Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 22, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
Entity File Number | 001-34774 | |
Entity Registrant Name | Cboe Global Markets, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-5446972 | |
Entity Address, Address Line One | 433 West Van Buren Street | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60607 | |
City Area Code | 312 | |
Local Phone Number | 786-5600 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CBOE | |
Security Exchange Name | CboeBZX | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 106,188,570 | |
Entity Central Index Key | 0001374310 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 659.4 | $ 341.9 |
Financial investments | 48.7 | 37.1 |
Accounts receivable, net of $0.9 allowance for credit losses at March 31, 2022 and $1.0 at December 31, 2021 | 380.3 | 326.9 |
Margin deposits and clearing funds | 1,810.3 | 745.9 |
Income taxes receivable | 42.7 | |
Other current assets | 36.5 | 36.8 |
Total current assets | 2,935.2 | 1,531.3 |
Investments | 244.5 | 245.8 |
Land | 2.3 | 2.3 |
Property and equipment, net | 106.7 | 105.2 |
Operating lease right of use assets | 122.5 | 110.1 |
Goodwill | 3,018.1 | 3,025.4 |
Intangible assets, net | 1,628.6 | 1,668.6 |
Other assets, net | 140.2 | 125.8 |
Total assets | 8,198.1 | 6,814.5 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 387.1 | 295.4 |
Section 31 fees payable | 36.2 | 40.8 |
Deferred revenue | 26.4 | 15.2 |
Margin deposits and clearing funds | 1,810.3 | 745.9 |
Income taxes payable | 32.5 | 8.2 |
Current portion of contingent consideration liabilities | 48.6 | 63.8 |
Total current liabilities | 2,341.1 | 1,169.3 |
Long-term debt | 1,593.6 | 1,299.3 |
Unrecognized tax benefits | 163 | 197.9 |
Deferred income taxes | 352.4 | 372.7 |
Non-current operating lease liabilities | 141.3 | 129.2 |
Contingent consideration liabilities | 4.7 | 6.7 |
Other non-current liabilities | 34.7 | 34.6 |
Total liabilities | 4,630.8 | 3,209.7 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and outstanding at March 31, 2022 and December 31, 2021 | ||
Common stock, $0.01 par value: 325,000,000 shares authorized, 108,369,053 and 106,188,570 shares issued and outstanding, respectively at March 31, 2022 and 108,159,319 and 106,646,498 shares issued and outstanding, respectively at December 31, 2021 | 1.1 | 1.1 |
Common stock in treasury, at cost, 2,180,483 shares at March 31, 2022 and 1,512,821 shares at December 31, 2021 | (185.2) | (106.8) |
Additional paid-in capital | 1,518.6 | 1,509.4 |
Retained earnings | 2,203.7 | 2,145.5 |
Accumulated other comprehensive income, net | 29.1 | 55.6 |
Total stockholders' equity | 3,567.3 | 3,604.8 |
Total liabilities and stockholders' equity | $ 8,198.1 | $ 6,814.5 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Accounts Receivable, Allowance for credit losses | $ 0.9 | $ 1 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 325,000,000 | 325,000,000 |
Common stock, shares issued (in shares) | 108,369,053 | 108,159,319 |
Common stock, shares outstanding (in shares) | 106,188,570 | 106,646,498 |
Common stock held in Treasury (in shares) | 2,180,483 | 1,512,821 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues: | ||
Total revenues | $ 974.5 | $ 1,010.8 |
Cost of revenues: | ||
Total cost of revenues | 556.4 | 645.3 |
Revenues less cost of revenues | 418.1 | 365.5 |
Operating expenses: | ||
Compensation and benefits | 81.2 | 72.3 |
Depreciation and amortization | 40.9 | 42 |
Technology support services | 19.2 | 17.2 |
Professional fees and outside services | 19.7 | 15.6 |
Travel and promotional expenses | 2.9 | 1.6 |
Facilities costs | 6.5 | 5.3 |
Acquisition-related costs | 2 | 3.4 |
Other expenses | 6 | 3.5 |
Total operating expenses | 178.4 | 160.9 |
Operating income | 239.7 | 204.6 |
Non-operating (expenses) income: | ||
Interest expense, net | (10.8) | (12.3) |
Other (expense) income, net | (4) | 0.6 |
Income before income tax provision | 224.9 | 192.9 |
Income tax provision | 115.3 | 55.7 |
Net income | 109.6 | 137.2 |
Net income allocated to participating securities | (0.4) | (0.4) |
Net income allocated to common stockholders | $ 109.2 | $ 136.8 |
Basic earnings per share (in dollars per share) | $ 1.02 | $ 1.27 |
Diluted earnings per share (in dollars per share) | $ 1.02 | $ 1.27 |
Basic weighted average shares outstanding (in shares) | 106.6 | 107.3 |
Diluted weighted average shares outstanding (in shares) | 106.8 | 107.4 |
Cash and spot markets | ||
Revenues: | ||
Total revenues | $ 461.9 | $ 548.9 |
Data and access solutions | ||
Revenues: | ||
Total revenues | 118.9 | 100.6 |
Derivatives markets | ||
Revenues: | ||
Total revenues | 393.7 | 361.3 |
Liquidity payments | ||
Cost of revenues: | ||
Total cost of revenues | 467.5 | 501.8 |
Routing and clearing | ||
Cost of revenues: | ||
Total cost of revenues | 22.3 | 27.1 |
Section 31 fees | ||
Cost of revenues: | ||
Total cost of revenues | 35.7 | 91.9 |
Royalty fees and other cost of revenues | ||
Cost of revenues: | ||
Total cost of revenues | $ 30.9 | $ 24.5 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net income | $ 109.6 | $ 137.2 |
Other comprehensive (loss) income, net of income tax: | ||
Foreign currency translation adjustments | (26.5) | 4.8 |
Comprehensive income | 83.1 | 142 |
Comprehensive income allocated to participating securities | (0.4) | (0.4) |
Comprehensive income allocated to common stockholders, net of income tax | $ 82.7 | $ 141.6 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Changes in Stockholder's Equity - USD ($) $ in Millions | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated other comprehensive income, net | Total |
Beginning balance at Dec. 31, 2020 | $ 1.2 | $ (1,250.4) | $ 2,713.3 | $ 1,809.8 | $ 75 | $ 3,348.9 |
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (45.3) | (45.3) | ||||
Stock-based compensation | 0.1 | 11.7 | 11.8 | |||
Repurchases of common stock from employee stock plans | (5.7) | (5.7) | ||||
Purchase of common stock | (47.6) | (47.6) | ||||
Shares issued under employee stock purchase plan | 0.1 | 0.1 | ||||
Net income | 137.2 | 137.2 | ||||
Other comprehensive income (loss) | 4.8 | 4.8 | ||||
Ending balance at Mar. 31, 2021 | 1.3 | (1,303.7) | 2,725.1 | 1,901.7 | 79.8 | 3,404.2 |
Beginning balance at Dec. 31, 2021 | 1.1 | (106.8) | 1,509.4 | 2,145.5 | 55.6 | 3,604.8 |
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (51.4) | (51.4) | ||||
Stock-based compensation | 9.1 | 9.1 | ||||
Repurchases of common stock from employee stock plans | (8.4) | (8.4) | ||||
Purchase of common stock | (70) | (70) | ||||
Shares issued under employee stock purchase plan | 0.1 | 0.1 | ||||
Net income | 109.6 | 109.6 | ||||
Other comprehensive income (loss) | (26.5) | (26.5) | ||||
Ending balance at Mar. 31, 2022 | $ 1.1 | $ (185.2) | $ 1,518.6 | $ 2,203.7 | $ 29.1 | $ 3,567.3 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Changes in Stockholder's Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Condensed Consolidated Statements of Changes in Stockholders' Equity | ||
Dividends (in dollars per share) | $ 0.48 | $ 0.42 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 109.6 | $ 137.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 40.9 | 42 |
Amortization of debt issuance cost and debt discount | 0.5 | 0.7 |
Provision for accounts receivable credit losses | 0.2 | 0.2 |
Provision for deferred income taxes | (17.8) | (5.8) |
Stock-based compensation expense | 9.1 | 11.7 |
Loss on disposal of property and equipment | 0.1 | |
Impairment charge of investment | 0.6 | |
Equity loss in investments | 3.1 | 0.4 |
Changes in assets and liabilities: | ||
Accounts receivable | (56.2) | (37.6) |
Restricted cash and cash equivalents (margin deposits and clearing funds) | 1,064.4 | 447.9 |
Income taxes receivable | 42.7 | 53.1 |
Other current assets | 0.3 | (12.8) |
Other assets | (15.7) | (6.1) |
Accounts payable and accrued liabilities | 2.8 | (2.5) |
Section 31 fees payable | (4.6) | (60.6) |
Deferred revenue | 11.2 | 11 |
Income taxes payable | 24.5 | 3.1 |
Unrecognized tax benefits | 56 | 9.5 |
Other liabilities | (11.3) | 7.1 |
Net cash provided by operating activities | 1,259.8 | 599.1 |
Cash flows from investing activities: | ||
Purchases of available-for-sale financial investments | (20.8) | (71) |
Proceeds from maturities of available-for-sale financial investments | 8.6 | 67.6 |
Contributions to investments | (1.9) | |
Purchases of property and equipment and leasehold improvements | (10.8) | (9.9) |
Net cash used in investing activities | (24.9) | (13.3) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 298.6 | |
Principal payments of current portion of long-term debt | (20) | |
Debt issuance costs | (4.8) | |
Cash dividends on common stock | (51.4) | (45.3) |
Repurchases of common stock from employee stock plans | (8.4) | (5.7) |
Payment of contingent consideration from acquisition | (17.4) | (0.8) |
Shares issued under employee stock purchase plan | (0.1) | (0.1) |
Purchase of common stock | (70) | (47.6) |
Net cash provided by (used in) financing activities | 146.5 | (119.5) |
Effect of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents | 0.7 | (0.5) |
Increase in cash, cash equivalents, and restricted cash and cash equivalents | 1,382.1 | 465.8 |
Cash, cash equivalents, and restricted cash and cash equivalents: Beginning of period | 1,092.2 | 1,057.5 |
Cash, cash equivalents, and restricted cash and cash equivalents: End of period | 2,474.3 | 1,523.3 |
Supplemental disclosure of cash transactions: | ||
Cash paid for income taxes | 10.3 | 2.8 |
Cash paid for interest | $ 8.8 | $ 13.8 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows (Parentheticals) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents | ||
Cash and cash equivalents | $ 659.4 | $ 263.3 |
Total | 2,474.3 | 1,523.3 |
Margin deposits and clearing funds | ||
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents | ||
Restricted cash and cash equivalents | 1,810.3 | $ 1,260 |
Other current assets | ||
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents | ||
Restricted cash and cash equivalents | $ 4.6 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2022 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | 1. ORGANIZATION AND BASIS OF PRESENTATION 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, 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 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. Basis of Presentation These interim unaudited condensed consolidated financial statements have been prepared in accordance with GAAP as established by FASB for interim financial information and with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year. The preparation of condensed 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. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. Beginning in the first quarter of 2022, the Company updated the financial statement captions within its condensed consolidated statements of income for both periods presented to better reflect the Company’s diversified products, expansive geographical reach, and overall business strategy. Below is a summary of the changes to the financial statement captions. The changes do not have a financial impact on the Company’s reported revenue, revenues less cost of revenues, reported net income, or cash flows from operations. Revenues ● Cash and spot markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s North American Equities, Europe and Asia Pacific, and Global FX segments. ● Data and access solutions – includes access and capacity fees, proprietary market data fees, and associated other revenue across Cboe’s five segments. ● Derivatives markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s Options, Futures, and Europe and Asia Pacific segments. Cost of Revenues ● Royalty fees and other cost of revenues – includes royalty fees and other cost of revenues across the Company’s five segments. 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 14 (“Segment Reporting”) for more information. Update to Significant Accounting Policies There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, that are of significance, or potential significance, to the Company. Recent Accounting Pronouncements - Adopted There were no recent applicable material accounting pronouncements that have been adopted as of March 31, 2022. Recent Accounting Pronouncements - Issued, not yet Adopted There were no applicable material accounting pronouncements that have been issued, but not yet adopted as of March 31, 2022. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2022 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 2. REVENUE RECOGNITION The Company’s main types of revenue contracts consist of the following, which are disaggregated from the condensed consolidated statements of income. ● 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 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. Proprietary market data also includes revenue from various licensing agreements, which was classified as other revenue prior to January 1, 2022. 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 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. All revenue recognized in the condensed 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 disaggregated revenue contract types listed above within each respective financial statement caption in the condensed consolidated statements of income (in millions): Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Three Months Ended March 31, 2022 Transaction and clearing fees $ 395.5 $ — $ 374.1 $ 769.6 Access and capacity fees — 77.9 — 77.9 Market data fees 22.9 39.6 8.2 70.7 Regulatory fees 31.9 — 10.7 42.6 Other revenue 11.6 1.4 0.7 13.7 $ 461.9 $ 118.9 $ 393.7 $ 974.5 Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Three Months Ended March 31, 2021 Transaction and clearing fees $ 428.9 $ — $ 334.3 $ 763.2 Access and capacity fees — 66.4 — 66.4 Market data fees 26.9 29.7 7.2 63.8 Regulatory fees 82.4 — 19.1 101.5 Other revenue 10.7 4.5 0.7 15.9 $ 548.9 $ 100.6 $ 361.3 $ 1,010.8 The following table depicts the disaggregation of revenue according to segment (in millions): North Europe Corporate American and Asia Global Items and Options Equities Pacific Futures FX Eliminations Total Three Months Ended March 31, 2022 Transaction and clearing fees $ 348.3 $ 330.8 $ 50.1 $ 25.8 $ 14.6 $ — $ 769.6 Access and capacity fees 35.8 26.0 9.3 4.5 2.3 — 77.9 Market data fees 25.9 34.2 8.3 2.0 0.3 — 70.7 Regulatory fees 10.7 31.9 — — — — 42.6 Other revenue 1.9 0.8 10.9 — 0.1 — 13.7 $ 422.6 $ 423.7 $ 78.6 $ 32.3 $ 17.3 $ — $ 974.5 Timing of revenue recognition Services transferred at a point in time $ 360.9 $ 363.5 $ 61.0 $ 25.8 $ 14.7 $ — $ 825.9 Services transferred over time 61.7 60.2 17.6 6.5 2.6 — 148.6 $ 422.6 $ 423.7 $ 78.6 $ 32.3 $ 17.3 $ — $ 974.5 Three Months Ended March 31, 2021 Transaction and clearing fees $ 308.7 $ 381.8 $ 34.7 $ 25.6 $ 12.4 $ — $ 763.2 Access and capacity fees 29.4 23.4 7.1 4.4 2.1 — 66.4 Market data fees 20.5 37.5 4.0 1.6 0.2 — 63.8 Regulatory fees 19.1 82.4 — — — — 101.5 Other revenue 4.7 0.9 10.0 — — 0.3 15.9 $ 382.4 $ 526.0 $ 55.8 $ 31.6 $ 14.7 $ 0.3 $ 1,010.8 Timing of revenue recognition Services transferred at a point in time $ 332.5 $ 465.1 $ 44.7 $ 25.6 $ 12.4 $ 0.3 $ 880.6 Services transferred over time 49.9 60.9 11.1 6.0 2.3 — 130.2 $ 382.4 $ 526.0 $ 55.8 $ 31.6 $ 14.7 $ 0.3 $ 1,010.8 Contract liabilities as of March 31, 2022 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): Balance at December 31, 2021 Cash Additions Revenue Recognized Balance at March 31, 2022 Liquidity provider sliding scale (1) $ — $ 7.2 $ (1.8) $ 5.4 Other, net 15.3 9.3 (3.5) 21.1 Total deferred revenue $ 15.3 $ 16.5 $ (5.3) $ 26.5 (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. