily Volume
Average Daily Notional Value
2021
2020
Trades Cleared
Net capture per 10,000 touched shares, in CAD
Net capture per matched value in basis points, in EUR
Fee per trade cleared, in EUR
EuroCCP - Net Settlement
Volume
9.9
4.1
250
200
150
)
s
d
n
a
s
u
o
h
t
n
i
(
e
m
u
o
V
y
l
i
a
D
e
g
a
r
e
v
A
l
1.1
0.9
0.7
R
U
E
n
i
,
t
n
e
m
e
l
t
t
e
s
r
e
p
e
e
f
t
e
N
Futures
Global FX
34.7
33.9
230.4
200.6
2.5
2.0
1.5
t
c
a
r
t
n
o
c
r
e
p
e
u
n
e
v
e
R
35
30
)
s
n
o
i
l
l
i
b
n
i
$
(
e
u
l
a
V
l
a
n
o
i
t
a
N
y
l
i
a
D
e
g
a
r
e
v
A
0.5
100
1.0
25
2021
2020
Net Settlement Volume
Net fee per settlement, in EUR
2021
2020
Average Daily Volume
Revenue per contract
2021
2020
Average Daily Notional Value
Net capture per one million dollars traded
4.0
3.0
2.0
1.0
d
e
d
a
r
t
s
r
a
l
l
o
d
n
o
i
l
l
i
m
e
n
o
r
e
p
e
r
u
t
p
a
c
t
e
N
68
The following table includes operational and financial metrics for our Options, North American Equities, Europe and
Asia Pacific, Futures, and Global FX segments. The metrics listed for Canadian Equities, EuroCCP, BIDS Trading,
Australian Equities, and Japanese Equities in the table below are included as a result of acquisitions completed during
2020 and 2021. Therefore, the table does not include results from the periods preceding each acquisition for the
applicable metrics. The following summarizes changes in certain operational and financial metrics for the year ended
December 31, 2021, compared to the year ended December 31, 2020.
Year Ended
December 31,
2021
2020
Increase/
(Decrease)
Percent
Change
(in millions, except percentages, trading days, and as noted below)
Options:
Average daily volume (ADV) (in millions of contracts):
Market ADV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total touched contracts (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index contract ADV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Multi-Listed contract ADV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Options revenue per contract (RPC) (2) . . . . . . . . . . . . . . . . . . . . . . .
Multi-Listed Options RPC (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index Options RPC (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Options Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Multi-Listed Options Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index Options Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North American Equities:
U.S. Equities:
U.S. Equities - Exchange:
ADV:
Total touched shares (in billions) (1) . . . . . . . . . . . . . . . . . . . . . . . .
Market ADV (in billions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Equities (net capture per one hundred touched shares) (3) . . . . . . . .
U.S. ETPs: launches (number of launches) . . . . . . . . . . . . . . . . . . . . . . .
U.S. ETPs: listings (number of listings) . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Equities - Off-Exchange (3):
ADV:
$
$
Total touched shares (in millions) (1) . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Equities - Off-Exchange (net capture per one hundred touched
shares) (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Canadian Equities:
ADV (matched shares, in millions) (6) . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net capture (per 10,000 touched shares, in Canadian dollars) (7) . . . . . . . .
Europe and Asia Pacific:
European Equities:
ADNV:
Matched ADNV (in billions) (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market ADNV (in billions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net capture (per matched notional value in basis points) (9) . . . . . . . . . . . .
EuroCCP:
Trades cleared (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fee per trade cleared (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net settlement volume (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net fee per settlement (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australian Equities:
ADNV (AUD billions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market share - Continuous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net capture (per matched notional value in basis points) (14) . . . . . . . . . . .
Japanese Equities:
ADNV (JPY billions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market share - Lit Continuous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net capture (per matched notional value in basis points) (15) . . . . . . . . . . .
Futures:
ADV (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue per contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global FX:
ADNV (in billions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global FX (net capture per one million dollars traded) (16) . . . . . . . . . . . . . .
Average British pound/U.S. dollar exchange rate . . . . . . . . . . . . . . . . . . . . . .
Average Canadian dollar/U.S. dollar exchange rate . . . . . . . . . . . . . . . . . . . .
Average Euro/U.S. dollar exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Euro/British pound exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Australian dollar/U.S. dollar exchange rate . . . . . . . . . . . . . . . . . . . .
Average Japanese Yen/U.S. dollar exchange rate . . . . . . . . . . . . . . . . . . . . .
€
€
€
$
¥
$
$
$
$
$
£
$
$
* Not meaningful
39.2
12.1
2.0
10.1
252
0.192
0.067
0.832
30.8 %
27.1 %
98.7 %
1.7
11.4
14.2 %
0.020
117
539
83.0
0.120
252
49.4
251
7.822
7.7
42.6
258
18.1 %
0.267
1,244.2
0.011
9.9
0.871
0.8
130
15.9 %
0.172
100.1
123
2.7 %
0.361
230.4
252
1.641
33.9
260
2.73
1.375
0.798
1.183
0.860
0.726
0.009
$
$
$
€
€
€
$
¥
$
$
$
$
$
£
$
$
29.5
10.1
1.8
8.3
253
0.193
0.057
0.819
34.3 %
30.0 %
99.2 %
1.8
10.9
15.8 %
0.021
114
437
—
—
253
43.1
104
8.264
6.9
40.1
258
17.2 %
0.249
545.5
0.011
4.1
0.811
—
—
— %
—
—
—
— %
—
200.6
253
1.665
34.7
260
2.70
1.283
0.746
1.141
0.889
—
—
$
$
$
€
€
€
$
¥
$
$
$
$
$
£
$
$
9.7
2.0
0.2
1.8
(1)
(0.001)
0.010
0.013
(3.5)%
(2.9)%
(0.5)%
(0.1)
0.5
(1.6)%
(0.001)
3
102
83
0.120
(1)
6.3
147
(0.442)
0.8
2.5
—
0.9 %
0.018
698.7
—
5.8
0.060
0.8
130
15.9 %
0.172
100.1
123
2.7 %
0.361
29.8
(1)
(0.024)
(0.8)
—
0.03
0.092
0.052
0.042
(0.029)
0.726
0.009
33 %
20 %
11 %
22 %
(0)%
(1)%
18 %
2 %
*
*
*
(6)%
5 %
*
(5)%
3 %
23 %
— %
— %
— %
15 %
141 %
(5)%
12 %
6 %
— %
*
7 %
128 %
— %
141 %
7 %
— %
— %
*
— %
— %
— %
*
— %
15 %
(0)%
(1)%
(2)%
— %
1 %
7 %
7 %
4 %
(3)%
— %
— %
69
(1) Touched volume represents the total number of shares of equity securities and ETFs internally matched on our
exchanges or routed to and executed on an external market center.
(2) Average revenue per contract, for options and futures represents total net transaction fees recognized for the period
divided by total contracts traded during the period.
(3) Net capture per one hundred touched shares refers to transaction fees less liquidity payments and routing and
clearing costs divided by the product of one-hundredth ADV of touched shares on BZX, BYX, EDGX, and EDGA
and the number of trading days.
(4) U.S. Equities – Off-Exchange data reflects Cboe’s acquisition of BIDS Trading, effective December 31, 2020.
(5) Net capture per 100 touched shares refers to transaction fees less order and execution management system
(OMS/EMS) fees and clearing costs divided by the product of one-hundredth ADV of touched shares on BIDS
Trading and the number of trading days for the period.
(6) Matched volume represents the total number of shares of equity securities and ETFs activity executed on our
exchanges.
(7) Net capture per 10,000 touched shares refers to transaction fees divided by the product of one-ten thousandth ADV
of shares for MATCHNow and the number of trading days.
(8) Matched ADNV represents the average daily notional value of shares or contracts executed on our exchanges.
(9) Net capture per matched notional value refers to transaction fees less liquidity payments in British pounds divided
by the product of ADNV in British pounds of shares matched on Cboe Europe Equities and Derivatives and the
number of trading days.
(10) Trades cleared refers to the total number of non-interoperable trades cleared.
(11) Fee per trade cleared refers to clearing fees divided by number of non-interoperable trades cleared.
(12) Net settlement volume refers to the total number of settlements executed after netting.
(13) Net fee per settlement refers to settlement fees less direct costs incurred to settle divided by the number of
settlements executed after netting.
(14) Net capture per matched notional value refers to transaction fees less liquidity payments in Australian dollars
divided by the product of ADNV in Australian dollars of shares matched on Cboe Australia and the number of
Australian Equities trading days.
(15) Net capture per matched notional value refers to transaction fees less liquidity payments in Japanese Yen divided
by the product of ADNV in Japanese Yen of shares matched on Cboe Japan and the number of Japanese Equities
trading days.
(16) Net capture per one million dollars traded refers to net transaction fees less liquidity payments, if any, divided by the
Spot and SEF products of one-thousandth of ADNV traded on the Cboe FX Markets and the number of trading
days, divided by two, which represents the buyer and seller that are both charged on the transaction.
70
Revenues
Total revenues for the year ended December 31, 2021 increased $67.7 million, or 2%, compared to the prior period
primarily due to a $275.1 million, or 11%, increase in transaction and clearing fees as a result of increased volumes
traded on the Options exchanges and additional revenues attributable to acquisitions made in 2020 and 2021, partially
offset by a decrease in regulatory fees as a result of a decline in the Section 31 fee rate. The following summarizes
changes in revenues for the year ended December 31, 2021 compared to the year ended December 31, 2020 (in millions,
except percentages):
Transaction and clearing fees . . . . . . . . . . . . . . . . . .
Access and capacity fees . . . . . . . . . . . . . . . . . . . . .
Market data fees . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulatory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction and Clearing Fees
Year Ended
December 31,
2021
2,693.1
280.7
252.1
208.3
60.6
3,494.8
$
$
2020
2,418.0
236.7
232.0
500.2
40.2
3,427.1
$
$
Increase/
(Decrease)
Percent
Change
$
$
275.1
44.0
20.1
(291.9)
20.4
67.7
11 %
19 %
9 %
(58)%
51 %
2 %
Transaction and clearing fees increased for the year ended December 31, 2021 compared to the same period in
2020 primarily due to a 33% increase in overall options market ADV, including a 22% increase in multi-listed options ADV,
additional transaction and clearing fees attributed to EuroCCP and BIDS, which the Company acquired in the third quarter
of 2020 and the end of the fourth quarter of 2020, respectively, and a 12% increase in European Equities matched ADNV.
Access and Capacity Fees
Access and capacity fees increased for the year ended December 31, 2021 compared to the same period in 2020
primarily due to increases in subscribers which results in an increase in logical port revenue across the Options, Europe
and Asia Pacific, and North American Equities segments, coupled with an increase in physical port revenue in the North
American Equities and Options segments.
Market Data Fees
Market data fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily
due to an increase in subscribers and additional revenue attributed to Chi-X Asia Pacific, which the Company acquired in
the third quarter of 2021.
Regulatory Fees
Regulatory fees decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily
due to a decrease in Section 31 fees as the result of a 64% decline in the Section 31 fee rate, from an average rate of
$21.90 per million dollars of covered sales in 2020 to an average rate of $7.80 per million dollars of covered sales in
2021.
Other Revenue
Other revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due
to additional interest income from EuroCCP, as well as an increase in trade reporting revenue within the Europe and Asia
Pacific segment.
71
Cost of Revenues
Cost of revenues decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily
due to lower Section 31 fees as a result of a decline in the Section 31 fee rate, partially offset by higher liquidity payments
as a result of increased volumes traded on the Options exchanges. The following summarizes changes in cost of
revenues for the year ended December 31, 2021 compared to the year ended December 31, 2020 (in millions, except
percentages):
Liquidity payments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Routing and clearing . . . . . . . . . . . . . . . . . . . . . . . . .
Section 31 fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Year Ended
December 31,
2021
1,650.7
87.8
179.6
86.3
14.3
2,018.7
2020
1,554.1
70.4
465.0
83.4
(0.1)
2,172.8
$
$
Increase/
(Decrease)
Percent
Change
$
$
96.6
17.4
(285.4)
2.9
14.4
(154.1)
6 %
25 %
(61) %
3 %
*
(7) %
* Not meaningful
Liquidity Payments
Liquidity payments increased for the year ended December 31, 2021 compared to the same period in 2020 primarily
due to an increase in volumes traded on the Options exchanges.
Routing and Clearing
The increase in routing and clearing fees for the year ended December 31, 2021 compared to the same period in
2020 was primarily due to an increase in routing and clearing fees attributed to EuroCCP and BIDS, partially offset by a
decrease in routed shares on the U.S. Equities exchanges.
Section 31 Fees
Section 31 fees decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily
due to a 64% decline in the Section 31 fee rate, from an average rate of $21.90 per million dollars of covered sales in
2020 to an average rate of $7.80 per million dollars of covered sales in 2021.
Royalty Fees
Royalty fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to
an increase in trading volume in licensed products and increased fees related to the dissemination of market data through
CSMI, partially offset by a decline in fees from PULSe, which was decommissioned in the fourth quarter of 2020.
Other Cost of Revenues
Other cost of revenue increased for the year ended December 31, 2021 compared to the same period in 2020
primarily due to additional interest expense from EuroCCP.
Revenues Less Cost of Revenues
Revenues less cost of revenues increased $221.8 million, or 18%, for the year ended December 31, 2021 compared
to the same period in 2020 primarily due to a $161.1 million, or 20%, increase in transaction and clearing fees less
liquidity payments and routing and clearing costs, coupled with increases in access and capacity fees and market data
fees.
72
The following summarizes the components of revenues less cost of revenues for the year ended December 31, 2021,
presented as a percentage of revenues less cost of revenues and compared to the year ended December 31, 2020 (in
millions, except percentages):
Transaction and clearing fees less liquidity payments and routing
Percentage of
Revenues Less
Cost of
Revenues
Year Ended
December 31,
Percent
Change 2021 2020
Year Ended
December 31,
2021
2020
and clearing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
793.5
236.7
Access and capacity fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
232.0
Market data fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.2
Regulatory fees, less Section 31 fees . . . . . . . . . . . . . . . . . . . . . . .
(83.4)
Royalty fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40.3
Revenues less cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,476.1 $ 1,254.3
954.6 $
280.7
252.1
28.7
(86.3)
46.3
65 % 63 %
20 %
19 %
19 %
19 %
18 %
17 %
9 %
3 %
2 %
(18)%
(7)%
(6)%
(3)%
15 %
3 %
3 %
18 % 100 % 100 %
Transaction and Clearing Fees Less Liquidity Payments and Routing and Clearing Costs
Transaction and clearing fees less liquidity payments and routing and clearing costs (“Net Transaction and Clearing
Fees”) increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a 33%
increase in overall options market ADV, additional net transaction and clearing fees attributed to BIDS and EuroCCP, and
a 12% increase in European Equities matched ADNV, partially offset by a 5% decrease in net capture on the U.S.
Equities exchanges.
Access and Capacity Fees
Access and capacity fees increased for the year ended December 31, 2021 compared to the same period in 2020
primarily due to an increase in logical port revenue across the Options, Europe and Asia Pacific, and North American
Equities segments, coupled with an increase in physical port revenue in the North American Equities and Options
segments.
Market Data Fees
Market data fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily
due to an increase in subscribers and additional revenue attributed to Chi-X Asia Pacific.
Regulatory Fees, Less Section 31 Fees
Regulatory fees, less Section 31 fees, decreased for the year ended December 31, 2021 compared to the same
period in 2020 primarily due to a decline in the ORF rate effective August 2, 2021, coupled with a decrease in fines and
assessment fees.
Royalty Fees
Royalty fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to
an increase in trading volume in licensed products and increased fees related to the dissemination of market data through
CSMI, partially offset by a decline in fees from PULSe, which was decommissioned in the fourth quarter of 2020.
Other
Other revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due
to additional net interest income from EuroCCP, as well as an increase in trade reporting revenue within the Europe and
Asia Pacific segment.
73
Operating Expenses
For the year ended December 31, 2021 compared to the year ended December 31, 2020, total operating expenses
increased primarily due to increases in compensation and benefits, professional fees and outside services, and
technology support services, partially offset by a decline in acquisition-related costs. The following summarizes changes
in operating expenses for the year ended December 31, 2021 compared to the year ended December 31, 2020 (in
millions, except percentages):
Year Ended
December 31,
2021
2020
Increase/
Percent
(Decrease) Change
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 288.5 $ 224.9 $
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology support services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees and outside services . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel and promotional expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Facilities costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 670.2 $ 592.1 $
158.5
54.5
60.6
6.6
17.6
45.2
24.2
167.4
66.7
83.7
9.7
22.2
15.6
16.4
63.6
8.9
12.2
23.1
3.1
4.6
(29.6)
(7.8)
78.1
28 %
6 %
22 %
38 %
47 %
26 %
(65)%
(32)%
13 %
Compensation and Benefits
Compensation and benefits increased for the year ended December 31, 2021 compared to the same period in 2020
primarily due to a $62.4 million increase in salaries, wages, bonuses, and benefits, driven by a $30.9 million increase in
compensation and benefits expense related to acquisitions made in 2020 and 2021, as well as a $30.5 million increase in
compensation and benefits expense related to increased headcount excluding acquisitions, partially offset by a $3.7
million increase in capitalized wages due to an increase in software projects eligible for capitalization.
Depreciation and Amortization
Depreciation and amortization increased for the year ended December 31, 2021 compared to the same period in
2020 primarily due to an increase in depreciation and amortization expense resulting from acquisitions made in 2020 and
2021, coupled with an increase in leasehold improvements related to the new headquarters location, partially offset by a
decline in amortization under the discounted cash flow method for the intangibles acquired in the Bats acquisition.
Technology Support Services
Technology support services costs increased for the year ended December 31, 2021 compared to the same period in
2020 primarily due to increased market data support services fees, data center hosting, network and phone connectivity
support services fees, and hardware maintenance fees related to acquisitions made in 2020 and 2021.
Professional Fees and Outside Services
Professional and outside services fees increased for the year ended December 31, 2021 compared to the same
period in 2020 primarily due to increases in legal fees of $7.8 million driven by additional litigation fees and higher general
legal fees, regulatory fees of $5.4 million driven by rising CAT costs, $3.7 million in contract services, and $2.4 million in
consulting fees in connection with acquisitions made in 2020 and 2021.
Travel and Promotional Expenses
Travel and promotional expenses increased for the year ended December 31, 2021 compared to the same period in
2020 primarily due to an increase in marketing and advertising expenses attributable to promotional efforts.
Facilities Costs
Facilities costs increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due
to an increase in rent expense related to the new headquarters building, additional office locations due to acquisitions
made in 2020 and 2021, and the new trading floor location.
74
Acquisition-Related Costs
Acquisition-related costs decreased for the year ended December 31, 2021 compared to the same period in 2020
primarily due to a decrease in overall acquisition activity, partially offset by the $11.0 million write-off of the Company’s
investment in Signal Trading Systems, LLC in the fourth quarter of 2020, coupled with the $8.1 million facilities-related
impairment charge in the second quarter of 2020.
Other Expenses
Other expenses decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily
due to a $6.7 million provision for notes receivable recorded in the third quarter of 2020, related to the CAT, as well as a
gain on change in contingent consideration related to MATCHNow recorded in the fourth quarter of 2021, partially offset
by increases in taxes, licenses, permits, and training and education expenses.
Operating Income
As a result of the items above, operating income for the year ended December 31, 2021 was $805.9 million,
compared to $662.2 million for the year ended December 31, 2020, an increase of $143.7 million, or 22%.
Interest Expense, Net
Net interest expense increased for the year ended December 31, 2021 compared to the same period in 2020
primarily due to commitment fees related to the EuroCCP Credit Facility, which was entered into in July 2020 and
subsequently amended and restated in July 2021, as well as additional interest expense related to the 1.625% Senior
Notes issued in the fourth quarter of 2020.
Other (Expense) Income, Net
Net other (expense) income decreased for the year ended December 31, 2021 compared to the same period in 2020
primarily due to the $32.6 million bargain purchase gain related to the EuroCCP acquisition recorded in the third quarter of
2020, coupled with a $5.0 million impairment on investment recorded in the third quarter of 2021.
Income Before Income Tax Provision
As a result of the above, income before income tax provision for the year ended December 31, 2021 was $756.1
million compared to $660.4 million for the year ended December 31, 2020, an increase of $95.7 million, or 14%.
Income Tax Provision
For the year ended December 31, 2021, the income tax provision was $227.1 million compared to $192.2 million for
the year ended December 31, 2020, an increase of $34.9 million, primarily due to the increase in income before income
tax provision and a higher effective tax rate for the year ended December 31, 2021. The effective tax rate for the year
ended December 31, 2021 was 30.0%, compared to a rate of 29.1% for the year ended December 31, 2020.
Net Income
As a result of the items above, net income for the year ended December 31, 2021 was $529.0 million, or 36% of
revenues less cost of revenues, compared to $468.2 million, or 37% of revenues less cost of revenues, for the year ended
December 31, 2020, an increase of $60.8 million, or 13%.
75
Segment Operating Results
We report results from our five segments: Options, North American Equities, Europe and Asia Pacific, Futures, and
Global FX. Segment performance is primarily based on operating income (loss). We have aggregated all corporate costs,
as well as other business ventures, within Corporate Items and Eliminations as those activities should not be used to
evaluate a segment's operating performance. All operating expenses that relate to activities of a specific segment have
been allocated to that segment.
The following summarizes our total revenues by segment (in millions, except percentages):
Total revenues by segment
$4,000.0
$3,500.0
$3,000.0
$2,500.0
)
s
n
o
i
l
l
i
m
n
i
(
$2,000.0
$1,500.0
$1,000.0
$500.0
$-
$3,494.5
$58.1 2%
$240.3 7%
$1,570.5
45%
$120.6 3%
$1,505.0
43%
$3,427.1
$57.8 2%
$140.5 4%
$1,789.5
52%
$109.2 3%
$1,330.1
39%
Options
Futures
North American Equities
Europe and Asia Pacific
Global FX
2021
2020
Note, the chart excludes Corporate revenues of $0.3 million for the year ended December 31, 2021.
Year Ended
December 31,
Percent
Percentage of
Total
Revenues
Year Ended
December 31,
2021
2020
Change
2021
2020
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,505.0 $ 1,330.1
1,789.5
North American Equities . . . . . . . . . . . . . . . . . . . . . .
140.5
Europe and Asia Pacific . . . . . . . . . . . . . . . . . . . . . .
109.2
Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57.8
Global FX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,494.8 $ 3,427.1
1,570.5
240.3
120.6
58.1
0.3
13 %
(12)%
71 %
10 %
1 %
*
2 %
43 %
45 %
7 %
3 %
2 %
— %
100 %
39 %
52 %
4 %
3 %
2 %
— %
100 %
* Not meaningful
76
The following summarizes our revenues less cost of revenues by segment (in millions, except percentages):
Revenues less cost of revenues by segment
$1,475.8
$57.6 4%
$183.9 12%
$362.5
25%
$116.8 8%
$755.0
51%
)
s
n
o
i
l
l
i
m
n
i
(
$1,600.0
$1,400.0
$1,200.0
$1,000.0
$800.0
$600.0
$400.0
$200.0
$-
$1,254.3
$57.8 5%
$114.4 9%
$326.6
26%
$105.8 8%
$649.7
52%
Options
Futures
2021
North American Equities
2020
Europe and Asia Pacific
Global FX
Note, the chart excludes Corporate revenues less cost of revenues of $0.3 million for the year ended December 31, 2021.
Year Ended
December 31,
Percent
Change
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
North American Equities . . . . . . . . . . . . . . . . . . . . . .
Europe and Asia Pacific . . . . . . . . . . . . . . . . . . . . . .
Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global FX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
649.7
326.6
114.4
105.8
57.8
—
Total revenues less cost of revenues . . . . . . . . . . . $ 1,476.1 $ 1,254.3
2021
755.0 $
362.5
183.9
116.8
57.6
0.3
Percentage of
Total Revenues
less Cost of Revenues
Year Ended
December 31,
2021
2020
16 %
11 %
61 %
10 %
(0)%
*
18 %
51 %
25 %
12 %
8 %
4 %
— %
100 %
52 %
26 %
9 %
8 %
5 %
— %
100 %
* Not meaningful
77
Options
The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and
EBITDA margin for our Options segment (in millions, except percentages):
Revenues less cost of revenues . . . . . . . . . . . . . . . $ 755.0
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . .
217.0
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 538.0
EBITDA (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 565.4
EBITDA margin (2) . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
74.9 %
$
2021
2020
649.7
219.3
430.4
461.3
71.0 %
Percent
Change
16 %
(1)%
25 %
23 %
*
Year Ended
December 31,
Percentage
of Total
Revenues
Year Ended
December 31,
2021
2020
50 %
14 %
36 %
38 %
*
49 %
16 %
32 %
35 %
*
* Not meaningful
(1) See footnote (2) to the table under “Overview” above for a reconciliation of net income to EBITDA, and
management’s reasons for using such non-GAAP measures.
(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.
Revenues less cost of revenues increased $105.3 million for the year ended December 31, 2021 compared to the
year ended December 31, 2020 primarily due to a 22% increase in multi-listed options ADV, coupled with an 11%
increase in index options ADV and an 18% increase in multi-listed options RPC. For the year ended December 31, 2021,
operating income increased $107.6 million compared to the year ended December 31, 2020 primarily due to an increase
in revenues less cost of revenues. Operating expenses decreased $2.3 million for the year ended December 31, 2021
compared to the year ended December 31, 2020 primarily due to a decrease in acquisition-related costs, partially offset
by increases in compensation and benefits, facilities costs, and travel and promotional expenses.
North American Equities
The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and
EBITDA margin for our North American Equities segment (in millions, except percentages):
Revenues less cost of revenues . . . . . . . . . . . . . . . . $
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EBITDA (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EBITDA margin (2) . . . . . . . . . . . . . . . . . . . . . . . . . .
* Not meaningful
$
2021
362.5
206.4
156.1
231.3
$
$
63.8 %
Year Ended
December 31,
2020
326.6
167.1
159.5
228.0
Percent
Change
11 %
24 %
(2)%
1 %
69.8 %
*
Percentage
of Total
Revenues
Year Ended
December 31,
2021
2020
23 %
13 %
10 %
15 %
*
18 %
9 %
9 %
13 %
*
(1) See footnote (2) to the table under “Overview” above for a reconciliation of net income to EBITDA, and
management’s reasons for using such non-GAAP measures.
(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.
Revenues less cost of revenues increased $35.9 million for the year ended December 31, 2021 compared to the year
ended December 31, 2020 primarily due to additional revenue attributed to BIDS. For the year ended December 31, 2021,
operating income decreased $3.4 million compared to the year ended December 31, 2020 due to an increase in operating
expenses, partially offset by an increase in revenues less cost of revenues. Operating expenses increased $39.3 million
for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to increases in
compensation and benefits and professional fees and outside services, partially offset by decreases in acquisition-related
costs and other expenses.
