Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 14, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2019 | ||
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 | 400 South LaSalle Street | ||
Entity Address, City or Town | Chicago | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60605 | ||
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 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Security Exchange Name | CboeBZX | ||
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 | 110,435,193 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001374310 | ||
Amendment Flag | false | ||
Entity Public Float | $ 11.5 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 229.3 | $ 275.1 |
Financial investments | 71 | 35.7 |
Accounts receivables, net | 234.7 | 287.3 |
Income taxes receivable | 56.8 | 70.4 |
Other current assets | 15.8 | 15.2 |
Total Current Assets | 607.6 | 683.7 |
Investments | 61.2 | 86.2 |
Land | 4.9 | |
Property and equipment, net | 47 | 71.7 |
Property held for sale | 21.1 | |
Operating lease right of use assets | 53.4 | |
Goodwill | 2,682.1 | 2,691.4 |
Intangible assets, net | 1,589.9 | 1,720.2 |
Other assets, net | 51.6 | 62.9 |
Total Assets | 5,113.9 | 5,321 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 171.9 | 198.5 |
Section 31 fees payable | 99 | 81.1 |
Deferred revenue | 4.5 | 8.5 |
Income taxes payable | 4 | 4.1 |
Current portion of long-term debt | 299.8 | |
Contingent consideration liability | 2.2 | 3.9 |
Total Current Liabilities | 281.6 | 595.9 |
Long-term debt | 867.6 | 915.6 |
Income tax liability | 135.9 | 114.9 |
Deferred income taxes | 399.7 | 436.8 |
Non-current operating lease liabilities | 46.7 | |
Other non-current liabilities | 26.8 | 7.4 |
Total Liabilities | 1,758.3 | 2,070.6 |
Commitments and Contingencies | ||
Redeemable Noncontrolling Interest | 9.4 | |
Stockholders' Equity: | ||
Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and outstanding at December 31, 2019 and December 31, 2018 | ||
Common stock, $0.01 par value: 325,000,000 shares authorized, 125,701,889 and 110,656,892 shares issued and outstanding, respectively at December 31, 2019 and 125,080,496 and 111,601,976 shares issued and outstanding, respectively at December 31, 2018 | 1.2 | 1.2 |
Common stock in treasury, at cost, 15,044,997 shares at December 31, 2019 and 13,478,520 shares at December 31, 2018 | (887.1) | (720.1) |
Additional paid-in capital | 2,691.3 | 2,660.2 |
Retained earnings | 1,512.6 | 1,288.2 |
Accumulated other comprehensive income, net | 37.6 | 11.5 |
Total Stockholders' Equity | 3,355.6 | 3,241 |
Total Liabilities, Redeemable Noncontrolling Interest, and Stockholders' Equity | $ 5,113.9 | $ 5,321 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets | ||
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) | 125,701,889 | 125,080,496 |
Common stock, shares outstanding (in shares) | 110,656,892 | 111,601,976 |
Common stock held in Treasury (in shares) | 15,044,997 | 13,478,520 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | |||
Total revenues | $ 2,496.1 | $ 2,768.8 | $ 2,229.1 |
Cost of revenues: | |||
Total cost of revenues | 1,359.2 | 1,551.9 | 1,233.5 |
Revenues less cost of revenues | 1,136.9 | 1,216.9 | 995.6 |
Operating expenses: | |||
Compensation and benefits | 199 | 228.8 | 201.4 |
Depreciation and amortization | 176.6 | 204 | 192.2 |
Technology support services | 46.2 | 47.9 | 42.1 |
Professional fees and outside services | 68.3 | 68.3 | 66 |
Travel and promotional expenses | 11.9 | 13 | 17.2 |
Facilities costs | 11 | 11.5 | 10.3 |
Acquisition-related costs | 48.5 | 30 | 84.4 |
Other expenses | 38.2 | 14 | 10.1 |
Total operating expenses | 599.7 | 617.5 | 623.7 |
Operating income | 537.2 | 599.4 | 371.9 |
Non-operating (expenses) income: | |||
Interest expense, net | (35.9) | (38.2) | (41.3) |
Other income, net | 0.1 | 10 | 3.8 |
Income before income tax provision (benefit) | 501.4 | 571.2 | 334.4 |
Income tax provision (benefit) | 130.6 | 146 | (66.2) |
Net income | 370.8 | 425.2 | 400.6 |
Net loss attributable to noncontrolling interest | 4.1 | 1.3 | 1.1 |
Net income excluding noncontrolling interest | 374.9 | 426.5 | 401.7 |
Change in redemption value of noncontrolling interest | (0.5) | (1.3) | (1.1) |
Net income allocated to participating securities | (1.7) | (3.1) | (3.9) |
Net income allocated to common stockholders | $ 372.7 | $ 422.1 | $ 396.7 |
Basic earnings per share (in dollars per share) | $ 3.35 | $ 3.78 | $ 3.70 |
Diluted earnings per share (in dollars per share) | $ 3.34 | $ 3.76 | $ 3.69 |
Basic weighted average shares outstanding (in shares) | 111.4 | 111.8 | 107.2 |
Diluted weighted average shares outstanding (in shares) | 111.8 | 112.2 | 107.5 |
Transaction fees | |||
Revenues: | |||