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | 3. ACQUISITIONS On July 1, 2021, the Company purchased Chi-X Holdings Limited, which was subsequently rebranded to Cboe Asia Pacific. Cboe 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 Cboe 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 date of acquisition (in millions, except as stated). All acquired intangible assets with finite lives are amortized using the straight-line method. Cboe Asia Pacific Useful Life (Years) Trading registrations and licenses $ 6.2 Indefinite Customer relationships 60.1 30 Technology 7.5 2 Total identifiable intangible assets $ 73.8 Acquisition-related costs relate to acquisitions and other strategic opportunities. The Company expensed $2.0 million of acquisition-related costs during the three months ended March 31, 2022, all of which related to professional fees and other expenses. The Company expensed $3.4 million of acquisition-related costs during the three months ended March 31, 2021, which included $2.8 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 condensed consolidated statements of income. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2022 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS As of March 31, 2022 and December 31, 2021, the Company’s investments were comprised of the following (in millions): March 31, December 31, 2022 2021 Equity method investments: Investment in 7Ridge Investments 3 LP $ 208.2 $ 209.5 Total equity method investments 208.2 209.5 Other equity investments: Investment in Eris Exchange Holdings, LLC 20.0 20.0 Investment in American Financial Exchange, LLC 10.6 10.6 Investment in Cboe Vest Financial Group, Inc. 2.9 2.9 Investment in Eris Digital Holdings, LLC 1.1 1.1 Investment in OCC 0.3 0.3 Other equity investments 1.4 1.4 Total other equity investments 36.3 36.3 Total investments $ 244.5 $ 245.8 Equity Method Investments The Company’s investment in 7Ridge Investments 3 LP (“7Ridge Fund”), accounted for under the equity method of accounting, 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). The Company’s interest in the 7Ridge Fund is equal to the carrying value of the investment as of March 31, 2022, or $208.2 million, which includes periodic capital contributions to the 7Ridge Fund, as well as the Company’s share of 7Ridge Fund’s profit or loss, including gains or losses arising from the fair value measurement of the investment(s) held by the 7Ridge Fund, booked against the investment account. The carrying value of the investment is included in investments within the condensed 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 condensed 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 March 31, 2022, 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. As announced on October 20, 2021, the Company plans to acquire the remaining interest in 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. The closing of the transaction is subject to customary closing conditions. As a result, the timing of the closing is uncertain, but the Company presently anticipates a closing in the second quarter of 2022. See Item 2 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) for more information. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following as of March 31, 2022 and December 31, 2021 (in millions): March 31, December 31, 2022 2021 Construction in progress $ 17.7 $ 17.3 Building 68.8 68.8 Furniture and equipment 261.4 256.5 Total property and equipment 347.9 342.6 Less accumulated depreciation (241.2) (237.4) Total property and equipment, net $ 106.7 $ 105.2 Depreciation expense using the straight-line method was $8.6 million and $7.4 million for the three months ended March 31, 2022 and 2021, 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 former headquarters location. The Company classified the associated land, building, and certain furniture and equipment of the former 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 March 31, 2022, the former 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 $11.2 million, which includes $2.3 million of land and $8.9 million of property and equipment, net on the condensed consolidated balance sheet as of March 31, 2022. |
CREDIT LOSSES
CREDIT LOSSES | 3 Months Ended |
Mar. 31, 2022 | |
CREDIT LOSSES | |
CREDIT LOSSES | 6. 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 condensed 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 is 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 during the three months ended March 31, 2022 (in millions): Balance at December 31, 2021 Current period provision for expected credit losses Write-offs charged against the allowance Recoveries collected Balance at March 31, 2022 Allowance for notes receivable credit losses $ 30.1 $ — $ — $ — $ 30.1 Allowance for accounts receivable credit losses 1.0 0.2 — (0.3) 0.9 Total allowance for credit losses $ 31.1 $ 0.2 $ — $ (0.3) $ 31.0 |
OTHER ASSETS, NET
OTHER ASSETS, NET | 3 Months Ended |
Mar. 31, 2022 | |
OTHER ASSETS, NET | |
OTHER ASSETS, NET | 7. OTHER ASSETS, NET Other assets, net consisted of the following as of March 31, 2022 and December 31, 2021 (in millions): March 31, December 31, 2022 2021 Software development work in progress $ 3.7 $ 5.6 Data processing software 106.3 103.8 Less accumulated depreciation and amortization (72.8) (70.9) Data processing software, net 37.2 38.5 Other assets (1) 103.0 87.3 Total other assets, net $ 140.2 $ 125.8 (1) At March 31, 2022 and December 31, 2021, the majority of the balance included notes receivable and long-term prepaid assets. See Note 6 (“Credit Losses”) for more information on the notes receivable included within other assets, net on the condensed consolidated balance sheets. As of March 31, 2022 and December 31, 2021, the notes receivable, net balance was $95.1 million and $79.3 million, respectively. Amortization expense related to data processing software was $1.7 million and $1.7 million for the three months ended March 31, 2022 and 2021, respectively. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 3 Months Ended |
Mar. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |
GOODWILL AND INTANGIBLE ASSETS, NET | 8. GOODWILL AND INTANGIBLE ASSETS, NET The following table presents the details of goodwill by segment (in millions): North American Europe and Options Equities Asia Pacific Global FX Total Balance as of December 31, 2021 $ 305.8 $ 1,876.9 $ 575.5 $ 267.2 $ 3,025.4 Changes in foreign currency exchange rates — 0.6 (7.9) — (7.3) Balance as of March 31, 2022 $ 305.8 $ 1,877.5 $ 567.6 $ 267.2 $ 3,018.1 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, 2021 $ 159.1 $ 991.4 $ 426.4 $ 91.7 $ 1,668.6 Amortization (3.4) (15.2) (6.9) (5.1) (30.6) Changes in foreign currency exchange rates — 0.5 (9.9) — (9.4) Balance as of March 31, 2022 $ 155.7 $ 976.7 $ 409.6 $ 86.6 $ 1,628.6 For the three months ended March 31, 2022 and 2021, amortization expense was $30.6 million and $32.9 million, respectively. The estimated future amortization expense is $85.2 million for the remainder of 2022, $102.5 million for 2023, $79.1 million for 2024, $68.6 million for 2025, and $61.2 million for 2026. The following tables present the categories of intangible assets as of March 31, 2022 and December 31, 2021 (in millions, except as stated): March 31, 2022 Weighted North Europe Average American and Asia Amortization Options Equities Pacific Global FX Period (in years) Trading registrations and licenses $ 95.5 $ 592.4 $ 215.3 $ — Indefinite Customer relationships 46.6 378.6 227.1 140.0 17 Market data customer relationships 53.6 322.0 63.4 64.4 10 Technology 28.1 41.1 34.8 22.5 4 Trademarks and tradenames 12.8 7.8 2.5 1.2 8 Accumulated amortization (80.9) (365.2) (133.5) (141.5) $ 155.7 $ 976.7 $ 409.6 $ 86.6 December 31, 2021 Weighted North Europe Average American and Asia Amortization Options Equities Pacific Global FX Period (in years) Trading registrations and licenses $ 95.5 $ 592.0 $ 221.1 $ — Indefinite Customer relationships 46.6 378.3 232.3 140.0 17 Market data customer relationships 53.6 322.0 65.2 64.4 10 Technology 28.1 41.1 35.6 22.5 5 Trademarks and tradenames 12.9 7.8 2.5 1.2 8 Accumulated amortization (77.6) (349.8) (130.3) (136.4) $ 159.1 $ 991.4 $ 426.4 $ 91.7 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following as of March 31, 2022 and December 31, 2021 (in millions): March 31, December 31, 2022 2021 Compensation and benefit-related liabilities $ 27.7 $ 68.6 Royalties 25.4 23.0 Current unrecognized tax benefits 90.9 — Accrued liabilities 73.9 73.3 Rebates payable 132.0 95.3 Marketing fee payable 16.0 15.7 Accounts payable 21.2 19.5 Total accounts payable and accrued liabilities $ 387.1 $ 295.4 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2022 | |
DEBT | |
DEBT | 10. DEBT The Company’s debt consisted of the following as of March 31, 2022 and December 31, 2021 (in millions): March 31, December 31, 2022 2021 Term Loan Agreement due December 2023, floating rate $ 159.5 $ 159.5 $300 million fixed rate Senior Notes due March 2032, stated rate of 3.000% 295.8 — $500 million fixed rate Senior Notes due December 2030, stated rate of 1.625% 493.5 493.3 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 646.7 646.5 Revolving Credit Agreement (1) (1.9) — EuroCCP Credit Facility — — Total debt $ 1,593.6 $ 1,299.3 (1) As of March 31, 2022 there was no balance drawn from the Revolving Credit Facility. The above represents the debt issuance costs related to the amendment of the Revolving Credit Agreement as defined below. As described below in further detail, on February 25, 2022, the Company amended the Revolving Credit Agreement (as defined below) to allow for an additional $150 million borrowing, on March 16, 2022, the Company issued $300 million, in aggregate principal amount, of the Company’s fixed rate Senior Notes due March 2032, in order to fund anticipated acquisitions, and on March 29, 2022, the Company amended the Term Loan Agreement (as defined below) to allow for additional draws of up to $400 million in the aggregate. 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 Cboe 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 percent consolidated EBITDA for four consecutive quarters to the greater of $350 million and 35 percent 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). On March 29, 2022, the Company further amended the Term Loan Agreement to, among other items, (i) allow for additional delayed draws of up to $400 million in the aggregate by the earliest of: (1) September 30, 2022, (2) the date of termination of the commitments of all of the lenders and (3) the date of termination of the commitment of each lender to make loans pursuant to an event of default; provided that this borrowing period shall end immediately upon the funding of the fifth borrowing of committed loans; (ii) adds a commitment fee based on the Company’s public debt ratings that will accrue until the expiration of the borrowing period; (iii) replaces LIBOR as the applicable reference rate with SOFR; and (iv) allows the company to increase the maximum permitted consolidated leverage ratio to 4.25 to 1.00 or 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 at the time it exercises such financial covenant step-up, the Company shall be exercising a like step-up under its revolving credit facility. 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; provided that the consolidated leverage ratio may, subject to certain triggering events set forth in the Term Loan Agreement, be increased to 4.25 to 1.00 or 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 at the time it exercises such financial covenant step-up, the Company shall be exercising a like step-up under its revolving credit facility. At March 31, 2022, the Company was in compliance with these covenants and did not exercise financial covenant step-up. Senior Notes On January 12, 2017, the Company entered into an indenture (the “Indenture”), by and between the Company and Computershare Trust Company, N.A. (as successor to 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. On December 15, 2020, the Company issued $500 million aggregate principal amount of 1.625% Senior Notes due 2030 ("1.625% 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. On March 16, 2022, the Company issued $300 million aggregate principal amount of 3.000% Senior Notes due 2032 (“3.000% Senior Notes” and, together with the 1.625% Senior Notes and the 3.650% Senior Notes, the "Senior Notes"). The form and terms of the 3.000% Senior Notes were established pursuant to an Officer’s Certificate, dated as of March 16, 2022, supplementing the Indenture. The Company intends to use the net proceeds from the 3.000% Senior Notes, together with cash on hand, and the proceeds of additional borrowings, to fund its previously announced acquisition of ErisX. The 3.000% Senior Notes mature on March 16, 2032 and bear interest at the rate of 3.000% per annum, payable semi-annually in arrears on March 16 and September 16 of each year, commencing September 16, 2022. 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 percent 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, the 1.625% Senior Notes, and the 3.000% 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, the 1.625% Senior Notes, and the 3.000% 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 March 31, 2022, the Company was in compliance with these covenants. Revolving Credit Agreement On February 25, 2022, the Company, as borrower, entered into a Second 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 $400 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 $200 million, for a total of $600 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 March 31, 2022, 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 March 31, 2022, no borrowings were outstanding under the Revolving Credit Agreement. Accordingly, at March 31, 2022, $400 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) the Relevant Rate (defined herein) plus a margin (based on the Company’s public debt ratings) ranging from 0.75 percent per annum to 1.25 percent per annum or (ii) a daily fluctuating rate based on the Administrative Agent’s prime rate (subject to certain minimums based upon the federal funds effective rate or Term SOFR), which is subject to a 1 percent floor, plus a margin (based on the Company’s public debt ratings) ranging from zero 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 February 25, 2027, 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 4.25 to 1.00 on one occasion and 4.00 to 1.00 on another occasion, in each case, for four consecutive fiscal quarters; provided that, prior to the exercise of the second such financial covenant step-up, the maximum consolidated leverage ratio shall have returned to a level of 3.50 to 1.00 for at least two consecutive fiscal quarters. At March 31, 2022, the Company was in compliance with these covenants and did not exercise financial covenant step-up. 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 March 31, 2022, no borrowings were outstanding under the Facility. Accordingly, at March 31, 2022, €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 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 March 31, 2022, 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 March 31, 2022 are as follows (in millions): Remainder of 2022 $ — 2023 160.0 2024 — 2025 — 2026 — Thereafter 1,450.0 Principal amounts repayable 1,610.0 Debt issuance costs (9.7) Unamortized discounts on notes (6.7) Total debt outstanding $ 1,593.6 Interest expense recognized on the Term Loan Agreement, the Senior Notes, and the Revolving Credit Agreement is included in interest expense, net in the condensed consolidated statements of income. The Company is also obligated to pay commitment fees under the terms of the Revolving Credit Agreement, Term Loan Agreement and Facility, which are also included in interest expense, net. Interest expense, net recognized in the condensed consolidated statements of income for the three months ended March 31, 2022 and 2021 is as follows (in millions): Three Months Ended March 31, 2022 2021 Components of interest expense: Contractual interest $ 11.2 $ 11.7 Amortization of debt discount and issuance costs 0.5 0.7 Interest expense $ 11.7 $ 12.4 Interest income (0.9) (0.1) Interest expense, net $ 10.8 $ 12.3 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | 3 Months Ended |