78
Europe and Asia Pacific
The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and
EBITDA margin for our Europe and Asia Pacific segment (in millions, except percentages):
Year Ended
December 31,
Percent
Revenues less cost of revenues . . . . . . . . . . . . . . . . $
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EBITDA (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EBITDA margin (2) . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2021
183.9
127.9
$
56.0
92.6
$
50.4 %
* Not meaningful
Change
61 %
58 %
67 %
(3)%
2020
114.4
80.9
33.5
95.1
83.1 %
*
Percentage
of Total
Revenues
Year Ended
December 31,
2021
2020
77 %
53 %
23 %
39 %
*
81 %
58 %
24 %
68 %
*
(1) See footnote (2) to the table under “Overview” above for a reconciliation of net income to EBITDA, and
management’s reasons for using such non-GAAP measures.
(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.
Revenues less cost of revenues increased $69.5 million for the year ended December 31, 2021 compared to the year
ended December 31, 2020 primarily due to additional revenue attributed to EuroCCP, Cboe Australia, and Cboe Japan,
as well as a 12% increase in European Equities matched ADNV. For the year ended December 31, 2021, operating
income increased $22.5 million compared to the year ended December 31, 2020 due to an increase in revenues less cost
of revenues, partially offset by an increase in operating expenses. Operating expenses increased $47.0 million for the
year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to increases in
compensation and benefits, technology support services, depreciation and amortization, and professional fees and
outside services.
Futures
The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA, and
EBITDA margin for our Futures segment (in millions, except percentages):
Revenues less cost of revenues . . . . . . . . . . . . . . . . $
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EBITDA (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EBITDA margin (2) . . . . . . . . . . . . . . . . . . . . . . . . . .
* Not meaningful
Year Ended
December 31,
Percent
$
2021
116.8
50.8
$
66.0
68.7
$
58.8 %
2020
105.8
52.0
53.8
56.9
53.8 %
Change
10 %
(2) %
23 %
21 %
*
Percentage
of Total
Revenues
Year Ended
December 31,
2021
2020
97 %
42 %
55 %
57 %
*
97 %
48 %
49 %
52 %
*
(1) See footnote (2) to the table under “Overview” above for a reconciliation of net income to EBITDA, and
management’s reasons for using such non-GAAP measures.
(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.
Revenues less cost of revenues increased $11.0 million for the year ended December 31, 2021 compared to the year
ended December 31, 2020 primarily due to a 15% increase in Futures ADV. For the year ended December 31, 2021,
operating income increased $12.2 million compared to the year ended December 31, 2020 due to an increase in
revenues less cost of revenues. Operating expenses decreased $1.2 million for the year ended December 31, 2021
79
compared to the year ended December 31, 2020 primarily due to decreases in other expenses, compensation and
benefits, and technology and support services, partially offset by an increase in travel and promotional expenses.
Global FX
The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and
EBITDA margin for our Global FX segment (in millions, except percentages):
Revenues less cost of revenues . . . . . . . . . . . . . . . $
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . $
EBITDA (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EBITDA margin (2) . . . . . . . . . . . . . . . . . . . . . . . . .
$
57.6
54.9
$
2.7
26.9
$
46.7 %
* Not meaningful
Year Ended
December 31,
2021
2020
Percent
Change
(0)%
6 %
(55)%
(17)%
*
57.8
51.8
6.0
32.4
56.1 %
Percentage
of Total
Revenues
Year Ended
December 31,
2021
99 %
94 %
5 %
46 %
*
2020
100 %
90 %
10 %
56 %
*
(1) See footnote (2) to the table under “Overview” above for a reconciliation of net income to EBITDA, and
management’s reasons for using such non-GAAP measures.
(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.
Revenues less cost of revenues decreased $0.2 million for the year ended December 31, 2021 compared to the year
ended December 31, 2020 primarily due to a 2% decrease in Global FX ADNV. For the year ended December 31, 2021,
operating income decreased $3.3 million compared to the year ended December 31, 2020 due to an increase in operating
expenses. Operating expenses increased $3.1 million for the year ended December 31, 2021 compared to the year
ended December 31, 2020 primarily due to increases in compensation and benefits and professional fees and outside
services, partially offset by a decrease in depreciation and amortization.
80
LIQUIDITY AND CAPITAL RESOURCES
Below are charts that reflect elements of our capital allocation:
)
s
n
o
i
l
l
i
m
n
I
(
$1,500.0
$1,250.0
$1,000.0
$750.0
$500.0
$250.0
$-
Dividends Paid
(in millions)
$193.3
$170.6
Outstanding Debt
$1,299.3
$1,203.9
$1,299.3
$1,135.2
December 31, 2021
$68.7
December 31, 2020
Short-Term Debt
Long-Term Debt
Repurchases under Share
Repurchase Program
(in millions)
Dividends per share
$349.1
$1.80
$1.56
2021
2020
$81.3
2021
2020
2021
2020
We expect our cash on hand at December 31, 2021 and other available resources, including cash generated from
operations, to be sufficient to continue to meet our cash requirements for the foreseeable future. In the near term, we
expect that our cash from operations and availability under the Revolving Credit Facility will meet our cash needs to fund
our operations, capital expenditures, interest payments on debt, debt repayments, any dividends, and opportunities for
common stock repurchases under the previously announced program. We may also utilize excess cash on hand to pay
down amounts outstanding under the Term Loan Agreement. See Note 12 (“Debt”) to the consolidated financial
statements for further information. To the extent that our cash sources are insufficient to fund our potential acquisitions,
we may participate in future financing transactions to obtain additional capital.
EuroCCP also has a €1.5 billion committed syndicated multicurrency revolving and swingline credit facility agreement
with EuroCCP as borrower and the Company as guarantor of scheduled interest and fees on borrowings (but not the
principal amount of any borrowings), (the “Facility”). The Facility is available to be drawn by EuroCCP towards
(a) financing unsettled amounts in connection with the settlement of transactions in securities and other items processed
through EuroCCP’s clearing system and (b) financing any other liability or liquidity requirement of EuroCCP incurred in the
operation of its clearing system. Borrowings under the Facility are secured by cash, eligible bonds and eligible equity
assets deposited by EuroCCP into secured accounts. As a result, should the Facility be drawn by EuroCCP it could
potentially impact EuroCCP’s liquidity, and we can give no assurance that this Facility will be sufficient to meet all of such
obligations or sufficiently mitigate EuroCCP’s liquidity risk to meet its payment obligations when due. Additionally, a
default of the Facility may allow lenders, under certain circumstances, to accelerate any related drawn amounts and may
result in the acceleration of the Company’s other outstanding debt to which a cross-acceleration or cross-default provision
applies, which may limit the Company’s liquidity, business and financing activities. The Facility is expected to terminate on
June 30, 2022 and we may not be able to enter into a replacement facility on commercially reasonable terms, or at all.
Our long-term cash needs will depend on many factors, including an introduction of new products, enhancements of
current products, the geographic mix of our business and any potential acquisitions. We believe our cash from operations
and the availability under our Revolving Credit Facility will meet any long-term needs unless a significant acquisition or
acquisitions are identified, in which case we expect that we would be able to borrow the necessary funds and/or issue
additional shares of our common stock to complete such acquisition(s). In addition, we do not expect COVID-19 to have a
material impact on our liquidity or capital resources, including cash from operations or uses of cash, or change our ability
to access capital markets in the near term or the foreseeable future.
Cash and cash equivalents include cash in banks and all non-restricted, highly liquid investments with original
maturities of three months or less at the time of purchase. Cash and cash equivalents as of December 31, 2021 increased
81
$96.5 million from December 31, 2020 primarily due to results of operations, adjustment for depreciation expense,
proceeds from available-for-sale financial investments, and proceeds from the term loan modification, partially offset by
contributions to investments, cash dividends paid on common stock, and acquisitions, net of cash acquired. See “Cash
Flow” below for further discussion.
Our cash and cash equivalents held outside of the United States in various foreign subsidiaries totaled $185.9 million
and $128.2 million as of December 31, 2021 and December 31, 2020, respectively. The remaining balance was held in
the United States and totaled $156.0 million and $117.2 million as of December 31, 2021 and December 31, 2020,
respectively. The majority of cash held outside the United States is available for repatriation, but under current law, could
subject us to additional United States income taxes, less applicable foreign tax credits.
Our financial investments include deferred compensation plan assets as well as investments with original or acquired
maturities longer than three months but that mature in less than one year from the balance sheet date and are recorded at
fair value. As of December 31, 2021, financial investments consisted of U.S. Treasury securities and deferred
compensation plan assets.
Our off-balance sheet arrangements include clearing operations related to EuroCCP. See Note 14 (“Clearing
Operations”) for discussion of contingent assets and liabilities related to clearing operations in connection with the
Company’s acquisition of EuroCCP.
Cash Flow
The following table summarizes our cash flow data for the years ended December 31, 2021, 2020 and 2019 (in
millions):
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency exchange rate changes on cash, cash equivalents,
For the Year Ended
December 31,
2020
2021
596.8 $ 1,458.8 $ 632.8
(15.9)
(430.5)
(352.7)
(662.9)
(201.7)
(200.3)
2019
and restricted cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9.1)
1.6
0.2
Increase (decrease) in cash, cash equivalents, and restricted cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
34.7 $
828.2 $
(45.8)
Reconciliation of cash, cash equivalents, and restricted cash and cash
equivalents:
245.4 $ 229.3
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
812.1
Restricted cash and cash equivalents (margin deposits and clearing funds) . . . .
Restricted cash and cash equivalents (included in other current assets) . . . . . . .
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,092.2 $ 1,057.5 $ 229.3
341.9 $
745.9
4.4
As of December 31,
2020
2021
2019
Net Cash Flows Provided by Operating Activities
During the year ended December 31, 2021, net cash provided by operating activities was $67.8 million higher than
net income. The variance is primarily attributable to the adjustment for depreciation and amortization expense of $167.4
million, the change in accounts payable and accrued liabilities of $45.0 million, and the change in unrecognized tax
benefits of $33.2 million, partially offset by the change in Section 31 fees payable of $112.1 million and the change in
restricted cash and cash equivalents, driven by a $66.2 million decrease in margin deposits and clearing funds related to
EuroCCP for the year ended December 31, 2021.
Net cash flows provided by operating activities were $596.8 million and $1,458.8 million for the years ended
December 31, 2021 and 2020, respectively. The change in net cash flows provided by operating activities was primarily
due to the change in restricted cash and cash equivalents, driven by margin deposits and clearing funds related to
EuroCCP, as well as the change in Section 31 fees payable, partially offset by the change in accounts receivable, as well
as the change in the bargain purchase gain and provision for deferred income taxes for the year ended December 31,
2021 compared to the year ended December 31, 2020.
82
Net cash provided by operating activities was $990.6 million higher than net income for the fiscal year ended
December 31, 2020. The variance is primarily attributed to the addition of $812.1 million of restricted cash and cash
equivalents, driven by margin deposits and clearing funds related to EuroCCP, the adjustment for depreciation and
amortization expense of $158.5 million, the change in accounts payable and accrued liabilities of $59.4 million, and the
change in Section 31 fees payable of $53.9 million, partially offset by the change in accounts receivable of $90.0 million.
Net cash provided by operating activities was $1,458.8 million and $632.8 million for the years ended December 31,
2020 and 2019, respectively. The increase in net cash flows provided by operating activities was primarily due to the
addition of margin deposits and clearing funds resulting from the EuroCCP acquisition and the increase in net income.
Net Cash Flows Used in Investing Activities
During the year ended December 31, 2021, net cash used in investing activities primarily consisted of contributions to
investments of $209.8 million, acquisitions, net of cash acquired of $151.5 million, and purchases of available-for-sale
financial investments of $101.2 million, partially offset by proceeds from available-for-sale financial investments of $160.2
million.
Net cash flows used in investing activities were $352.7 million and $430.5 million for the years ended December 31,
2021 and 2020, respectively. The variance is primarily due to the change in acquisitions, net of cash acquired, and the
change in purchases of available-for-sale financial investments, partially offset by contributions to investments and the
change in proceeds from available-for-sale financial investments for the year ended December 31, 2021 compared to the
year ended December 31, 2020.
Net cash flows used in investing activities totaled $430.5 million and $15.9 million for the years ended December 31,
2020 and 2019, respectively. The variance is primarily due to acquisitions, net of cash acquired in 2020 and the return of
capital from investments in 2019.
Capital expenditures are expected to be in the range of $47.0 million to $52.0 million, reflecting expenditures
associated with the Company’s trading floor relocation, which is anticipated to occur in the second quarter of 2022,
ongoing capacity and technology-related investments, as well as anticipated project delays due to supply chain
interruptions.
Net Cash Flows Used in Financing Activities
During the year ended December 31, 2021, net cash used in financing activities primarily consisted of cash dividends
paid on common stock of $193.3 million and share repurchases of $81.3 million, partially offset by proceeds from long-
term debt of $110.0 million.
Net cash flows used in financing activities were $200.3 million and $201.7 million for the years ended December 31,
2021 and 2020, respectively. The variance is primarily due to the change in share repurchases, as well as the change in
principal payments of long-term debt, partially offset by the change in proceeds from long-term debt.
For the year ended December 31, 2020, the Company received proceeds from long-term debt of $493.7 million, of
which $70.0 million was used to pay down the revolving credit facility draw taken in the third quarter of 2020, repurchased
$349.1 million of common stock, paid dividends totaling $170.6 million, and paid down $155.0 million of long-term debt.
Net cash flows used in financing activities totaled $662.9 million for the year ended December 31, 2019. The
Company paid down $350.0 million of long-term debt, repurchased $156.9 million of common stock, and paid dividends of
$150.0 million.
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Financial Assets
The following summarizes our financial assets excluding margin deposits and clearing funds as of December 31,
2021, 2020 and 2019 (in millions):
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less deferred compensation plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less cash collected for Section 31 fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted cash (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
341.9 $
As of December 31,
2020
245.4 $
37.1
(28.0)
(25.9)
325.1 $
92.4
(24.5)
(103.0)
210.3 $
2019
229.3
71.0
(23.4)
(69.0)
207.9
(1) Adjusted cash is a non-GAAP measure and represents cash and cash equivalents plus financial investments, minus
deferred compensation plan assets and cash collected for Section 31 fees. We have presented adjusted cash
because we consider it an important supplemental measure of our liquidity and believe that it is frequently used by
analysts, investors and other interested parties in the evaluation of companies.
Debt
The following summarizes our debt obligations as of December 31, 2021, 2020 and 2019 (in millions):
Term Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3.650% Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.625% Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EuroCCP Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less unamortized discount and debt issuance costs . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,299.3 $ 1,203.9 $
650.0
500.0
—
—
(16.1)
70.0 $
2021
160.0 $
650.0
500.0
—
—
(10.7)
As of December 31,
2020
2019
225.0
650.0
—
—
—
(7.4)
867.6
At December 31, 2021, we were in compliance with the covenants of our debt agreements.
In addition to the debt outstanding, as of December 31, 2021, we had an additional $250.0 million available through
our revolving credit facility, with the ability to borrow another $100.0 million by increasing the commitments under the
facility. Together with adjusted cash, we had $675.1 million available to fund our operations, capital expenditures,
potential acquisitions, debt repayments and any dividends as of December 31, 2021.
Dividends
The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within
the discretion of the Company's Board of Directors and may be affected by various factors, including our earnings,
financial condition, capital requirements, level of indebtedness and other considerations our Board of Directors deems
relevant. Future debt obligations and statutory provisions, among other things, may limit, or in some cases prohibit, our
ability to pay dividends.
Share Repurchase Program
In 2011, the Board of Directors approved an initial authorization for the Company to repurchase shares of its
outstanding common stock of $100 million and approved additional authorizations of $100 million in each of 2012, 2013,
2014, 2015 and 2016, $250 million in each of 2018, 2019 and 2020, and $200 million in February 2021, for a total
authorization of $1.6 billion. The program permits the Company to purchase shares through a variety of methods,
including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It
does not obligate the Company to make any repurchases at any specific time or situation.
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Under the program, for the year ended December 31, 2021, the Company repurchased 822,005 shares of common
stock at an average cost per share of $98.82, totaling $81.3 million. Since inception of the program through December 31,
2021, the Company has repurchased 18,072,129 shares of common stock at an average cost per share of $68.12,
totaling $1.2 billion.
As of December 31, 2021, the Company had $318.9 million of availability remaining under its existing share
repurchase authorizations.
Lease and Obligations
The Company currently leases additional office space, data centers and remote network operations center, with lease
terms remaining from 7 months to 186 months as of December 31, 2021. In September 2019, we entered into two leases
that commenced in 2020 for a new principal office space and trading floor space, both located in Chicago, Illinois.
Additionally, in October 2021, the Company signed a new lease that commenced in February 2022 for a new principal
office space in Amsterdam. See Note 24 (“Leases”) to the consolidated financial statements for additional information.
Total rent expense related to current and former lease obligations for the years ended December 31, 2021, 2020 and
2019 totaled $25.6 million, $20.2 million and $12.4 million, respectively. In addition to our lease obligations, we have
contractual obligations related to certain operating leases, data and telecommunications agreements, and our long-term
debt outstanding.
Purchase obligations include our estimate of the minimum outstanding obligations under agreements to purchase
goods or services that we believe are enforceable and legally binding and that specify all significant terms, including fixed
or minimum quantities to be purchased; fixed or minimum and maximum amounts to be paid; and the approximate timing
of the transaction. Purchase obligations include certain licensing agreements with various licensors which contain annual
minimum fee requirements as well as payments calculated using agreed upon contract rates and reported cleared
volumes. Purchase obligations exclude agreements that are cancellable at any time without penalty.
We have excluded from the contractual obligations listed below $745.9 million in cash margin deposits and clearing
funds. Clearing participants of EuroCCP are required to make deposits to a clearing fund. The cash deposits made by
clearing participants are recorded in the consolidated balance sheet as current assets with equal and offsetting current
liabilities. See Note 14 (“Clearing Operations”) to the consolidated financial statements for additional information on
EuroCCP and the margin deposits and clearing funds.
Future minimum payments under these leases and agreements were as follows as of December 31, 2021:
Payments Due by Period
Less than
1 year
More than
1 year
Total
Contractual Obligations
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal payments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payments on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,525.3 $
149.1 $
871.5
1,310.0
194.7
19.3 $
69.0
—
33.1
129.8
802.5
1,310.0
161.6
121.4 $ 2,403.9
Commercial Commitments and Contractual Obligations
As of December 31, 2021, our commercial commitments and contractual obligations included operating leases, data
and telecommunications agreements, equipment leases, our long-term debt outstanding, contingent considerations and
other obligations. See Note 23 (“Commitments, Contingencies, and Guarantees”) to the consolidated financial statements
for a discussion of commitments and contingencies, Note 12 (“Debt”) for a discussion of the outstanding debt, Note 14
(“Clearing Operations”) for information on EuroCCP’s clearinghouse exposure guarantee, and Note 24 (“Leases”) for
discussion on operating leases and equipment leases.
Guarantees
We use Wedbush and Morgan Stanley to clear our routed equities transactions for our U.S. Equities exchanges.
Wedbush and Morgan Stanley guarantee the trade until one day after the trade date, after which time the NSCC provides
a guarantee. The BIDS Trading ATS platform delivers matched trades to BOA, which delivers the matched trades to the
NSCC. BOA guarantees the trade until one day after the trade date, after which time the NSCC provides a guarantee. In
85
the case of failure to perform on the part of Wedbush or Morgan Stanley on routed transactions for our U.S. Equities
exchanges, we provide the guarantee to the counterparty to the trader. In the case of failure to perform on the part of BOA
on transactions for the BIDS Trading ATS platform, BIDS has obligations to the counterparties to satisfy the trades. OCC
acts as a central counterparty on all transactions in listed equity options in our Options segment, and as such, guarantees
clearance and settlement of all of our options transactions. We believe that any potential requirement for us to make
payments under these guarantees is remote and accordingly, have not recorded any liability in the consolidated financial
statements for these guarantees. Similarly, with respect to U.S. listed equity options and futures, we deliver matched
trades of our customers to the OCC, which acts as a central counterparty on all transactions occurring on Cboe Options,
C2, BZX, EDGX, and CFE and, as such, guarantees clearance and settlement of all of our matched options and futures
trades. With respect to Canadian equities, we deliver matched trades of our customers to The Canadian Depository for
Securities, which acts as a central counterparty on all transactions occurring on MATCHNow and, as such, guarantees
clearance and settlement of all of our matched Canadian equities trades. With respect to Australian equities and
derivatives, we deliver matched trades of our customers to ASX Clear Pty Ltd and ASX Settlement Pty Ltd. ASX Clear Pty
Ltd acts as a central counterparty on all transactions occurring on Cboe Australia and, as such, guarantees clearance and
settlement on all of our matched trades in Australia. With respect to Japanese equities, we deliver matched trades of our
customers to the Japanese Securities Clearing Corporation, which acts as a central counterparty on all transactions
occurring on Cboe Japan and, as such, guarantees clearance and settlement on all of our matched trades in Japan.
CRITICAL ACCOUNTING ESTIMATES
The preparation of consolidated financial statements in conformity with U.S. GAAP requires our management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of the amounts of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ materially from those estimates. On an ongoing basis, the
Company evaluates its estimates, including those related to areas that require a significant level of judgment or are
otherwise subject to an inherent degree of uncertainty. The Company bases its estimates on historical experience,
observance of trends in particular areas, information available from outside sources and various other assumptions that
are believed to be reasonable under the circumstances. Information from these sources form the basis for making
judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources.
We have identified the estimates below as critical to our business operations and the understanding of our results of
operations. The impact of, and any associated risks related to, these estimates on our business operations is discussed
throughout "Management's Discussion and Analysis of Financial Condition and Results of Operations." For a detailed
discussion on these estimates and other accounting policies, see Note 2 (“Summary of Significant Accounting Policies”) to
the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Goodwill and Other Intangible Assets
Description
Our acquisitions of Bats, Cboe Vest Financial Group Inc. (“Vest”), Silexx Financial Systems, LLC (“Silexx”), LiveVol,
Hanweck, FT Options, Trade Alert, MATCHNow, BIDS Holdings and Chi-X APAC resulted in the recording of goodwill
and other intangible assets, while our acquisition of EuroCCP, resulted in a bargain purchase gain and other intangible
assets. In accordance with ASC 350—Intangibles—Goodwill and Other, we test the carrying values of goodwill and
indefinite-lived intangible assets for impairment at least annually, or more frequently when events or changes in
circumstances signal indicators of impairment are present.
Judgments and Uncertainties
The estimated fair values of our reporting units are based on the market approach and the income approach (using
discounted estimated future cash flows). The estimated fair values of indefinite-lived intangibles used the income
approach. The discounted estimated future cash flow analysis requires judgments about the discount rate, forecasted
revenue growth rate, and operating expenses, that are inherent in these fair value estimates over the estimated remaining
operating period. Additionally, the analysis contains uncertainty surrounding future events. As such, actual results may
differ from these estimates and lead to a revaluation of our goodwill and indefinite-lived intangible assets.
86
Effect if Actual Results Differ from Assumptions
If updated estimates indicate that the fair value of goodwill or any indefinite-lived intangibles is less than the carrying
value of the asset, an impairment charge is expected to be recorded in the consolidated statements of income in the
period of the change in estimate, which could result in a material change to the consolidated financial statements.
However, due to the results of our impairment analyses in 2021, in which all reporting units estimated fair value exceeded
their carrying value, we do not consider our goodwill and indefinite-lived intangibles to have a significant risk of
impairment.
Income Taxes
Description
The Company’s consolidated global income tax provision, deferred tax assets and liabilities, valuation allowances,
and liabilities for unrecognized tax benefits are determined through the interpretation of tax laws and assumptions of
future events to calculate an expectation of future tax consequences.
Judgments and Uncertainties
On an ongoing basis, the Company evaluates its tax estimates and judgments. This evaluation is based on factors
including historical experience, such as the conclusions of examinations by tax authorities, changes in tax laws or rates,
new examination activity, and results of any related legal processes. We use judgment in the evaluation of uncertain tax
positions and the estimation of unrecognized tax benefits when determining the largest amount greater than 50% likely to
be realized upon ultimate settlement with the taxing authority, assessing the likelihood of the benefit being realized upon
settlement, and the calculating expected ultimate settlement amount.
Effect if Actual Results Differ from Assumptions
Significant changes in these estimates or judgments may result in an increase or decrease to our tax provision in a
future period. Additionally, it is possible that the ultimate settlement may differ from the liabilities for unrecognized tax
benefits currently reported if tax authorities ultimately reach a conclusion that differs from the Company’s expectation. We
believe assumptions made regarding income taxes to be reasonable and do not believe any change in the judgments
made by management would result in a material change to the consolidated financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 3 (“Recent Accounting Pronouncements”) to the consolidated financial statements for further discussion of
recently adopted and recently issued accounting pronouncements that are applicable to the Company.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a result of our operating activities, we are exposed to market risks such as foreign currency exchange rate risk,
equity risk, credit risk, interest rate risk, and liquidity risk. We have implemented policies and procedures to measure,
manage and monitor and report risk exposures, which are reviewed regularly by management and our Board of Directors.
Foreign Currency Exchange Rate Risk
Our operations in Europe, Canada and Asia are subject to increased currency translation risk as revenues and
expenses are denominated in foreign currencies, primarily the British pound, Canadian dollar, Singapore dollar, Hong
Kong dollar, Euro, Australian dollar, and Japanese Yen. We also have de minimis exposure to other foreign currencies,
including the Swiss Franc, Norwegian Kroner, Swedish Krona, Danish Kroner, and Philippine Peso.
87
For the year ended December 31, 2021, our exposure to foreign-denominated revenues and expenses is presented
by primary foreign currency in the following table (in millions, except percentages):
Year Ended
December 31, 2021
British
Pounds (1) Euros (1)
Australian
Dollars (1)
Foreign denominated % of:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of 10% adverse currency fluctuation on:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.9 %
0.2 %
3.5 %
$
6.6
0.4
2.3
2.8 %
2.1 %
5.7 %
$
9.5
4.0
3.8
0.3 %
0.0 %
1.4 %
1.1
0.0
0.9
(1) An average foreign exchange rate to the U.S. dollar for the period was used. See Item 7 (“Management’s Discussion
and Analysis of Financial Condition and Results of Operations”) for the table summarizing the changes in certain
operational and financial metrics for more information.