Total revenues | $ 1,716.2 | $ 1,986.9 | $ 1,564.9 |
Access and capacity fees | |||
Revenues: | |||
Total revenues | 221.9 | 211 | 181.6 |
Market data fees | |||
Revenues: | |||
Total revenues | 213.5 | 204 | 164.5 |
Regulatory fees | |||
Revenues: | |||
Total revenues | 311.7 | 333.9 | 291.5 |
Other revenue | |||
Revenues: | |||
Total revenues | 32.8 | 33 | 26.6 |
Liquidity payments | |||
Cost of revenues: | |||
Total cost of revenues | 964.7 | 1,113 | 849.7 |
Routing and clearing | |||
Cost of revenues: | |||
Total cost of revenues | 35.8 | 39.1 | 37.6 |
Section 31 fees | |||
Cost of revenues: | |||
Total cost of revenues | 271.4 | 302.4 | 260 |
Royalty fees | |||
Cost of revenues: | |||
Total cost of revenues | 86.8 | $ 97.4 | $ 86.2 |
Other | |||
Cost of revenues: | |||
Total cost of revenues | $ 0.5 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 370.8 | $ 425.2 | $ 400.6 |
Other comprehensive (loss) income, before tax: | |||
Foreign currency translation adjustments | 26.1 | (39.2) | 51.3 |
Unrealized holding gains on available-for-sale investments | 0.2 | ||
Comprehensive income | 396.9 | 386 | 452.1 |
Comprehensive loss attributable to noncontrolling interest | 4.1 | 1.3 | 1.1 |
Comprehensive income excluding noncontrolling interest | 401 | 387.3 | 453.2 |
Change in redemption value of noncontrolling interest | (0.5) | (1.3) | (1.1) |
Comprehensive income allocated to participating securities | (1.7) | (3.1) | (3.9) |
Comprehensive income allocated to common stockholders, net of tax | $ 398.8 | $ 382.9 | $ 448.2 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholder's Equity - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income, net | Redeemable Noncontrolling Interests | Total |
Beginning balance at Dec. 31, 2016 | $ 900,000 | $ (532,200,000) | $ 139,200,000 | $ 710,800,000 | $ (800,000) | $ 12,600,000 | $ 317,900,000 |
Increase (Decrease) in Stockholders' Equity | |||||||
Cash dividends on common stock | (118,100,000) | (118,100,000) | |||||
Stock-based compensation | 52,600,000 | 52,600,000 | |||||
Exercise of common stock options | 4,000,000 | 4,000,000 | |||||
Issuance of vested restricted stock granted to employees | 300,000 | 300,000 | |||||
Issuance of stock for acquisition of Bats Global Markets, Inc. | 300,000 | 2,424,400,000 | 2,424,700,000 | ||||
Shares issued under employee stock purchase plan | (26,100,000) | (26,100,000) | |||||
Net income excluding noncontrolling interest | 401,700,000 | 401,700,000 | |||||
Purchase of additional equity interest from noncontrolling interest | 3,200,000 | (3,200,000) | 3,200,000 | ||||
Other comprehensive income (loss) | 51,500,000 | 51,500,000 | |||||
Net loss attributable to redeemable noncontrolling interest | (1,100,000) | ||||||
Redemption value adjustment of redeemable noncontrolling interest | (1,100,000) | 1,100,000 | (1,100,000) | ||||
Ending balance at Dec. 31, 2017 | 1,200,000 | (558,300,000) | 2,623,700,000 | 993,300,000 | 50,700,000 | 9,400,000 | 3,110,600,000 |
Increase (Decrease) in Stockholders' Equity | |||||||
Cash dividends on common stock | (130,300,000) | (130,300,000) | |||||
Stock-based compensation | 35,100,000 | 35,100,000 | |||||
Common stock repurchased from employee stock plans | (20,900,000) | 1,400,000 | (19,500,000) | ||||
Purchase of common stock | (140,900,000) | (140,886,284) | |||||
Net income excluding noncontrolling interest | 426,500,000 | 426,500,000 | |||||
Other comprehensive income (loss) | (39,200,000) | (39,200,000) | |||||
Net loss attributable to redeemable noncontrolling interest | (1,300,000) | ||||||
Redemption value adjustment of redeemable noncontrolling interest | (1,300,000) | 1,300,000 | (1,300,000) | ||||
Ending balance at Dec. 31, 2018 | 1,200,000 | (720,100,000) | 2,660,200,000 | 1,288,200,000 | 11,500,000 | 9,400,000 | 3,241,000,000 |
Increase (Decrease) in Stockholders' Equity | |||||||
Cash dividends on common stock | (150,000,000) | (150,000,000) | |||||
Stock-based compensation | 21,800,000 | 21,800,000 | |||||
Exercise of common stock options | 9,300,000 | 9,300,000 | |||||
Common stock repurchased from employee stock plans | (11,000,000) | (11,000,000) | |||||
Purchase of common stock | (156,900,000) | (156,871,476) | |||||
Shares issued under employee stock purchase plan | 900,000 | 900,000 | |||||
Net income excluding noncontrolling interest | 374,900,000 | 374,900,000 | |||||
Other comprehensive income (loss) | 26,100,000 | 26,100,000 | |||||
Net loss attributable to redeemable noncontrolling interest | (4,100,000) | ||||||
Redemption value adjustment of redeemable noncontrolling interest | (500,000) | 500,000 | (500,000) | ||||
Deconsolidation of former subsidiary with noncontrolling interest | $ (5,800,000) | ||||||