Mar. 31, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | 11. ACCUMULATED OTHER COMPREHENSIVE INCOME, NET The following represents the changes in accumulated other comprehensive income, net by component (in millions): Foreign Total Accumulated Currency Unrealized Other Translation Investment Post-Retirement Comprehensive Adjustment Loss Benefits Income, Net Balance at December 31, 2021 $ 55.4 $ (0.1) $ 0.3 $ 55.6 Other comprehensive loss (26.5) — — (26.5) Balance at March 31, 2022 $ 28.9 $ (0.1) $ 0.3 $ 29.1 |
CLEARING OPERATIONS
CLEARING OPERATIONS | 3 Months Ended |
Mar. 31, 2022 | |
CLEARING OPERATIONS | |
CLEARING OPERATIONS | 12. 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 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 March 31, 2022, 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 condensed 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 condensed consolidated balance sheet. The following tables present the Company’s total clearing participant deposits as of March 31, 2022 and December 31, 2021 (in millions): March 31, 2022 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 1,666.8 $ 495.8 $ 2,162.6 Clearing funds 143.5 38.3 181.8 Interoperability funds (1) 788.6 95.8 884.4 Total $ 2,598.9 $ 629.9 $ 3,228.8 December 31, 2021 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 600.0 $ 287.0 $ 887.0 Clearing funds 145.9 41.9 187.8 Interoperability funds (1) 423.3 92.6 515.9 Total $ 1,169.2 $ 421.5 $ 1,590.7 (1) These amounts are not reflected in the condensed 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 16 (“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. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 3 Months Ended |
Mar. 31, 2022 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | 13. 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 FASB Accounting Standards Codification (“ASC”) 820— Fair Value Measurement ● 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 condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, 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 March 31, 2022 and December 31, 2021 (in millions): March 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 21.3 $ 21.3 $ — $ — Marketable securities: Mutual funds 17.4 17.4 — — Money market funds 10.0 10.0 — — Total assets $ 48.7 $ 48.7 $ — $ — Liabilities: Contingent consideration liabilities $ 53.3 $ — $ — $ 53.3 Total liabilities $ 53.3 $ — $ — $ 53.3 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 9.1 $ 9.1 $ — $ — Marketable securities: Mutual funds 18.4 18.4 — — Money market funds 9.6 9.6 — — Total assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Total liabilities $ 70.5 $ — $ — $ 70.5 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 March 31, 2022. See Note 15 (“Employee Benefit Plans”) for more information. Contingent Consideration Liabilities In connection with the acquisitions of Hanweck Associates, LLC (“Hanweck”), MATCHNow, and Cboe Asia Pacific, as well as the acquisition of assets of FT Providers, LLC (“FT Options”) and Trade Alert, LLC (“Trade Alert”), the Company entered into contingent consideration arrangements with the former owners. The total fair value of the liabilities at March 31, 2022 was $53.3 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 $17.4 million in contingent consideration to Hanweck, FT Options, and Cboe Asia Pacific during the three months ended March 31, 2022. 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 March 31, 2022. 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. The Company did not perform an impairment test during the three months ended March 31, 2022, as there were no market events that would indicate it was more likely than not that these assets were impaired. 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 4 (“Investments”) for more information. During the three months ended March 31, 2022, 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 tables present 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 March 31, 2022 and December 31, 2021 (in millions): March 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 21.3 $ 21.3 $ — $ — Deferred compensation plan assets 27.4 27.4 — — Total assets $ 48.7 $ 48.7 $ — $ — Liabilities: Contingent consideration liabilities $ 53.3 $ — $ — $ 53.3 Deferred compensation plan liabilities 27.4 27.4 — — Debt 1,593.6 — 1,593.6 — Total liabilities $ 1,674.3 $ 27.4 $ 1,593.6 $ 53.3 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 9.1 $ 9.1 $ — $ — Deferred compensation plan assets 28.0 28.0 — — Total assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Deferred compensation plan liabilities 28.0 28.0 — — Debt 1,299.3 — 1,299.3 — Total liabilities $ 1,397.8 $ 28.0 $ 1,299.3 $ 70.5 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. At March 31, 2022 and December 31, 2021, the fair values of the Company’s debt obligations were as follows (in millions): Fair Value March 31, 2022 December 31, 2021 Term Loan Agreement $ 155.0 $ 160.1 3.650% Senior Notes 661.7 702.6 1.625% Senior Notes 430.4 470.9 3.000% Senior Notes 300.0 — 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 three months ended March 31, 2022 (in millions): Level 3 Financial Liabilities for the Three Months Ended March 31, 2022 Balance at Realized (Gains) Foreign Balance at Beginning of Losses during Currency End of Period Period Additions Settlements Translation Period Liabilities Contingent consideration liabilities $ 70.5 $ — $ — $ (17.4) $ 0.2 $ 53.3 Total liabilities $ 70.5 $ — $ — $ (17.4) $ 0.2 $ 53.3 |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Mar. 31, 2022 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 14. 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 (“Organization and Basis of Presentation”). 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 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 fees generated from the consolidated tape plans, the licensing of proprietary options market data, index licensing, and access and capacity services. North American Equities. Europe and Asia Pacific. 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 Cboe Asia Pacific in July 2021. Cboe Europe operates lit and dark books, a periodic auctions book, and Cboe BIDS Europe, 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. Global FX. Summarized financial data of reportable segments was as follows (in millions): North Europe Corporate American and Asia Items and Options Equities Pacific Futures Global FX Eliminations Total Three Months Ended March 31, 2022 Revenues $ 422.6 $ 423.7 $ 78.6 $ 32.3 $ 17.3 $ — $ 974.5 Operating income (loss) 162.7 38.6 20.9 17.0 2.4 (1.9) 239.7 Three Months Ended March 31, 2021 Revenues $ 382.4 $ 526.0 $ 55.8 $ 31.6 $ 14.7 $ 0.3 $ 1,010.8 Operating income (loss) 128.7 45.1 14.5 17.5 1.2 (2.4) 204.6 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2022 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 15. EMPLOYEE BENEFIT PLANS Eligible U.S. employees 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 $27.4 million and $28.0 million at March 31, 2022 and December 31, 2021, respectively. Although the value of the plans are recorded in financial investments on the condensed 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 condensed consolidated statements of income. The Company contributed $3.3 million and $2.2 million to the defined contribution plans for the three months ended March 31, 2022 and 2021, respectively. Eligible employees outside of the U.S., which includes employees of Cboe Europe, EuroCCP, MATCHNow, BIDS, and Cboe 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 $0.9 million and $0.6 million for the three months ended March 31, 2022 and 2021, respectively. This expense is included in compensation and benefits in the condensed consolidated statements of income. |
REGULATORY CAPITAL
REGULATORY CAPITAL | 3 Months Ended |
Mar. 31, 2022 | |
REGULATORY CAPITAL | |
REGULATORY CAPITAL | 16. 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 March 31, 2022, 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 at March 31, 2022, or the summation of the credit risk, market risk and fixed overheads requirements, as defined. On March 8, 2019, Cboe NL received approval from the Dutch Ministry of Finance to operate a RM, an 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. 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 March 31, 2022 (in millions): Minimum Subsidiary Regulatory Authority Actual Requirement Cboe Trading FINRA/SEC $ 17.4 $ 1.2 BIDS Trading FINRA/SEC 10.8 0.5 Cboe Europe FCA 49.7 26.7 Cboe Chi-X Europe FCA 0.4 0.1 Cboe NL Dutch Authority for Financial Markets 9.9 5.4 EuroCCP DNB 57.9 37.7 MATCHNow IIROC 5.4 0.2 CFE CFTC 59.7 46.8 SEF CFTC 2.4 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 March 31, 2022, Cboe Australia holds $4.6 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 March 31, 2022, Cboe Japan had a regulatory capital ratio of 266%. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 17. 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 $9.1 million and $11.7 million for the three months ended March 31, 2022 and 2021, respectively. Stock-based compensation expense is included in compensation and benefits and acquisition-related costs in the condensed consolidated statements of income. The activity in the Company’s restricted stock, consisting of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) for the three months ended March 31, 2022 was as follows: RSAs and RSUs The following table summarizes RSA and RSU activity during the three months ended March 31, 2022: Weighted Number of average grant Shares date fair value Nonvested stock at December 31, 2021 443,319 $ 99.22 Granted 253,860 120.77 Vested (176,343) 98.19 Forfeited (20,438) 98.98 Nonvested stock at March 31, 2022 500,398 $ 110.52 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. During the three months ended March 31, 2022, to satisfy employees’ tax obligations upon the vesting of restricted stock, the Company purchased 65,429 shares of common stock totaling $7.8 million as the result of the vesting of 175,047 shares of restricted stock. PSUs The following table summarizes restricted stock units contingent upon achievement of performance conditions, also known as PSUs, activity during the three months ended March 31, 2022: Weighted Number of average grant Shares date fair value Nonvested stock at December 31, 2021 152,410 $ 108.41 Granted 62,388 142.05 Vested (16,834) 96.00 Forfeited (33,542) 95.40 Nonvested stock at March 31, 2022 164,422 $ 125.10 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 (1.75)%, three-year volatility (32.2)% 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 three months ended March 31, 2022, to satisfy employees’ tax obligations upon the vesting of performance stock, the Company purchased 5,245 shares of common stock totaling $0.6 million as the result of the vesting of 16,834 shares of performance stock. As of March 31, 2022, there were $50.6 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 2.2 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. The Company records compensation expense over the offering period related to the discount that is given to employees, which totaled $0.1 million and $0.1 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, 637,225 shares were reserved for future issuance under the ESPP. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2022 | |
EQUITY | |