Equity Risk
Our investment in European, Canadian, and Asia Pacific operations is exposed to volatility in currency exchange
rates through translation of our net assets or equity to U.S. dollars. The assets and liabilities of our European businesses
are denominated in British pounds or Euros. The assets and liabilities of our Canadian businesses are denominated in
Canadian dollars. The assets and liabilities of our Asia Pacific businesses are denominated in Hong Kong dollars,
Australian dollars, Japanese Yen, or Philippine Pesos. Fluctuations in currency exchange rates may create volatility in our
reported results as we are required to translate foreign currency reported statements of financial condition and operational
results into U.S. dollars for consolidated reporting. The translation of these non-U.S. dollar statements of financial
condition into U.S. dollars for consolidated reporting results in a cumulative translation adjustment, which is recorded in
accumulated other comprehensive income, net within stockholders' equity on our consolidated balance sheet.
Our primary exposure to this equity risk as of December 31, 2021 is presented by foreign currency in the following
table (in millions):
Net equity investment in Cboe Europe, EuroCCP, and MATCHNow . . . . . . . . $
Impact on consolidated equity of a 10% adverse currency fluctuation . . . . . . .
657.0 $
65.7
101.5 $
10.1
151.9
15.2
British
Pounds (1)
Euros (1)
Canadian
Dollars (1)
(1) Converted to U.S. dollars using the foreign exchange rate of British pounds per U.S. dollar, Euros per U.S. dollar, and
Canadian dollars per U.S. dollar, respectively, as of December 31, 2021.
Credit Risk
We are exposed to credit risk from third parties, including customers, counterparties and clearing agents. These
parties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. We limit
our exposure to credit risk by considering such risk when selecting the counterparties with which we make investments
and execute agreements.
We do not have counterparty credit risk with respect to trades matched on our exchanges in the U.S., Canada, and
Europe. With respect to listed equities, we deliver matched trades of our customers to the NSCC without taking on
counterparty risk for those trades. NSCC acts as a central counterparty on all equity transactions occurring on BZX, BYX,
EDGX and EDGA and, as such, guarantees clearance and settlement of all of our matched equity trades. Similarly, with
respect to U.S. listed equity options and futures, we deliver matched trades of our customers to the OCC, which acts as a
central counterparty on all transactions occurring on Cboe Options, C2, BZX, EDGX and CFE and, as such, guarantees
clearance and settlement of all of our matched options and futures trades. With respect to Canadian equities, we deliver
matched trades of our customers to The Canadian Depository for Securities, which acts as a central counterparty on all
transactions occurring on MATCHNow and, as such, guarantees clearance and settlement of all of our matched Canadian
equities trades. The BIDS Trading ATS platform delivers matched trades to BOA, which delivers the matched trades to
the NSCC. BOA guarantees the trade until one day after the trade date, after which time the NSCC provides a guarantee.
88
Thus, BIDS Trading is potentially exposed to credit risk to the counterparty between the trade date and one day after the
trade date in the event BOA fails. With respect to Australian equities and derivatives, we deliver matched trades of our
customers to ASX Clear Pty Ltd and ASX Settlement Pty Ltd. ASX Clear Pty Ltd acts as a central counterparty on all
transactions occurring on Cboe Australia and, as such, guarantees clearance and settlement on all of our matched trades
in Australia. With respect to Japanese equities, we deliver matched trades of our customers to the Japanese Securities
Clearing Corporation, which acts as a central counterparty on all transactions occurring on Cboe Japan and, as such,
guarantees clearance and settlement on all of our matched trades in Japan.
With respect to orders Cboe Trading routes to other markets for execution on behalf of our customers, Cboe Trading
is exposed to some counterparty credit risk in the case of failure to perform on the part of our clearing firms, Morgan
Stanley or Wedbush. Morgan Stanley and Wedbush guarantee trades until one day after the trade date, after which time
NSCC provides a guarantee. The BIDS Trading ATS platform delivers matched trades to BOA, which delivers the
matched trades to the NSCC. Thus, Cboe Trading is potentially exposed to credit risk to the counterparty to a trade routed
to another market center between the trade date and one day after the trade date in the event that Morgan Stanley or
Wedbush fails. The BIDS Trading ATS platform is potentially exposed to counterparty credit risk on equities trades
between the trade date and one day after the trade date in the event that BOA fails. We believe that any potential
requirement for us to make payments under these guarantees is remote and accordingly, have not recorded any liability in
the consolidated financial statements for these guarantees.
Historically, we have not incurred any liability due to a customer’s failure to satisfy its contractual obligations as
counterparty to a system trade. Credit difficulties or insolvency, or the perceived possibility of credit difficulties or
insolvency, of one or more larger or more visible market participants could also result in market-wide credit difficulties or
other market disruptions.
We do not have counterparty credit risk with respect to institutional spot FX trades occurring on our platform because
Cboe FX is not a counterparty to any FX transactions. All transactions occurring on our platform occur bilaterally between
two banks or prime brokers as counterparties to the trade. While Cboe FX does not have direct counterparty risk, Cboe
FX may suffer a decrease in transaction volume if a bank or prime broker experiences an event that causes other prime
brokers to decrease or revoke the credit available to the prime broker experiencing the event. Therefore, Cboe FX may
have risk that is related to the credit of the banks and prime brokers that trade FX on the Cboe FX platform.
We also have credit risk related to transaction fees that are billed in arrears to customers on a monthly basis. Our
potential exposure to credit losses on these transactions is represented by the receivable balances in our balance sheet.
Our customers are financial institutions whose ability to satisfy their contractual obligations may be impacted by volatile
securities markets.
As a result of the acquisition of EuroCCP on July 1, 2020, the Company is exposed to further credit risk through our
clearing operations. EuroCCP holds material amounts of clearing participant collateral, both cash and non-cash deposits,
which are held or invested primarily to provide security of capital while minimizing credit risk as well as liquidity and
market risks. The following is a summary of the risks associated with these deposits and how these risks are mitigated:
• Credit Risk - The credit risk is predominantly in the event a clearing participant fails to meet a financial or
contractual obligation. EuroCCP attempts to mitigate this risk through minimum participant requirements for clearing
participants and monitoring their financial health. To cover potential loss to EuroCCP in the event of a clearing participant
default, collateral is required from clearing participants. Besides potential defaults of clearing participants, the main credit
risk faced by the clearinghouse is exposure to clearing participants when a trade fails to settle. To help mitigate this risk, a
fail fee is charged to discourage late settlements. This fee covers EuroCCP’s costs but also acts as a deterrent as
required by Regulation (EU) No 236/2012 on short selling, together with certain aspects of credit default swaps.
•
Liquidity Risk - Liquidity risk is the risk EuroCCP may not be able to meet its payment obligations in the right
currency, in the right place and at the right time. To help mitigate this risk, EuroCCP monitors its liquidity requirements
closely and maintains funds and assets in a manner which attempt to minimize the risk of loss or delay in the access by
the clearinghouse to such funds and assets. For example, holding funds with a central bank where possible or making
only short-term investments serves to help reduce liquidity risks. Liquidity is mainly required for securities settlement. The
payment and settlement obligations generally stem from the function of EuroCCP as a cash equity clearinghouse: shares
are bought and sold by clearing participants on a trading platform or OTC, and netted to settle two days later. During the
settlement the actual payment for and delivery of the shares take place, this process requires intraday liquidity. If
89
counterparties, which receive shares against payment, are unable to settle, an overnight liquidity need arises. The
overnight liquidity is typically very short term, and is usually limited to a few days.
• Market Risk - EuroCCP is also exposed to market risk in the event that a clearing participant defaults and the
market prices of the securities in its open positions have moved adversely so the clearinghouse can only close out the
participant’s obligations at a loss. To help mitigate market risk, EuroCCP collects collateral from clearing participants to
cover for the probable loss during normal market conditions, together with contributions to the clearing fund to cover
losses if a default occurred during extreme but plausible market conditions. Adverse movements in exchange rates
affecting the value of obligations and collateral are factored into the calculation of the amount of collateral to be collected.
On a regular basis, we review and evaluate changes in the status of our counterparties’ creditworthiness. Credit
losses such as those described above could adversely affect our consolidated financial position and results of operations.
Any such effects to date have been minimal.
Interest Rate Risk
We have exposure to market risk for changes in interest rates relating to our cash and cash equivalents, financial
investments, and indebtedness. As of December 31, 2021 and 2020, our cash and cash equivalents and financial
investments were $379.0 million and $337.8 million, respectively, of which $185.9 million and $128.0 million is held
outside of the United States in various foreign subsidiaries in 2021 and 2020, respectively. The remaining cash and cash
equivalents and financial investments are denominated in U.S. dollars. We do not use our investment portfolio for trading
or other speculative purposes. Due to the nature of these investments, we have not been exposed to, nor do we
anticipate being exposed to, material risks due to changes in interest rates, assuming no change in the amount or
composition of our cash and cash equivalents and financial investments.
As of December 31, 2021, we had $1,299.3 million in outstanding debt, of which $1,139.9 million relates to our Senior
Notes, which bear interest at fixed interest rates. Changes in interest rates will have no impact on the interest we pay on
fixed-rate obligations. The remaining amounts outstanding of $159.5 million relates to the Term Loan Agreement, which
bears interest at fluctuating rates and, therefore, subjects us to interest rate risk. A hypothetical 100 basis point increase
in interest rates relating to the amounts outstanding under the Term Loan Agreement as of December 31, 2021 would
decrease annual pre-tax earnings by $1.6 million, assuming no change in the composition of our outstanding
indebtedness. We are also exposed to changes in interest rates as a result of borrowings under our Revolving Credit
Agreement and the EuroCCP Credit Facility, as these facilities bear interest at fluctuating rates. As of December 31,
2021, there were no outstanding borrowings under our Revolving Credit agreement and no outstanding borrowings under
the EuroCCP Credit Facility. See Note 12 (“Debt”) to the consolidated financial statements for a discussion of debt
agreements.
Liquidity Risk
We are exposed to liquidity risk under certain circumstances in relation to the cross-acceleration and cross-default
provisions within the Term Loan Agreement and the Revolving Credit Agreement as a result of the Company, as
guarantor, entering into the EuroCCP Credit Facility. A default of the Facility may allow lenders to accelerate any related
drawn amounts and may result in the acceleration of the Company’s other outstanding debt to which a cross-acceleration
or cross-default provision applies, which may limit the Company’s liquidity, business and financing activities. See Note 12
(“Debt”) to the consolidated financial statements for a discussion of debt agreements.
90
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Cboe Global Markets, Inc. and Subsidiaries
Reports of Independent Registered Public Accounting Firms (PCAOB ID 185 and 34) . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements:
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
97
98
99
100
101
102
91
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Cboe Global Markets, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Cboe Global Markets, Inc. and subsidiaries (the
Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income,
changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the
consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and
its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission, and our report dated February 18, 2022 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of unrecognized tax benefits
As discussed in Notes 2 and 21 to the consolidated financial statements, the Company recognizes the tax benefit
from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by
the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the consolidated
financial statements from such a position is measured based upon the largest benefit that has greater than 50%
likelihood of being realized upon ultimate settlement.
92
We identified the evaluation of unrecognized tax benefits in certain jurisdictions as a critical audit matter. A higher
degree of auditor judgment and the involvement of professionals with specialized skills and knowledge was required
to evaluate the Company’s estimate of tax benefits to be realized upon ultimate settlement of its tax positions.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls over the Company’s unrecognized tax benefits
process, including controls over the estimate of tax benefits to be realized upon ultimate settlement of tax positions.
We evaluated the Company’s ability to estimate its unrecognized tax benefits by comparing historical unrecognized
tax benefits to actual results upon the conclusion of examinations by applicable taxing authorities. In addition, we
involved tax professionals with specialized skills and knowledge who assisted in:
— analyzing the Company’s tax positions, including the measurement of unrecognized tax benefits
— evaluating changes in applicable laws and regulations
— inspecting settlements with applicable taxing authorities.
We have served as the Company’s auditor since 2020.
Chicago, Illinois
February 18, 2022
/s/ KPMG LLP
93
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Cboe Global Markets, Inc.
Opinion on the Financial Statements
We have audited the consolidated statements of income, comprehensive income, changes in stockholders' equity, and
cash flows of Cboe Global Markets, Inc. and subsidiaries (the "Company") for the year ended December 31, 2019, and
the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31,
2019, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
February 21, 2020
We began serving as the Company’s auditor in 1973. In 2020 we became the predecessor auditor.
94
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Cboe Global Markets, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Cboe Global Markets, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established
in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related
consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years
then ended, and the related notes (collectively, the consolidated financial statements), and our report dated February 18,
2022 expressed an unqualified opinion on those consolidated financial statements.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021, excluded Chi-X Asia Pacific, acquired with effect from July 1, 2021. This acquired business had total
assets and total stockholders’ equity of $266.5 million and $242.5 million, respectively, and total revenues and revenues
less costs of revenues of $17.1 million and $16.7 million, respectively, which are included in the Company’s consolidated
financial statements as of and for the year ended December 31, 2021. Our audit of internal control over financial reporting
of the Company also excluded an evaluation of the internal control over financial reporting of Chi-X Asia Pacific.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
95
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Chicago, Illinois
February 18, 2022
/s/ KPMG LLP
96
Cboe Global Markets, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2021 and 2020
(In millions, except share and per share data)
December 31, December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net of $1.0 allowance for credit losses at December 31, 2021 and $0.6 at
December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margin deposits and clearing funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Section 31 fees payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margin deposits and clearing funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of contingent consideration liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
341.9 $
37.1
245.4
92.4
326.9
745.9
42.7
36.8
1,531.3
245.8
2.3
105.2
—
110.1
3,025.4
1,668.6
125.8
6,814.5 $
295.4 $
40.8
15.2
745.9
8.2
—
63.8
1,169.3
1,299.3
197.9
372.7
129.2
6.7
34.6
3,209.7
337.3
812.1
53.1
26.5
1,566.8
42.7
—
82.6
13.0
111.0
2,895.1
1,729.0
76.3
6,516.5
250.0
152.9
10.2
812.1
4.2
68.7
15.2
1,313.3
1,135.2
164.7
377.6
132.1
17.5
27.2
3,167.6
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and
outstanding at December 31, 2021 and December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Common stock, $0.01 par value: 325,000,000 shares authorized, 108,159,319 and 106,646,498
shares issued and outstanding, respectively at December 31, 2021 and 125,998,967 and
107,299,933 shares issued and outstanding, respectively at December 31, 2020 . . . . . . . . . . . . .
Common stock in treasury, at cost, 1,512,821 shares at December 31, 2021 and 18,699,034
1.1
1.2
shares at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(106.8)
1,509.4
2,145.5
55.6
3,604.8
6,814.5 $
(1,250.4)
2,713.3
1,809.8
75.0
3,348.9
6,516.5
See accompanying notes to consolidated financial statements.
97
Cboe Global Markets, Inc. and Subsidiaries
Consolidated Statements of Income
Years ended December 31, 2021, 2020 and 2019
(In millions, except per share data)
Revenues:
2021
2020
2019
Transaction and clearing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,693.1 $ 2,418.0 $ 1,716.2
221.9
Access and capacity fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
213.5
Market data fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
311.7
Regulatory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32.8
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,496.1
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
280.7
252.1
208.3
60.6
3,494.8
236.7
232.0
500.2
40.2
3,427.1
Cost of revenues:
Liquidity payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Routing and clearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 31 fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenues less cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,650.7
87.8
179.6
86.3
14.3
2,018.7
1,476.1
1,554.1
70.4
465.0
83.4
(0.1)
2,172.8
1,254.3
964.7
35.8
271.4
86.8
0.5
1,359.2
1,136.9
Operating expenses:
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology support services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees and outside services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel and promotional expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Facilities costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
288.5
167.4
66.7
83.7
9.7
22.2
15.6
16.4
670.2
805.9
224.9
158.5
54.5
60.6
6.6
17.6
45.2
24.2
592.1
662.2
Non-operating (expenses) income:
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss attributable redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . .
Net income excluding redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . .
Change in redemption value of redeemable noncontrolling interest . . . . . . . . . .
Net income allocated to participating securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income allocated to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(47.4)
(2.4)
756.1
227.1
529.0
—
529.0
—
(1.7)
527.3 $
4.93 $
4.92 $
(37.6)
35.8
660.4
192.2
468.2
—
468.2
—
(1.2)
467.0 $
4.28 $
4.27 $
Basic weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107.0
107.2
109.1
109.3
199.0
176.6
46.2
68.3
11.9
11.0
48.5
38.2
599.7
537.2
(35.9)
0.1
501.4
130.6
370.8
4.1
374.9
(0.5)
(1.7)
372.7
3.35
3.34
111.4
111.8
See accompanying notes to consolidated financial statements.
98
Cboe Global Markets, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years ended December 31, 2021, 2020 and 2019
(In millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 529.0 $ 468.2 $ 370.8
Other comprehensive income (loss), net of income tax:
2021
2020
2019
26.1
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Unrealized holding losses on financial investments . . . . . . . . . . . . . . . . . . . . .
—
Post-retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
396.9
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1
Comprehensive loss attributable to redeemable noncontrolling interest . . . .
401.0
Comprehensive income excluding redeemable noncontrolling interest . . . . . . . . .
(0.5)
Change in redemption value of redeemable noncontrolling interest . . . . . . . . . . .
(1.7)
Comprehensive income allocated to participating securities . . . . . . . . . . . . . . . . .
Comprehensive income allocated to common stockholders, net of income tax . . $ 507.9 $ 504.4 $ 398.8
(19.3)
—
(0.1)
509.6
—
509.6
—
(1.7)
36.5
(0.3)
1.2
505.6
—
505.6
—
(1.2)
See accompanying notes to consolidated financial statements.
99
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S
Cboe Global Markets, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31, 2021, 2020 and 2019
(In millions)
2021
2020
2019
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjustments to reconcile net income to net cash provided by operating activities:
529.0 $
468.2 $
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance cost and debt discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized gain on available-for-sale financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for accounts receivable credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for notes receivable credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of property held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss related to deconsolidation of former subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity earnings in investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bargain purchase gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margin deposits and clearing funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 31 fees payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities:
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from acquisition-related escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions to investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of capital from investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of available-for-sale financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from maturities of available-for-sale financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property and equipment and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal payments of current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends on common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock from employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of common stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares issued under employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of contingent consideration from acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents . . . . . . . . . . .
Increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents . . . . . . . . . . . . . . . . . . .
Cash, cash equivalents, and restricted cash and cash equivalents:
167.4
2.2
(2.7)
—
0.4
(18.9)
—
26.6
0.4
—
—
—
0.4
5.6
—
12.0
(66.2)
10.3
(4.4)
(47.4)
45.0
(112.1)
4.9
3.9
33.2
7.2
596.8
(151.5)
0.6
(209.8)
—
(101.2)
160.2
—
(51.0)
(352.7)
110.0
(20.0)
—
—
—
(193.3)
(6.2)
—
(0.4)
(9.1)
(81.3)
(200.3)
(9.1)
34.7
158.5
2.0
—
(0.4)
0.1
(30.9)
6.7
21.7
—
8.1
—
—
(1.1)
15.1
(32.6)
(90.0)
812.1
5.4
(5.1)
(23.4)
59.4
53.9
4.5
(1.1)
28.8
(1.1)
1,458.8
(351.5)
—
(12.1)
—
(222.5)
202.5
0.5
(47.4)
(430.5)
493.7
(155.0)
70.0
(70.0)
(4.5)
(170.6)
(14.2)
0.2
—
(2.2)
(349.1)
(201.7)
1.6
828.2
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,057.5
1,092.2 $
229.3
1,057.5 $
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash and cash equivalents (margin deposits and clearing funds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash and cash equivalents (included in other current assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
341.9
745.9
4.4
1,092.2 $
245.4
812.1
—
1,057.5 $
Supplemental disclosure of cash transactions:
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
209.8 $
42.1
191.5 $
29.2
Supplemental disclosure of noncash investing activities:
Note receivable issued in connection with deconsolidation of former subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment recognized in connection with deconsolidation of former subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets of former subsidiary deconsolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, net acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration related to acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
3.5
—
1.0
133.6
73.8
3.1
0.5
(1.8)
(0.1)
—
(49.6)
(15.6)
—
—
—
11.0
1.7
5.9
201.2
247.7
4.4
0.9
(16.7)
(1.3)
(1.0)
(32.7)
(6.7)
See accompanying notes to consolidated financial statements.
370.8
176.6
2.2
2.6
(1.3)
1.0
(37.2)
23.4
21.8
4.4
6.1
2.0
10.5
(2.2)
—
—
50.3
—
13.5
(16.9)
—
(25.7)
17.9
(4.1)
0.1
21.0
(4.0)
632.8
—
—
—
30.0
(108.8)
98.0
—
(35.1)
(15.9)
—
(350.0)
—
—
—
(150.0)
(11.0)
9.3
—
(4.3)
(156.9)
(662.9)
0.2
(45.8)
275.1
229.3
229.3
—
—
229.3
134.9
32.7
3.7
2.9
14.5
—
—
—
—
—
—
—
—
—
—
—
—
101
Cboe Global Markets, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
As of December 31, 2021 and 2020 and for the
Years ended December 31, 2021, 2020 and 2019
1. NATURE OF OPERATIONS
Cboe Global Markets, Inc. (“Cboe” or “the Company”), a leading provider of market infrastructure and tradable
products, delivers cutting-edge trading, clearing and investment solutions to market participants around the world. The
Company is committed to operating a trusted, inclusive global marketplace, providing leading products, technology and
data solutions that enable participants to define a sustainable financial future. Cboe provides trading solutions and
products in multiple asset classes, including equities, derivatives and FX, across North America, Europe, and Asia Pacific.
Cboe’s subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In
addition, the Company operates one of the largest stock exchanges by value traded in Europe, and owns EuroCCP, a
leading pan-European equities and derivatives clearinghouse, BIDS Trading, a leading block-trading ATS by volume in
the U.S., MATCHNow, a leading equities ATS in Canada, Cboe Australia, an operator of trading venues in Australia, and
Cboe Japan, an operator of trading venues in Japan. Cboe also is a leading market globally for exchange-traded products
(“ETPs”) listings and trading.
The Company is headquartered in Chicago with offices in Amsterdam, Belfast, Calgary, Hong Kong, Kansas City,
London, Manila, New York, San Francisco, Sarasota Springs, Singapore, Sydney, Tokyo and Toronto.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Accounting
These consolidated financial statements are prepared in conformity with accounting principles generally accepted in
the United States (“GAAP”) as established by FASB.
(b) Basis of Presentation
The accompanying financial statements are presented on a consolidated basis to include the accounts and
transactions of Cboe Global Markets, Inc. and its majority owned subsidiaries and all significant intercompany accounts
and transactions have been eliminated.
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and
liabilities, and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates
based upon historical experience, observance of trends, information available from outside sources and various other
assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these
estimates under different conditions or assumptions.
For those consolidated subsidiaries in which the Company’s ownership is less than 100% and for which the Company
has control over the assets and liabilities and the management of the entity, the outside stockholders’ interest is shown as
noncontrolling interest.
Segment information
The Company has five business segments: Options, North American Equities, Europe and Asia Pacific, Futures, and
Global FX, which is reflective of how the Company’s chief operating decision-maker reviews and operates the business.
See Note 16 (“Segment Reporting”) for more information.
(c) Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of the amounts
of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
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revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material
estimates that are particularly susceptible to significant change in the near term include the valuation of goodwill,
indefinite-lived intangible assets, and unrecognized tax benefits.
(d) Cash and Cash Equivalents
The Company’s cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains
cash at various regulated financial institutions and brokerage firms which, at times, may be in excess of the federal
depository insurance limit. The Company’s management regularly monitors these institutions and believes that the
potential for future loss is remote. The Company considers liquid investments with original or acquired maturities of three
months or less to be cash equivalents.
(e) Financial Investments
Financial investments are classified as trading or available-for-sale.
Trading financial investments represent financial investments held by Cboe Trading that retain the industry-specific
accounting classification required for broker-dealers and marketable securities held in a rabbi trust for the Company’s
non-qualified retirement and benefit plans. The investments held by the broker-dealer subsidiary are recorded at fair value
with changes in unrealized gains and losses reflected within interest expense, net in the consolidated statements of
income. The investments held in a trust are recorded at fair value with changes in unrealized gains or losses recorded
within other income (expense) and the equal and offsetting charges in the related liability are recorded in compensation
and benefits expense in the consolidated statements of income.
Available-for-sale financial investments are comprised of the financial investments not held by Cboe Trading,
including highly liquid U.S. Treasury securities. Unrealized gains and losses, net of income taxes, are included as a
component of accumulated other comprehensive income in the accompanying consolidated balance sheets.
Interest on financial investments, including amortization of premiums and accretion of discounts, is recognized as
income when earned. Realized gains and losses on financial investments are calculated using the specific identification
method and are included in interest expense, net in the accompanying consolidated statements of income.
A decline in the fair value of any available-for-sale investment below carrying value that is deemed to be
other-than-temporary results in an impairment to reduce the carrying value to realizable value. To determine whether an
impairment is other-than-temporary, the Company considers all available information relevant to the collectability of the
investment, including past events, current conditions, and reasonable and supportable forecasts when developing
estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the
impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted
performance of the investee, and the general market condition in the geographic area or industry in which the investee
operates.
(f) Accounts Receivable, Net
Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried
at amortized cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis
and recognizes the total owed from a member firm as accounts receivable, net and the total owed to a member firm as
accounts payable and accrued liabilities in the consolidated balance sheets. On a periodic basis, management evaluates
the Company’s accounts receivable and records an allowance for expected credit losses using an aging schedule. The
aging schedule applies loss rates based on historical loss information and, as deemed necessary, is adjusted for
differences in the nature of the receivables that exist at the reporting date from the historical period. Due to the short-term
nature of the accounts receivable, changes in future economic conditions are not expected to have a significant impact on
the expected credit losses.
The accounts receivable are presented net of allowance for credit losses on the consolidated balance sheets and the
associated losses are presented in other operating expenses on the consolidated statements of income.
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(g) Property and Equipment, Net
Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the
straight-line method over the estimated lives of the assets, generally ranging from three to seven years. Expenditures for
repairs and maintenance are charged to expense as incurred. Depreciation of leasehold improvements is calculated using
the straight-line method over the shorter of the related lease term or the estimated useful life of the assets.
Long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances
indicate that the carrying values of the assets may not be recoverable. The Company bases this evaluation on such
impairment indicators as the nature of the assets, the future economic benefit of the assets, any historical or future
profitability measurements, as well as other external market conditions or factors that may be present. If such impairment
indicators are present that would indicate that the carrying value of any asset may not be recoverable, the Company
determines whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at
the lowest level for which identifiable cash flows exist. In the event of impairment, the Company recognizes a loss for the
difference between the carrying value and the estimated value of the asset as measured using quoted market prices or, in
the absence of quoted market prices, a discounted cash flow analysis.
The Company expenses software development costs as incurred during the preliminary project stage, while
capitalizing costs incurred during the application development stage, which includes design, coding, installation and
testing activities.