Ending balance at Dec. 31, 2019 | $ 1,200,000 | $ (887,100,000) | $ 2,691,300,000 | $ 1,512,600,000 | $ 37,600,000 | $ 3,355,600,000 |
Consolidated Statement of Cha_2
Consolidated Statement of Changes in Stockholder's Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Changes in Stockholders' Equity | |||
Dividends (in dollars per share) | $ 1.34 | $ 1.16 | $ 1.04 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | |||
Net income | $ 370.8 | $ 425.2 | $ 400.6 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 176.6 | 204 | 192.2 |
Amortization of debt issuance cost | 2.2 | 2.5 | 3.6 |
Change in fair value of contingent consideration | 2.6 | 3.9 | 1 |
Realized gain on available-for-sale securities | (1.3) | (1.4) | (0.4) |
Provision for uncollectable accounts receivable | 1 | ||
Provision for uncollectable convertable notes receivable | 3.8 | ||
Provision for deferred income taxes | (37.2) | (47.7) | (238.4) |
Stock-based compensation expense | 21.8 | 35.1 | 52.6 |
Loss on disposition of property | 4.4 | 1 | |
Impairment of assets held for sale | 6.1 | ||
Loss related to deconsolidation of former subsidiary | 2 | ||
Impairment of goodwill | 10.5 | ||
Provision for uncollectable notes receivable | 23.4 | ||
Impairment of data processing software | 14.9 | ||
Equity in investments | (2.2) | (1.1) | (1.4) |
Changes in assets and liabilities: | |||
Accounts receivable | 50.3 | (70.3) | (20.6) |
Income taxes receivable | 13.5 | (53.2) | 42 |
Other prepaid expenses | (16.9) | (15.8) | (7.3) |
Accounts payable and accrued liabilities | (25.7) | 46.8 | 10.3 |
Section 31 fees payable | 17.9 | (24.5) | (42.4) |
Deferred revenue | (4.1) | (7) | 7.8 |
Income taxes payable | 0.1 | 0.4 | (50.5) |
Income tax liability | 21 | 36.1 | 6.3 |
Other liabilities | (4) | 0.7 | 0.3 |
Net Cash Flows provided by Operating Activities | 632.8 | 534.7 | 374.4 |
Cash Flows from Investing Activities: | |||
Acquisitions, net of cash acquired | (1,414.1) | ||
Purchases of available-for-sale financial investments | (108.8) | (166.2) | (136) |
Proceeds from maturities of available-for-sale financial investments | 98 | 178.7 | 155.1 |
Return of capital from investments | 30 | ||
Purchases of investments | (1.8) | (4) | |
Purchases of property and equipment | (35.1) | (36.3) | (37.5) |
Net Cash Flows used in Investing Activities | (15.9) | (25.6) | (1,436.5) |
Cash Flows from Financing Activities: | |||
Proceeds from long-term debt | 300 | 1,943.9 | |
Principal payments of long term debt | (350) | (325) | (700) |
Proceeds from credit facility | 39 | ||
Payments of credit facility | (39) | ||
Debt issuance costs | (2) | ||
Dividends paid | (150) | (130.3) | (118.1) |
Purchase of unrestricted stock from employees | (11) | (20.9) | (26.1) |
Proceeds from exercise of stock-based compensation | 9.3 | 2.1 | 2 |
Payment of contingent consideration in conjunction with acquisition of a business | (4.3) | (56.6) | |
Purchase of common stock under announced program | (156.9) | (140.9) | |
Net Cash Flows (used in) provided by Financing Activities | (662.9) | (371.6) | 1,099.7 |
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash equivalents | 0.2 | (5.9) | 8.6 |
(Decrease) Increase in Cash and Cash Equivalents | (45.8) | 131.6 | 46.2 |
Cash and Cash Equivalents: Beginning of Period | 275.1 | 143.5 | 97.3 |
Cash and Cash Equivalents: End of Period | 229.3 | 275.1 | 143.5 |
Supplemental disclosure of cash transactions: | |||
Cash paid for income taxes | 134.9 | 213.4 | 177.4 |
Interest paid | 32.7 | $ 38.7 | 27 |
Supplemental disclosure of noncash transactions: | |||
Forfeiture of common stock for payment of exercise of stock options | 3.7 | ||
Supplemental disclosure of noncash investing activities: | |||
Accounts receivable acquired | 117.8 | ||
Financial investments acquired | 66 | ||
Property and equipment acquired | 21.8 | ||
Goodwill acquired | 2,653.3 | ||
Intangible assets acquired | 2,000 | ||
Other assets acquired | 32.8 | ||
Accounts payable and accrued expenses assumed | (59.9) | ||
Section 31 fees payable acquired | (143.6) | ||
Deferred tax liability acquired | (722.6) | ||
Other liabilities assumed | (135.5) | ||
Issuance of common stock related to acquisition | $ (2,424.7) | ||
Note receivable issued in connection with deconsolidation of former subsidiary | 3.7 | ||
Investment recognized in connection with deconsolidation of former subsidiary | 2.9 | ||
Net assets of former subsidiary deconsolidated | $ 14.5 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2019 | |
NATURE OF OPERATIONS | |