EQUITY | 18. EQUITY Common Stock The Company’s common stock is listed on Cboe BZX under the trading symbol CBOE. As of March 31, 2022, 325,000,000 shares of the Company’s common stock were authorized, $0.01 par value, and 108,369,053 and 106,188,570 shares were issued and outstanding, respectively. 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 condensed 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 2,180,483 and 1,512,821 shares of common stock in treasury as of March 31, 2022 and December 31, 2021, respectively. 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 subsequently approved additional authorizations 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. The table below shows the repurchased shares of common stock under the Company’s share repurchase program during the periods presented as follows: Three Months Ended March 31, 2022 2021 Number of shares of common stock repurchased 596,988 490,632 Average price paid per share $ 117.25 $ 96.97 Total purchase price (in millions) $ 70.0 $ 47.6 Since inception of the program through March 31, 2022, the Company has repurchased 18,669,117 shares of common stock at an average cost per share of $69.69, totaling $1.3 billion. As of March 31, 2022 and 2021, the Company had $248.9 million and $352.5 million of availability remaining under its existing share repurchase authorizations, respectively. Purchase of Common Stock from Employees The Company purchased 70,674 and 59,202 shares that were not part of the publicly announced share repurchase authorization from employees for an average price paid per share of $118.89 and $96.03 during the three months ended March 31, 2022 and 2021, respectively. These shares consisted of shares retained to cover payroll withholding taxes in connection with the vesting of restricted stock awards, restricted stock units, and performance share awards. 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. As of March 31, 2022, and December 31, 2021, the Company had no shares of preferred stock issued or outstanding. Dividends During the three months ended March 31, 2022, the Company declared and paid paid 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. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 19. INCOME TAXES The Company records income tax expense during interim periods based on the best estimate of the full year’s tax rate as adjusted for discrete items, if any, that are taken into account in the relevant interim period. Each quarter, the Company updates its estimate of the annual effective tax rate and any change in the estimated rate is recorded on a cumulative basis. The effective tax rate from continuing operations was 51.3% (29.9% excluding Section 199 related matters) and 28.9% for the three months ended March 31, 2022 and 2021, respectively. The following table summarizes the non-GAAP calculation of the effective tax rate for the three months ended March 31, 2022: Tax Rate GAAP effective tax rate 51.3 % Tax effect of Section 199 related matters (21.4) % Effective tax rate excluding Section 199 matters 29.9 % The higher effective tax rate in the first quarter of 2022 is due to the derecognition of the Company’s Section 199 tax benefits for tax years 2008 through 2016 upon the unfavorable decision by the United States Tax Court in the matter of Bats Global Markets Holdings, Inc. and Subsidiaries v. Commissioner of Internal Revenue, on March 31, 2022. 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 9, 2018 with the Court of Federal Claims for a refund of Section 199 claims related to tax years 2008 through 2010, resulting in the establishment of a single case before the Court of Federal Claims. 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. On March 31, 2022, the U.S. Tax Court issued its decision rejecting the Company’s basis for its petition (the “Opinion”). A notice of appeal, which would lie before the U.S. Court of Appeals for the 10th Circuit, must be filed within 90 days of entry of the pending decision which will give effect to the Opinion. The Company plans to appeal. Two cases remain pending in U.S. Tax Court and the case before the Court of Federal Claims also remains pending. Trial dates in those cases have not been established. As a result of the Opinion, the Company’s Section 199 positions no longer meet the recognition threshold provided by ASC 740-10. Accordingly, the Company increased its provision for income taxes in order to fully reserve for the expected aggregate amount of additional liabilities that the Company currently expects would result from these cases if they were all decided against the Company. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 20. 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 for the three months ended March 31, 2022 and 2021 (in millions, except per share data): Three Months Ended March 31, 2022 2021 Basic earnings per share numerator: Net income $ 109.6 $ 137.2 Earnings allocated to participating securities (0.4) (0.4) Net income allocated to common stockholders $ 109.2 $ 136.8 Basic earnings per share denominator: Weighted average shares outstanding 106.6 107.3 Basic earnings per share $ 1.02 $ 1.27 Diluted earnings per share numerator: Net income $ 109.6 $ 137.2 Earnings allocated to participating securities (0.4) (0.4) Net income allocated to common stockholders $ 109.2 $ 136.8 Diluted earnings per share denominator: Weighted average shares outstanding 106.6 107.3 Dilutive potential common shares outstanding 0.2 0.1 Total dilutive weighted average shares 106.8 107.4 Diluted earnings per share $ 1.02 $ 1.27 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. |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | 21. COMMITMENTS, CONTINGENCIES, AND GUARANTEES Legal Proceedings As of March 31, 2022, 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 condensed 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 March 31, 2022, 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 federal district court for the Southern District of New York (“Lower Court”) 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 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. On September 24, 2015, Plaintiffs filed a Notice of Appeal with the Court of Appeals for the Second Circuit (“2 nd nd nd nd nd nd nd nd 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 (“7 th th th th th th 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 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 6 (“Credit Losses”) for information on promissory notes related to the CAT. See also Note 19 (“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 12 (“Clearing Operations”) for information on EuroCCP’s clearinghouse exposure guarantee. See Note 22 (“Leases”) for information on lease obligations. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2022 | |
LEASES. | |
LEASES | 22. 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 March 31, 2022 one 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 March 31, 2022 and December 31, 2021, respectively (in millions): March 31, December 31, 2022 2021 Operating lease right of use assets $ 122.5 $ 110.1 Total leased assets $ 122.5 $ 110.1 Accrued liabilities $ 16.9 $ 15.6 Non-current operating lease liabilities 141.3 129.2 Total leased liabilities $ 158.2 $ 144.8 The following table presents operating lease costs and other information as of and for the three months ended March 31, 2022 and 2021, respectively (in millions, except as stated): Three Months Ended March 31, 2022 2021 Operating lease costs (1) $ 7.4 $ 6.2 Lease term and discount rate information: Weighted average remaining lease term (years) 10.7 11.9 Weighted average discount rate 3.1 % 3.4 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 5.3 $ 4.1 Lease incentive for leasehold improvements — — Right-of-use assets obtained in exchange for lease liabilities 14.8 1.0 (1) Includes short-term lease and variable lease costs, which are immaterial. The maturities of the lease liabilities are as follows as of March 31, 2022 (in millions): March 31, 2022 Remainder of 2022 $ 15.2 2023 21.0 2024 16.1 2025 15.2 2026 16.2 After 2026 105.1 Total lease payments (1) $ 188.8 Less: Interest (30.6) Present value of lease liabilities $ 158.2 (1) Total lease payments include $20.4 million related to options to extend lease terms that are reasonably certain of being exercised. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 23. SUBSEQUENT EVENTS On April 27, 2022, pursuant to the Term Loan Agreement, the Company submitted a committed loan notice to borrow $190 million on April 29, 2022. On April 28, 2022, the Company entered into an agreement to sell its former headquarters building with a tentative close date in June 2022, subject to customary closing conditions. There have been no other subsequent events that would require disclosure in, or adjustment to, the condensed consolidated financial statements as of and for the three months ended March 31, 2022. |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Basis of Presentation | Basis of Presentation These interim unaudited condensed consolidated financial statements have been prepared in accordance with GAAP as established by FASB for interim financial information and with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year. The preparation of condensed 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. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. Beginning in the first quarter of 2022, the Company updated the financial statement captions within its condensed consolidated statements of income for both periods presented to better reflect the Company’s diversified products, expansive geographical reach, and overall business strategy. Below is a summary of the changes to the financial statement captions. The changes do not have a financial impact on the Company’s reported revenue, revenues less cost of revenues, reported net income, or cash flows from operations. Revenues ● Cash and spot markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s North American Equities, Europe and Asia Pacific, and Global FX segments. ● Data and access solutions – includes access and capacity fees, proprietary market data fees, and associated other revenue across Cboe’s five segments. ● Derivatives markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s Options, Futures, and Europe and Asia Pacific segments. Cost of Revenues ● Royalty fees and other cost of revenues – includes royalty fees and other cost of revenues across the Company’s five segments. |
Segment information | 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 14 (“Segment Reporting”) for more information. |
Update to Significant Accounting Policies | Update to Significant Accounting Policies There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, that are of significance, or potential significance, to the Company. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - Adopted There were no recent applicable material accounting pronouncements that have been adopted as of March 31, 2022. Recent Accounting Pronouncements - Issued, not yet Adopted There were no applicable material accounting pronouncements that have been issued, but not yet adopted as of March 31, 2022. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
REVENUE RECOGNITION | |
Schedule of disaggregated revenue contract types | Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Three Months Ended March 31, 2022 Transaction and clearing fees $ 395.5 $ — $ 374.1 $ 769.6 Access and capacity fees — 77.9 — 77.9 Market data fees 22.9 39.6 8.2 70.7 Regulatory fees 31.9 — 10.7 42.6 Other revenue 11.6 1.4 0.7 13.7 $ 461.9 $ 118.9 $ 393.7 $ 974.5 Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Three Months Ended March 31, 2021 Transaction and clearing fees $ 428.9 $ — $ 334.3 $ 763.2 Access and capacity fees — 66.4 — 66.4 Market data fees 26.9 29.7 7.2 63.8 Regulatory fees 82.4 — 19.1 101.5 Other revenue 10.7 4.5 0.7 15.9 $ 548.9 $ 100.6 $ 361.3 $ 1,010.8 |
Schedule of disaggregation of revenue | The following table depicts the disaggregation of revenue according to segment (in millions): North Europe Corporate American and Asia Global Items and Options Equities Pacific Futures FX Eliminations Total Three Months Ended March 31, 2022 Transaction and clearing fees $ 348.3 $ 330.8 $ 50.1 $ 25.8 $ 14.6 $ — $ 769.6 Access and capacity fees 35.8 26.0 9.3 4.5 2.3 — 77.9 Market data fees 25.9 34.2 8.3 2.0 0.3 — 70.7 Regulatory fees 10.7 31.9 — — — — 42.6 Other revenue 1.9 0.8 10.9 — 0.1 — 13.7 $ 422.6 $ 423.7 $ 78.6 $ 32.3 $ 17.3 $ — $ 974.5 Timing of revenue recognition Services transferred at a point in time $ 360.9 $ 363.5 $ 61.0 $ 25.8 $ 14.7 $ — $ 825.9 Services transferred over time 61.7 60.2 17.6 6.5 2.6 — 148.6 $ 422.6 $ 423.7 $ 78.6 $ 32.3 $ 17.3 $ — $ 974.5 Three Months Ended March 31, 2021 Transaction and clearing fees $ 308.7 $ 381.8 $ 34.7 $ 25.6 $ 12.4 $ — $ 763.2 Access and capacity fees 29.4 23.4 7.1 4.4 2.1 — 66.4 Market data fees 20.5 37.5 4.0 1.6 0.2 — 63.8 Regulatory fees 19.1 82.4 — — — — 101.5 Other revenue 4.7 0.9 10.0 — — 0.3 15.9 $ 382.4 $ 526.0 $ 55.8 $ 31.6 $ 14.7 $ 0.3 $ 1,010.8 Timing of revenue recognition Services transferred at a point in time $ 332.5 $ 465.1 $ 44.7 $ 25.6 $ 12.4 $ 0.3 $ 880.6 Services transferred over time 49.9 60.9 11.1 6.0 2.3 — 130.2 $ 382.4 $ 526.0 $ 55.8 $ 31.6 $ 14.7 $ 0.3 $ 1,010.8 |
Schedule of revenue recognized from contract liabilities and the remaining balance | The revenue recognized from contract liabilities and the remaining balance is shown below (in millions): Balance at December 31, 2021 Cash Additions Revenue Recognized Balance at March 31, 2022 Liquidity provider sliding scale (1) $ — $ 7.2 $ (1.8) $ 5.4 Other, net 15.3 9.3 (3.5) 21.1 Total deferred revenue $ 15.3 $ 16.5 $ (5.3) $ 26.5 (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. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITIONS | |
Schedule of finite-lived and indefinite-lived intangible assets acquired | The following table presents the details of intangible assets at the date of acquisition (in millions, except as stated). All acquired intangible assets with finite lives are amortized using the straight-line method. Cboe Asia Pacific Useful Life (Years) Trading registrations and licenses $ 6.2 Indefinite Customer relationships 60.1 30 Technology 7.5 2 Total identifiable intangible assets $ 73.8 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INVESTMENTS | |
Schedule of investments | As of March 31, 2022 and December 31, 2021, the Company’s investments were comprised of the following (in millions): March 31, December 31, 2022 2021 Equity method investments: Investment in 7Ridge Investments 3 LP $ 208.2 $ 209.5 Total equity method investments 208.2 209.5 Other equity investments: Investment in Eris Exchange Holdings, LLC 20.0 20.0 Investment in American Financial Exchange, LLC 10.6 10.6 Investment in Cboe Vest Financial Group, Inc. 2.9 2.9 Investment in Eris Digital Holdings, LLC 1.1 1.1 Investment in OCC 0.3 0.3 Other equity investments 1.4 1.4 Total other equity investments 36.3 36.3 Total investments $ 244.5 $ 245.8 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | Property and equipment, net consisted of the following as of March 31, 2022 and December 31, 2021 (in millions): March 31, December 31, 2022 2021 Construction in progress $ 17.7 $ 17.3 Building 68.8 68.8 Furniture and equipment 261.4 256.5 Total property and equipment 347.9 342.6 Less accumulated depreciation (241.2) (237.4) Total property and equipment, net $ 106.7 $ 105.2 |
CREDIT LOSSES (Tables)
CREDIT LOSSES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CREDIT LOSSES | |
Schedule of changes in allowance for credit losses | The following represents the changes in allowance for credit losses during the three months ended March 31, 2022 (in millions): Balance at December 31, 2021 Current period provision for expected credit losses Write-offs charged against the allowance Recoveries collected Balance at March 31, 2022 Allowance for notes receivable credit losses $ 30.1 $ — $ — $ — $ 30.1 Allowance for accounts receivable credit losses 1.0 0.2 — (0.3) 0.9 Total allowance for credit losses $ 31.1 $ 0.2 $ — $ (0.3) $ 31.0 |
OTHER ASSETS, NET (Tables)
OTHER ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
OTHER ASSETS, NET | |