(h) Goodwill and Intangible Assets, Net
Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable
intangible assets of a business acquired. Goodwill is allocated to the Company’s reporting units based on the assignment
of the fair values of each reporting unit of the acquired company. The Company tests goodwill for impairment at the
reporting unit level annually, or in interim periods if certain events occur indicating that the carrying value may be
impaired. The impairment test is performed during the fourth quarter using October 1st carrying values, and if the fair
value of the reporting unit is found to be less than the carrying value, an impairment loss is recorded. The Company
performed its 2021 annual goodwill impairment test and determined that no impairment existed.
Intangible assets, net, primarily include acquired trademarks and trade names, customer relationships, strategic
alliance agreements, licenses and registrations and non-compete agreements. Intangible assets with finite lives are
amortized based on the discounted cash flow method applied over the estimated useful lives of the intangible assets and
are tested for impairment if certain events occur indicating that the carry value may be impaired.
Intangible assets deemed to have indefinite useful lives are not amortized, but instead are tested for impairment at
least annually, usually concurrently with goodwill. Impairment exists if the fair value of the asset is less than the carrying
value, and in that case, an impairment loss is recorded. The Company performed its 2021 annual intangible assets
impairment test using October 1, 2021 carrying values and determined that no impairment existed.
(i) Treasury Stock
The Company accounts for the purchase of treasury stock under the cost method with the shares of stock
repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in
the consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are either
available to be redistributed or they are retired. The Company accounts for the retirement of treasury stock by deducting
its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in-
capital on the consolidated balance sheets.
(j) Foreign Currency
The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated into
U.S. dollars using the exchange rate in effect as of each balance sheet date. Statements of income and cash flow
amounts are translated using the average exchange rate during the period. The cumulative effects of translating the
balance sheet accounts from the functional currency into the U.S. dollar at the applicable exchange rates are included in
accumulated other comprehensive income (loss), net in the accompanying consolidated balance sheets. Foreign currency
gains and losses are recorded as other (expense) income, net in the consolidated statements of income. The Company’s
operations in the United Kingdom, Amsterdam, Canada, Singapore, Philippines, Hong Kong, Australia and Japan are
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recorded in Pounds sterling, Euros, Canadian dollars, Singapore dollars, Philippine pesos, Hong Kong dollars, Australian
dollars and Japanese Yen, respectively.
(k) Income Taxes
Deferred taxes are recorded on a liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax
position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The
tax benefit recognized in the consolidated financial statements from such a position is measured based on the largest
benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties
expense is recognized on the full amount of deferred benefits for uncertain tax positions. The Company’s policy is to
include interest and penalties related to unrecognized tax benefits in the income tax provision within the consolidated
statements of income.
The Company elected to account for global intangible low-taxed income (“GILTI”) in the period in which it is incurred,
and therefore, has not provided any deferred tax impacts of GILTI in the consolidated financial statements.
(l) Revenue Recognition
For further discussion related to revenue recognition of fees, such as transaction and clearing fees and liquidity
payments, access and capacity fees, market data fees, and regulation transaction and Section 31 fees, see Note 4
(“Revenue Recognition”).
Concentrations of Revenue and Liquidity Payments
For the years ended December 31, 2021, 2020, and 2019, no customer accounted for more than 13% of the
Company’s total revenue.
No customer is contractually or otherwise obligated to continue to use the Company’s services. The loss of, or a
significant reduction of, participation by these customers may have a material adverse effect on the Company’s business,
financial position, results of operations and cash flows. The two largest clearing members clear the majority of the market-
maker sides of transactions at all of the Company’s U.S. options exchanges. If either of these clearing members were to
withdraw from the business of market-maker clearing and market-makers were unable to transfer to another clearing
member, this could create significant disruption to the U.S. options markets, including Cboe’s.
(m) Earnings Per Share
The computation of basic earnings per share is calculated by reducing net income for the period by dividends paid or
declared and undistributed net income for the period that are allocated to participating securities to arrive at net income
allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average
number of common shares outstanding during the period to determine net income per share allocated to common
stockholders.
The computation of diluted earnings per share is calculated by dividing net income allocated to common stockholders
by the sum of the weighted average number of common shares outstanding plus all additional common shares that would
have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using
the more dilutive of the two-class or treasury stock method.
(n) Stock-Based Compensation
The Company grants stock-based compensation to its employees through awards of restricted stock units.
Additionally, in connection with the acquisition of Bats, the Company inherited stock options and restricted stock awards
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that had been previously awarded by Bats. As all stock options were exercised in 2020, none were outstanding in 2021.
The Company grants stock-based compensation to its employees through restricted stock units and grants restricted
stock awards to its board members. The Company records stock-based compensation expense for all stock-based
compensation granted based on the grant-date fair value. The Company recognizes stock-based compensation expense
related to stock-based compensation awards with graded vesting that have a service condition on a straight-line basis
over the requisite service period of the entire award.
The amount of stock-based compensation expense related to awards of restricted stock and restricted stock units is
based on the fair value of Cboe Global Markets, Inc. common stock at the date of grant. The fair value is based on a
current market-based transaction of the Company’s common stock. If a market-based transaction of the Company’s
common stock is not available, then the fair value is based on an independent third-party valuation using equal weighting
of two valuation analysis techniques, discounted cash flows and valuation multiples observed from publicly traded
companies in a similar industry.
(o) Business Combinations
The Company records identifiable assets, liabilities and goodwill acquired in a business combination at fair value at
the acquisition date. Additionally, transaction-related costs are expensed in the period incurred.
(p) Debt Issuance Costs
All costs incurred to issue debt are capitalized as a contra-liability and amortized over the life of the debt using the
interest method.
(q) Investments
The Company generally accounts for investments using the measurement alternative when it owns less than 20% of
the outstanding voting stock of a company, there is an absence of readily determinable fair value for the respective
investment, and the Company has an inability to exercise significant influence over the investment based upon the
respective ownership interests held. The Company recognizes dividend income when declared.
In general, the equity method of accounting is used when the Company owns 20% to 50% of the outstanding voting
stock of a company and when it is able to exercise significant influence over the operating and financial policies of a
company. For equity method investments, the Company records the pro-rata share of earnings or losses each period and
records any dividends received as a reduction in the investment balance. The equity method investment is inclusive of
other-than-temporary declines in value, recognized by the investee, who considers a variety of factors such as the
earnings capacity of the investment and the fair value of the investment compared to its carrying value. If the estimated
fair value of the investment is less than the carrying value and the decline in value is considered to be other than
temporary, the excess of the carrying value over the estimated fair value is recognized in the financial statements as an
impairment.
(r) Leases
The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is
the lessee, operating leases are included in operating lease right of use (“ROU”) assets, accrued liabilities, and non-
current operating lease liabilities on the balance sheet as of December 31, 2021. The Company does not have any
finance leases as of December 31, 2021.
ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments
over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease
payments made at or before the lease commencement date, less lease incentives received. The Company uses its
incremental borrowing rate based on the information available at the lease commencement date in determining the lease
liabilities, as the rate implicit in the Company’s leases are generally not reasonably determinable. Lease terms may
include options to extend or terminate when the Company is reasonably certain that the option will be exercised. Lease
expense is recognized on a straight-line basis over the lease term.
The Company also has lease arrangements with lease and non-lease components. The Company elected the
practical expedient not to separate non-lease components from lease components for the Company’s leases. The
Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease
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liabilities are not recognized for short-term leases. For short-term operating leases, lease expense is recognized on a
straight-line basis over the lease term.
Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet and the
Company recognizes lease expense in facilities costs within the consolidated statements of income for these leases on a
straight-line basis over the lease term. Certain leases include one or more options to renew, with renewal terms that can
extend the lease term from one to five years or more, and some of which include the Company’s option to terminate the
leases within one year. When the implicit rate in the Company’s lease is not reasonably determinable, the Company
applies an incremental borrowing rate based on the information available at the lease commencement date in determining
the present value of lease payments.
(s) Margin Deposits and Clearing Funds
Margin deposits and clearing funds in the form of cash contributions by EuroCCP’s clearing participants where title
has transferred to EuroCCP are included as current assets with equal and offsetting current liabilities in the consolidated
balance sheet. These margin deposits and clearing funds are deposited with De Nederlandsche Bank (“DNB”), can only
be used for specified EuroCCP operations, and fluctuate over time due to changes in deposit requirements. Certain non-
cash margin deposits and clearing fund deposits, as well as interoperability fund deposits, are not reflected in the
accompanying consolidated balance sheet, as EuroCCP does not take economic ownership of these balances. Cash held
as margin deposits and clearing fund deposits may be invested at an approved bank in accordance with EuroCCP’s
investment policy, and any interest or gain received, or loss incurred on invested funds is recorded in other revenue in the
consolidated statements of income.
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recent Accounting Pronouncements – Adopted
In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) –
Simplifying the Accounting for Income Taxes. This ASU removed certain income tax exceptions and modifies existing
guidance to simplify the accounting for income taxes. For public entities, the update was effective for fiscal years and
interim period within those fiscal years, beginning after December 15, 2020. The Company adopted this ASU on
January 1, 2021, which did not result in a material impact to the consolidated financial statements and disclosures.
Recent Accounting Pronouncements – Issued, not yet Adopted
There were no applicable material accounting pronouncements that have been issued but were not yet adopted as of
December 31, 2021.
4. REVENUE RECOGNITION
The Company’s main types of revenue contracts are:
• Transaction and clearing fees - Transaction fees represent fees charged by the Company for meeting the point-
in-time performance obligation of executing a trade on its markets. These fees can be variable based on trade
volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded
on a monthly basis. Transaction fees are recognized across all segments. Clearing fees, which include
settlement fees, represent fees charged by the Company for meeting the point-in-time performance obligation for
transactions cleared and settled by EuroCCP. Clearing fees can be variable based on trade volume tiered
discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly
basis. Clearing fees are recognized in the Europe and Asia Pacific segment. Transaction and clearing fees, as
well as any tiered volume discounts, are calculated and billed monthly in accordance with the Company’s
published fee schedules.
• Access and capacity fees - Access and capacity fees represent fees assessed for the opportunity to trade,
including fees for trading-related functionality across all segments, terminal and other equipment rights,
maintenance services, trading floor space and telecommunications services. Facilities, systems services and
other fees are generally monthly fee-based. These fees are billed monthly in accordance with the Company’s
published fee schedules and recognized on a monthly basis when the performance obligations are met. All
107
access and capacity fees associated with the trading floor are recognized over time in the Options segment, as
the performance obligations are met.
• Market data fees - Market data fees represent the fees received by the Company from the U.S. tape plans and
fees charged to customers for proprietary market data. Fees from the U.S. tape plans are collected monthly
based on published fee schedules and distributed quarterly to the Exchanges based on a known formula. A
contract for proprietary market data is entered into and charged on a monthly basis in accordance with the
Company’s published fee schedules as the service is provided. Both types of market data are satisfied over time,
and revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the
Company provides the data to meet its performance obligation. U.S. tape plan market data is recognized in the
North American Equities and Options segments. Proprietary market data fees are recognized across all
segments.
• Regulatory fees - There are two types of regulatory fees that the Company recognizes. The first type represents
fees collected by the Company to cover the Section 31 fees charged to the Exchanges by the SEC for meeting
the point-in-time performance obligation of executing a trade on its markets. The fees charged to customers are
based on the fee set by the SEC per notional value of U.S. Equities exchange transactions and per round turn of
Options transactions executed on the Company’s U.S. securities markets. These fees are calculated and billed
monthly and are recognized in the North American Equities and Options segments. As the Exchanges are
responsible for the ultimate payment to the SEC, the Exchanges are considered the principal in these
transactions. Regulatory fees also include the options regulatory fee (“ORF”) which supports the Company’s
regulatory oversight function in the Options segment, along with other miscellaneous regulatory fees, and neither
can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the
performance obligation is fulfilled.
• Other revenue - Other revenue primarily includes revenue from various licensing agreements, interest income
from clearing operations, all fees related to the trade reporting facility operated in the Europe and Asia Pacific
segment, listing fees, and revenue associated with advertisements through the Company’s websites.
108
All revenue recognized in the consolidated statements of income is considered to be revenue from contracts with
customers, with the exception of interest income from clearing operations. The following table depicts the disaggregation
of revenue according to segment (in millions):
North
American Europe and
Corporate
Items and
Options
Equities
Asia Pacific
Futures
Global FX Eliminations
Total
Year Ended December 31, 2021
Transaction and clearing fees . . . . $
Access and capacity fees . . . . . . .
Market data fees . . . . . . . . . . . . . .
Regulatory fees . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . .
Timing of revenue recognition
Services transferred at a point in
1,231.2 $ 1,173.1 $
145.3 $
124.0
84.3
46.6
18.9
1,505.0
98.0
134.6
161.6
3.2
1,570.5
31.2
25.6
—
38.2
240.3
95.2 $
18.7
6.6
0.1
—
120.6
48.3 $
8.8
1.0
—
—
58.1
— $ 2,693.1
280.7
—
252.1
—
208.3
—
60.6
0.3
3,494.8
0.3
time . . . . . . . . . . . . . . . . . . . . . . $
1,296.7 $ 1,337.9 $
183.5 $
Services transferred over time . . . .
208.3
1,505.0
232.6
1,570.5
56.8
240.3
95.3 $
25.3
120.6
48.3 $
9.8
58.1
0.3 $ 2,962.0
532.8
3,494.8
—
0.3
Year Ended December 31, 2020
Transaction and clearing fees . . . . $
Access and capacity fees . . . . . . .
Market data fees . . . . . . . . . . . . . .
Regulatory fees . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . .
Timing of revenue recognition
Services transferred at a point in
1,046.3 $ 1,147.2 $
107.0
74.2
83.4
19.2
1,330.1
84.2
137.0
416.8
4.3
1,789.5
90.9 $
20.6
13.4
—
15.6
140.5
84.5 $
17.0
6.6
—
1.1
109.2
49.1 $
7.9
0.8
—
—
57.8
— $ 2,418.0
236.7
—
232.0
—
500.2
—
40.2
—
3,427.1
—
time . . . . . . . . . . . . . . . . . . . . . . $
1,148.9 $ 1,568.3 $
106.5 $
Services transferred over time . . . .
181.2
1,330.1
221.2
1,789.5
34.0
140.5
85.6 $
23.6
109.2
49.1 $
8.7
57.8
— $ 2,958.4
468.7
—
3,427.1
—
Year Ended December 31, 2019
Transaction and clearing fees . . . . $
Access and capacity fees . . . . . . .
Market data fees . . . . . . . . . . . . . .
Regulatory fees . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . .
Timing of revenue recognition
Services transferred at a point in
time . . . . . . . . . . . . . . . . . . . . . . $
Services transferred over time . . . .
742.9 $
104.1
55.7
64.0
16.4
983.1
744.6 $
78.9
138.1
247.0
4.5
1,213.1
73.1 $
16.5
12.6
—
8.6
110.8
110.2 $
45.4 $
15.6
6.5
0.7
2.9
135.9
6.8
0.6
—
0.2
53.0
— $ 1,716.2
221.9
—
213.5
—
311.7
—
32.8
0.2
2,496.1
0.2
823.3 $
159.8
983.1
996.1 $
217.0
1,213.1
81.7 $
29.1
110.8
113.8 $
45.6 $
22.1
135.9
7.4
53.0
0.2 $ 2,060.7
435.4
2,496.1
—
0.2
Contract liabilities as of December 31, 2021 primarily represent prepayments of transaction fees and certain access
and capacity and market data fees to the Exchanges. The revenue recognized from contract liabilities and the remaining
balance is shown below (in millions):
Liquidity provider sliding scale (1) . . . . $
Other, net . . . . . . . . . . . . . . . . . . . . . . .
Total deferred revenue . . . . . . . . . . . . $
— $
10.2
10.2 $
7.2 $
17.6
24.8 $
(7.2) $
(12.5)
(19.7) $
Balance at
January 1, 2021
Cash Additions
Revenue
Recognized
Balance at
December 31, 2021
—
15.3
15.3
(1) Liquidity providers are eligible to participate in the sliding scale program, which involves prepayment of transaction
fees, and to receive reduced fees based on the achievement of certain volume thresholds within a calendar month.
These transaction fees are amortized and recorded ratably as the transactions occur over the period.
5. ACQUISITIONS
On February 3, 2020, the Company purchased Hanweck Associates, LLC (“Hanweck”) and the assets of FT
Providers, LLC (“FT Options”). Hanweck and FT Options are both providers of risk analytics market data and included in
the Company’s Options segment. On June 1, 2020, the Company purchased the assets of Trade Alert, LLC (“Trade
Alert”), a real-time alerts and order flow analysis service provider included in the Company’s Options segment. On
August 4, 2020, the Company completed the acquisition of MATCHNow, one of the largest equities ATSs in Canada,
which is
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included in the Company’s North American Equities segment. Of these acquisitions’ aggregate purchase price, $100.7
million was allocated to goodwill, $59.0 million was allocated to intangible assets, and $2.2 million was allocated to
working capital. In connection with these acquisitions, approximately $32.7 million in contingent consideration (in the
aggregate) related to future financial performance of the acquired business or developmental milestones has been
recorded in the Company’s consolidated financial statements. These amounts represent the allocation of the purchase
price. See below for further discussion of intangible assets acquired.
On July 1, 2020, the Company completed the acquisition of the remaining 80% interest in EuroCCP, a pan-European
equities clearinghouse, which is included in the Company’s Europe and Asia Pacific segment. Of the acquisition’s
purchase price of the remaining interest, $32.3 million was allocated to intangible assets and $56.0 million was allocated
to working capital upon consolidation. Prior to signing the agreement to acquire the remaining 80% of EuroCCP, the
Company agreed on the purchase price with the other shareholders, as they were looking to liquidate their investments in
EuroCCP. That agreement gave way to a $32.6 million bargain purchase gain, which was included in other non-operating
(expense) income, net in the consolidated statement of income. These amounts represent the allocation of the purchase
price and are subject to revision during the remainder of the measurement period, a period not to exceed twelve months
from the acquisition date. In connection with the acquisition, EuroCCP put in place a committed revolving credit facility of
up to €1.5 billion, see Note 12 (“Debt”) for more information. See below for further discussion of intangible assets
acquired.
On December 31, 2020, the Company purchased BIDS Holdings (“BIDS”). BIDS Holdings owns BIDS Trading, LP, a
registered broker-dealer and the operator of the BIDS ATS, the largest block-trading ATS by volume in the U.S. The ATS
operated by BIDS is not a registered national securities exchange or a facility thereof. The acquisition of BIDS provided
the Company with a foothold in the off-exchange segment of the U.S. equities market, which allowed the Company’s
presence in the North American Equities segment to expand. Of the acquisition’s purchase price, $100.0 million was
allocated to goodwill, $156.4 million was allocated to intangible assets, and $23.3 million was allocated to working capital.
See below for further discussion of intangible assets acquired.
On July 1, 2021, the Company purchased Chi-X Asia Pacific. Chi-X Asia Pacific is a holding company of alternative
market operators and providers of market solutions, which is included in the Company’s Europe and Asia Pacific
segment. The acquisition of Chi-X Asia Pacific provided the Company with a single point of entry into two key capital
markets, Australia and Japan, to help enable it to expand its global equities and market data business into Asia Pacific,
bring other products and services to the region, and further expand access to its proprietary product suite in the region. Of
the acquisition’s purchase price, $133.6 million was allocated to goodwill, $73.8 million was allocated to intangible assets,
$25.7 million was allocated to working capital, and $49.6 million in contingent consideration, which is earned based on
developmental milestones of the acquired business. These amounts represent the allocation of the purchase price and
are subject to revision during the remainder of the measurement period, a period not to exceed twelve months from the
acquisition date. See below for further discussion of intangible assets acquired.
The following table presents the details of intangible assets at the dates of acquisition (in millions, except as stated).
All acquired intangible assets with finite lives are amortized using the straight-line method.
Useful
Life
(Years)
Hanweck
FT
Options
Useful
Life
(Years)
Trade
Alert
Useful
Life
(Years) EuroCCP
Useful
Life
Useful
Life
(Years) MATCHNow
(Years) BIDS
Useful
Life
(Years)
Chi-X
Asia
Pacific
Useful
Life
(Years)
Trading
registrations
and licenses . . . $
Customer
—
$
—
$ —
$
28.1 Indefinite $
18.4 Indefinite $
—
$ 6.2 Indefinite
relationships . . .
4.9
13
2.2
13
0.7
13
—
17.4
15
137.0
17
60.1
30
Technology . . . . .
Trademarks and
2.1
4
0.9
4
0.3
4
3.6
6
tradenames . . .
7.0
10
3.2
10
1.0
10
0.6
10
0.7
0.2
7
2
17.8
11
7.5
2
1.6
10
—
Total identifiable
intangible
assets . . . . . . . $
14.0
$
6.3
$
2.0
$
32.3
$
36.7
$
156.4
$
73.8
Acquisition-related costs relate to acquisitions and other strategic opportunities. The Company expensed $15.6
million of acquisition-related costs during the year ended December 31, 2021, which primarily included $15.0 million of
professional fees and other expenses and $0.6 million of impairment charges related to investments. These acquisition-
related expenses are included in acquisition-related costs in the consolidated statements of income.
110
The Company expensed $45.3 million of acquisition-related costs during the year ended December 31, 2020, which
included $22.1 million of professional fees, $15.1 million of impairment charges related to investments, and other
expenses and $8.1 million of impairment charges related to facilities. These acquisition-related expenses are included in
acquisition-related costs in the consolidated statements of income.
The Company expensed $48.5 million of acquisition-related costs during the year ended December 31, 2019 that
included $19.3 million of compensation-related costs, $10.5 million of impairment of goodwill charges, $6.1 million of
impairment of facilities charges, $4.5 million loss on disposal of data processing software, $3.9 million of professional
fees, $2.2 million of termination fees related to an assigned lease agreement, and $2.0 million of general and
administrative expenses. These acquisition-related expenses are included in acquisition-related costs in the consolidated
statements of income.
6. INVESTMENTS
As of December 31, 2021 and 2020, the Company's investments were comprised of the following (in millions):
As of December 31,
2021
2020
Equity method investments:
Investment in Signal Trading Systems, LLC . . . . . . . . . . . . . . . . . . . . . . . . $
Investment in 7Ridge Investments 3 LP . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
209.5
209.5
Other equity investments:
Investment in Eris Exchange Holdings, LLC . . . . . . . . . . . . . . . . . . . . . . . .
Investment in American Financial Exchange, LLC . . . . . . . . . . . . . . . . . . .
Investment in Cboe Vest Financial Group, Inc. . . . . . . . . . . . . . . . . . . . . . .
Investment in Eris Digital Holdings, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in OCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.0
10.6
2.9
1.1
0.3
1.4
36.3
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
245.8 $
Equity Method Investments
2.0
—
2.0
20.0
10.6
2.9
0.8
0.3
6.1
40.7
42.7
Equity method investments included investments in Signal Trading Systems, LLC (“Signal”), a 50% joint venture with
FlexTrade System, Inc. (“FlexTrade”) to develop and market PULSe, a multi-asset front-end order entry system. In 2020,
the Company commenced an initiative to migrate PULSe, and its related activity to Cboe Silexx, LLC, a wholly-owned
subsidiary of the Company. PULSe was decommissioned as of December 31, 2020, and the joint venture with FlexTrade
was wound down during the first quarter of 2021. The Company concluded that the remaining investment in Signal had no
future economic value and the remaining balance was written off as of March 31, 2021. The loss related to the write-off
was included within acquisition-related costs in the consolidated statements of income.
On October 31, 2021, the Company, through a wholly-owned subsidiary, became a limited partner of 7Ridge
Investments 3 LP (“7Ridge Fund”) in connection with 7Ridge Fund’s planned acquisition of Trading Technologies
International, Inc. (“Trading Technologies”). On December 13, 2021, the Company’s subsidiary provided its financial
commitment to 7Ridge Fund, and on December 21, 2021, 7Ridge Fund completed the acquisition of Trading
Technologies. Trading Technologies is a global provider of next-generation professional trading software, connectivity and
data solutions. The Company is strategically aligned with Trading Technologies’ vision of delivering a leading trading,
connectivity and data network to the global trading community.
The Company’s investment in the 7Ridge Fund, represents a nonconsolidated variable interest entity (“VIE”). The
Company has determined that consolidation of the VIE is not required as the Company is not the primary beneficiary of
the 7Ridge Fund, as it does not have controlling financial interest and lacks the ability to unilaterally remove the general
partner, 7Ridge Investments 3 GP Limited, direct material strategic decisions, or dissolve the entity (i.e. the Company
does not have unilateral substantive “kick-out” or “liquidation” rights).
111
The Company’s interest in the 7Ridge Fund investment is equal to the carrying value of the investment as of
December 31, 2021, or $209.5 million, which is included in investments within the consolidated balance sheets. The
Company’s maximum loss exposure, in the unlikely event that all of the VIE’s assets become worthless, is limited to the
carrying value of Company’s investment.
Other Equity Investments
The carrying value of other equity investments is included in investments in the consolidated balance sheets. The
Company accounts for these investments using the measurement alternative given the absence of readily determinable
fair values for the respective investments and due to the Company’s inability to exercise significant influence over the
investments based upon the respective ownership interests held. As of December 31, 2021, other equity investments
primarily reflect a 20% investment in OCC and minority investments in Eris Exchange Holdings, LLC, American Financial
Exchange, LLC, and Cboe Vest Financial Group, Inc.
In January 2016, the Company, through its subsidiary Cboe Vest, LLC (“Cboe Vest”), acquired a majority of the
outstanding equity of Vest, an asset investment manager focused on Target Outcome Investment strategies. The
purchase price consisted of $18.9 million in cash, reflecting payments of $14.9 million to former stockholders and $4.0
million to Vest for newly issued shares, and represented an ownership interest of 60% resulting in the consolidation of
Vest operations. The remaining 40% noncontrolling interest was held by the remaining Vest stockholders. The remaining
Vest stockholders had a put option that could have been exercised to Vest and Vest had a call option that could have
been exercised to the remaining stockholders. The put and call options could have been exercised after five years though
they could have been accelerated by certain employment-related actions. The combination of the noncontrolling interest
and a redemption feature resulted in a redeemable noncontrolling interest, which was classified outside of permanent
equity on the consolidated balance sheet. The Company’s ownership interest decreased in August 2019 which resulted in
the deconsolidation of Vest operations and the elimination of the redeemable noncontrolling interest.
In May 2020, Eris Exchange Holdings, LLC completed a restructuring transaction to spin out Eris Digital Holdings,
LLC into a stand-alone entity. The restructuring qualifies as an exchange of ownership interest, though it required no
additional consideration exchanged to execute the exchange of units. The restructuring did not result in a change in
number of units owned by the Company or a substantial change in the Company’s ownership interest percentage. No
gain or loss is recognized as a result of the restructuring. As discussed below, on October 19, 2021, the Company
entered into an agreement to acquire all of the outstanding equity interests of Eris Digital Holdings, LLC. However, Eris
Exchange Holdings, LLC is not a part of this transaction and the Company retains its minority equity ownership interest in
Eris Exchange Holdings, LLC.