NATURE OF OPERATIONS | 1. NATURE OF OPERATIONS Cboe Global Markets, Inc. (“Cboe” or “the Company”) is one of the world’s largest exchange holding companies, offering cutting-edge trading and investment solutions to investors around the world. The Company is committed to defining markets to benefit its participants and drive the global marketplace forward through product innovation, leading edge technology and seamless trading solutions. Cboe offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, U.S. and European equities, exchange-traded products (“ETPs”), global foreign exchange (“FX”) and multi-asset volatility products based on the VIX Index, recognized as the world’s premier gauge of U.S. equity market volatility. 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 equities stock exchanges by value traded in Europe and is a leading market globally for ETP listings and trading. The Company is headquartered in Chicago with offices in Kansas City, New York, London, San Francisco, Amsterdam, Singapore, Hong Kong, and Ecuador. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles of Accounting These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) as established by FASB. (b) Basis of Presentation The accompanying financial statements are presented on a consolidated basis to include the accounts and transactions of Cboe Global Markets, Inc. and its majority owned subsidiaries and all significant intercompany accounts and transactions have been eliminated. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, valuation of redeemable noncontrolling interest and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates based upon historical experience, observance of trends, information available from outside sources and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. For those consolidated subsidiaries in which the Company’s ownership is less than 100% and for which the Company has control over the assets and liabilities and the management of the entity, the outside stockholders’ interests are shown as non-controlling interest. Segment information The Company has five business segments: Options, U.S. Equities, Futures, European Equities, and Global FX, which is reflective of how the Company’s chief operating decision-maker reviews and operates the business. See Note 17 (“Segment Reporting”) for more information. (c) Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of the amounts of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of goodwill, indefinite-lived intangible assets, and unrecognized tax benefits. (d) Cash and Cash Equivalents The Company’s cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains cash at various financial institutions and brokerage firms which, at times, may be in excess of the federal depository insurance limit. The Company’s management regularly monitors these institutions and believes that the potential for future loss is remote. The Company considers all liquid investments with original or acquired maturities of three months or less to be cash equivalents. (e) Financial Investments Financial investments are classified as trading or available-for-sale. Trading financial investments represent financial investments held by the Company’s broker-dealer subsidiary that retain the industry-specific accounting classification required for broker-dealers and marketable securities held in a rabbi trust for the Company’s non-qualified retirement and benefit plans. The investments held by the broker-dealer subsidiary are recorded at fair value with changes in unrealized gains and losses reflected within interest expense, net in the consolidated statements of income. The investments held in a rabbi trust are recorded at fair value with changes in unrealized gains or losses recorded within other income (expense) and the equal and offsetting charges in the related liability are recorded in compensation and benefits expense in the consolidated statements of income. Available-for-sale financial investments are comprised of the financial investments not held by the broker-dealer subsidiary, including highly liquid U.S. Treasury securities. Unrealized gains and losses, net of income taxes, are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. Interest on financial investments, including amortization of premiums and accretion of discounts, is recognized as income when earned. Realized gains and losses on financial investments are calculated using the specific identification method and are included in interest expense, net in the accompanying consolidated statements of income. A decline in the fair value of any available-for-sale investment below carrying amount that is deemed to be other-than-temporary results in an impairment to reduce the carrying amount to realizable value. To determine whether an impairment is other-than-temporary, the Company considers all available information relevant to the collectability of the investment, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates. (f) Accounts