Schedule of other assets, net | Other assets, net consisted of the following as of March 31, 2022 and December 31, 2021 (in millions): March 31, December 31, 2022 2021 Software development work in progress $ 3.7 $ 5.6 Data processing software 106.3 103.8 Less accumulated depreciation and amortization (72.8) (70.9) Data processing software, net 37.2 38.5 Other assets (1) 103.0 87.3 Total other assets, net $ 140.2 $ 125.8 (1) At March 31, 2022 and December 31, 2021, the majority of the balance included notes receivable and long-term prepaid assets. See Note 6 (“Credit Losses”) for more information on the notes receivable included within other assets, net on the condensed consolidated balance sheets. As of March 31, 2022 and December 31, 2021, the notes receivable, net balance was $95.1 million and $79.3 million, respectively. |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |
Schedule of goodwill details by segment | The following table presents the details of goodwill by segment (in millions): North American Europe and Options Equities Asia Pacific Global FX Total Balance as of December 31, 2021 $ 305.8 $ 1,876.9 $ 575.5 $ 267.2 $ 3,025.4 Changes in foreign currency exchange rates — 0.6 (7.9) — (7.3) Balance as of March 31, 2022 $ 305.8 $ 1,877.5 $ 567.6 $ 267.2 $ 3,018.1 |
Schedule of details of intangible assets | 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, 2021 $ 159.1 $ 991.4 $ 426.4 $ 91.7 $ 1,668.6 Amortization (3.4) (15.2) (6.9) (5.1) (30.6) Changes in foreign currency exchange rates — 0.5 (9.9) — (9.4) Balance as of March 31, 2022 $ 155.7 $ 976.7 $ 409.6 $ 86.6 $ 1,628.6 |
Schedule of categories of intangible assets | The following tables present the categories of intangible assets as of March 31, 2022 and December 31, 2021 (in millions, except as stated): March 31, 2022 Weighted North Europe Average American and Asia Amortization Options Equities Pacific Global FX Period (in years) Trading registrations and licenses $ 95.5 $ 592.4 $ 215.3 $ — Indefinite Customer relationships 46.6 378.6 227.1 140.0 17 Market data customer relationships 53.6 322.0 63.4 64.4 10 Technology 28.1 41.1 34.8 22.5 4 Trademarks and tradenames 12.8 7.8 2.5 1.2 8 Accumulated amortization (80.9) (365.2) (133.5) (141.5) $ 155.7 $ 976.7 $ 409.6 $ 86.6 December 31, 2021 Weighted North Europe Average American and Asia Amortization Options Equities Pacific Global FX Period (in years) Trading registrations and licenses $ 95.5 $ 592.0 $ 221.1 $ — Indefinite Customer relationships 46.6 378.3 232.3 140.0 17 Market data customer relationships 53.6 322.0 65.2 64.4 10 Technology 28.1 41.1 35.6 22.5 5 Trademarks and tradenames 12.9 7.8 2.5 1.2 8 Accumulated amortization (77.6) (349.8) (130.3) (136.4) $ 159.1 $ 991.4 $ 426.4 $ 91.7 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following as of March 31, 2022 and December 31, 2021 (in millions): March 31, December 31, 2022 2021 Compensation and benefit-related liabilities $ 27.7 $ 68.6 Royalties 25.4 23.0 Current unrecognized tax benefits 90.9 — Accrued liabilities 73.9 73.3 Rebates payable 132.0 95.3 Marketing fee payable 16.0 15.7 Accounts payable 21.2 19.5 Total accounts payable and accrued liabilities $ 387.1 $ 295.4 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
DEBT | |
Schedule of debt | March 31, December 31, 2022 2021 Term Loan Agreement due December 2023, floating rate $ 159.5 $ 159.5 $300 million fixed rate Senior Notes due March 2032, stated rate of 3.000% 295.8 — $500 million fixed rate Senior Notes due December 2030, stated rate of 1.625% 493.5 493.3 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 646.7 646.5 Revolving Credit Agreement (1) (1.9) — EuroCCP Credit Facility — — Total debt $ 1,593.6 $ 1,299.3 (1) As of March 31, 2022 there was no balance drawn from the Revolving Credit Facility. The above represents the debt issuance costs related to the amendment of the Revolving Credit Agreement as defined below. |
Schedule of maturities of long-term debt | The future expected loan repayments related to the Term Loan Agreement and the Senior Notes as of March 31, 2022 are as follows (in millions): Remainder of 2022 $ — 2023 160.0 2024 — 2025 — 2026 — Thereafter 1,450.0 Principal amounts repayable 1,610.0 Debt issuance costs (9.7) Unamortized discounts on notes (6.7) Total debt outstanding $ 1,593.6 |
Schedule of interest expense | Interest expense, net recognized in the condensed consolidated statements of income for the three months ended March 31, 2022 and 2021 is as follows (in millions) Three Months Ended March 31, 2022 2021 Components of interest expense: Contractual interest $ 11.2 $ 11.7 Amortization of debt discount and issuance costs 0.5 0.7 Interest expense $ 11.7 $ 12.4 Interest income (0.9) (0.1) Interest expense, net $ 10.8 $ 12.3 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | |
Schedule of Accumulated Other Comprehensive Income, Net | The following represents the changes in accumulated other comprehensive income, net by component (in millions): Foreign Total Accumulated Currency Unrealized Other Translation Investment Post-Retirement Comprehensive Adjustment Loss Benefits Income, Net Balance at December 31, 2021 $ 55.4 $ (0.1) $ 0.3 $ 55.6 Other comprehensive loss (26.5) — — (26.5) Balance at March 31, 2022 $ 28.9 $ (0.1) $ 0.3 $ 29.1 |
CLEARING OPERATIONS (Tables)
CLEARING OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CLEARING OPERATIONS | |
Schedule of total clearing participant deposits | The following tables present the Company’s total clearing participant deposits as of March 31, 2022 and December 31, 2021 (in millions): March 31, 2022 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 1,666.8 $ 495.8 $ 2,162.6 Clearing funds 143.5 38.3 181.8 Interoperability funds (1) 788.6 95.8 884.4 Total $ 2,598.9 $ 629.9 $ 3,228.8 December 31, 2021 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 600.0 $ 287.0 $ 887.0 Clearing funds 145.9 41.9 187.8 Interoperability funds (1) 423.3 92.6 515.9 Total $ 1,169.2 $ 421.5 $ 1,590.7 (1) These amounts are not reflected in the condensed consolidated balance sheet, as EuroCCP does not take economic ownership of these balances. |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
FAIR VALUE MEASUREMENT | |
Schedule of fair value hierarchy for 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 March 31, 2022 and December 31, 2021 (in millions): March 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 21.3 $ 21.3 $ — $ — Marketable securities: Mutual funds 17.4 17.4 — — Money market funds 10.0 10.0 — — Total assets $ 48.7 $ 48.7 $ — $ — Liabilities: Contingent consideration liabilities $ 53.3 $ — $ — $ 53.3 Total liabilities $ 53.3 $ — $ — $ 53.3 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 9.1 $ 9.1 $ — $ — Marketable securities: Mutual funds 18.4 18.4 — — Money market funds 9.6 9.6 — — Total assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Total liabilities $ 70.5 $ — $ — $ 70.5 |
Schedule of fair value hierarchy of financial instruments held | The following tables present 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 March 31, 2022 and December 31, 2021 (in millions): March 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 21.3 $ 21.3 $ — $ — Deferred compensation plan assets 27.4 27.4 — — Total assets $ 48.7 $ 48.7 $ — $ — Liabilities: Contingent consideration liabilities $ 53.3 $ — $ — $ 53.3 Deferred compensation plan liabilities 27.4 27.4 — — Debt 1,593.6 — 1,593.6 — Total liabilities $ 1,674.3 $ 27.4 $ 1,593.6 $ 53.3 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 9.1 $ 9.1 $ — $ — Deferred compensation plan assets 28.0 28.0 — — Total assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Deferred compensation plan liabilities 28.0 28.0 — — Debt 1,299.3 — 1,299.3 — Total liabilities $ 1,397.8 $ 28.0 $ 1,299.3 $ 70.5 |
Schedule of fair value of debt obligation | At March 31, 2022 and December 31, 2021, the fair values of the Company’s debt obligations were as follows (in millions): Fair Value March 31, 2022 December 31, 2021 Term Loan Agreement $ 155.0 $ 160.1 3.650% Senior Notes 661.7 702.6 1.625% Senior Notes 430.4 470.9 3.000% Senior Notes 300.0 — |
Summary of changes in the fair value of 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 three months ended March 31, 2022 (in millions): Level 3 Financial Liabilities for the Three Months Ended March 31, 2022 Balance at Realized (Gains) Foreign Balance at Beginning of Losses during Currency End of Period Period Additions Settlements Translation Period Liabilities Contingent consideration liabilities $ 70.5 $ — $ — $ (17.4) $ 0.2 $ 53.3 Total liabilities $ 70.5 $ — $ — $ (17.4) $ 0.2 $ 53.3 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
SEGMENT REPORTING | |
Summarized financial data of reportable segments | Summarized financial data of reportable segments was as follows (in millions): North Europe Corporate American and Asia Items and Options Equities Pacific Futures Global FX Eliminations Total Three Months Ended March 31, 2022 Revenues $ 422.6 $ 423.7 $ 78.6 $ 32.3 $ 17.3 $ — $ 974.5 Operating income (loss) 162.7 38.6 20.9 17.0 2.4 (1.9) 239.7 Three Months Ended March 31, 2021 Revenues $ 382.4 $ 526.0 $ 55.8 $ 31.6 $ 14.7 $ 0.3 $ 1,010.8 Operating income (loss) 128.7 45.1 14.5 17.5 1.2 (2.4) 204.6 |
REGULATORY CAPITAL (Tables)
REGULATORY CAPITAL (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
REGULATORY CAPITAL | |
Schedule of actual and minimum regulatory capital requirements of the subsidiary | 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 March 31, 2022 (in millions): Minimum Subsidiary Regulatory Authority Actual Requirement Cboe Trading FINRA/SEC $ 17.4 $ 1.2 BIDS Trading FINRA/SEC 10.8 0.5 Cboe Europe FCA 49.7 26.7 Cboe Chi-X Europe FCA 0.4 0.1 Cboe NL Dutch Authority for Financial Markets 9.9 5.4 EuroCCP DNB 57.9 37.7 MATCHNow IIROC 5.4 0.2 CFE CFTC 59.7 46.8 SEF CFTC 2.4 0.9 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
STOCK-BASED COMPENSATION | |
Summary of restricted stock activity | Weighted Number of average grant Shares date fair value Nonvested stock at December 31, 2021 443,319 $ 99.22 Granted 253,860 120.77 Vested (176,343) 98.19 Forfeited (20,438) 98.98 Nonvested stock at March 31, 2022 500,398 $ 110.52 |
Summary of performance-based restricted stock units | Weighted Number of average grant Shares date fair value Nonvested stock at December 31, 2021 152,410 $ 108.41 Granted 62,388 142.05 Vested (16,834) 96.00 Forfeited (33,542) 95.40 Nonvested stock at March 31, 2022 164,422 $ 125.10 |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
EQUITY | |
Summary of repurchased shares of the company's common stock under the share repurchase program | Three Months Ended March 31, 2022 2021 Number of shares of common stock repurchased 596,988 490,632 Average price paid per share $ 117.25 $ 96.97 Total purchase price (in millions) $ 70.0 $ 47.6 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
Schedule of reconciliation of the statutory federal income tax rate to the effective income tax rate | The following table summarizes the non-GAAP calculation of the effective tax rate for the three months ended March 31, 2022: Tax Rate GAAP effective tax rate 51.3 % Tax effect of Section 199 related matters (21.4) % Effective tax rate excluding Section 199 matters 29.9 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
EARNINGS PER SHARE | |
Reconciliation of basic and diluted net income per common share | The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2022 and 2021 (in millions, except per share data): Three Months Ended March 31, 2022 2021 Basic earnings per share numerator: Net income $ 109.6 $ 137.2 Earnings allocated to participating securities (0.4) (0.4) Net income allocated to common stockholders $ 109.2 $ 136.8 Basic earnings per share denominator: Weighted average shares outstanding 106.6 107.3 Basic earnings per share $ 1.02 $ 1.27 Diluted earnings per share numerator: Net income $ 109.6 $ 137.2 Earnings allocated to participating securities (0.4) (0.4) Net income allocated to common stockholders $ 109.2 $ 136.8 Diluted earnings per share denominator: Weighted average shares outstanding 106.6 107.3 Dilutive potential common shares outstanding 0.2 0.1 Total dilutive weighted average shares 106.8 107.4 Diluted earnings per share $ 1.02 $ 1.27 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
LEASES. | |
Schedule of supplemental balance sheet | The following table presents the supplemental balance sheet information related to leases as of March 31, 2022 and December 31, 2021, respectively (in millions): March 31, December 31, 2022 2021 Operating lease right of use assets $ 122.5 $ 110.1 Total leased assets $ 122.5 $ 110.1 Accrued liabilities $ 16.9 $ 15.6 Non-current operating lease liabilities 141.3 129.2 Total leased liabilities $ 158.2 $ 144.8 |
Schedule of lease cost and other information | The following table presents operating lease costs and other information as of and for the three months ended March 31, 2022 and 2021, respectively (in millions, except as stated): Three Months Ended March 31, 2022 2021 Operating lease costs (1) $ 7.4 $ 6.2 Lease term and discount rate information: Weighted average remaining lease term (years) 10.7 11.9 Weighted average discount rate 3.1 % 3.4 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 5.3 $ 4.1 Lease incentive for leasehold improvements — — Right-of-use assets obtained in exchange for lease liabilities 14.8 1.0 (1) Includes short-term lease and variable lease costs, which are immaterial. |
Schedule of maturities of lease liabilities | The maturities of the lease liabilities are as follows as of March 31, 2022 (in millions): March 31, 2022 Remainder of 2022 $ 15.2 2023 21.0 2024 16.1 2025 15.2 2026 16.2 After 2026 105.1 Total lease payments (1) $ 188.8 Less: Interest (30.6) Present value of lease liabilities $ 158.2 (1) Total lease payments include $20.4 million related to options to extend lease terms that are reasonably certain of being exercised. |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Number of reportable segments | 5 |
REVENUE RECOGNITION - Revenue b
REVENUE RECOGNITION - Revenue by product line and Segment (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2022USD ($)item | Mar. 31, 2021USD ($) | |
Segment Reporting Information | ||
Number of types of regulatory fees the Company recognizes | item | 2 | |
Revenues | $ 974.5 | $ 1,010.8 |
Services transferred at a point in time | ||
Segment Reporting Information | ||
Revenues | 825.9 | 880.6 |
Services transferred over time | ||
Segment Reporting Information | ||
Revenues | 148.6 | 130.2 |
Corporate Items and Eliminations | ||
Segment Reporting Information | ||
Revenues | 0.3 | |
Corporate Items and Eliminations | Services transferred at a point in time | ||
Segment Reporting Information | ||
Revenues | 0.3 | |
Options | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 422.6 | 382.4 |
Options | Operating Segments | Services transferred at a point in time | ||
Segment Reporting Information | ||
Revenues | 360.9 | 332.5 |
Options | Operating Segments | Services transferred over time | ||
Segment Reporting Information | ||
Revenues | 61.7 | 49.9 |
North American Equities | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 423.7 | 526 |
North American Equities | Operating Segments | Services transferred at a point in time | ||
Segment Reporting Information | ||
Revenues | 363.5 | 465.1 |
North American Equities | Operating Segments | Services transferred over time | ||