In August 2020, the Company recorded within acquisition-related costs in the consolidated statements of income an
impairment charge of $4.1 million on its investment in AFX based on management’s assessment of the fair value of the
investment.
On September 21, 2021, CurveGlobal Limited (“CurveGlobal”), a minority investment of the Company included within
other equity investments, announced plans to wind down the company in January 2022. The Company concluded that the
remaining investment in CurveGlobal had no future economic value, and thus, wrote off the investment as of
September 30, 2021. CurveGlobal ceased operations on January 28, 2022. The loss related to the write-off was included
within other (expense) income, net in the consolidated statements of income.
As announced on October 20, 2021, the Company plans to acquire the remaining interest in Eris Digital Holdings,
LLC. The closing of the transaction is subject to regulatory review and other customary closing conditions. As a result, the
timing of the closing is uncertain, but the Company presently anticipates a closing in the first half of 2022. See Item 7
(“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) for more information.
112
7. PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following as of December 31, 2021 and 2020 (in millions):
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
17.3 $
68.8
256.5
342.6
(237.4)
105.2 $
2020
2.0
—
227.1
229.1
(146.5)
82.6
December 31, December 31,
Depreciation expense using the straight-line method was $33.5 million, $26.8 million and $24.5 million for the years
ended December 31, 2021, 2020 and 2019, respectively.
As a result of the Merger, there was a reduction in employee workspace needed in Chicago, which led to the decision
to market for sale the headquarters location. The Company classified the associated land, building, and certain furniture
and equipment of the headquarters location as held for sale, performed an impairment assessment, and ceased
depreciation effective May 1, 2019, as the Company anticipated selling the property held for sale in less than twelve
months. As of December 31, 2021, the headquarters location remains on the market for sale and management’s intent to
sell the property is unchanged. However, due to the time elapsed since active marketing for sale of the building
commenced, the Company has reclassified the property to held and used, effective May 1, 2021, and the building was
once again subject to depreciation. The total value of the property classified as property held and used was $11.7 million,
which includes $2.3 million of land and $9.4 million of property and equipment, net on the consolidated balance sheet as
of December 31, 2021. As a result of the headquarters location’s classification as held for sale during the second quarter
of 2020, an impairment assessment was performed and an additional impairment charge of $8.1 million was recorded in
acquisition related costs within the Options segment in the accompanying consolidated statements of income.
8. CREDIT LOSSES
Current expected credit losses are estimated for accounts receivable and certain notes receivable. The notes
receivable included within other assets, net on the consolidated balance sheets primarily relate to the consolidated audit
trail (“CAT”), which involves the creation of an audit trail that strives to enhance regulators’ ability to monitor trading
activity in the U.S. markets through a phased implementation. The funding of the CAT is ultimately expected to be
provided by both self-regulatory organizations (“SROs”) (which includes the Exchanges) and industry members; however,
the funding to date has solely been provided by the SROs in exchange for promissory notes, which are expected to be
repaid once fee filings and plan amendments associated with a funding model are approved by the SEC and such
industry member fees are collected. Until those fees are collected, the SROs may continue to incur additional significant
costs, including additional promissory notes to fund CAT operations. The allowance for notes receivable credit losses
associated with the CAT are calculated using a probability of default methodology that is primarily based on various
potential outcomes of the funding model proposals being discussed with the SEC. Accounts receivable represent
amounts due from the Company’s member firms. The allowance for accounts receivable credit losses is calculated using
an aging schedule.
The following represents the changes in allowance for credit losses for the year ended December 31, 2021 (in
millions):
Balance at
January 1,
2021
Current period
provision for
expected credit
losses
Write-offs charged
against the
allowance
Recoveries
collected
Balance at
December 31,
2021
Allowance for notes receivable credit
losses . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for accounts receivable credit
losses . . . . . . . . . . . . . . . . . . . . . . . . . .
Total allowance for credit losses . . . . . . .
$
30.1 $
— $
— $
— $
30.1
0.6
$
30.7 $
0.7
0.7 $
(0.3)
(0.3) $
—
— $
1.0
31.1
113
9. OTHER ASSETS, NET
Other assets, net consisted of the following as of December 31, 2021 and 2020 (in millions):
Software development work in progress . . . . . . . . . . . . . . . . . . . . . . . $
Data processing software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . .
Data processing software, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5.6 $
103.8
(70.9)
38.5
87.3
125.8 $
8.4
92.6
(63.5)
37.5
38.8
76.3
December 31, December 31,
2021
2020
(1) At December 31, 2021 and December 31, 2020, the majority of the balance included long-term prepaid assets and
notes receivable. See Note 8 (“Credit Losses”) for more information on the notes receivable included within other
assets, net on the consolidated balance sheets. As of December 31, 2021 and December 31, 2020, the notes
receivable, net balance was $79.3 million and $32.6 million, respectively.
Amortization expense related to data processing software was $7.3 million, $6.9 million, and $13.5 million for the
years ended December 31, 2021, 2020, and 2019, respectively.
10. GOODWILL AND INTANGIBLE ASSETS, NET
The following table presents the details of goodwill by segment (in millions):
North American Europe and
Options
Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . $ 239.4 $
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in foreign currency exchange rates . . . . . . . . .
66.4
—
Balance as of December 31, 2020 . . . . . . . . . . . . . . . . . . . . $ 305.8 $
Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in foreign currency exchange rates . . . . . . . . .
—
—
—
Balance as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . $ 305.8 $
Total
—
9.7
134.8
2.1
Equities
Asia Pacific Global FX
1,740.4 $ 435.1 $ 267.2 $ 2,682.1
201.2
11.8
1,877.3 $ 444.8 $ 267.2 $ 2,895.1
(0.9)
134.0
(2.8)
1,876.9 $ 575.5 $ 267.2 $ 3,025.4
(0.4)
134.0
(2.9)
(0.5)
—
0.1
—
—
—
—
—
Goodwill has been allocated to specific reporting units for purposes of impairment testing - Options, North American
Equities, Europe and Asia Pacific and Global FX. No goodwill has been allocated to Futures. Goodwill impairment testing
is performed annually in the fiscal fourth quarter or more frequently if conditions exist that indicate that the asset may be
impaired.
The following table presents the details of the intangible assets (in millions):
North American Europe and
Options
Equities
Asia Pacific Global FX
Total
Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . $ 166.6 $
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in foreign currency exchange rates . . . . . . . . .
22.3
(15.5)
—
Balance as of December 31, 2020 . . . . . . . . . . . . . . . . . . . . $ 173.4 $
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in foreign currency exchange rates . . . . . . . . .
—
(14.3)
—
Balance as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . $ 159.1 $
32.3
(23.4)
14.2
—
(24.9)
—
921.4 $ 363.7 $ 138.2 $ 1,589.9
193.1
247.7
(124.8)
(61.0)
16.2
2.0
1,055.5 $ 386.8 $ 113.3 $ 1,729.0
73.8
(126.6)
(7.6)
991.4 $ 426.4 $ 91.7 $ 1,668.6
—
(21.6)
—
—
(64.4)
0.3
73.8
(26.3)
(7.9)
For the years ended December 31, 2021, 2020 and 2019, amortization expense was $126.6 million, $124.8 million
and $138.6 million, respectively. The estimated future amortization expense is $116.1 million for 2022, $103.0 million for
2023, $79.5 million for 2024, $68.9 million for 2025, and $61.5 million for 2026.
114
The following tables present the categories of intangible assets at December 31, 2021 and 2020 (in millions):
December 31, 2021
North American
Europe and
Options
Equities
Trading registrations and licenses . . . . . . . . $
Customer relationships . . . . . . . . . . . . . . . . .
Market data customer relationships . . . . . . .
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trademarks and tradenames . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . .
$
95.5 $
46.6
53.6
28.1
12.9
(77.6)
159.1 $
592.0 $
378.3
322.0
41.1
7.8
(349.8)
991.4 $
Asia Pacific Global FX
221.1 $
232.3
65.2
35.6
2.5
(130.3)
426.4 $
—
140.0
64.4
22.5
1.2
(136.4)
91.7
Trading registrations and licenses . . . . . . . $
Customer relationships . . . . . . . . . . . . . . . .
Market data customer relationships . . . . . .
Technology . . . . . . . . . . . . . . . . . . . . . . . . . .
Trademarks and tradenames . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . .
$
95.5 $
46.6
53.6
28.1
12.9
(63.3)
173.4 $
11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
December 31, 2020
North American
Europe and
Options
Equities
592.0 $
378.3
322.0
41.1
7.8
(285.7)
1,055.5 $
Asia Pacific Global FX
219.3 $
175.7
65.9
28.6
2.6
(105.3)
386.8 $
—
140.0
64.4
22.5
1.2
(114.8)
113.3
Weighted
Average
Amortization
Period (in years)
Indefinite
17
10
5
8
Weighted
Average
Amortization
Period (in years)
Indefinite
16
11
5
9
Accounts payable and accrued liabilities consisted of the following as of December 31, 2021 and 2020 (in millions):
Compensation and benefit-related liabilities . . . . . . . . . . . . . $
Termination benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rebates payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing fee payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accounts payable and accrued liabilities . . . . . . . . . . . $
December 31, 2021 December 31, 2020
49.1
0.5
17.2
55.5
85.1
14.1
28.5
250.0
68.4 $
0.2
23.0
73.3
95.3
15.7
19.5
295.4 $
12. DEBT
The Company’s debt consisted of the following as of December 31, 2021 and 2020 (in millions):
Term Loan Agreement due December 2023, floating rate . . $
$500 million fixed rate Senior Notes due December 2030,
December 31, 2021 December 31, 2020
68.7
159.5 $
stated rate of 1.625% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
493.3
489.3
$650 million fixed rate Senior Notes due January 2027,
stated rate of 3.650% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
EuroCCP Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
646.5
—
—
1,299.3 $
645.9
—
—
1,203.9
As described below in further detail, on June 25, 2021, the Company further amended the Term Loan Agreement (as
defined below) to extend the maturity date from December 15, 2021 to December 15, 2023 and to allow for an additional
draw of $110 million, which the Company borrowed on June 25, 2021 in order to fund a portion of the acquisition of Chi-X
Asia Pacific.
115
Term Loan Agreement
On March 22, 2018, the Company, as borrower, entered into a Term Loan Credit Agreement (the “Term Loan
Agreement”) with Bank of America, N.A. (“Bank of America”), as administrative agent and initial lender, and the several
banks and other financial institutions from time to time party thereto as lenders. Bank of America also acted as sole lead
arranger and sole bookrunner with respect to the Term Loan Agreement. The Term Loan Agreement provided for a senior
unsecured term loan facility in an aggregate principal amount of $300 million. The proceeds of the loan under the Term
Loan Agreement were used to repay the $300 million of outstanding indebtedness under the prior term loan agreement
entered into on December 15, 2016.
Loans under the Term Loan Agreement bear interest, at the Company’s option, at either (i) the London Interbank
Offered Rate (“LIBOR”) periodically fixed for an interest period (as selected by the Company) of one, two, three or six
months plus a margin (based on the Company’s public debt ratings) ranging from 1.00 percent per annum to 1.50 percent
per annum or (ii) a daily floating rate based on the agent’s prime rate (subject to certain minimums based upon the federal
funds effective rate or LIBOR) plus a margin (based on the Company’s public debt ratings) ranging from zero percent per
annum to 0.50 percent per annum. The Company was required to pay an up-front fee of 0.05 percent to the agent for the
entry into the Term Loan Agreement.
On May 29, 2020, the Company amended the Term Loan Agreement to, among other items, (i) permit liens on assets
of the EuroCCP settlement and clearing business that secures indebtedness incurred in support of its settlement and
clearing activities, and permit the Company’s subsidiaries to incur such indebtedness, provided that such amounts are
repaid within 35 days; and (ii) provide that LIBOR, as used in the Term Loan Agreement, may be succeeded by one or
more secured overnight financing rates (“SOFR”) published by the Federal Reserve Bank of New York or another
alternate benchmark rate giving due consideration to any evolving or then-existing convention for similar agreements.
On June 25, 2021, the Company further amended the Term Loan Agreement to, among other items, (i) extend the
maturity date from December 15, 2021 to December 15, 2023; (ii) allow for an additional draw of $110 million, which the
Company borrowed on June 25, 2021 in order to fund a portion of the previously announced acquisition of Chi-X Asia
Pacific; (iii) modify the applicable margin paid on the loans to 65 basis points regardless of the Company’s debt rating;
(iv) add LIBOR replacement provisions, generally transitioning to a hardwired approach based on SOFR, with certain
adjustments as further described in the amendment; (v) increase the amount of indebtedness certain subsidiaries may
incur from the greater of $250 million and 35% consolidated EBITDA for four consecutive quarters to the greater of $350
million and 35% consolidated EBITDA for four consecutive quarters; (vi) allow the Company to increase the maximum
permitted consolidated leverage ratio to 4.00 to 1.00 (from 3.50 to 1.00) for four consecutive fiscal quarters following
certain acquisitions, provided this increase may be made only once; and (vii) modify certain other provisions to be
consistent with the Company’s Revolving Credit Agreement (as defined below).
The Term Loan Agreement, which matures on December 15, 2023, contains customary representations, warranties
and affirmative and negative covenants for facilities of its type, including financial covenants, events of default, including
cross-defaults from the Company’s other indebtedness, and indemnification provisions in favor of the lenders thereunder.
The negative covenants include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the
Company’s subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants
require the Company to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of
not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00. At December 31,
2021, the Company was in compliance with these covenants.
Senior Notes
On January 12, 2017, the Company entered into an indenture (the “Indenture”), by and between the Company and
Wells Fargo Bank, National Association, as trustee, in connection with the issuance of $650 million aggregate principal
amount of the Company’s 3.650% Senior Notes due 2027 (“3.650% Senior Notes”). The form and terms of the 3.650%
Senior Notes were established pursuant to an Officer’s Certificate, dated as of January 12, 2017, supplementing the
Indenture. The Company used a portion of the net proceeds from the 3.650% Senior Notes to fund, in part, the Merger,
including the payment of related fees and expenses and the repayment of Bats’ existing indebtedness, and the remainder
for general corporate purposes. The 3.650% Senior Notes mature on January 12, 2027 and bear interest at the rate of
3.650% per annum, payable semi-annually in arrears on January 12 and July 12 of each year, commencing July 12,
2017.
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On December 15, 2020, the Company issued $500 million aggregate principal amount of 1.625% Senior Notes due
2030 ("1.625% Senior Notes" and, together with the 3.650% Senior Notes, the "Senior Notes"). The form and terms of the
1.625% Senior Notes were established pursuant to an Officer’s Certificate, dated as of December 15, 2020,
supplementing the Indenture. The Company used the net proceeds from the 1.625% Senior Notes to finance the
acquisition of BIDS Trading, repay a portion of amounts outstanding under the term loan facility and all outstanding
indebtedness under the revolving credit facility and the remainder for general corporate purposes, which may include the
financing of future acquisitions or the repayment of other outstanding indebtedness. The 1.625% Senior Notes mature on
December 15, 2030 and bear interest at the rate of 1.625% per annum, payable semi-annually in arrears on June 15 and
December 15 of each year, commencing June 15, 2021.
The Senior Notes are unsecured obligations of the Company and rank equally with all of the Company’s other
existing and future unsecured, senior indebtedness, but are effectively junior to the Company’s secured indebtedness, to
the extent of the value of the assets securing such indebtedness, and will be structurally subordinated to the secured and
unsecured indebtedness of the Company’s subsidiaries.
The Company has the option to redeem some or all of the Senior Notes, at any time in whole or from time to time in
part, at the redemption prices set forth in the applicable Officer’s Certificate. The Company may also be required to offer
to repurchase the Senior Notes upon the occurrence of a Change of Control Triggering Event (as such term is defined in
the applicable Officer’s Certificate) at a repurchase price equal to 101% of the aggregate principal amount of Senior Notes
to be repurchased.
Indenture
Under the Indenture, the Company may issue debt securities, which includes the 3.650% Senior Notes and the
1.625% Senior Notes, at any time and from time to time, in one or more series without limitation on the aggregate
principal amount. The Indenture governing the 3.650% Senior Notes and the 1.625% Senior Notes contains customary
restrictions, including a limitation that restricts the Company’s ability and the ability of certain of the Company’s
subsidiaries to create or incur secured debt. Such Indenture also limits certain sale and leaseback transactions and
contains customary events of default. At December 31, 2021, the Company was in compliance with these covenants.
Revolving Credit Agreement
On December 21, 2020, the Company, as borrower, entered into an Amended and Restated Credit Agreement (the
“Revolving Credit Agreement”), which amended and restated the prior revolving credit agreement, with Bank of America,
N.A., as administrative agent and as swing line lender, certain lenders named therein (the “Revolving Lenders”), BOFA
Securities, Inc., as sole lead arranger and sole bookrunner and certain syndication agents named therein ("Syndication
Agents").
The Revolving Credit Agreement provides for a senior unsecured $250 million three-year revolving credit facility (the
“Revolving Credit Facility”) that includes a $25 million swing line sub-facility. The Company may also, subject to the
agreement of the applicable lenders, increase the commitments under the Revolving Credit Facility by up to $100 million,
for a total of $350 million. Subject to specified conditions, the Company may designate one or more of its subsidiaries as
additional borrowers under the Revolving Credit Agreement provided that the Company guarantees all borrowings and
other obligations of any such subsidiaries under the Revolving Credit Agreement. As of December 31, 2021, no
subsidiaries were designated as additional borrowers.
Funds borrowed under the Revolving Credit Agreement may be used to fund working capital and for other general
corporate purposes, including the making of any acquisitions the Company may pursue in the ordinary course of its
business. As of December 31, 2021, no borrowings were outstanding under the Revolving Credit Agreement. Accordingly,
at December 31, 2021, $250 million of borrowing capacity was available for the purposes permitted by the Revolving
Credit Agreement.
Loans under the Revolving Credit Agreement will bear interest, at the Company’s option, at either (i) LIBOR plus a
margin (based on the Company’s public debt ratings) ranging from 0.875 percent per annum to 1.50 percent per annum
or (ii) a daily floating rate based on the agent’s prime rate (subject to certain minimums based upon the federal funds
effective rate or LIBOR) plus a margin (based on the Company’s public debt ratings) ranging from zero percent per
annum to 0.50 percent per annum. The Revolving Credit Agreement includes a mechanism to replace LIBOR with an
alternate benchmark rate that includes the forward-looking term rate for any interest period that is based on the SOFR
117
published by the Federal Reserve Bank of New York, as may be adjusted pursuant to the terms of the Revolving Credit
Agreement.
Subject to certain conditions stated in the Revolving Credit Agreement, the Company and any subsidiaries
designated as additional borrowers may borrow, prepay and reborrow amounts under the Revolving Credit Facility at any
time during the term of the Revolving Credit Agreement. The Revolving Credit Agreement will terminate and all amounts
owing thereunder will be due and payable on December 21, 2023, unless the commitments are terminated earlier, either
at the request of the Company or, if an event of default occurs, by the Revolving Lenders (or automatically in the case of
certain bankruptcy-related events). The Revolving Credit Agreement contains customary representations, warranties and
affirmative and negative covenants for facilities of its type, including financial covenants, events of default and
indemnification provisions in favor of the Revolving Lenders. The negative covenants include restrictions regarding the
incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject to
certain exceptions in each case. The financial covenants require the Company to meet a quarterly financial test with
respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated
leverage ratio of not greater than 3.50 to 1.00; provided that the consolidated leverage ratio may, subject to certain
triggering events set forth in the Revolving Credit Agreement, be increased to 4.00 to 1.00 for four consecutive fiscal
quarters. At December 31, 2021, the Company was in compliance with these covenants.
EuroCCP Credit Facility
On July 1, 2020, EuroCCP, as borrower, the Company, as guarantor, entered into a Facility Agreement (the “Facility”
or “EuroCCP Credit Facility”) with Bank of America Merrill Lynch International Designated Activity Company, as co-
ordinator, facility agent, lender, sole lead arranger and sole bookrunner, Citibank N.A., as security agent, and certain
other lenders named therein.
The Facility provides for a €1.5 billion committed syndicated multicurrency revolving and swingline credit facility
(i) that is available to be drawn by EuroCCP (as borrower) towards (a) financing unsettled amounts in connection with the
settlement of transactions in securities and other items processed through EuroCCP’s clearing system and (b) financing
any other liability or liquidity requirement of EuroCCP incurred in the operation of its clearing system and (ii) under which
the scheduled interest and fees on borrowings (but not the principal amount of any borrowings) are guaranteed by the
Company. Subject to certain conditions, EuroCCP is able to increase the commitments under the Facility by up to €500
million, to a total of €2.0 billion.
Borrowings under the Facility are secured by cash, eligible government bonds and eligible equity assets deposited by
EuroCCP into secured accounts. In addition, EuroCCP must ensure that at all times the aggregate of (a) each clearing
participant’s contribution to the relevant clearing fund, (b) each clearing participant’s margin amount and (c) any cash
equities purchased using the proceeds of the assets described in (a) and (b), less the amount of any such clearing
participant contribution, margin amount or cash equities which have been transferred to (or secured in favor of) any
provider of settlement or custody services to EuroCCP, is not less than €500 million. As of December 31, 2021, no
borrowings were outstanding under the Facility. Accordingly, at December 31, 2021, €1.5 billion of borrowing capacity
was available for the purposes permitted by the Facility.
Borrowings under the Facility’s revolving loans and non-U.S. dollar swingline loans bear interest at the relevant
floating base rate plus a margin of 1.75 percent per annum and (subject to certain conditions) borrowings under the
Facility’s U.S. dollar swingline loans bear interest as the higher of the relevant agent’s prime commercial lending rate for
U.S. dollars and 0.5 percent per annum over the federal funds effective rate. A commitment fee of 0.30 percent per
annum is payable on the unused and uncalled amount of the Facility during the availability period.
Subject to certain conditions stated in the Facility, EuroCCP may borrow, prepay and reborrow amounts under the
Facility at any time during the term of the Facility. The Facility will terminate and all amounts owing thereunder will be due
and payable on 364 days from the date of the agreement, unless the commitments are terminated earlier, either at the
request of EuroCCP or, if an event of default occurs, by the Lenders (or automatically in the case of certain bankruptcy-
related events).
The Facility contains customary representations, warranties and covenants for facilities of its type, including events of
default of the Company and EuroCCP and indemnification provisions in favor of the Lenders. In particular, the covenants
include restrictions regarding the incurrence of liens by EuroCCP and its subsidiaries, and an event of default will be
triggered if EuroCCP ceases its business, subject to certain exceptions in each case. There is also a requirement for the
net worth of (a) the Company to be no less than $1.75 billion on the date of each drawdown and delivery of compliance
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certificates and (b) EuroCCP to be the higher of €24 million and any such amount required for EuroCCP to meet minimum
liquidity regulations under applicable regulation at all times. At December 31, 2021, the Company and EuroCCP were in
compliance with these covenants.
On July 1, 2021, the Facility was amended and restated to, among other items: (i) extend the term of the Facility until
June 30, 2022; (ii) update benchmark rates for U.S. dollar swingline loans and alternative term rates for revolving loans;
(iii) remove references to LIBOR and clarified procedures to calculate interest rates; (iv) reduce the minimum tangible net
worth requirement from €24 million to €20 million; (v) include a new tranche in the revolving and swingline facilities to
increase access to certain currencies; (vi) update the borrowing base calculations to more accurately reflect the collateral
held by EuroCCP; and (vii) modify certain other provisions to incorporate updates in applicable laws and regulations.
Loan and Notes Payments and Contractual Interest
The future expected loan repayments related to the Term Loan Agreement and the Senior Notes as of December 31,
2021 are as follows (in millions):
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal amounts repayable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized discounts on notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
160.0
—
—
1,150.0
1,310.0
(5.1)
(5.6)
1,299.3
Interest expense recognized on the Term Loan Agreement, the Senior Notes, and the Revolving Credit Agreement is
included in interest expense, net in the consolidated statements of income. The Company is also obligated to pay
commitment fees under the terms of the Facility and Revolving Credit Agreement which are also included in interest
expense, net. Interest expense, net recognized in the consolidated statements of income for the years ended
December 31, 2021, 2020 and 2019 are as follows (in millions):
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2020
2019
2021
Components of interest expense:
Contractual interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Amortization of debt discount and issuance costs . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
45.7 $
2.3
48.0 $
(0.6)
47.4 $
35.3 $
3.4
38.7 $
(1.1)
37.6 $
35.6
2.2
37.8
(1.9)
35.9
13. ACCUMULATED OTHER COMPREHENSIVE INCOME, NET
The following represents the changes in accumulated other comprehensive income, net by component (in millions):
Foreign Currency
Translation
Adjustment
Unrealized
Investment
Gain/Loss
Post-Retirement
Benefits
Total Accumulated Other
Comprehensive
Income, Net
Balance at December 31, 2019 . . . . . . . . . $
Other comprehensive income (loss) . . . . . .
Balance at December 31, 2020 . . . . . . . . . $
Other comprehensive loss . . . . . . . . . . . . . .
Balance at December 31, 2021 . . . . . . . . . $
38.2 $
36.5
74.7 $
(19.3)
55.4 $
0.2 $
(0.3)
(0.1) $
—
(0.1) $
(0.8) $
1.2
0.4 $
(0.1)
0.3 $
37.6
37.4
75.0
(19.4)
55.6
14. CLEARING OPERATIONS
EuroCCP is a European equities central counterparty that provides post-trade services to stock exchanges, MTFs
over-the-counter (“OTC”) equities trades, and an equity index derivatives exchange. EuroCCP clears equities from
eighteen European markets and the United States, as well as Depositary Receipts, ETFs, and exchange traded
119
currencies (“ETCs”). In September, 2021 EuroCCP began clearing equity index derivatives for six European markets.
Through a novation process, EuroCCP becomes the buyer for every seller and the seller for every buyer, thereby
protecting clearing participants from counterparty risk and allowing the settlement of trades in the event of a clearing
participant default.
EuroCCP only assumes the guarantor role if it has an equal and offsetting claim against a clearing participant. For
the period ended December 31, 2021, there have been no events of default for which a liability is required to be
recognized in accordance with GAAP.
Clearing Participant Deposits
EuroCCP generally requires all clearing participants to deposit collateral to help mitigate EuroCCP’s exposure to
credit risk in the event that a clearing participant fails to meet a financial or contractual obligation.
Margin Deposits
Margin deposits, which are predominately in the form of cash and cash equivalents, are deposits made by each
clearing participant to EuroCCP to cover some or all of the credit risk of its failure to fulfill its obligations in the trade.