Receivable, Net Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried at cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis and recognizes the total owed from a member firm as an asset and the total owed to a member firm as a liability. On a periodic basis, management evaluates the Company’s receivables and determines an appropriate allowance for uncollectible accounts receivable based on anticipated collections. In circumstances where a specific customer’s inability to meet its financial obligations is probable, the Company records a specific provision for uncollectible accounts against amounts due to reduce the receivable to the amount the Company estimates will be collected. Once the Company determines an allowance for an uncollectible account is necessary, interest on the receivable ceases to be accrued. (g) Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated lives of the assets, generally ranging from three Long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. The Company bases this evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present that would indicate that the carrying amount of any asset may not be recoverable, the Company determines whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. In the event of impairment, the Company recognizes a loss for the difference between the carrying amount and the estimated value of the asset as measured using quoted market prices or, in the absence of quoted market prices, a discounted cash flow analysis. The Company expenses software development costs as incurred during the preliminary project stage, while capitalizing costs incurred during the application development stage, which includes design, coding, installation and testing activities. (h) Goodwill and Intangible Assets, Net Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of a business acquired. Goodwill is allocated to the Company’s reporting units based on the assignment of the fair values of each reporting unit of the acquired company. The Company tests goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying value may be impaired. The impairment test is performed during the fourth quarter using October 1 st no Intangible assets, net, primarily include acquired trademarks and trade names, customer relationships, strategic alliance agreements, licenses and registrations and non-compete agreements. Intangible assets with finite lives are amortized based on the discounted cash flow method applied over the estimated useful lives of the intangible assets and are tested for impairment if certain events occur indicating that the carry value may be impaired. Intangible assets deemed to have indefinite useful lives are not amortized, but instead are tested for impairment at least annually, usually concurrently with goodwill. Impairment exists if the fair value of the asset is less than the carrying amount, and in that case, an impairment loss is recorded. The Company performed its 2019 annual intangible assets impairment test using October 1, 2019 carrying values and determined that no impairment existed. (i) Foreign Currency The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated into U.S. dollars using the exchange rate in effect as of each balance sheet date. Statements of income and cash flow amounts are translated using the average exchange rate during the period. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at the applicable exchange rates are included in accumulated other comprehensive income (loss), net in the balance sheet. Foreign currency gains and losses are recorded as other income, net in the consolidated statements of income. The Company’s operations in the United Kingdom, Singapore, and Hong Kong are recorded in Pounds sterling, Singapore dollars, and Hong Kong dollars, respectively. (j) Income Taxes Deferred taxes are recorded on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense is recognized on the full amount of deferred benefits for uncertain tax positions. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in the income tax provision within the consolidated statements of income. We have elected to account for global intangible low-taxed income (“GILTI”) in the period in which it is incurred, and therefore, have not provided any deferred tax impacts of GILTI in our consolidated financial statements. (k) Revenue Recognition For further discussion related to revenue recognition of fees, such as transaction fees and liquidity payments, access and capacity fees, market data fees, and regulation transaction and Section 31 fees, see Note 4 (“Revenue Recognition”). Concentrations of Revenue and Liquidity Payments For the years ended December 31, 2019, 2018, and 2017, two members accounted for 