Segment Reporting Information | ||
Revenues | 60.2 | 60.9 |
Futures | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 32.3 | 31.6 |
Futures | Operating Segments | Services transferred at a point in time | ||
Segment Reporting Information | ||
Revenues | 25.8 | 25.6 |
Futures | Operating Segments | Services transferred over time | ||
Segment Reporting Information | ||
Revenues | 6.5 | 6 |
Europe and Asia Pacific | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 78.6 | 55.8 |
Europe and Asia Pacific | Operating Segments | Services transferred at a point in time | ||
Segment Reporting Information | ||
Revenues | 61 | 44.7 |
Europe and Asia Pacific | Operating Segments | Services transferred over time | ||
Segment Reporting Information | ||
Revenues | 17.6 | 11.1 |
Global FX | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 17.3 | 14.7 |
Global FX | Operating Segments | Services transferred at a point in time | ||
Segment Reporting Information | ||
Revenues | 14.7 | 12.4 |
Global FX | Operating Segments | Services transferred over time | ||
Segment Reporting Information | ||
Revenues | 2.6 | 2.3 |
Transaction and clearing fees | ||
Segment Reporting Information | ||
Revenues | 769.6 | 763.2 |
Transaction and clearing fees | Options | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 348.3 | 308.7 |
Transaction and clearing fees | North American Equities | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 330.8 | 381.8 |
Transaction and clearing fees | Futures | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 25.8 | 25.6 |
Transaction and clearing fees | Europe and Asia Pacific | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 50.1 | 34.7 |
Transaction and clearing fees | Global FX | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 14.6 | 12.4 |
Access and capacity fees | ||
Segment Reporting Information | ||
Revenues | 77.9 | 66.4 |
Access and capacity fees | Options | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 35.8 | 29.4 |
Access and capacity fees | North American Equities | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 26 | 23.4 |
Access and capacity fees | Futures | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 4.5 | 4.4 |
Access and capacity fees | Europe and Asia Pacific | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 9.3 | 7.1 |
Access and capacity fees | Global FX | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 2.3 | 2.1 |
Market data fees | ||
Segment Reporting Information | ||
Revenues | 70.7 | 63.8 |
Market data fees | Options | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 25.9 | 20.5 |
Market data fees | North American Equities | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 34.2 | 37.5 |
Market data fees | Futures | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 2 | 1.6 |
Market data fees | Europe and Asia Pacific | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 8.3 | 4 |
Market data fees | Global FX | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 0.3 | 0.2 |
Regulatory fees | ||
Segment Reporting Information | ||
Revenues | 42.6 | 101.5 |
Regulatory fees | Options | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 10.7 | 19.1 |
Regulatory fees | North American Equities | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 31.9 | 82.4 |
Other revenue | ||
Segment Reporting Information | ||
Revenues | 13.7 | 15.9 |
Other revenue | Corporate Items and Eliminations | ||
Segment Reporting Information | ||
Revenues | 0.3 | |
Other revenue | Options | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 1.9 | 4.7 |
Other revenue | North American Equities | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 0.8 | 0.9 |
Other revenue | Europe and Asia Pacific | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 10.9 | 10 |
Other revenue | Global FX | Operating Segments | ||
Segment Reporting Information | ||
Revenues | 0.1 | |
Cash and spot markets | ||
Segment Reporting Information | ||
Revenues | 461.9 | 548.9 |
Cash and spot markets | Transaction and clearing fees | ||
Segment Reporting Information | ||
Revenues | 395.5 | 428.9 |
Cash and spot markets | Market data fees | ||
Segment Reporting Information | ||
Revenues | 22.9 | 26.9 |
Cash and spot markets | Regulatory fees | ||
Segment Reporting Information | ||
Revenues | 31.9 | 82.4 |
Cash and spot markets | Other revenue | ||
Segment Reporting Information | ||
Revenues | 11.6 | 10.7 |
Data and access solutions | ||
Segment Reporting Information | ||
Revenues | 118.9 | 100.6 |
Data and access solutions | Access and capacity fees | ||
Segment Reporting Information | ||
Revenues | 77.9 | 66.4 |
Data and access solutions | Market data fees | ||
Segment Reporting Information | ||
Revenues | 39.6 | 29.7 |
Data and access solutions | Other revenue | ||
Segment Reporting Information | ||
Revenues | 1.4 | 4.5 |
Derivatives markets | ||
Segment Reporting Information | ||
Revenues | 393.7 | 361.3 |
Derivatives markets | Transaction and clearing fees | ||
Segment Reporting Information | ||
Revenues | 374.1 | 334.3 |
Derivatives markets | Market data fees | ||
Segment Reporting Information | ||
Revenues | 8.2 | 7.2 |
Derivatives markets | Regulatory fees | ||
Segment Reporting Information | ||
Revenues | 10.7 | 19.1 |
Derivatives markets | Other revenue | ||
Segment Reporting Information | ||
Revenues | $ 0.7 | $ 0.7 |
REVENUE RECOGNITION - Rollforwa
REVENUE RECOGNITION - Rollforward of contract liabilities (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | $ 15.3 |
Cash Additions | 16.5 |
Revenue Recognition | (5.3) |
Ending Balance | 26.5 |
Liquidity provider sliding scale | |
Revenue recognized from contract liabilities and remaining balance | |
Cash Additions | 7.2 |
Revenue Recognition | (1.8) |
Ending Balance | 5.4 |
Other, net | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | 15.3 |
Cash Additions | 9.3 |
Revenue Recognition | (3.5) |
Ending Balance | $ 21.1 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Millions | Jul. 01, 2021USD ($)item | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) |
Acquisitions | ||||
Contingent consideration liabilities | $ 53.3 | $ 70.5 | ||
Acquisition-related costs | 2 | $ 3.4 | ||
Professional fees | 19.7 | 15.6 | ||
Acquisitions | ||||
Acquisitions | ||||
Acquisition-related costs | $ 2 | 3.4 | ||
Professional fees | 2.8 | |||
Impairment of investment | $ 0.6 | |||
Cboe Asia Pacific | ||||
Acquisitions | ||||
Goodwill | $ 133.6 | |||
Intangible assets | 73.8 | |||
Working capital | 25.7 | |||
Contingent consideration liabilities | $ 49.6 | |||
Number of key capital markets | item | 2 |
ACQUISITIONS - Intangible asset
ACQUISITIONS - Intangible assets acquired (Details) - Cboe Asia Pacific $ in Millions | Jul. 01, 2021USD ($) |
Acquisitions | |
Total identifiable intangible assets | $ 73.8 |
Customer relationships | |
Acquisitions | |
Finite-lived intangible assets acquired | $ 60.1 |
Useful Life (Years) | 30 years |
Technology | |
Acquisitions | |
Finite-lived intangible assets acquired | $ 7.5 |
Useful Life (Years) | 2 years |
Trading registrations and licenses | |
Acquisitions | |
Indefinite-lived intangible assets acquired | $ 6.2 |
INVESTMENTS - Schedule of inves
INVESTMENTS - Schedule of investments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Schedule of Cost and Equity Method Investments | ||
Total equity method investments | $ 208.2 | $ 209.5 |
Total other equity investments | 36.3 | 36.3 |
Total investments | 244.5 | 245.8 |
Investment in 7Ridge Investments 3 LP | ||
Schedule of Cost and Equity Method Investments | ||
Total equity method investments | 208.2 | 209.5 |
Investment in Eris Exchange Holdings, LLC | ||
Schedule of Cost and Equity Method Investments | ||
Total other equity investments | 20 | 20 |
Investment in American Financial Exchange, LLC | ||
Schedule of Cost and Equity Method Investments | ||
Total other equity investments | 10.6 | 10.6 |
Investment in Cboe Vest Financial Group, Inc. | ||
Schedule of Cost and Equity Method Investments | ||
Total other equity investments | 2.9 | 2.9 |
Investment in Eris Digital Holdings, LLC | ||
Schedule of Cost and Equity Method Investments | ||
Total other equity investments | 1.1 | 1.1 |
Investment in OCC | ||
Schedule of Cost and Equity Method Investments | ||
Total other equity investments | $ 0.3 | 0.3 |
Investment percentage | 20.00% | |
Other equity investments | ||
Schedule of Cost and Equity Method Investments | ||
Total other equity investments | $ 1.4 | $ 1.4 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property and Equipment, Net | |||
Total property and equipment | $ 347.9 | $ 342.6 | |
Less accumulated depreciation | (241.2) | (237.4) | |
Total property and equipment, net | 106.7 | 105.2 | |
Depreciation expense | 8.6 | $ 7.4 | |
Construction in progress | |||
Property and Equipment, Net | |||
Total property and equipment | 17.7 | 17.3 | |
Building | |||
Property and Equipment, Net | |||
Total property and equipment | 68.8 | 68.8 | |
Furniture and equipment | |||
Property and Equipment, Net | |||
Total property and equipment | $ 261.4 | $ 256.5 |
PROPERTY AND EQUIPMENT, NET - H
PROPERTY AND EQUIPMENT, NET - Headquarters location (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Property and Equipment, Net | ||
Property held and used | $ 106.7 | $ 105.2 |
Land | 2.3 | 2.3 |
Property and equipment | 106.7 | $ 105.2 |
Chicago Headquarters Location | ||
Property and Equipment, Net | ||
Property held and used | 11.2 | |
Land | 2.3 | |
Property and equipment | $ 8.9 |
CREDIT LOSSES (Details)
CREDIT LOSSES (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Credit losses | |
Allowance balance at beginning of period | $ 31.1 |
Current period provision for expected credit losses | 0.2 |
Recoveries collected | (0.3) |
Allowance balance at end of period | 31 |
Notes receivable | |
Credit losses | |
Allowance balance at beginning of period | 30.1 |
Allowance balance at end of period | 30.1 |
Accounts receivable | |
Credit losses | |
Allowance balance at beginning of period | 1 |
Current period provision for expected credit losses | 0.2 |
Recoveries collected | (0.3) |
Allowance balance at end of period | $ 0.9 |
OTHER ASSETS, NET (Details)
OTHER ASSETS, NET (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Intangible Assets | |||
Less accumulated depreciation and amortization | $ (72.8) | $ (70.9) | |
Data processing software, net | 37.2 | 38.5 | |
Other assets | 103 | 87.3 | |
Total other assets, net | 140.2 | 125.8 | |
Notes receivable, net | 95.1 | 79.3 | |
Amortization expense | 30.6 | $ 32.9 | |
Software development work in progress | |||
Intangible Assets | |||
Software | 3.7 | 5.6 | |
Data processing software | |||
Intangible Assets | |||
Software | 106.3 | $ 103.8 | |
Amortization expense | $ 1.7 | $ 1.7 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill by segment (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Goodwill | |
Balance at beginning of the period | $ 3,025.4 |
Changes in foreign currency exchange rates | (7.3) |
Balance at end of the period | 3,018.1 |
Options | |
Goodwill | |
Balance at beginning of the period | 305.8 |
Balance at end of the period | 305.8 |
North American Equities | |
Goodwill | |
Balance at beginning of the period | 1,876.9 |
Changes in foreign currency exchange rates | 0.6 |
Balance at end of the period | 1,877.5 |
Europe and Asia Pacific | |
Goodwill | |
Balance at beginning of the period | 575.5 |
Changes in foreign currency exchange rates | (7.9) |
Balance at end of the period | 567.6 |
Global FX | |
Goodwill | |
Balance at beginning of the period | 267.2 |
Balance at end of the period | 267.2 |
Futures | |
Goodwill | |
Balance at end of the period | $ 0 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible assets by segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Intangible Assets | ||
Balance at beginning of the period | $ 1,668.6 | |
Amortization | (30.6) | $ (32.9) |
Changes in foreign currency exchange rates | (9.4) | |
Balance at end of the period | 1,628.6 | |
Options | ||
Intangible Assets | ||
Balance at beginning of the period | 159.1 | |
Amortization | (3.4) | |
Balance at end of the period | 155.7 | |
North American Equities | ||
Intangible Assets | ||
Balance at beginning of the period | 991.4 | |
Amortization | (15.2) | |
Changes in foreign currency exchange rates | 0.5 | |
Balance at end of the period | 976.7 | |
Europe and Asia Pacific | ||
Intangible Assets | ||
Balance at beginning of the period | 426.4 | |
Amortization | (6.9) | |
Changes in foreign currency exchange rates | (9.9) | |
Balance at end of the period | 409.6 | |
Global FX | ||
Intangible Assets | ||
Balance at beginning of the period | 91.7 | |
Amortization | (5.1) | |
Balance at end of the period | $ 86.6 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Estimated Future Amortization (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
GOODWILL AND INTANGIBLE ASSETS, NET | ||
Amortization expense | $ 30.6 | $ 32.9 |
Amortization expense | ||
Future amortization expense, remainder of 2022 | 85.2 | |
2023 | 102.5 | |
2024 | 79.1 | |
2025 | 68.6 | |
2026 | $ 61.2 |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible assets by category (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Intangible Assets | ||
Intangible assets, net | $ 1,628.6 | $ 1,668.6 |
Customer relationships | Weighted Average | ||
Intangible Assets | ||
Amortization period (in years) | 17 years | 17 years |
Market data customer relationships | Weighted Average | ||
Intangible Assets | ||
Amortization period (in years) | 10 years | 10 years |
Technology | Weighted Average | ||
Intangible Assets | ||
Amortization period (in years) | 4 years | 5 years |
Trademarks and tradenames | Weighted Average | ||
Intangible Assets | ||
Amortization period (in years) | 8 years | 8 years |
Options | ||
Intangible Assets | ||
Accumulated amortization | $ (80.9) | $ (77.6) |
Intangible assets, net | 155.7 | 159.1 |
Options | Customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 46.6 | 46.6 |
Options | Market data customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 53.6 | 53.6 |
Options | Technology | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 28.1 | 28.1 |
Options | Trademarks and tradenames | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 12.8 | 12.9 |
Options | Trading registrations and licenses | ||
Intangible Assets | ||
Indefinite-lived intangible assets, gross | 95.5 | 95.5 |
North American Equities | ||
Intangible Assets | ||
Accumulated amortization | (365.2) | (349.8) |
Intangible assets, net | 976.7 | 991.4 |
North American Equities | Customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 378.6 | 378.3 |
North American Equities | Market data customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 322 | 322 |
North American Equities | Technology | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 41.1 | 41.1 |
North American Equities | Trademarks and tradenames | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 7.8 | 7.8 |
North American Equities | Trading registrations and licenses | ||
Intangible Assets | ||