EuroCCP maintains and manages all cash deposits related to margin deposits. Substantially all risks and rewards of
margin deposit ownership, including net interest income, belong to EuroCCP and are recorded in other revenue on the
consolidated statements of income. In the event of a default, EuroCCP can access the defaulting participant’s margin
deposits to cover the defaulting participant’s losses. For more information, see “Default and Liquidity Waterfalls” below.
Clearing Funds
The clearing fund mutualizes the risk of default among all clearing participants. Depending on their membership,
clearing participants contribute to the cash-equity and/or derivatives segment of the clearing fund. Although the entire
clearing fund is available to cover potential losses in the event that the margin deposits and the clearing fund deposits of
a defaulting clearing participant are inadequate to fulfill that clearing participant’s outstanding financial obligations, the
clearing fund first uses the product class segment of the Clearing Fund in which the defaulting participants was active
(see Default and Liquidity Waterfalls below). In the event of a default, EuroCCP is generally required to liquidate the
defaulting clearing participant’s open positions. To the extent that the positions remain open, EuroCCP is required to
assume the defaulting clearing participant’s obligations related to the open positions. Clearing participants are required to
make contributions to the clearing fund that are proportional to their risk exposure in the form of cash or non-cash
contributions, which generally consist of highly liquid securities.
Interoperability Fund
For the cash equity business line, EuroCCP has entered into interoperable arrangements with two other central
counterparties (“CCPs”). Under these arrangements, margin is paid to, and received from, the other CCPs. The
interoperability fund consists of collateral pledged by EuroCCP to the other interoperable CCPs, to cover margin calls
EuroCCP received from other interoperable CCPs. For EuroCCP, the collateral pledged by the clearing participants is
maintained in an interoperability fund designated account. EuroCCP does not have any economic interest or ownership in
the collateral; therefore, these balances are not included in the consolidated balance sheet.
120
The following tables present the Company’s total clearing participant deposits as of December 31, 2021 and
December 31, 2020 (in millions):
December 31, 2021
Margin deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Clearing funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interoperability funds (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash Contributions Non-Cash Contributions (1) Total Contributions
887.0
187.8
515.9
1,590.7
600.0 $
145.9
423.3
1,169.2 $
41.9
92.6
421.5 $
287.0 $
December 31, 2020
Margin deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Clearing funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interoperability funds (1) . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash Contributions Non-Cash Contributions (1) Total Contributions
720.5
562.3
553.7
1,836.5
319.5 $
492.6
378.5
1,190.6 $
69.7
175.2
645.9 $
401.0 $
(1) These amounts are not reflected in the consolidated balance sheet, as EuroCCP does not take economic ownership
of these balances.
Default and Liquidity Waterfalls
The default waterfall is the priority order in which the capital resources are expected to be utilized in the event of a
default where the defaulting clearing participant’s collateral would not be sufficient to cover the cost to liquidate its
portfolio. If a default occurs and the defaulting clearing participant’s collateral, including margin deposits and clearing fund
deposits, are depleted, then additional capital is utilized in the following order:
•
EuroCCP dedicated own resources: The EuroCCP default waterfall first utilizes its own dedicated resources
ahead of clearing fund contributions of non-defaulting clearing participants, up to 25% of EuroCCP capital
requirements discussed in Note 18 (“Regulatory Capital”).
• Clearing fund: Second, the EuroCCP default waterfall utilizes traditional CCP risk mutualization, in the event that
default losses fully exhaust EuroCCP’s dedicated own resources amount, whereby contributions applicable to a
particular product class are applied first to any loss attributable to that product class.
•
Pro rata contributions: Third, if the default losses caused cannot be covered by the first two layers, the non-
defaulting clearing participants shall on demand make additional payments to EuroCCP on a pro rata basis in
proportion to the amount of their clearing fund contributions to cover any such remaining losses, which is limited
to an amount equal to twice their clearing fund contribution as established under EuroCCP’s rules and
regulations. In this scenario, contributions applicable to a particular product class are first applied to any losses
attributable to that product class.
In addition to the default waterfall, the liquidity waterfall is the priority order in which the liquidity resources are
expected to be utilized for EuroCCP’s ordinary course business operations and in situations when additional liquidity
resources and liquidity measures may be activated in case of a potential liquidity shortfall. Liquidity, intraday or overnight,
is mainly required for securities settlement. In ordinary course business circumstances, liquidity resources include the
collateral directly deposited with EuroCCP, FX swap arrangements, and reverse repurchase agreements, as well as the
use of the Facility.
15. FAIR VALUE MEASUREMENT
Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an
orderly transaction between market participants at the measurement date and in the principal or most advantageous
market for that asset or liability. The fair value should be calculated based on assumptions that market participants would
use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should
include consideration of non-performance risk, including the Company’s own credit risk.
The Company applied ASC 820— Fair Value Measurement, which provides guidance for using fair value to measure
assets and liabilities by defining fair value and establishing the framework for measuring fair value. ASC 820 applies to
financial and nonfinancial instruments that are measured and reported on a fair value basis. The three-level hierarchy of
fair value measurements is based on whether the inputs to those measurements are observable or unobservable.
Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the
121
Company’s market assumptions. The fair value hierarchy requires the use of observable market data when available and
consists of the following levels:
•
•
•
Level 1—Unadjusted inputs based on quoted markets for identical assets or liabilities.
Level 2—Observable inputs, either direct or indirect, not including Level 1 measurements, corroborated
by market data or based upon quoted prices in non-active markets.
Level 3—Unobservable inputs that reflect management’s best assumptions of what market participants
would use in valuing the asset or liability.
The Company has included a tabular disclosure for financial assets and liabilities that are measured at fair value on a
recurring basis in the consolidated balance sheets as of December 31, 2021 and 2020, respectively.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value
on a recurring basis as of December 31, 2021 and 2020 (in millions):
Assets:
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marketable securities:
Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Liabilities:
Contingent consideration liabilities . . . . . . . . . . . . . . . . . . . . $
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Assets:
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marketable securities:
Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities:
$
Total
Level 1
Level 2
Level 3
December 31, 2021
9.1 $
9.1 $
— $
18.4
9.6
37.1
$
18.4
9.6
37.1
$
—
—
—
$
—
—
—
—
70.5 $
70.5 $
— $
— $
— $
— $
70.5
70.5
Total
Level 1
Level 2
Level 3
December 31, 2020
67.9 $
67.9 $
— $
15.9
8.6
92.4
$
15.9
8.6
92.4
$
—
—
—
$
—
—
—
—
Contingent consideration liabilities . . . . . . . . . . . . . . . . . . . $
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
32.7 $
32.7 $
— $
— $
— $
— $
32.7
32.7
The following is a description of the Company’s valuation methodologies used for instruments measured at fair value
on a recurring basis:
Financial Investments
Financial investments consist of highly liquid U.S. Treasury securities and marketable securities held in a trust for the
Company’s non-qualified retirement and benefit plans, also referred to as deferred compensation plan assets. The
deferred compensation plan assets have an equal and offsetting deferred compensation plan liability based on the value
of the deferred compensation plan assets. These securities are valued by obtaining feeds from a number of live data
sources, including active market makers and inter-dealer brokers and therefore categorized as Level 1. No material
adjustments were made to the carrying value of financial investments for the period ended December 31, 2021. See Note
17 (“Employee Benefit Plans”) for more information.
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Contingent Consideration Liabilities
In connection with the acquisitions of Hanweck, MATCHNow, and Chi-X Asia Pacific, as well as the acquisition of
assets of FT Options and Trade Alert, the Company entered into contingent consideration arrangements with the former
owners. The total fair value of the liabilities at December 31, 2021 was $70.5 million. That value is based on the
Company’s estimate of the likelihood that certain performance targets in the respective acquisition agreements are
expected to be accomplished. In connection with the contingent consideration arrangements, the Company paid a total of
$9.1 million in contingent consideration to Hanweck, FT Options, Trade Alert and Chi-X Asia Pacific in 2021. Because the
fair value measurements relating to the contingent consideration liabilities are subject to management judgment,
measurement uncertainty is inherent in the valuation of the contingent consideration liabilities as of the reporting date.
Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is
immaterial as of December 31, 2021.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets, such as goodwill and intangible assets, are measured at fair value on a non-recurring basis. For
goodwill, the process involves using a market approach and income approach (using discounted estimated cash flows) to
determine the fair value of each reporting unit on a stand-alone basis. That fair value is compared to the carrying value of
the reporting unit, including its recorded goodwill. In connection with the annual impairment evaluation of goodwill and
indefinite life intangibles, impairment is considered to have occurred if the fair value of the reporting unit is lower than the
carrying value of the reporting unit. For the intangible assets, the process also involves using a discounted cash flow
method to determine the fair value of each intangible asset. Impairment is considered to have occurred if the fair value of
the intangible asset is lower than its carrying value. These measurements are considered Level 3 and these assets are
recognized at fair value if they are deemed to be impaired.
Equity investments without readily determinable fair values that are valued using the measurement alternative are
measured at fair value on a non-recurring basis. See Note 6 (“Investments”) for more information. During the year ended
December 31, 2021, no observable transactions or impairments materially impacted the measurements of the
investments accounted for as other equity investments.
Fair Value of Assets and Liabilities
The following table presents the Company’s fair value hierarchy for certain assets and liabilities held by the
Company, with the exception of debt which is presented at its carrying value, as of December 31, 2021 and 2020 (in
millions):
Total
Level 1
Level 2
Level 3
December 31, 2021
Assets:
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . .
Deferred compensation plan assets . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities:
Contingent consideration liabilities . . . . . . . . . . . .
Deferred compensation plan liabilities . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
70.5
—
—
70.5
$
$
9.1 $
28.0
37.1 $
9.1 $
28.0
37.1 $
— $
—
— $
— $
— $
—
1,299.3
28.0
—
28.0 $ 1,299.3 $
$
70.5 $
28.0
1,299.3
$ 1,397.8 $
123
Assets:
U.S. Treasury securities . . . . . . . . . . . . . . . . . . . .
Deferred compensation plan assets . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities:
Contingent consideration liabilities . . . . . . . . . . . .
Deferred compensation plan liabilities . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Level 1
Level 2
Level 3
December 31, 2020
$
$
67.9 $
24.5
92.4 $
67.9 $
24.5
92.4 $
— $
—
— $
$
32.7 $
24.5
1,319.1
$ 1,376.3 $
— $
— $
—
1,319.1
24.5
—
24.5 $ 1,319.1 $
—
—
—
32.7
—
—
32.7
Certain financial assets and liabilities, including cash and cash equivalents, accounts receivable, income tax
receivable, accounts payable and Section 31 fees payable, are not measured at fair value on a recurring basis, but the
carrying values approximate fair value due to their liquid or short-term nature.
Debt
The debt balance consists of fixed rate, Senior Notes and a floating rate, Term Loan Agreement. The fair values of
the Senior Notes are classified as Level 2 under the fair value hierarchy and are estimated using prevailing market
quotes. The fair value of the Term Loan Agreement was determined by utilizing a discounted cash flow analysis and is
considered a Level 2 measurement.
The fair values of the Company’s debt obligations for 2021 and 2020 were as follows (in millions):
Term Loan Agreement . . . . . . . . . . . . .
3.650% Senior Notes . . . . . . . . . . . . . .
1.625% Senior Notes . . . . . . . . . . . . . .
$
$
160.1
702.6
470.9
70.0
744.0
505.1
December 31, 2021
December 31, 2020
Fair Value
Information on Level 3 Financial Liabilities
The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities
during the year ended December 31, 2021 and 2020 (in millions):
Level 3 Financial Liabilities for the Year Ended December 31, 2021
Balance at
Beginning of
Period
Realized (gains)
losses during
period
Balance at
Additions Settlements Translation End of Period
Currency
Foreign
Liabilities
Contingent consideration liabilities . . . . $
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . $
32.7 $
32.7 $
(2.7) $ 49.6 $
(2.7) $ 49.6 $
(9.1) $
(9.1) $
— $
— $
70.5
70.5
Level 3 Financial Liabilities for the Year Ended December 31, 2020
Balance at
Beginning of
Period
Realized (gains)
losses during
period
Currency Balances at
Additions Settlements Translation End of Period
Foreign
Liabilities
Contingent consideration liabilities . . . . $
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . $
2.2 $
2.2 $
— $ 32.7 $
— $ 32.7 $
(2.2) $
(2.2) $
— $
— $
32.7
32.7
16. SEGMENT REPORTING
The Company reports five business segments: Options, North American Equities, Europe and Asia Pacific, Futures,
and Global FX, which is reflective of how the Company's chief operating decision-maker reviews and operates the
business, as discussed in Note 1 (“Nature of Operations”). Segment performance is primarily evaluated based on
operating income (loss). The Company’s chief operating decision-maker does not use segment-level assets or income
124
and expenses below operating income (loss) as key performance metrics; therefore, such information is not presented
below. The Company has aggregated all of its corporate costs, as well as other business ventures, within the Corporate
Items and Eliminations totals based on the decision that those activities should not be used to evaluate the operating
performance of the segments; however, operating expenses that relate to activities of a specific segment have been
allocated to that segment.
Options. The Options segment includes options on market indices (“index options”), as well as on the stocks of
individual corporations (“equity options”), and options on ETPs, such as exchange-traded funds (“ETFs”) and exchange-
traded notes (“ETNs”), which are “multi-listed” options and listed on a non-exclusive basis. These options are eligible to
trade on Cboe Options, C2, BZX, EDGX, and other U.S. national security exchanges. Cboe Options is the Company’s
primary options market and offers trading in listed options through a single system that integrates electronic trading and
traditional open outcry trading on the Cboe Options trading floor in Chicago. C2 Options, BZX Options, and EDGX
Options are all-electronic options exchanges, and typically operate with different market models and fee structures than
Cboe Options. The Options segment also includes applicable market data revenue generated from the consolidated tape
plans, the licensing of proprietary options market data, index licensing, and access and capacity services.
North American Equities. The North American Equities segment includes listed U.S. equities and ETP transaction
services that occur on fully electronic exchanges owned and operated by BZX, BYX, EDGX, and EDGA, equities
transactions that occur on the BIDS Trading platform, and Canadian equities and other transaction services that occur on
or through the MATCHNow ATS. The North American Equities segment also includes ETP listings on BZX, the Cboe
Global Markets, Inc. common stock listing, applicable market data revenue generated from the consolidated tape plans,
the licensing of proprietary equities market data, routing services, and access and capacity services.
Europe and Asia Pacific. The Europe and Asia Pacific segment includes the pan-European listed equities and
derivatives transaction services, ETPs, exchange-traded commodities, and international depository receipts that are
hosted on MTFs operated by Cboe Europe Equities (Cboe Europe and Cboe NL) and Cboe Europe Derivatives (“CEDX”).
It also includes the ETP listings business on RMs and clearing activities of EuroCCP, as well as the equities transaction
services of Cboe Australia and Cboe Japan, each operators of trading venues in Australia and Japan. This segment was
previously referred to as the European Equities segment but was updated to the Europe segment in the first quarter of
2021 as a result of the launch of Cboe Europe Derivatives, a pan-European derivatives platform in September 2021. The
segment was subsequently updated to Europe and Asia Pacific to reflect the acquisition of Chi-X Asia Pacific in
July 2021. Cboe Europe operates lit and dark books, a periodic auctions book, and a Large-in-Scale (“LIS”) trading
negotiation facility for UK symbols. Cboe NL, launched in October 2019 and based in Amsterdam, operates similar
business functionality to that offered by Cboe Europe, and provides for trading only in European Economic Area (“EEA”)
symbols. The new Cboe Europe Derivatives venue offers futures and options based on Cboe Europe equity indices. This
segment also includes Cboe Europe, Cboe NL, CEDX, Cboe Australia and Cboe Japan revenue generated from the
licensing of proprietary market data and from access and capacity services.
Futures. The Futures segment includes transaction services provided by the Company’s fully electronic futures
exchange, CFE, which includes offerings for trading of VIX futures and other futures products, the licensing of proprietary
market data, as well as access and capacity services.
Global FX. The Global FX segment includes institutional FX trading services that occur on the Cboe FX fully
electronic trading platform, non-deliverable forward FX transactions (“NDFs”) offered for execution on Cboe SEF and
Cboe Swiss, as well as revenue generated from the licensing of proprietary market data and from access and capacity
services.
125
Summarized financial data of reportable segments was as follows (in millions):
Year ended December 31, 2021
North
American Europe and
Corporate
Items and
Options
Equities
Asia Pacific Futures Global FX Eliminations
Total
Revenues . . . . . . . . . . . . . . . . . . . $ 1,505.0 $ 1,570.5 $ 240.3 $ 120.6 $ 58.1 $
Operating income (loss) . . . . . . . .
538.0
156.1
56.0
66.0
2.7
Year ended December 31, 2020
Revenues . . . . . . . . . . . . . . . . . . . $ 1,330.1 $ 1,789.5 $ 140.5 $ 109.2 $ 57.8 $
Operating income (loss) . . . . . . . .
159.5
430.4
33.5
53.8
6.0
Year ended December 31, 2019
Revenues . . . . . . . . . . . . . . . . . . . $
Operating income (loss) . . . . . . . .
17. EMPLOYEE BENEFIT PLANS
983.1 $ 1,213.1 $ 110.8 $ 135.9 $ 53.0 $
20.3
334.3
132.5
83.1
(4.9)
0.3 $ 3,494.8
805.9
(12.9)
— $ 3,427.1
662.2
(21.0)
0.2 $ 2,496.1
537.2
(28.1)
Eligible U.S. employees, which includes BIDS U.S. employees as of January 1, 2021, are eligible to participate in the
Cboe Options SMART Plan (“SMART Plan”). The SMART Plan is a defined contribution plan, which is qualified under
Internal Revenue Code Section 401(k). In addition, eligible employees may participate in the Supplemental Employee
Retirement Plan, Executive Retirement Plan and Deferred Compensation Plan. Effective January 1, 2017, the Executive
Retirement Plan is closed to new executive officers and employees. Each plan is a defined contribution plan that is non-
qualified under the Internal Revenue Code. The Deferred Compensation Plan assets, held in a trust, are subject to the
claims of general creditors of the Company and totaled $28.0 million at December 31, 2021. Although the value of the
plans are recorded in financial investments on the consolidated balance sheets, there are equal and offsetting liabilities in
other non-current liabilities. The investment results of these plans have no impact on net income as the investment results
are recorded in equal amounts to both other expense, net and compensation and benefits expense in the consolidated
statements of income. The Company contributed $11.8 million, $10.5 million, and $11.3 million to the defined contribution
plans for the years ended December 31, 2021, 2020, and 2019, respectively.
Eligible employees outside of the U.S., which includes employees of Cboe Europe, EuroCCP, MATCHNow, BIDS,
and Chi-X Asia Pacific are eligible to participate in various employee-selected stakeholder contribution plans or plans
covered by local jurisdictions or by applicable laws. The Company’s contribution amounted to $2.3 million, $1.6 million,
and $0.7 million for the years ended December 31, 2021, 2020, and 2019, respectively. This expense is included in
compensation and benefits in the consolidated statements of income.
18. REGULATORY CAPITAL
As broker-dealers registered with the SEC, Cboe Trading and BIDS Trading are subject to the SEC’s Uniform Net
Capital Rule (“Rule 15c3-1”), which requires the maintenance of minimum net capital, as defined therein. The SEC’s
requirement also provides that equity capital may not be withdrawn or a cash dividend paid if certain minimum net capital
requirements are not met. Cboe Trading and BIDS Trading compute the net capital requirements under the basic method
provided for in Rule 15c3-1. As of December 31, 2021, Cboe Trading and BIDS Trading were required to maintain net
capital equal to the greater of 6.67% of aggregate indebtedness items, as defined, or $0.1 million.
As entities regulated by the FCA, Cboe Europe is subject to the Financial Resource Requirement (“FRR”) and Cboe
Chi-X Europe is subject to the Capital Resources Requirement (“CRR”). As a RIE, Cboe Europe computes its FRR in
accordance with its Financial Risk Assessment, as agreed by the FCA.
In accordance with the Markets in Financial Instruments Directive of the FCA requirements, Cboe Chi-X Europe
computes its CRR as the greater of the base requirement of $0.1 million as of December 31, 2021, or the summation of
the credit risk, market risk and fixed overheads requirements, as defined. Cboe Chi-X Europe is currently dormant having
ceased offering its routing service in November 2018.
On March 8, 2019, Cboe NL received approval from the Dutch Ministry of Finance to operate a RM, a MTF, and an
approved publication arrangement in the Netherlands. As a RM, Cboe NL is subject to minimum capital requirements, as
established by the Dutch Ministry of Finance in the license dated March 8, 2019.
126
EuroCCP was granted authorization under European Market Infrastructure Regulation (“EMIR”) by the National
Competent Authority, DNB. EuroCCP is required by the EMIR, to maintain a minimum amount of capital to reflect an
estimate of the capital required to wind down or restructure the activities of the clearinghouse, cover operational, legal and
business risks and to reserve capital to meet credit, counterparty and market risks not covered by the clearing
participants’ collateral and clearing funds.
The Investment Industry Regulatory Organization of Canada (“IIROC”) sets and monitors regulatory capital
requirements for MATCHNow to protect its clients and counterparties. MATCHNow is required to maintain a prescribed
minimum level of risk adjusted capital in accordance with such requirements as IIROC may from time to time prescribe.
As a designated contract market regulated by the CFTC, CFE is required to meet two capital adequacy tests: (i) its
financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered,
liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating
costs. The amounts presented below represent the greater of the two capital adequacy requirements.
As a swap execution facility regulated by the CFTC, Cboe SEF is required to meet two capital adequacy tests: (i) its
financial resources must exceed at least twelve months of its projected operating costs and (ii) its unencumbered, liquid
financial assets must be equal to the greater of: (a) three months of projected operating costs or (b) its projected wind-
down costs. The amounts presented below represent the greater of the two capital adequacy requirements.
The following table presents the Company’s subsidiaries with regulatory capital requirements discussed above, as
well as the actual and minimum regulatory capital requirements of the subsidiary as of December 31, 2021 (in millions):
Regulatory Authority
Subsidiary
Cboe Trading . . . . . . . . . . . . . . FINRA/SEC
BIDS Trading . . . . . . . . . . . . . . FINRA/SEC
Cboe Europe . . . . . . . . . . . . . . FCA
Cboe Chi-X Europe . . . . . . . . . FCA
Cboe NL . . . . . . . . . . . . . . . . . . Dutch Authority for Financial Markets
EuroCCP . . . . . . . . . . . . . . . . . DNB
MATCHNow . . . . . . . . . . . . . . .
IIROC
CFE . . . . . . . . . . . . . . . . . . . . . . CFTC
SEF . . . . . . . . . . . . . . . . . . . . . . CFTC
$
Actual
Minimum
Requirement
20.4 $
12.0
52.2
0.3
9.8
65.6
4.3
61.0
2.3
1.3
1.2
27.5
0.1
3.8
38.0
0.2
42.2
0.9
Cboe Australia is regulated by the Australian Securities and Investments Commission (“ASIC”). Cboe Australia is
required to maintain sufficient financial resources to operate the market properly in accordance with Section 794A(d) of
the Corporations Act, which Cboe Australia satisfies by maintaining a prudent cash reserve, which must be equal to at
least six months of its projected operating expenses. As of December 31, 2021, Cboe Australia holds $4.4 million in cash
deposits to meet this requirement.
Cboe Japan is regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers
Association (“JSDA”). Cboe Japan is required to maintain a minimum level of regulatory capital ratio of 120% in
accordance with such requirements prescribed by the JFSA and JSDA. As of December 31, 2021, Cboe Japan had a
regulatory capital ratio of 273%.
19. STOCK-BASED COMPENSATION
Stock-based compensation is based on the fair value of the award on the date of grant, which is recognized over the
related service period, net of actual forfeitures. The service period is the period over which the related service is
performed, which is generally the same as the vesting period. Vesting may be accelerated for certain officers and
employees as a result of attaining certain age and service-based requirements in the Company’s long-term incentive plan
and award agreements.
The Company recognized stock-based compensation expense of $26.6 million, $21.7 million, and $21.8 million for
the years ended December 31, 2021, 2020, and 2019, respectively. Stock-based compensation expense is included in
compensation and benefits and acquisition-related costs in the consolidated statements of income.
127
The activity in the Company's stock options and restricted stock, consisting of restricted stock awards (“RSAs”),
restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”), was as follows:
Stock Options
Summary stock option activity is presented below:
Outstanding, January 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding and exercisable December 31, 2021 . . . . . . . . . . . .
Weighted
average exercise
price
Number of
Shares
369,483 $
358,649
10,834 $
10,834
— $
—
— $
26.40
26.63
18.59
18.59
—
—
—
All outstanding stock options were exercised during the year ended December 31, 2020. The total intrinsic value of
stock options exercised was $0.9 million and $26.0 million for the years ended December 31, 2020 and 2019,
respectively.
RSAs and RSUs
The following table summarizes RSA and RSU activity during the year ended December 31, 2021:
Nonvested stock at January 1, 2019 . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested stock at December 31, 2019 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested stock at December 31, 2020 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested stock at December 31, 2021 . . . . . . . . . . . . . . . . . . . .
Number of
shares
631,764 $
216,891
(313,856)
(98,786)
436,013 $
193,912
(272,258)
(15,585)
342,082 $
298,084
(166,598)
(30,249)
443,319 $
Weighted
average grant
date fair value
85.85
93.45
83.25
85.50
91.58
115.89
88.32
106.70
108.40
92.32
106.13
97.01
99.22
RSAs granted to non-employee members of the Board of Directors have a one-year vesting period and vesting
accelerates upon the occurrence of a change in control of the Company. Unvested portions of the RSAs will be forfeited if
the director leaves the Board of Directors prior to the applicable vesting date. The RSAs have voting rights and entitle the
holder to receive dividends.
RSUs entitle the holder to one share of common stock upon vesting, typically vest over a three year period, and
vesting accelerates upon the occurrence of a change in control or a termination of employment following a change in
control or in the event of a participant’s earlier death or disability. Vesting will also accelerate upon a qualified retirement,
where applicable and permitted. Where applicable and permitted, qualified retirement eligibility occurs once achieving 55
years of age and 10 years of service for grants awarded in and after 2017. Unvested RSUs will be forfeited if the officer,
or employee leaves the Company prior to the applicable vesting date, except in limited circumstances. The RSUs have no
voting rights but entitle the holder to receive dividend equivalents.
In the year ended December 31, 2021, to satisfy employees’ tax obligations upon the vesting of restricted stock, the
Company purchased 53,929 shares of common stock totaling $5.3 million as the result of the vesting of 149,071 shares of
restricted stock.