Indefinite-lived intangible assets, gross | 592.4 | 592 |
Europe and Asia Pacific | ||
Intangible Assets | ||
Accumulated amortization | (133.5) | (130.3) |
Intangible assets, net | 409.6 | 426.4 |
Europe and Asia Pacific | Customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 227.1 | 232.3 |
Europe and Asia Pacific | Market data customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 63.4 | 65.2 |
Europe and Asia Pacific | Technology | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 34.8 | 35.6 |
Europe and Asia Pacific | Trademarks and tradenames | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 2.5 | 2.5 |
Europe and Asia Pacific | Trading registrations and licenses | ||
Intangible Assets | ||
Indefinite-lived intangible assets, gross | 215.3 | 221.1 |
Global FX | ||
Intangible Assets | ||
Accumulated amortization | (141.5) | (136.4) |
Intangible assets, net | 86.6 | 91.7 |
Global FX | Customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 140 | 140 |
Global FX | Market data customer relationships | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 64.4 | 64.4 |
Global FX | Technology | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | 22.5 | 22.5 |
Global FX | Trademarks and tradenames | ||
Intangible Assets | ||
Finite-lived intangible assets, gross | $ 1.2 | $ 1.2 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||
Compensation and benefit-related liabilities | $ 27.7 | $ 68.6 |
Royalties | 25.4 | 23 |
Current unrecognized tax benefits | 90.9 | |
Accrued liabilities | 73.9 | 73.3 |
Rebates payable | 132 | 95.3 |
Marketing fee payable | 16 | 15.7 |
Accounts payable | 21.2 | 19.5 |
Total accounts payable and accrued liabilities | $ 387.1 | $ 295.4 |
DEBT - Schedule of long-term de
DEBT - Schedule of long-term debt (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 16, 2022 | Dec. 31, 2021 | Dec. 15, 2020 | Mar. 22, 2018 | Jan. 12, 2017 |
Debt Instrument | ||||||
Total debt | $ 1,593.6 | $ 1,299.3 | ||||
Debt issuance costs | (9.7) | |||||
Balance drawn from revolving credit facility | 0 | |||||
Term Loan Agreement | ||||||
Debt Instrument | ||||||
Total debt | 159.5 | 159.5 | ||||
Debt instrument face amount | $ 300 | |||||
3.000% Senior Notes due March 2032 | ||||||
Debt Instrument | ||||||
Total debt | 295.8 | |||||
Debt instrument face amount | $ 300 | $ 300 | ||||
Interest rate (as a percent) | 3.00% | 3.00% | ||||
1.625% Senior Notes due December 2030 | ||||||
Debt Instrument | ||||||
Total debt | $ 493.5 | 493.3 | ||||
Debt instrument face amount | $ 500 | $ 500 | $ 500 | |||
Interest rate (as a percent) | 1.625% | 1.625% | 1.625% | 1.625% | ||
3.650% Senior Notes due January 2027 | ||||||
Debt Instrument | ||||||
Total debt | $ 646.7 | $ 646.5 | ||||
Debt instrument face amount | $ 650 | $ 650 | $ 650 | |||
Interest rate (as a percent) | 3.65% | 3.65% | 3.65% | 3.65% | ||
Revolving Credit Agreement | ||||||
Debt Instrument | ||||||
Total debt | $ 0 | |||||
Debt issuance costs | $ (1.9) |
DEBT (Details)
DEBT (Details) € in Millions, $ in Millions | Mar. 29, 2022USD ($) | Feb. 25, 2022USD ($)subsidiary | Jun. 25, 2021USD ($) | Jul. 01, 2020USD ($) | Mar. 22, 2018USD ($) | Mar. 31, 2022USD ($)subsidiary | Mar. 31, 2021USD ($) | Mar. 31, 2022EUR (€)subsidiary | Mar. 28, 2022 | Mar. 16, 2022USD ($) | Dec. 31, 2021USD ($) | Jul. 01, 2021EUR (€) | Dec. 15, 2020USD ($) | Jul. 01, 2020EUR (€) | Jan. 12, 2017USD ($) |
Debt Instrument | |||||||||||||||
Repayments of outstanding indebtedness | $ 20 | ||||||||||||||
Proceeds from long-term debt | $ 298.6 | ||||||||||||||
Borrowings outstanding | $ 1,593.6 | $ 1,299.3 | |||||||||||||
Floor Rate | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 1.00% | ||||||||||||||
Dollars SFOR | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.10% | ||||||||||||||
Sterling SONIA | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.0326% | ||||||||||||||
Euros EURIBOR | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.00% | ||||||||||||||
Term Loan Agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Repayments of outstanding indebtedness | $ 300 | ||||||||||||||
Debt instrument face amount | $ 300 | ||||||||||||||
Up-front fee (as percent) | 0.05 | 0.05 | |||||||||||||
Indebtedness subsidiaries may incur | $ 250 | ||||||||||||||
Consolidated EBITDA (Percentage) | 35.00% | ||||||||||||||
Minimum consolidated interest ratio | 4 | ||||||||||||||
Maximum consolidated leverage ratio | 3.50 | 3.50 | 3.50 | ||||||||||||
Borrowings outstanding | $ 159.5 | 159.5 | |||||||||||||
Term Loan Agreement | Minimum | |||||||||||||||
Debt Instrument | |||||||||||||||
Maximum consolidated leverage ratio | 4 | ||||||||||||||
Term Loan Agreement | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Maximum consolidated leverage ratio | 4.25 | ||||||||||||||
Term Loan Agreement | LIBOR | Minimum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 1.00% | ||||||||||||||
Term Loan Agreement | LIBOR | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 1.50% | ||||||||||||||
Term Loan Agreement | Prime Rate | Minimum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.00% | ||||||||||||||
Term Loan Agreement | Prime Rate | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.50% | ||||||||||||||
Amended term loan agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Proceeds from long-term debt | $ 400 | $ 110 | |||||||||||||
Applicable margin on loans | 0.65 | ||||||||||||||
Indebtedness subsidiaries may incur | $ 350 | ||||||||||||||
Consolidated EBITDA (Percentage) | 35.00% | ||||||||||||||
Maximum consolidated leverage ratio | 4 | ||||||||||||||
Amended term loan agreement | Minimum | |||||||||||||||
Debt Instrument | |||||||||||||||
Maximum consolidated leverage ratio | 4 | ||||||||||||||
Amended term loan agreement | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Proceeds from long-term debt | $ 400 | ||||||||||||||
Maximum consolidated leverage ratio | 4.25 | ||||||||||||||
Amended Revolving Credit Agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Credit facility, maximum borrowing capacity | $ 150 | ||||||||||||||
Senior Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Redemption price | 101.00% | ||||||||||||||
3.000% Senior Notes due March 2032 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument face amount | $ 300 | $ 300 | |||||||||||||
Interest rate (as a percent) | 3.00% | 3.00% | 3.00% | ||||||||||||
Borrowings outstanding | $ 295.8 | ||||||||||||||
1.625% Senior Notes due December 2030 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument face amount | $ 500 | $ 500 | $ 500 | ||||||||||||
Interest rate (as a percent) | 1.625% | 1.625% | 1.625% | 1.625% | 1.625% | ||||||||||
Borrowings outstanding | $ 493.5 | $ 493.3 | |||||||||||||
3.650% Senior Notes due January 2027 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument face amount | $ 650 | $ 650 | $ 650 | ||||||||||||
Interest rate (as a percent) | 3.65% | 3.65% | 3.65% | 3.65% | 3.65% | ||||||||||
Borrowings outstanding | $ 646.7 | $ 646.5 | |||||||||||||
Revolving Credit Agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Minimum consolidated interest ratio | 4 | ||||||||||||||
Maximum consolidated leverage ratio | 3.50 | 3.50 | |||||||||||||
Credit facility, maximum borrowing capacity | $ 400 | ||||||||||||||
Term of facility | 3 years | ||||||||||||||
Maximum borrowing capacity, increase limit | $ 200 | ||||||||||||||
Maximum borrowing capacity, total with increase | $ 600 | ||||||||||||||
Number of subsidiaries designated as additional borrowers | subsidiary | 0 | 0 | |||||||||||||
Borrowings outstanding | $ 0 | ||||||||||||||
Borrowing capacity available | $ 400 | ||||||||||||||
Revolving Credit Agreement | Minimum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.75% | ||||||||||||||
Minimum consolidated interest ratio | 4 | ||||||||||||||
Number of subsidiaries that may be designated as additional borrowers | subsidiary | 1 | ||||||||||||||
Revolving Credit Agreement | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 1.25% | ||||||||||||||
Minimum consolidated interest ratio | 4.25 | ||||||||||||||
Revolving Credit Agreement | Prime Rate | Minimum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.00% | ||||||||||||||
Revolving Credit Agreement | Prime Rate | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.25% | ||||||||||||||
Revolving Credit Agreement | Swing Line Sub-Facility | |||||||||||||||
Debt Instrument | |||||||||||||||
Credit facility, maximum borrowing capacity | $ 25 | ||||||||||||||
EuroCCP | Credit Facility | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument face amount | € | € 1,500 | ||||||||||||||
Maximum borrowing capacity, increase limit | € | 500 | ||||||||||||||
Maximum borrowing capacity, total with increase | € | 2,000 | ||||||||||||||
Borrowings outstanding | € | € 0 | ||||||||||||||
Borrowing capacity available | € | € 1,500 | ||||||||||||||
Debt instrument, threshold amount transferred to provider of settlement or custody services | € | 500 | ||||||||||||||
Percentage of commitment fee | 0.30% | ||||||||||||||
Facility payable | 364 days | ||||||||||||||
Debt instrument, threshold net worth on each drawdown | $ 1,750 | ||||||||||||||
Debt instrument, amount to meet minimum liquidity regulations | € | € 20 | € 24 | |||||||||||||
EuroCCP | Credit Facility | Base Rate | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 1.75% | ||||||||||||||
EuroCCP | Credit Facility | Federal Funds Effective Rate | |||||||||||||||
Debt Instrument | |||||||||||||||
Interest rate margin (as a percent) | 0.50% |
DEBT - Debt repayments (Details
DEBT - Debt repayments (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Long-term Debt | ||
2023 | $ 160 | |
Thereafter | 1,450 | |
Principal amounts repayable | 1,610 | |
Debt issuance costs | (9.7) | |
Unamortized discounts on notes | (6.7) | |
Total debt outstanding | $ 1,593.6 | $ 1,299.3 |
DEBT - Interest Expense (Detail
DEBT - Interest Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
DEBT | ||
Contractual interest | $ 11.2 | $ 11.7 |
Amortization of debt discount and issuance costs | 0.5 | 0.7 |
Interest expense | 11.7 | 12.4 |
Interest income | (0.9) | (0.1) |
Interest expense, net | $ 10.8 | $ 12.3 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
AOCI Rollforward | ||
Beginning balance | $ 3,604.8 | $ 3,348.9 |
Other comprehensive income (loss) | (26.5) | 4.8 |
Ending balance | 3,567.3 | 3,404.2 |
Accumulated Other Comprehensive Income, Net | ||
AOCI Rollforward | ||
Beginning balance | 55.6 | 75 |
Other comprehensive income (loss) | (26.5) | 4.8 |
Ending balance | 29.1 | $ 79.8 |
Foreign Currency Translation Adjustment | ||
AOCI Rollforward | ||
Beginning balance | 55.4 | |
Other comprehensive income (loss) | (26.5) | |
Ending balance | 28.9 | |
Unrealized Investment Loss | ||
AOCI Rollforward | ||
Beginning balance | (0.1) | |
Ending balance | (0.1) | |
Post-Retirement Benefits | ||
AOCI Rollforward | ||
Beginning balance | 0.3 | |
Ending balance | $ 0.3 |
CLEARING OPERATIONS - Narrative
CLEARING OPERATIONS - Narrative (Details) - EuroCCP | 1 Months Ended | 3 Months Ended |
Sep. 30, 2021item | Mar. 31, 2022Counterpartyitem | |
Clearing Operations | ||
Number of European markets | item | 6 | 18 |
Number of central counterparties | Counterparty | 2 | |
Default and liquid waterfalls regulatory capital | 25.00% |
CLEARING OPERATIONS - Clearing
CLEARING OPERATIONS - Clearing participant (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Clearing Operations | ||
Cash Contributions | $ 2,598.9 | $ 1,169.2 |
Non-Cash Contributions | 629.9 | 421.5 |
Total Contributions | 3,228.8 | 1,590.7 |
Margin deposits | ||
Clearing Operations | ||
Cash Contributions | 1,666.8 | 600 |
Non-Cash Contributions | 495.8 | 287 |
Total Contributions | 2,162.6 | 887 |
Clearing funds | ||
Clearing Operations | ||
Cash Contributions | 143.5 | 145.9 |
Non-Cash Contributions | 38.3 | 41.9 |
Total Contributions | 181.8 | 187.8 |
Interoperability funds | ||
Clearing Operations | ||
Cash Contributions | 788.6 | 423.3 |
Non-Cash Contributions | 95.8 | 92.6 |
Total Contributions | $ 884.4 | $ 515.9 |
FAIR VALUE MEASUREMENT - Fair v
FAIR VALUE MEASUREMENT - Fair value hierarchy for assets and liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
Total assets | $ 48.7 | $ 37.1 |
Liabilities: | ||
Contingent consideration liabilities | 53.3 | 70.5 |
Total liabilities | 1,674.3 | 1,397.8 |
Level 1 | ||
Assets: | ||
Total assets | 48.7 | 37.1 |
Liabilities: | ||
Total liabilities | 27.4 | 28 |
Level 2 | ||
Liabilities: | ||
Total liabilities | 1,593.6 | 1,299.3 |
Level 3 | ||
Liabilities: | ||
Contingent consideration liabilities | 53.3 | 70.5 |
Total liabilities | 53.3 | 70.5 |
Recurring | ||
Assets: | ||
Total assets | 48.7 | 37.1 |
Liabilities: | ||
Contingent consideration liabilities | 53.3 | 70.5 |
Total liabilities | 53.3 | 70.5 |
Recurring | U.S. Treasury securities | ||
Assets: | ||
Total assets | 21.3 | 9.1 |
Recurring | Marketable securities | Mutual funds | ||
Assets: | ||
Total assets | 17.4 | 18.4 |
Recurring | Marketable securities | Money market funds | ||
Assets: | ||
Total assets | 10 | 9.6 |
Recurring | Level 1 | ||
Assets: | ||
Total assets | 48.7 | 37.1 |
Recurring | Level 1 | U.S. Treasury securities | ||
Assets: | ||
Total assets | 21.3 | 9.1 |
Recurring | Level 1 | Marketable securities | Mutual funds | ||
Assets: | ||
Total assets | 17.4 | 18.4 |
Recurring | Level 1 | Marketable securities | Money market funds | ||
Assets: | ||
Total assets | 10 | 9.6 |
Recurring | Level 3 | ||
Liabilities: | ||
Contingent consideration liabilities | 53.3 | 70.5 |
Total liabilities | $ 53.3 | $ 70.5 |
FAIR VALUE MEASUREMENT - Fair_2
FAIR VALUE MEASUREMENT - Fair value hierarchy of financial instruments held (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
U.S. Treasury securities | $ 21.3 | $ 9.1 |
Deferred compensation plan assets | 27.4 | 28 |
Total assets | 48.7 | 37.1 |
Liabilities: | ||
Contingent consideration liabilities | 53.3 | 70.5 |
Deferred compensation plan liabilities | 27.4 | 28 |
Debt | 1,593.6 | 1,299.3 |
Total liabilities | 1,674.3 | 1,397.8 |
Level 1 | ||
Assets: | ||
U.S. Treasury securities | 21.3 | 9.1 |
Deferred compensation plan assets | 27.4 | 28 |
Total assets | 48.7 | 37.1 |
Liabilities: | ||
Deferred compensation plan liabilities | 27.4 | 28 |
Total liabilities | 27.4 | 28 |
Level 2 | ||
Liabilities: | ||
Debt | 1,593.6 | 1,299.3 |
Total liabilities | 1,593.6 | 1,299.3 |
Level 3 | ||
Liabilities: | ||
Contingent consideration liabilities | 53.3 | 70.5 |
Total liabilities | $ 53.3 | $ 70.5 |
FAIR VALUE MEASUREMENT - Narrat
FAIR VALUE MEASUREMENT - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Segment Reporting Information | |||
Contingent consideration liabilities | $ 53.3 | $ 70.5 | |
Payment of contingent consideration liabilities | 17.4 | $ 0.8 | |
Chi-X Asia Pacific | |||
Segment Reporting Information | |||
Payment of contingent consideration liabilities | 17.4 | ||
Recurring | |||
Segment Reporting Information | |||
Contingent consideration liabilities | $ 53.3 | $ 70.5 |
FAIR VALUE MEASUREMENT - Fair_3
FAIR VALUE MEASUREMENT - Fair values of debt obligations (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 16, 2022 | Dec. 31, 2021 | Dec. 15, 2020 | Jan. 12, 2017 |
Debt | |||||
Debt obligations | $ 1,593.6 | $ 1,299.3 | |||
Level 2 | |||||
Debt | |||||
Debt obligations | 1,593.6 | 1,299.3 | |||
Term Loan Agreement | Level 2 | |||||
Debt | |||||
Debt obligations | $ 155 | $ 160.1 | |||
3.650% Senior Notes due January 2027 | |||||
Debt | |||||
Interest rate (as a percent) | 3.65% | 3.65% | 3.65% | 3.65% | |
3.650% Senior Notes due January 2027 | Level 2 | |||||
Debt | |||||
Debt obligations | $ 661.7 | $ 702.6 | |||
1.625% Senior Notes due December 2030 | |||||
Debt | |||||
Interest rate (as a percent) | 1.625% | 1.625% | 1.625% | 1.625% | |
1.625% Senior Notes due December 2030 | Level 2 | |||||
Debt | |||||
Debt obligations | $ 430.4 | $ 470.9 | |||
3.000% Senior Notes due March 2032 | |||||
Debt | |||||
Interest rate (as a percent) | 3.00% | 3.00% | |||
3.000% Senior Notes due March 2032 | Level 2 | |||||
Debt | |||||
Debt obligations | $ 300 |
FAIR VALUE MEASUREMENT - Change
FAIR VALUE MEASUREMENT - Changes in fair value of Level 3 financial liabilities (Details) - Level 3 $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Changes in fair value of level 3 financial liabilities | |
Balance at Beginning of Period | $ 70.5 |
Settlements | (17.4) |
Foreign Currency Translation | 0.2 |
Balance at End of Period | 53.3 |
Contingent consideration liability | |
Changes in fair value of level 3 financial liabilities | |
Balance at Beginning of Period | 70.5 |
Settlements | (17.4) |
Foreign Currency Translation | 0.2 |
Balance at End of Period | $ 53.3 |
SEGMENT REPORTING - Summarized
SEGMENT REPORTING - Summarized financial information by reportable segment (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2022USD ($)segment | Mar. 31, 2021USD ($) | |
Segment Reporting Information | ||
Number of reportable segments | segment | 5 | |
Revenues | $ 974.5 | $ 1,010.8 |
Operating income (loss) | 239.7 | 204.6 |
Operating Segments | Options | ||
Segment Reporting Information | ||
Revenues | 422.6 | 382.4 |
Operating income (loss) | 162.7 | 128.7 |
Operating Segments | North American Equities | ||
Segment Reporting Information | ||
Revenues | 423.7 | 526 |
Operating income (loss) | 38.6 | 45.1 |
Operating Segments | Europe and Asia Pacific | ||
Segment Reporting Information | ||
Revenues | 78.6 | 55.8 |
Operating income (loss) | 20.9 | 14.5 |
Operating Segments | Futures | ||
Segment Reporting Information | ||
Revenues | 32.3 | 31.6 |
Operating income (loss) | 17 | 17.5 |
Operating Segments | Global FX | ||
Segment Reporting Information | ||
Revenues | 17.3 | 14.7 |
Operating income (loss) | 2.4 | 1.2 |
Corporate Items and Eliminations | ||
Segment Reporting Information | ||
Revenues | 0.3 | |
Operating income (loss) | $ (1.9) | $ (2.4) |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Outside of US. | |||
Defined Contribution Plan | |||
Company contribution amount | $ 0.9 | $ 0.6 | |
SMART Plan | |||
Defined Contribution Plan | |||
Total assets in the trust | 27.4 | $ 28 | |
Company contribution amount | $ 3.3 | $ 2.2 |
REGULATORY CAPITAL (Details)
REGULATORY CAPITAL (Details) $ in Millions | Mar. 31, 2022USD ($)Test |
Cboe Trading | |
Regulatory Requirement | |
Capital | $ 17.4 |
Minimum Requirement | 1.2 |
BIDS Trading | |
Regulatory Requirement | |
Capital | 10.8 |
Minimum Requirement | 0.5 |
Cboe Europe | |
Regulatory Requirement | |
Capital | 49.7 |
Minimum Requirement | 26.7 |
Cboe Chi-X Europe | |
Regulatory Requirement | |
Capital | 0.4 |
Minimum Requirement | 0.1 |
Capital resources requirement | 0.1 |
Cboe NL | |
Regulatory Requirement | |
Capital | 9.9 |
Minimum Requirement | 5.4 |
EuroCCP | |
Regulatory Requirement | |
Capital | 57.9 |
Minimum Requirement | 37.7 |
MATCHNow | |
Regulatory Requirement | |
Capital | 5.4 |
Minimum Requirement | 0.2 |
CFE | |
Regulatory Requirement | |
Capital | 59.7 |
Minimum Requirement | $ 46.8 |
Number of capital adequacy tests required to be met | Test | 2 |
SEF | |
Regulatory Requirement | |
Capital | $ 2.4 |
Minimum Requirement | $ 0.9 |
Number of capital adequacy tests required to be met | Test | 2 |
Cboe Australia | |
Regulatory Requirement | |
Cash deposits | $ 4.6 |
Chi-X Japan | |
Regulatory Requirement | |
Minimum required regulatory capital ratio (as a percent) | 120.00% |
Regulatory capital ratio (as a percent) | 266.00% |
Cboe Trading and BIDS Trading | |
Regulatory Requirement | |
Minimum net capital required to be maintained, option 1 - percentage of aggregate indebtedness items | 6.67% |
Minimum net capital required to be maintained, option 2 - amount | $ 0.1 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation expense | $ 9.1 | $ 11.7 |
Payments for the purchase of shares to satisfy the employee income tax withholdings | $ 8.4 | $ 5.7 |
RSAs and RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of shares of common stock of which unit is convertible (in shares) | 1 | |
Vesting period | 3 years | |
Qualified retirement eligibility age for grants awarded in and after 2017 | 55 years | |
Qualified retirement eligibility number of years of service for grants awarded in and after 2017 | 10 years | |
Shares purchased to satisfy the employee income tax withholdings (in shares) | 65,429 | |
Payments for the purchase of shares to satisfy the employee income tax withholdings | $ 7.8 | |
Vested (in shares) | 176,343 | |
RSAs and RSUs | Director | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Vesting period | 1 year | |
PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of shares of common stock of which unit is convertible (in shares) | 1 | |
Vesting period | 3 years | |
Shares purchased to satisfy the employee income tax withholdings (in shares) | 5,245 | |
Payments for the purchase of shares to satisfy the employee income tax withholdings | $ 0.6 | |
Vested (in shares) | 16,834 | |
Risk-free interest rate | 1.75% | |
Volatility time period | 3 years | |
Expected volatility | 32.20% | |
Correlation to S&P 500 Index time period | 3 years | |
Correlation with S&P index | 0.51 | |
Unrecognized compensation expense | $ 50.6 | |
Unrecognized compensation expense, period for recognition | 2 years 2 months 12 days | |
PSUs | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Units ultimately expected to be awarded | 0.00% | |
PSUs | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Units ultimately expected to be awarded | 200.00% | |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Vested (in shares) | 175,047 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted stock activity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
May 31, 2018 | Mar. 31, 2022 | Mar. 31, 2021 | |
Employee Stock Purchase Plan | |||
Compensation expense | $ 9,100,000 | $ 11,700,000 | |
ESPP | |||
Employee Stock Purchase Plan | |||
Number of shares of common stock made available for purchase to employees | 750,000 | ||
Maximum percentage of annual salary that an employee is permitted to utilize to purchase stock | 10.00% | ||
Maximum number of shares that a participant can purchase during any single offering period | 312 | ||
Maximum fair market value of stock an employee can purchase under the plan per calendar year | $ 25,000 | ||
Compensation expense | $ 100,000 | $ 100,000 | |
Shares were reserved for future issuance | 637,225 | ||
ESPP | US. | |||
Employee Stock Purchase Plan | |||
Exercise price per share of common stock as a percent of fair market value | 90.00% | ||
ESPP | Outside of US | |||
Employee Stock Purchase Plan | |||
Exercise price per share of common stock as a percent of fair market value | 85.00% | ||
RSAs and RSUs | |||
Number of shares | |||
Beginning balance (in shares) | 443,319 | ||
Granted (in shares) | 253,860 | ||
Vested (in shares) | (176,343) | ||
Forfeited (in shares) | (20,438) | ||
Ending balance (in shares) | 500,398 | ||
Weighted average grant date fair value | |||
Beginning balance (in USD per share) | $ 99.22 | ||
Granted (in dollars per share) | 120.77 | ||
Vested (in USD per share) | 98.19 | ||
Forfeited (in USD per share) | 98.98 | ||
Ending balance (in USD per share) | $ 110.52 | ||
Restricted Stock | |||
Number of shares | |||
Vested (in shares) | (175,047) | ||
PSUs | |||
Number of shares | |||
Beginning balance (in shares) | 152,410 | ||
Granted (in shares) | 62,388 | ||
Vested (in shares) | (16,834) | ||
Forfeited (in shares) | (33,542) | ||
Ending balance (in shares) | 164,422 | ||
Weighted average grant date fair value | |||
Beginning balance (in USD per share) | $ 108.41 | ||
Granted (in dollars per share) | 142.05 | ||
Vested (in USD per share) | 96 | ||
Forfeited (in USD per share) | 95.40 | ||
Ending balance (in USD per share) | $ 125.10 |
EQUITY (Details)
EQUITY (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 135 Months Ended | ||
Mar. 31, 2022USD ($)Vote / shares$ / sharesshares | Mar. 31, 2021USD ($)$ / sharesshares | Mar. 31, 2022USD ($)Vote / shares$ / sharesshares | Dec. 31, 2021$ / sharesshares | |
Common Stock | ||||
Common stock, shares authorized (in shares) | 325,000,000 | 325,000,000 | 325,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 108,369,053 | 108,369,053 | 108,159,319 | |
Common stock, shares outstanding (in shares) | 106,188,570 | 106,188,570 | 106,646,498 | |
Common stock, votes per share | Vote / shares | 1 | 1 | ||
Common Stock in Treasury, at Cost | ||||
Common stock held in Treasury (in shares) | 2,180,483 | 2,180,483 | 1,512,821 | |
Share Repurchase Program | ||||
Number of shares of common stock repurchased | 596,988 | 490,632 | 18,669,117 | |
Average price paid per share | $ / shares | $ 117.25 | $ 96.97 | $ 69.69 | |
Total purchase price | $ | $ 70 | $ 47.6 | $ 1,300 | |
Purchase of Common Stock from Employees | ||||
Stock repurchased from employee stock plans (in shares) | 70,674 | 59,202 | ||
Average price paid per share (in dollars per share) | $ / shares | $ 118.89 | $ 96.03 | ||
Preferred stock | ||||
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 | 20,000,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | |
Dividends | ||||
Cash dividends declared (in dollars per share) | $ / shares | $ 0.48 | 0.42 | ||
Cash dividends paid (in dollars per share) | $ / shares | $ 0.48 | $ 0.42 | ||
Aggregate payout | $ | $ 51.4 | $ 45.3 |
EQUITY - Share Repurchase Progr
EQUITY - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 135 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | |
Share Repurchase Program | |||
Number of shares of common stock repurchased | 596,988 | 490,632 | 18,669,117 |
Average price paid per share | $ 117.25 | $ 96.97 | $ 69.69 |
Total purchase price | $ 70 | $ 47.6 | $ 1,300 |
Availability remaining under existing share repurchase authorizations | $ 248.9 | $ 352.5 | $ 248.9 |
INCOME TAXES - Calculation of t
INCOME TAXES - Calculation of the Effective Tax Rate (Details) - case | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Nov. 29, 2018 | |
INCOME TAXES | |||
GAAP effective tax rate | 51.30% | ||
Tax effect of Section 199 related matters | (21.40%) | ||
Effective tax rate excluding Section 199 matters | 29.90% | 28.90% | |
Number of cases before the U.S. Tax Court | 2 | 3 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Basic and Diluted earnings per share numerator: | ||
Net income | $ 109.6 | $ 137.2 |
Earnings allocated to participating securities | (0.4) | (0.4) |
Net income allocated to common stockholders | $ 109.2 | $ 136.8 |
Basic earnings per share denominator: | ||
Weighted average shares outstanding (in shares) | 106.6 | 107.3 |
Basic earnings per share (in dollars per share) | $ 1.02 | $ 1.27 |
Diluted earnings per share denominator: | ||
Weighted average shares outstanding (in shares) | 106.6 | 107.3 |
Dilutive common shares issued under stock program (in shares) | 0.2 | 0.1 |
Total dilutive weighted average shares (in shares) | 106.8 | 107.4 |
Diluted earnings per share (in dollars per share) | $ 1.02 | $ 1.27 |
COMMITMENTS, CONTINGENCIES, A_2
COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Details) $ in Millions | Sep. 28, 2018claim | Mar. 31, 2022USD ($) | Apr. 18, 2014item |
Loss Contingencies | |||
2022 | $ 14 | ||
2023 | 14 | ||
2024 | 14 | ||
2025 | 14 | ||
2026 | $ 14 | ||
City of Providence | Pending Litigation | |||
Loss Contingencies | |||
The number of other securities exchanges a lawsuit has been filed against | item | 14 | ||
VIX Litigation | Pending Litigation | |||
Loss Contingencies | |||
Number of Commodity Exchange Act claims | claim | 3 |
LEASES (Details)
LEASES (Details) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Oct. 31, 2021USD ($)ft² | May 31, 2021USD ($)ft² | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | |
Leases | ||||
Options to renew | true | |||
Total leased liabilities | $ 158.2 | $ 144.8 | ||
Additional right of use assets | 14.8 | |||
Additional operating lease liabilities | $ 14.8 | |||
Minimum | ||||
Leases | ||||
Renewal term | 1 year | |||
Maximum | ||||
Leases | ||||
Renewal term | 5 years | |||
Option to terminate period | 1 year | |||
Office space In London | ||||
Leases | ||||
Area of office space leased | ft² | 21,000 | |||
Initial term | 69 months | |||
Renewal term | 60 months | |||
Total leased liabilities | $ 9.5 | |||
Office space in Amsterdam | ||||
Leases | ||||
Area of office space leased | ft² | 29,500 | |||
Total leased liabilities | $ 9.2 | |||
Initial term of lease | 120 months | |||
Renewal Term | 60 months |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
LEASES. | ||
Operating lease right of use assets | $ 122.5 | $ 110.1 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | |
Accrued liabilities | $ 16.9 | 15.6 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accounts Payable and Accrued Liabilities, Current | |
Non-current operating lease liabilities | $ 141.3 | 129.2 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Non-current operating lease liabilities | |
Total lease liabilities | $ 158.2 | $ 144.8 |
LEASES - Lease Costs and Other
LEASES - Lease Costs and Other Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
LEASES. | ||
Operating lease costs | $ 7.4 | $ 6.2 |
Weighted average remaining lease term (years) | 10 years 8 months 12 days | 11 years 10 months 24 days |
Weighted average discount rate | 3.10% | 3.40% |
Cash paid for amounts included in the measurement of lease liabilities | $ 5.3 | $ 4.1 |
Right-of-use assets obtained in exchange for lease liabilities | $ 14.8 | $ 1 |
LEASES - Maturities (Details)
LEASES - Maturities (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Maturities of Lease Liabilities | ||
Remainder of 2022 | $ 15.2 | |
2023 | 21 | |
2024 | 16.1 | |
2025 | 15.2 | |
2026 | 16.2 | |
After 2026 | 105.1 | |
Total lease payments | 188.8 | |
Less: Interest | (30.6) | |
Present value of lease liabilities | 158.2 | $ 144.8 |
Minimum lease payments related to option to extend term | $ 20.4 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions | Apr. 27, 2022USD ($) |
Subsequent Event | Term Loan Agreement | |
Subsequent Events | |
Committed loan notice to borrow | $ 190 |