128
PSUs
The following table summarizes restricted stock units contingent upon achievement of performance conditions, also
known as PSUs, activity during the year ended December 31, 2021:
Nonvested stock at January 1, 2019 . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested stock at December 31, 2019 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested stock at December 31, 2020 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested stock at December 31, 2021 . . . . . . . . . . . . . . . . . . . .
Weighted
average grant
date fair value
Number of
Shares
151,842 $
86,134
(69,372)
(36,356)
132,248 $
72,975
(48,053)
(34,504)
122,666 $
71,302
(29,468)
(12,090)
152,410 $
100.81
88.22
74.56
97.78
107.21
125.62
108.91
109.85
115.18
98.32
111.45
110.20
108.41
PSUs include awards related to earnings per share during the performance period as well as awards related to total
shareholder return during the performance period. The Company used the Monte Carlo valuation model method to
estimate the fair value of the total shareholder return PSUs which incorporated the following assumptions: risk-free
interest rate (0.15)%, three-year volatility (31.8)% and three-year correlation with S&P 500 Index (0.51). Each of these
performance shares has a performance condition under which the number of units ultimately awarded will vary from 0% to
200% of the original grant, with each unit representing the contingent right to receive one share of the Company’s
common stock. The vesting period for the PSUs contingent on the achievement of performance conditions is three years.
For each of the performance awards, the PSUs will be settled in shares of the Company’s common stock following vesting
of the PSU assuming that the participant has been continuously employed during the vesting period, subject to
acceleration in the event of a change in control of the Company, or a termination of employment following a change in
control, or in the event of a participant’s earlier death or disability. Participants have no voting rights with respect to the
PSUs until the issuance of the shares of common stock. Dividends are accrued by the Company and will be paid once the
PSUs contingent on the achievement of performance conditions vest.
In the year ended December 31, 2021, to satisfy employees’ tax obligations upon the vesting of performance stock,
the Company purchased 9,982 shares of common stock totaling $0.9 million as the result of the vesting of 29,468 shares
of performance stock.
As of December 31, 2021, there were $25.5 million in total unrecognized compensation costs related to restricted
stock, restricted stock units, and performance stock units. These costs are expected to be recognized over a weighted
average period of 1.7 years.
Employee Stock Purchase Plan
In May 2018, the Company’s stockholders approved an Employee Stock Purchase Plan, (“ESPP”), under which a
total of 750,000 shares of the Company’s common stock will be made available for purchase to employees. The ESPP is
a broad-based plan that permits employees to contribute up to 10% of wages and base salary to purchase shares of the
Company’s common stock at a discount, subject to applicable annual Internal Revenue Service limitations. Under the
ESPP, a participant may not purchase more than a maximum of 312 shares of the Company’s common stock during any
single offering period. No participant may accrue options to purchase shares of the Company’s common stock at a rate
that exceeds $25,000 in fair market value of the Company’s common stock (determined at the time such options are
granted) for each calendar year in which such rights are outstanding at any time. The exercise price per share of common
stock shall be 90% (for eligible U.S. employees) or 85% (for eligible international employees) of the lesser of the fair value
of the stock on the first day of the applicable offering period or the applicable exercise date.
129
The Company records compensation expense over the offering period related to the discount that is given to
employees, which totaled $0.4 million, $0.3 million, and $0.4 million for the years ended December 31, 2021, 2020, and
2019, respectively. As of December 31, 2021, 655,078 shares were reserved for future issuance under the ESPP.
20. EQUITY
Common Stock
The Company’s common stock is listed on Cboe BZX under the trading symbol CBOE. As of December 31, 2021,
325,000,000 shares of the Company’s common stock were authorized, $0.01 par value, and 108,159,319 and
106,646,498 shares were issued and outstanding, respectively. The holders of common stock are entitled to one vote per
share.
Common Stock in Treasury, at Cost
The Company accounts for the purchase of treasury stock under the cost method with the shares of stock
repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in
the consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are retired or they
are available to be redistributed. When treasury shares are redistributed, they are recorded at the average cost of the
treasury shares acquired. When treasury shares are retired, they are removed from the common stock in treasury
balance. The Company held 1,512,821 and 18,699,034 shares of common stock in treasury as of December 31, 2021
and December 31, 2020, respectively.
In December 2021, the Board of Directors approved the retirement of 18,072,129 shares of treasury stock. These
shares represent shares that were repurchased as part of the Company’s share repurchase program since inception
through October 2021. The retirement is recorded as a decrease to treasury stock, common stock, and additional paid in
capital on the consolidated balance sheets.
Share Repurchase Program
In 2011, the Board of Directors approved an initial authorization for the Company to repurchase shares of its
outstanding common stock of $100 million and approved additional authorizations of $100 million in each of 2012, 2013,
2014, 2015 and 2016, $250 million in each of 2018, 2019 and 2020, and $200 million in February 2021, for a total
authorization of $1.6 billion. The Company expects to fund repurchases primarily through the use of existing cash
balances. The program permits the Company to purchase shares, through a variety of methods, including in the open
market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the
Company to make any repurchases at any specific time or situation.
Under the program, for the year ended December 31, 2021, the Company has repurchased 822,005 shares of
common stock at an average cost per share of $98.82, totaling $81.3 million. Since inception of the program through
December 31, 2021, the Company has repurchased 18,072,129 shares of common stock at an average cost per share of
$68.12, totaling $1.2 billion.
As of December 31, 2021, the Company had $318.9 million of availability remaining under its existing share
repurchase authorizations.
130
The table below shows the repurchased shares of common stock under the Company’s share repurchase program
during the periods presented as follows:
Shares Repurchased
Average Repurchase
Price Per Share
Amount of Repurchases
(in millions)
2021
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total open market common stock repurchases . . .
2020
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total open market common stock repurchases . . .
2019
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total open market common stock repurchases . . .
Purchase of Common Stock from Employees
— $
—
331,373
490,632
822,005
1,013,709 $
465,366
992,159
1,062,881
3,534,115
600,442 $
453,319
100
366,793
1,420,654
— $
—
101.57
96.97
86.79 $
89.92
100.54
112.46
115.76 $
115.49
104.75
95.36
—
—
33.7
47.6
81.3
88.0
41.8
99.8
119.5
349.1
69.5
52.4
0.01
35.0
156.9
The Company purchased 63,911 and 120,552 shares that were not part of the publicly announced share repurchase
authorization from employees for an average price paid per share of $97.19 and $117.98 during the years ended
December 31, 2021 and 2020, respectively. These shares consisted of shares retained to cover payroll withholding taxes
or option costs in connection with the vesting of restricted stock awards, restricted stock units, performance share awards,
and stock option exercises.
Preferred Stock
The Company has authorized the issuance of 20,000,000 shares of preferred stock, par value $0.01 per share,
issuable from time to time in one or more series. For the years ended December 31, 2021, and 2020, the Company had
no shares of preferred stock issued or outstanding.
Dividends
During the year ended December 31, 2021, the Company declared and paid cash dividends per share of $1.80, for
an aggregate payout of $193.3 million. During the year ended December 31, 2020, the Company declared and paid cash
dividends per share of $1.56, for an aggregate payout of $170.6 million.
Each share of common stock, including RSAs, RSUs, and PSUs, is entitled to receive dividend and dividend
equivalents, respectively, if, as and when declared by the Board of Directors of the Company. The Company’s expectation
is to continue to pay dividends. The decision to pay a dividend, however, remains within the discretion of the Company’s
Board of Directors and may be affected by various factors, including earnings, financial condition, capital requirements,
level of indebtedness and other considerations the Board of Directors deems relevant. Future debt obligations and
statutory provisions, among other things, may limit, or in some cases prohibit, the Company’s ability to pay dividends.
As a holding company, the Company’s ability to declare and continue to pay dividends in the future with respect to its
common stock will also be dependent upon the ability of its subsidiaries to pay dividends to it under applicable corporate
law.
131
21. INCOME TAXES
Net deferred tax assets and liabilities consist of the following as of December 31, 2021 and 2020 (in millions):
As of December 31,
2021
2020
Deferred tax assets:
Accrued compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, equipment and technology, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, equipment and technology, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses or assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
14.7
2.8
33.5
54.4
105.4
(12.2)
93.2
11.4
2.4
36.2
39.3
89.3
(6.8)
82.5
(372.4)
(19.8)
(44.3)
(4.7)
(24.7)
(465.9)
$ (372.7)
(351.1)
(21.8)
(56.6)
(2.8)
(27.8)
(460.1)
(377.6)
$
The Company provides a valuation allowance against deferred tax assets if, based on management’s assessment of
historical and projected future operating results and other available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. A valuation allowance of $12.2 million and $6.8 million was recorded against
gross deferred tax assets for certain investments, net operating and capital losses as of December 31, 2021 and 2020,
respectively.
As of December 31, 2021, the Company has capital loss carryforwards of $10.6 million, which, if unused, will expire
in 2024.
The Company considers its non-U.S. earnings to be indefinitely reinvested outside of the U.S. to the extent these
earnings are not subject to U.S. income tax under an anti-deferral tax regime. As of December 31, 2021, the cumulative
amount of undistributed earnings in these subsidiaries is $53.0 million. Given our intent to reinvest these earnings for an
indefinite period of time, we have not accrued a deferred tax liability on these earnings. A determination of an
unrecognized deferred tax liability related to these earnings is not practicable.
The provision for income taxes for the years ended December 31, 2021, 2020 and 2019 consists of the following (in
millions):
2021
Year Ended December 31,
2020
2019
Current tax expense:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 148.4 $ 143.7 $ 98.7
61.2
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.9
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
167.8
Total current tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
70.5
8.9
223.1
83.4
14.2
246.0
Deferred income tax expense/(benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax benefit . . . . . . . . . . . . . . . . . . . . .
(28.7)
(3.8)
(4.7)
(37.2)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 227.1 $ 192.2 $ 130.6
(25.2)
(9.1)
3.4
(30.9)
(24.3)
(7.3)
12.7
(18.9)
132
For the years ended December 31, 2021, 2020, and 2019, income before taxes consists of the following (in millions):
Year Ended December 31,
2020
2019
2021
U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 714.0 $ 601.9 $ 480.0
Foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 756.1 $ 660.4 $ 501.4
42.1
58.5
A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years
ended December 31, 2021, 2020, and 2019 is as follows:
Statutory U.S. federal income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of federal, state and local tax law & rate changes, net . . . . . . . . . . . .
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduction for Foreign-Derived Intangible Income . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
21.0 %
(0.2)%
4.2 %
2.9 %
(1.1)%
0.8 %
1.5 %
29.1 %
2021
21.0 %
1.9 %
4.3 %
3.2 %
(0.6)%
— %
0.2 %
30.0 %
2019
21.0 %
— %
5.0 %
2.6 %
(1.2)%
— %
(1.4)%
26.0 %
A reconciliation of the beginning and ending uncertain tax positions, excluding interest and penalties, is as follows (in
millions):
Balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gross increases on tax positions in prior period . . . . . . . . . . . . . . . . . . . . . . .
Gross decreases on tax positions in prior period . . . . . . . . . . . . . . . . . . . . . . .
Gross increases on tax positions in current period . . . . . . . . . . . . . . . . . . . . .
Lapse of statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
138.6 $
3.4
(0.2)
26.5
(6.2)
162.1 $
2020
116.7 $
3.3
—
24.3
(5.7)
138.6 $
2019
102.3
3.1
(6.3)
18.5
(0.9)
116.7
As of December 31, 2021, 2020 and 2019, the Company had $162.1 million, $137.4 million, and $114.9
million, respectively, of uncertain tax positions, net of federal benefit, which, if recognized in the future, would affect the
effective income tax rate. Reductions to uncertain tax positions from the lapse of the applicable statutes of limitations and
potential audit settlements during the next twelve months are estimated to be approximately $1.0 million.
Estimated interest costs and penalties are classified as part of the provision for income taxes in the Company's
consolidated statements of income and were $9.7 million, $6.9 million, and $6.6 million, for the periods
ended December 31, 2021, 2020 and 2019, respectively. Accrued interest and penalties were $35.8 million, $26.1 million
and $19.2 million as of December 31, 2021, 2020 and 2019, respectively.
The following table summarizes the tax years that are either currently under audit or remain open and subject to
examination by the tax authorities in the most significant jurisdictions in which Cboe operates:
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008-2016, 2018-2021
2015-2021
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018-2021
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015-2021
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011-2021
New York City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018-2021
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015-2021
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Company petitioned the U.S. Tax Court on January 13, 2017, May 7, 2018 and November 29, 2018 for a
redetermination of IRS notices of deficiency for Cboe and certain of its subsidiaries for tax years 2011 through 2015
related to its Section 199 claims. These petitions resulted in the establishment of three cases before the U.S. Tax Court.
The Company also filed a complaint on October 5, 2018 with the Court of Federal Claims for a refund of Section 199
claims related to tax years 2008 through 2010. The complaint resulted in the establishment of a single case before the
Court of Federal Claims.
133
The first case that went to trial involved certain subsidiaries related to electronic trading for tax years 2011, 2012 and
2013. The U.S. Tax Court held the trial remotely from May 24, 2021 to June 1, 2021. Post-trial briefing in that case
concluded on October 28, 2021. On July 9, 2021, the Company sought a stay in the second U.S. Tax Court case involving
certain subsidiaries related to hybrid trading for the same tax years, which was denied on August 8, 2021. As a result, two
cases remain pending in U.S. Tax Court, as does the case pending before the Court of Federal Claims. Trial dates in
those cases have not been established.
Although there can be no assurances, the Company continues to believe, based on its current assessment of the
Section 199 claims, that the reasonably expected aggregate amount of any additional liabilities that may result from these
cases, if any, will not have a material adverse effect on the financial position, results of operations, or cash flows of the
Company. As of December 31, 2021, the Company has not resolved these matters, and proceedings continue in U.S. Tax
Court and the Court of Federal Claims.
22. EARNINGS PER SHARE
The computation of basic net income per common share is calculated by reducing net income for the period by
dividends paid or declared and undistributed net income for the period that are allocated to participating securities to
arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the
weighted average number of common shares outstanding during the period to determine net income per share allocated
to common stockholders.
The computation of diluted net income per share is calculated by dividing net income allocated to common
stockholders by the sum of the weighted average number of common shares outstanding plus all additional common
shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is
calculated using the more dilutive of the two-class or treasury stock method.
The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share
data):
Year Ended December 31,
2020
2021
2019
Basic earnings per share numerator:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 529.0 $ 468.2 $ 370.8
4.1
Net loss attributable to noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
374.9
Net income excluding redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . .
(0.5)
Change in redemption value of redeemable noncontrolling interest . . . . . . . . . .
(1.7)
Net income allocated to participating securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income allocated to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 527.3 $ 467.0 $ 372.7
—
468.2
—
(1.2)
—
529.0
—
(1.7)
Basic earnings per share denominator:
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
107.0
109.1
4.93 $
4.28 $
111.4
3.35
Diluted earnings per share numerator:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 529.0 $ 468.2 $ 370.8
4.1
Net loss attributable to redeemable noncontrolling interest . . . . . . . . . . . . . . . . .
374.9
Net income excluding redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . .
(0.5)
Change in redemption value of redeemable noncontrolling interest . . . . . . . . . .
(1.7)
Net income allocated to participating securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income allocated to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 527.3 $ 467.0 $ 372.7
—
468.2
—
(1.2)
—
529.0
—
(1.7)
Diluted earnings per share denominator:
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive common shares issued under stock program . . . . . . . . . . . . . . . . . . . . .
Total dilutive weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
107.0
0.2
107.2
109.1
0.2
109.3
4.92 $
4.27 $
111.4
0.4
111.8
3.34
For the periods presented, the Company did not have shares of stock-based compensation that would have an anti-
dilutive effect on the computation of diluted earnings per share.
134
23. COMMITMENTS, CONTINGENCIES, AND GUARANTEES
Legal Proceedings
As of December 31, 2021, the Company was subject to the various legal proceedings and claims discussed below,
as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the
ordinary course of business.
The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal
proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure
decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can
be reasonably estimated, and the Company discloses the amount accrued and the amount of a reasonably possible loss
in excess of the amount accrued, if such disclosure is necessary for the consolidated financial statements to not be
misleading. The Company does not record liabilities when the likelihood that the liability has been incurred is probable,
but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.
The Company’s assessment of whether a loss is remote, reasonably possible, or probable is based on its assessment of
the ultimate outcome of the matter following all appeals.
As of December 31, 2021, the Company does not believe that there is a reasonable possibility that any material loss
exceeding the amounts already recognized for these legal proceedings and claims, regulatory reviews, inspections or
other legal proceedings, if any, has been incurred. While the consequences of certain unresolved proceedings are not
presently determinable, the outcome of any proceeding is inherently uncertain and an adverse outcome from certain
matters could have a material effect on the financial position, results of operations, or cash flows of the Company in any
given reporting period.
City of Providence
On April 18, 2014, the City of Providence, Rhode Island filed a securities class action lawsuit in the Southern District
of New York against Bats and Direct Edge Holdings LLC, as well as 14 other securities exchanges. The action purports to
be brought on behalf of all public investors who purchased and/or sold shares of stock in the United States since April 18,
2009 on a registered public stock exchange (“Exchange Defendants”) or a U.S.-based alternate trading venue and were
injured as a result of the alleged misconduct detailed in the complaint, which includes allegations that the Exchange
Defendants committed fraud through a variety of business practices associated with, among other things, what is
commonly referred to as high frequency trading. On May 2, 2014 and May 20, 2014, American European Insurance
Company and Harel Insurance Co., Ltd. each filed substantially similar class action lawsuits against the Exchange
Defendants which were ultimately consolidated with the City of Providence, Rhode Island securities class action lawsuit.
On June 18, 2015, the Southern District of New York (the “Lower Court”) held oral argument on the pending Motion to
Dismiss and thereafter, on August 26, 2015, the Lower Court issued an Opinion and Order granting Exchange
Defendants’ Motion to Dismiss, dismissing the complaint in full. Plaintiff filed a Notice of Appeal of the dismissal on
September 24, 2015 and its appeal brief on January 7, 2016. Respondent's brief was filed on April 7, 2016 and oral
argument was held on August 24, 2016. Following oral argument, the Court of Appeals issued an order requesting that
the SEC submit an amicus brief on whether the Lower Court had jurisdiction and whether the Exchange Defendants have
immunity in the claims alleged. The SEC filed its amicus brief with the Court of Appeals on November 28, 2016 and
Plaintiff and the Exchange Defendants filed their respective supplemental response briefs on December 12, 2016. On
December 19, 2017, the Court of Appeals reversed the Lower Court’s dismissal and remanded the case back to the
Lower Court. On March 13, 2018, the Court of Appeals denied the Exchange Defendants’ motion for re-hearing. The
Exchange Defendants filed their opening brief for their motion to dismiss May 18, 2018, Plaintiffs’ response was filed
June 15, 2018 and the Exchange Defendants’ reply was filed June 29, 2018. On May 28, 2019, the Lower Court issued
an opinion and order denying the Exchange Defendants’ motion to dismiss. On June 17, 2019, the Exchange Defendants
filed a motion seeking interlocutory appeal of the May 28, 2019 dismissal order, which was denied July 16, 2019.
Exchange Defendants filed their answers on July 25, 2019. Targeted discovery regarding class certification and legal
preclusion concluded on April 26, 2021. On May 28, 2021, (1) Plaintiffs filed a Motion for Class Certification, (2) Bats and
NYSE filed a joint Motion for Summary Judgment on Grounds of Legal Preclusion and a joint Motion for Summary
Judgment on Grounds of Lack of Article III Standing, and (3) Nasdaq filed a Motion for Summary Judgment for Legal
Preclusion. Briefing on these dispositive motions concluded in December 2021. The parties also filed motions to exclude
some of the other’s experts. Oral argument regarding the joint Motion for Lack of Article III Standing and Exchange
Defendant’s motion to exclude the testimony of one of Plaintiffs’ experts is scheduled for March 11, 2022. The Company
is unable to estimate what, if any, liability may result from this litigation. However, the Company believes that the claims
are without merit and intends to litigate the matter vigorously.
135
VIX Litigation
On March 20, 2018, a putative class action complaint captioned Tomasulo v. Cboe Exchange, Inc., et al.,
No. 18-cv-02025 was filed in federal district court for the Northern District of Illinois alleging that the Company intentionally
designed its products, operated its platforms, and formulated the method for calculating VIX and the Special Opening
Quotation, (i.e., the special VIX value designed by the Company and calculated on the settlement date of VIX derivatives
prior to the opening of trading), in a manner that could be collusively manipulated by a group of entities named as John
Doe defendants. A number of similar putative class actions, some of which do not name the Company as a party, were
filed in federal court in Illinois and New York on behalf of investors in certain volatility-related products. On June 14, 2018,
the Judicial Panel on Multidistrict Litigation centralized the putative class actions in the federal district court for the
Northern District of Illinois. On September 28, 2018, plaintiffs filed a master, consolidated complaint that is a putative
class action alleging various claims against the Company and John Doe defendants in the federal district court for the
Northern District of Illinois. The claims asserted against the Company consist of a Securities Exchange Act fraud claim,
three Commodity Exchange Act claims and a state law negligence claim. Plaintiffs request a judgment awarding class
damages in an unspecified amount, as well as punitive or exemplary damages in an unspecified amount, prejudgment
interest, costs including attorneys’ and experts’ fees and expenses and such other relief as the court may deem just and
proper. On November 19, 2018, the Company filed a motion to dismiss the master consolidated complaint and the
plaintiffs filed their response on January 7, 2019. The Company filed its reply on January 28, 2019. On May 29, 2019, the
federal district court for the Northern District of Illinois granted the Company’s motion to dismiss plaintiffs’ entire complaint
against the Company. The state law negligence claim was dismissed with prejudice and the other claims were dismissed
without prejudice with leave to file an amended complaint, which plaintiffs filed on July 19, 2019. On August 28, 2019, the
Company filed its second motion to dismiss the amended consolidated complaint and plaintiffs filed their response on
October 8, 2019. On January 27, 2020, the federal district court for the Northern District of Illinois granted the Company’s
second motion to dismiss and all counts against the Company were dismissed with prejudice. On April 21, 2020, the
federal district court for the Northern District of Illinois granted plaintiffs’ motion to certify the January 27, 2020 dismissal
order for an immediate appeal. On May 19, 2020, plaintiffs filed a notice of appeal with the Court of Appeals for the
Seventh Circuit (“7th Circuit”), seeking to appeal the April 21, 2020 order granting the entry of partial final judgment and
both orders granting the Company’s motions to dismiss entered on May 29, 2019 and January 27, 2020. On June 29,
2020, plaintiffs filed their opening brief with the 7th Circuit, on August 28, 2020 the Company filed its opposition brief with
the 7th Circuit, on September 7, 2020, CME Group Inc., Intercontinental Exchange, Inc. and National Futures Association
filed an amici curiae brief in support of the Company on the Bad Faith Standard with the 7th Circuit and on October 16,
2020, plaintiffs filed their reply brief with the 7th Circuit. Oral arguments were held remotely on November 30, 2020 and
the parties are currently awaiting a decision by the 7th Circuit. The Company currently believes that the claims are without
merit and intends to litigate the matter vigorously. The Company is unable to estimate what, if any, liability may result from
this litigation.
Other
As self-regulatory organizations under the jurisdiction of the SEC, Cboe Options, C2, BZX, BYX, EDGX and EDGA
are subject to routine reviews and inspections by the SEC. As a designated contract market under the jurisdiction of the
CFTC, CFE is subject to routine rule enforcement reviews and examinations by the CFTC. Cboe SEF, LLC is a swap
execution facility registered with the CFTC and subject to routine rule enforcement reviews and examinations by the
CFTC. Cboe Trading and BIDS Trading are subject to reviews and inspections by FINRA. The Company has from time to
time received inquiries and investigative requests from the SEC’s Office of Compliance Inspections and Examinations and
the CFTC’s Division of Market Oversight as well as the SEC Division of Enforcement and CFTC Division of Enforcement
seeking information about the Company’s compliance with its obligations as a self-regulatory organization under the
federal securities laws and Commodity Exchange Act as well as members’ compliance with the federal securities laws
and Commodity Exchange Act.
In addition, while Cboe Europe, Cboe Chi-X Europe, EuroCCP, Cboe NL, Cboe Australia, Cboe Japan, and
MATCHNow have not been the subject of any material litigation or regulatory investigation in the past, there is always the
possibility of such action in the future. As Cboe Europe and Cboe Chi-X Europe are domiciled in the UK, it is likely that
any action would be taken in the UK courts in relation to litigation or by the FCA in relation to any regulatory enforcement
action. As EuroCCP is domiciled in the Netherlands, it is likely that any action would be taken in the Dutch courts in
relation to litigation or by the DNB or Dutch Authority for Financial Markets in relation to any regulatory enforcement
action. For Cboe NL, also domiciled in the Netherlands, it is likely that any actions would be taken in the Dutch courts in
relation to litigation or Dutch Authority for Financial Markets in relation to any regulatory enforcement action. As Cboe
Australia is domiciled in Australia, it is likely that any action would be taken in the Australian courts in relation to litigation
or by the ASIC, in relation to any regulatory enforcement action. As Cboe Japan is domiciled in Japan, it is likely that any
action would be taken in the Japanese courts in relation to litigation or by the JFSA or the JSDA in relation to any
136
regulatory enforcement action. As MATCHNow is domiciled in Canada, it is likely that any action would be taken in the
Canadian courts in relation to litigation or by the IIROC or Ontario Securities Commission in relation to any regulatory
enforcement action.
The Company is also currently a party to various other legal proceedings in addition to those already mentioned.
Management does not believe that the likely outcome of any of these other reviews, inspections, investigations or other
legal proceedings is expected to have a material impact on the Company’s financial position, results of operations,
liquidity or capital resources.
See also Note 8 (“Credit Losses”) for information on promissory notes related to the CAT.
See also Note 21 (“Income Taxes”).
Contractual Obligations
The Company has contractual obligations related to licensing agreements with various licensors, some of which
included fixed fees and/or variable fees calculated using agreed upon contracted rates and reported cleared volumes.
Certain licensing agreements contain annual minimum fee requirements that total $14.0 million each year for the next five
years.
See Note 14 (“Clearing Operations”) for information on EuroCCP’s clearinghouse exposure guarantee.
See Note 24 (“Leases”) for information on lease obligations.
24. LEASES
The Company currently leases office space, data centers, remote network operations centers, and equipment under
non-cancelable operating leases with third parties as of December 31, 2021. Certain leases include one or more options
to renew, with renewal terms that can extend the lease term from one to five years or more, and some of which include
the Company’s option to terminate the leases within one year. During the year ended December 31, 2021, $14.1 million of
right of use assets and $14.1 million of lease liabilities were added related to new operating leases, including the addition
of $0.9 million of right of use assets and lease liabilities related to acquisitions.
In May 2021, the Company signed a new lease to secure approximately 21,000 square feet of office space in
London. The initial term of the lease is 69 months from the accounting commencement date, June 24, 2021. The
Company has the option to renew the lease term for an additional 60 months. The total legally binding minimum lease
payments for this lease are approximately $9.5 million.
Additionally, in October 2021, the Company signed a new lease to secure approximately 29,500 square feet of office
space in Amsterdam. The initial term of the lease is 120 months from the accounting commencement date, February 1,
2022. The Company has the option to renew the lease term for an additional 60 months. The total legally binding
minimum lease payments for this lease are approximately $9.2 million.
The following table presents the supplemental balance sheet information related to leases as of December 31, 2021
and 2020 (in millions):
Operating lease right of use assets . . . . . . . . . . . . . . . $
Total leased assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-current operating lease liabilities . . . . . . . . . . . . . .
Total leased liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 31,
2021
December 31,
2020
110.1 $
110.1 $
15.6 $
129.2
144.8 $
111.0
111.0
12.5
132.1
144.6
137
The following table presents operating lease costs and other information as of and for the year ended December 31,
2021 (in millions, except as stated):
Year Ended
December 31,
2021
Year Ended
December 31,
2020
Operating lease costs (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
25.6
$
20.2
Lease term and discount rate information:
Weighted average remaining lease term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.1
3.3 %
12.1
3.4 %
Supplemental cash flow information and non-cash activity:
Cash paid for amounts included in the measurement of lease liabilities . . . . . . . .
Lease incentive for leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for lease liabilities . . . . . . . . . . . . . . . .
$
$
17.2
—
14.1
11.1
25.2
68.9
(1) Includes short-term lease and variable lease costs, which are immaterial.
The total rent expense related to lease obligations, reflected in technology support services and facilities costs line
items on the consolidated statements of income, for the years ended December 31, 2021, 2020, and 2019 were $25.6
million, $20.2 million, and $12.4 million, respectively.
The maturities of the lease liabilities are as follows as of December 31, 2021 (in millions):
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
After 2026 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 31,
2021
19.3
17.7
12.0
11.5
12.5
96.5
169.5
(24.7)
144.8
(1) Total lease payments include $20.4 million related to options to extend lease terms that are reasonably certain of
being exercised.
25. SUBSEQUENT EVENTS
On February 10, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.48 per share. The
dividend is payable on March 15, 2022 to stockholders of record at the close of business on February 28, 2022.
On February 9 and 10, 2022, the Company’s Board of Directors and Compensation Committee, as applicable,
approved granting 260,190 RSUs and 62,388 PSUs, with an effective date of February 19, 2022, to certain officers and
employees at a fair value, based on the closing price of the Company’s stock on the grant date. The shares have a three
year vesting period based on achievement of certain service, performance and/or market conditions and vesting
accelerates upon the occurrence of a termination of employment following a change in control of the Company or in the
event of earlier death, disability or qualified retirement.
There have been no additional subsequent events that would require disclosure in, or adjustment to, the consolidated
financial statements as of and for the year ended December 31, 2021.
138
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company's management, with the participation of its Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and
Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered
by this report. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.
(b) Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. The
Company’s internal control system has been designed to provide reasonable assurance to management and the
Board of Directors regarding the preparation and fair presentation of published financial statements.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021. Management based its assessment on criteria for effective internal control over financial
reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Management’s assessment included evaluating the design of our
internal control over financial reporting and testing the operational effectiveness of our internal control over financial
reporting. The results of its assessment were reviewed with the audit committee of the Board of Directors.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021, excluded Chi-X Asia Pacific, acquired with effect from July 1, 2021. This acquired business had
aggregate total assets and total stockholders’ equity of $266.5 million and $242.5 million, respectively, and total
revenues and revenues less costs of revenues of $17.1 million and $16.7 million, respectively, which are included in
the Company’s consolidated financial statements as of and for the year ended December 31, 2021.
As of the date of this Annual Report on Form 10-K, we have integrated the acquired EuroCCP, MATCHNow, and
BIDS Holdings operations into our overall internal controls over financial reporting.
No changes occurred in the Company’s internal control over financial reporting during fourth quarter 2021 that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting. Based on its assessment of the Company’s internal control over financial reporting, management believes
that, as of December 31, 2021, internal control over financial reporting is effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 has been
audited by KPMG LLP, an independent registered public accounting firm, as stated in their report on page 95.
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
139
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Information relating to our directors, including our audit committee and audit committee financial experts and the
procedures by which stockholders can recommend director nominees, and our executive officers will be in our definitive
Proxy Statement for our 2022 Annual Meeting of Stockholders planned to be held on May 12, 2022, which will be filed
within 120 days of the end of our fiscal year ended December 31, 2021 (“2022 Proxy Statement”) and is incorporated
herein by reference. Information relating to our executive officers is included on pages 28 and 29 of this Annual Report on
Form 10-K.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer, as well as all other employees and directors. Our Code of Business Conduct and
Ethics is available on our website at http://ir.cboe.com/governance.cfm. We will also provide a copy of the Code of
Business Conduct and Ethics to stockholders at no charge upon written request.
Item 11. Executive Compensation
Information relating to our executive officer and director compensation and the compensation committee of our Board
of Directors will be in the 2022 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information relating to security ownership of certain beneficial owners of our common stock and information relating
to the security ownership of our management will be in the 2022 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding certain relationships and related transactions and director independence will be in the 2022
Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information regarding principal accountant fees and services will be in the 2022 Proxy Statement and is incorporated
herein by reference.
140
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents filed as part of this report
(1) Financial Statements
Our consolidated financial statements and the related reports of management and our independent
registered public accounting firm which are required to be filed as part of this report are included in this
Annual Report on Form 10-K beginning at page 92. These consolidated financial statements are as follows:
• Consolidated Balance Sheets as of December 31, 2021 and 2020
• Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019
• Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020
and 2019
• Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31,
2021, 2020 and 2019
• Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
• Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
The Company has not included any financial statement schedules because they are not applicable or the
required information is included in the consolidated financial statements or notes thereto.
(3) List of Exhibits
See (b) Exhibits below
(b) Exhibits
Exhibit
No.
Description of Exhibit
3.1 Third Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the
Company's Current Report on Form 8-K (File No. 001-34774) filed on October 17, 2017.
3.2 Seventh Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K (File No. 001-34774) filed on August 5, 2021.
4.1
Indenture, dated as of January 12, 2017, by and between the Cboe Global Markets, Inc. (f/k/a CBOE
Holdings, Inc.) and Wells Fargo Bank National Association, as trustee, incorporated by reference to Exhibit
4.1 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on January 12, 2017.
4.2 Officer’s Certificate, dated as of January 12, 2017, establishing the 3.650% Senior Notes due 2027 of Cboe
Global Markets, Inc. (f/k/a CBOE Holdings, Inc.), incorporated by reference to Exhibit 4.2 to the Company’s
Current Report on Form 8-K (File No. 001-34774) filed on January 12, 2017.
4.3 Form of 3.650% Senior Notes due 2027 (included in Exhibit 4.2 hereto).
4.4 Officer’s Certificate, dated as of December 15, 2020, establishing the 1.625% Senior Notes due 2030 of
Cboe Global Markets, Inc., incorporated by reference to Exhibit 4.2 to the Company’s Current Report on
Form 8-K (File No. 001-34774) filed on December 15, 2020.
4.5 Form of 1.625% Senior Notes due 2030 (included in Exhibit 4.4 hereto).
141
4.6 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934,
incorporated by reference to Exhibit 4.6 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2019 (File No. 001-34774) filed on February 22, 2020.
10.1 Term Loan Credit Agreement, dated as of March 22, 2018, by and among Cboe Global Markets, Inc., Bank of
America, N.A., as administrative agent, and the lender parties thereto, incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on March 23, 2018.
10.2 Amendment No. 1 to Term Loan Credit Agreement, dated as of May 29, 2020, by and among Cboe Global
Markets, Inc., Bank of America, N.A., as administrative agent, and the lender parties thereto, incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on June 3,
2020.
10.3 Amendment No. 2 to Term Loan Credit Agreement, dated as of June 25, 2021, by and among Cboe Global
Markets, Inc., Bank of America, N.A., as administrative agent and initial lender, incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on July 1, 2021.
10.4 Amended and Restated Credit Agreement, dated as of December 21, 2020, by and among Cboe Global
Markets, Inc., with Bank of America, N.A., as administrative agent and as swing line lender, certain lenders
named therein, BOFA Securities, Inc., as sole lead arranger and sole bookrunner and certain syndication
agents named therein, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K (File No. 001-34774) filed on December 22, 2020.
10.5 Facility Agreement, dated July 1, 2020, by and among European Central Counterparty N.V. as borrower,
Cboe Global Markets, Inc. as guarantor, Bank of America Merrill Lynch International Designated Activity
Company, as co-ordinator, facility agent, lender, sole lead arranger and sole bookrunner, Citibank N.A., as
security agent, and certain lenders named therein (the “Facility Agreement”), incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on July 1, 2020.
10.6 Amendment and Restatement Agreement, dated July 1, 2021, by and among European Central Counterparty
N.V., Cboe Global Markets, Inc., as guarantor, Bank of America Europe Designated Activity Company, as co-
ordinator and facility agent and Citibank N.A., London Branch as security agent relating to the Facility
Agreement, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File
No. 001-34774) filed on July 2, 2021.
10.7 Restated License Agreement, dated November 1, 1994, by and between Standard & Poor's Financial
Services LLC (as successor-in-interest to Standard & Poor's, a division of McGraw-Hill, Inc.) and Cboe
Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated) (the "S&P License Agreement"),
incorporated by reference to Exhibit 10.1 to Amendment No. 6 to the Company's Registration Statement on
Form S-4 (File No. 333-140574) filed on April 12, 2010.+
10.8 Amendment No. 1 to the S&P License Agreement, dated January 15, 1995, incorporated by reference to
Exhibit 10.2 to Amendment No. 6 to the Company's Registration Statement on Form S-4 (File
No. 333-140574) filed on April 12, 2010.+
10.9 Amendment No. 2 to the S&P License Agreement, dated April 1, 1998, incorporated by reference to
Exhibit 10.3 to Amendment No. 6 to the Company's Registration Statement on Form S-4 (File
No. 333-140574) filed on April 12, 2010.+
10.10 Amendment No. 3 to the S&P License Agreement, dated July 28, 2000, incorporated by reference to
Exhibit 10.4 to Amendment No. 6 to the Company's Registration Statement on Form S-4 (File
No. 333-140574) filed on April 12, 2010.+
10.11 Amendment No. 4 to the S&P License Agreement, dated October 27, 2000, incorporated by reference to
Exhibit 10.5 to Amendment No. 6 to the Company's Registration Statement on Form S-4 (File
No. 333-140574) filed on April 12, 2010.+
10.12 Amendment No. 5 to the S&P License Agreement, dated March 1, 2003, incorporated by reference to
Exhibit 10.6 to Amendment No. 6 to the Company's Registration Statement on Form S-4 (File
No. 333-140574) filed on April 12, 2010.+
10.13 Amended and Restated Amendment No. 6 to the S&P License Agreement, dated February 24, 2009,
incorporated by reference to Exhibit 10.7 to Amendment No. 6 to the Company's Registration Statement on
Form S-4 (File No. 333-140574) filed on April 12, 2010.+
142
10.14 Amended and Restated Amendment No. 7 to the S&P License Agreement, dated February 24, 2009,
incorporated by reference to Exhibit 10.8 to Amendment No. 6 to the Company's Registration Statement on
Form S-4 (File No. 333-140574) filed on April 12, 2010.+
10.15 Amendment No. 8 to the S&P License Agreement, dated January 9, 2005, incorporated by reference to
Exhibit 10.9 to Amendment No. 6 to the Company's Registration Statement on Form S-4 (File
No. 333-140574) filed on April 12, 2010.+
10.16 Amendment No. 10 to the S&P License Agreement, dated June 19, 2009, incorporated by reference to
Exhibit 10.10 to Amendment No. 6 to the Company's Registration Statement on Form S-4 (File
No. 333-140574) filed on April 12, 2010.+
10.17 Amendment No. 11 to the S&P License Agreement, dated as of April 29, 2010, incorporated by reference to
Exhibit 10 to the Company's Current Report on Form 8-K (File No. 001-34774) filed on May 11, 2010.
10.18 Amendment No. 12 to the S&P License Agreement, dated March 9, 2013, incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-34774) filed on May 7, 2013. +
10.19 Amendment No. 13 to the S&P License Agreement, dated as of December 21, 2017, incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-34774) filed on
December 22, 2017.+
10.20 Amendment No. 14 to the S&P License Agreement, dated December 20, 2018, incorporated by reference to
Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (File
No. 001-34774) filed on February 22, 2019.
10.21 Amendment No. 15 to the S&P License Agreement, dated January 25, 2019, incorporated by reference to
Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (File
No. 001-34774) filed on February 22, 2019.
10.22 Amendment No. 16 to the S&P License Agreement, made as of April 1, 2020, incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q (File No. 001-34774) filed on July 31, 2020.
10.23 Amendment No. 17 to the S&P License Agreement, made as of August 1, 2020, incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-34774) filed on October 30,
2020. +
10.24 Amendment No. 18 to the S&P License Agreement, made as of October 26, 2021, incorporated by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-34774) filed on October 29,
2021.+
10.25 Form of Amended and Restated Director Indemnification Agreement, incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (File
No. 001-34774) filed on August 4, 2017.
10.26 Employment Agreement, by and between Cboe Global Markets, Inc. and Edward Tilly, dated February 11,
2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File
No. 001-34774) filed on February 14, 2020.*
10.27 Offer Letter Agreement for David Howson, dated December 19, 2019, incorporated by reference to Exhibit
10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (File
No. 001-34774) filed on February 22, 2020.*
10.28 Form of UK Executive Employment Agreement between Bats Global Markets, Inc. and certain executive
officers, incorporated by reference to Exhibit 10.16 to Amendment No. 3 to Bats Global Markets, Inc.’s
Registration Statement on Form S-1 (File No. 333-208565) filed on April 4, 2016.*
10.29 Cboe Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated) Executive Retirement Plan,
incorporated by reference to Exhibit 10.13 to Amendment No. 4 to the Company's Registration Statement on
Form S-4 (File No. 333-140574) filed on August 14, 2009.*
10.30 Amendments to the Cboe Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated) Executive
Retirement Plan, incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the year ended December 31, 2016 (File No. 001-34774) filed on February 22, 2017.*
143
10.31 Cboe Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated) Supplemental Retirement Plan,
incorporated by reference to Exhibit 10.14 to Amendment No. 4 to the Company's Registration Statement on
Form S-4 (File No. 333-140574) filed on August 14, 2009.*
10.32 Amendment No. 1 to the Cboe Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated)
Supplemental Retirement Plan, incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2010 (File No. 001-34774) filed on November 12, 2010.*
10.33 Amendments to the Cboe Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated)
Supplemental Retirement Plan, incorporated by reference to Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2016 (File No. 001-34774) filed on February 22, 2017.*
10.34 Cboe Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated) Deferred Compensation Plan for
Officers, incorporated by reference to Exhibit 10.15 to Amendment No. 4 to the Company's Registration
Statement on Form S-4 (File No. 333-140574) filed on August 14, 2009.*
10.35 Amendments to the Cboe Exchange, Inc. (f/k/a Chicago Board Options Exchange, Incorporated) Deferred
Compensation Plan for Officers, incorporated by reference to Exhibit 10.16 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2016 (File No. 001-34774) filed on February 22, 2017.*
10.36 Cboe Global Markets, Inc. Executive Severance Plan, incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K (File No. 001-34774) filed on August 2, 2018.*
10.37 Cboe Global Markets, Inc. Amended and Restated Executive Severance Plan, incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on February 12, 2021.*
10.38 Cboe Global Markets, Inc. Employee Stock Purchase Plan, incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K (File No. 001-34774) filed on May 18, 2018.*
10.39 Second Amended and Restated Cboe Global Markets, Inc. (f/k/a CBOE Holdings, Inc.) Long-Term Incentive
Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File
No. 001-34774) filed on May 24, 2016.*
10.40 Form of Restricted Stock Award Agreement (for Non-employee Directors), incorporated by reference to
Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File
No. 001-34774) filed on May 11, 2017.*
10.41 Form of Restricted Stock Award Agreement (for Non-employee CDN Directors), incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on August 2, 2019.
10.42 Form of 2018 Restricted Stock Unit Award Agreement (for Executive Officers), incorporated by reference to
Exhibit 10.58 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (File
No. 001-34774) filed on February 22, 2018.*
10.43 Form of 2018 Restricted Stock Unit Award Agreement (relative total shareholder return), incorporated by
reference to Exhibit 10.59 to the Company's Annual Report on Form 10-K for the year ended December 31,
2017 (File No. 001-34774) filed on February 22, 2018.*
10.44 Form of 2018 Restricted Stock Unit Award Agreement (earnings per share), incorporated by reference to
Exhibit 10.60 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (File
No. 001-34774) filed on February 22, 2018.*
10.45 Form of Restricted Stock Unit Award Agreement (3 Year Cliff Vest), incorporated by reference to Exhibit 10.2
to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on May 18, 2018.*
10.46 Form of 2019 Restricted Stock Unit Award Agreement (for Executive Officers), incorporated by reference to
Exhibit 10.64 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (File
No. 001-34774) filed on February 22, 2019.*
10.47 Form of 2019 Restricted Stock Unit Award Agreement (relative total shareholder return), incorporated by
reference to Exhibit 10.65 to the Company’s Annual Report on Form 10-K for the year ended December 31,
2018 (File No. 001-34774) filed on February 22, 2019. *
10.48 Form of 2019 Restricted Stock Unit Award Agreement (earnings per share), incorporated by reference to
Exhibit 10.66 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (File
No. 001-34774) filed on February 22, 2019.*
144
10.49 Form of 2019 Restricted Stock Unit Award Agreement (3 Year Cliff Vest), incorporated by reference to Exhibit
10.67 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (File
No. 001-34774) filed on February 22, 2019.*
10.50 Form of 2020 Edward Tilly Restricted Stock Unit Award Agreement (relative total shareholder return),
incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-34774)
filed on February 14, 2020.*
10.51 Form of 2020 Edward Tilly Restricted Stock Unit Award Agreement (earnings per share), incorporated by
reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-34774) filed on
February 14, 2020.*
10.52 Form of 2020 Restricted Stock Unit Award Agreement (for Executive Officers), incorporated by reference to
Exhibit 10.66 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (File
No. 001-34774) filed on February 22, 2020.*
10.53 Form of 2020 Restricted Stock Unit Award Agreement (relative total shareholder return), incorporated by
reference to Exhibit 10.67 to the Company's Annual Report on Form 10-K for the year ended December 31,
2019 (File No. 001-34774) filed on February 22, 2020.*
10.54 Form of 2020 Restricted Stock Unit Award Agreement (earnings per share), incorporated by reference to
Exhibit 10.68 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (File
No. 001-34774) filed on February 22, 2020.*
10.55 Form of 2020 Restricted Stock Unit Award Agreement (3 Year Cliff Vest), incorporated by reference to Exhibit
10.69 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (File
No. 001-34774) filed on February 22, 2020.*
10.56 Form of 2021 Edward Tilly Restricted Stock Unit Award Agreement (relative total shareholder return),
incorporated by reference to Exhibit 10.67 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2020 (File No. 001-34774) filed on February 19, 2021.*
10.57 Form of 2021 Edward Tilly Restricted Stock Unit Award Agreement (earnings per share), incorporated by
reference to Exhibit 10.68 to the Company's Annual Report on Form 10-K for the year ended December 31,
2020 (File No. 001-34774) filed on February 19, 2021.*
10.58 Form of 2021 Restricted Stock Unit Award Agreement (for Executive Officers), incorporated by reference to
Exhibit 10.69 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (File
No. 001-34774) filed on February 19, 2021.*
10.59 Form of 2021 Restricted Stock Unit Award Agreement (relative total shareholder return), incorporated by
reference to Exhibit 10.70 to the Company's Annual Report on Form 10-K for the year ended December 31,
2020 (File No. 001-34774) filed on February 19, 2021.*
10.60 Form of 2021 Restricted Stock Unit Award Agreement (earnings per share), incorporated by reference to
Exhibit 10.71 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (File
No. 001-34774) filed on February 19, 2021).*
10.61 Form of 2022 Edward Tilly Restricted Stock Unit Award Agreement (relative total shareholder return) (filed
herewith).*
10.62 Form of 2022 Edward Tilly Restricted Stock Unit Award Agreement (earnings per share) (filed herewith).*
10.63 Form of 2022 Restricted Stock Unit Award Agreement (for Executive Officers) (filed herewith).*
10.64 Form of 2022 Restricted Stock Unit Award Agreement (relative total shareholder return) (filed herewith).*
10.65 Form of 2022 Restricted Stock Unit Award Agreement (earnings per share) (filed herewith).*
10.66 Form of 2022 Restricted Stock Unit Award Agreement without Retirement Vesting (relative total shareholder
return) (filed herewith).*
10.67 Form of 2022 Restricted Stock Unit Award Agreement without Retirement Vesting (earnings per share) (filed
herewith).*
21.1 Subsidiaries of Cboe Global Markets, Inc. (filed herewith).
23.1 Consent of Independent Registered Public Accounting Firm (filed herewith).
145
23.2 Consent of Independent Registered Public Accounting Firm (filed herewith).
24.1 Powers of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K).
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 (filed herewith).
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 (filed herewith).
32.1 Certificate of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18
of the United States Code (filed herewith).
32.2 Certificate of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of
the United States Code (filed herewith).
101.INS
iXBRL Instance Document (filed herewith).
101.SCH
iXBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL
iXBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF
iXBRL Taxonomy Extension Definition Linkbase (filed herewith).
101.LAB
iXBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE
iXBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104 Cover Page Interactive Data File (embedded as Inline XBRL document).
*Indicates Management Compensatory Plan, Contract or Arrangement.
+Certain confidential portions (as indicated therein) of this exhibit have been omitted.
Item 16. Form 10-K Summary
None.
146
Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 18, 2022
Cboe Global Markets, Inc.
(Registrant)
By:
Name:
Title:
/s/ Brian N. Schell
Brian N. Schell
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Edward T. Tilly, as attorney-in-fact and agent, with full power of substitution and re-substitution, to sign on his or
her behalf, individually and in any and all capacities, including the capacities stated below, any and all amendments to this
Annual Report on Form 10-K for the year ended December 31, 2021 and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney-in-fact
and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities on the dates indicated.
SIGNATURE
TITLE
DATE
/s/ EDWARD T. TILLY
Chairman, President, and Chief Executive Officer
February 18, 2022
Edward T. Tilly
(Principal Executive Officer)
/s/ BRIAN N. SCHELL
Executive Vice President, Chief Financial Officer and Treasurer
February 18, 2022
Brian N. Schell
(Principal Financial Officer)
/s/ JILL M. GRIEBENOW
Senior Vice President and Chief Accounting Officer
February 18, 2022
Jill M. Griebenow
(Principal Accounting Officer)
/s/ WILLIAM M. FARROW III
Director
William M. Farrow III
February 18, 2022
/s/ EDWARD J. FITZPATRICK
Director
February 18, 2022
Edward J. Fitzpatrick
/s/ IVAN K. FONG
Director
Ivan K. Fong
/s/ JANET P. FROETSCHER
Director
Janet P. Froetscher
/s/ JILL R. GOODMAN
Director
Jill R. Goodman
147
February 18, 2022
February 18, 2022
February 18, 2022
SIGNATURE
TITLE
/s/ ALEXANDER J. MATTURRI
Director
Alexander J. Matturri
/s/ JENNIFER J. McPEEK
Director
Jennifer J. McPeek
/s/ RODERICK A. PALMORE
Director
Roderick A. Palmore
/s/ JAMES E. PARISI
Director
James E. Parisi
/s/ JOSEPH P. RATTERMAN
Director
Joseph P. Ratterman
/s/ JILL E. SOMMERS
Director
Jill E. Sommers
/s/ EUGENE S. SUNSHINE
Director
Eugene S. Sunshine
DATE
February 18, 2022
February 18, 2022
February 18, 2022
February 18, 2022
February 18, 2022
February 18, 2022
February 18, 2022
/s/ FREDRIC J. TOMCZYK
Director
February 18, 2022
Fredric J. Tomczyk
148
Investor Information
Stock Listing
Cboe Global Markets, Inc.’s common stock is listed
on the Cboe BZX Exchange, Inc. under the ticker
symbol “CBOE.” On December 31, 2021, there were
106,646,498 shares of common stock outstanding.
Annual Meeting
The 2022 Annual Meeting of Stockholders will be
held on Thursday, May 12, 2022, at 9:00 a.m. Central
Time, via a live webcast at
www.virtualshareholdermeeting.com/cboe2022.
Holders of common stock of record at the close of
business on March 17, 2022 are entitled to vote at the
Annual Meeting. A notice of meeting, proxy
statement and proxy card or voting instructions
were provided to stockholders of record with this
Form 10-K.
Transfer Agent
Registered stockholders can access their account
online. Log on
to www.shareholder.broadridge.com/cboe to view
share balance, change address, complete certain
transactions and get answers to other stock related
inquiries. You can also write or call the Cboe transfer
agent at:
Broadridge Corporate Issuer Solutions, Inc.
P.O. Box 1342
Brentwood, NY 11717
Telephone: 866-301-8223
720-399-2148 (Outside the U.S.)
Website: www.shareholder.broadridge.com/cboe
Investor Relations
Direct inquiries to:
Investor Relations
Cboe Global Markets, Inc.
433 W. Van Buren Street
Chicago, IL 60607
Phone: 312-786-7559
E-mail: investorrelations@cboe.com
Investor information is available on the Investor
Relations section of the Cboe website,
http://ir.cboe.com, including SEC filings, quarterly
earnings releases, webcasts and presentations, press
releases, information on corporate governance
and a variety of stockholder resources, including
historical stock information, dividend payments, an
investor FAQ and a list of analysts who cover the
company.
Corporate Social Responsibility Report
This report provides insight into Cboe’s approach to
ESG with the goal of demonstrating how ESG
practices are integrated within our strategy, business
processes and culture. You can read the report
online at https://www.cboe.com/about/corporate-
social-responsibility/.
Corporate Information
Cboe Global Markets (Cboe: CBOE), a leading
provider of market infrastructure and tradable
products, delivers cutting-edge trading, clearing and
investment solutions to market participants
around the world. The company is committed to
operating a trusted, inclusive global marketplace,
providing leading products, technology and data
solutions that enable participants to define a
sustainable financial future. Cboe provides trading
solutions and products in multiple asset classes,
including equities, derivatives and FX, across North
America, Europe and Asia Pacific. To learn more,
visit www.cboe.com.
Independent Auditors for the 2021 Fiscal Year
KPMG LLP
Chicago, IL