18%, 23%, and 17%, respectively, of the Company’s transaction fees. No member accounted for more than 15% of the Company’s total revenue during the years ended December 31, 2019, 2018, and 2017. For the years ended December 31, 2019, 2018, and 2017, No member is contractually or otherwise obligated to continue to use the Company’s services. The loss of, or a significant reduction of, participation by these members may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows. The two largest clearing members mentioned above clear the majority of the market-maker sides of transactions at all of the Company’s U.S. options exchanges. If either of these clearing members were to withdraw from the business of market-maker clearing and market-makers were unable to transfer to another clearing member, this could create significant disruption to the U.S. options markets, including ours. (l) Earnings Per Share The computation of basic earnings per share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders. The computation of diluted earnings per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method. (m) Stock-Based Compensation The Company grants stock-based compensation to its employees through awards of restricted stock units. In connection with the acquisition of Bats, Bats previously awarded stock options and restricted stock awards. The Company records stock-based compensation expense for all stock-based compensation granted based on the grant-date fair value. The Company recognizes stock-based compensation expense related to stock-based compensation awards with graded vesting that have a service condition on a straight-line basis over the requisite service period of the entire award. In connection with the acquisition of Bats, as discussed in Note 20 (“Stock-Based Compensation’) in further detail, each outstanding Bats stock option granted under any of the Bats Plans that was outstanding immediately prior to the effective time of the acquisition of Bats was converted into an option to purchase our common stock, on the same terms and conditions (including vesting schedule) as were applicable to such Bats stock option. All stock options are currently vested. In addition, each award of Bats restricted shares granted under any of the Bats Plans that was unvested immediately prior to the effective time of the acquisition of Bats was assumed by the Company and converted into an award of restricted shares of our common stock, subject to the same terms and conditions (including vesting schedule) that applied to the applicable Bats restricted shares. The amount of stock-based compensation expense related to awards of restricted stock and restricted stock units is based on the fair value of Cboe Global Markets, Inc. common stock at the date of grant. The fair value is based on a current market-based transaction of the Company’s common stock. If a market-based transaction of the Company’s common stock is not available, then the fair value is based on an independent third-party valuation using equal weighting of two valuation analysis techniques, discounted cash flows and valuation multiples observed from publicly traded companies in a similar industry. (n) Business Combinations The Company records identifiable assets, liabilities and goodwill acquired in a business combination at fair value at the acquisition date. Additionally, transaction-related costs are expensed in the period incurred. (o) Debt Issuance Costs All costs incurred to issue debt are capitalized as a contra-liability and amortized over the life of the loan using the interest method. (p) Cost and Equity Method Investments The Company uses the cost method to account for a non-marketable equity investment in an entity that it does not control and for which it does not have the ability to exercise significant influence over an entity’s operating and financial policies. When it does not have a controlling financial interest in an entity but can exercise significant influence over the entity's operating and financial policies, such investment is accounted for using the equity method. The Company recognizes dividend income when declared. In general, the equity method of accounting is used when the Company owns 20% to 50% of the outstanding voting stock of a company and when it is able to exercise significant influence over the operating and financial policies of a company. The Company has an investment where it has significant influence and as such accounts for the investments under the equity method of accounting. For equity method investments, the Company records the pro-rata share of earnings or losses each period and records any dividends received as a reduction in the investment balance. The equity method investment is evaluated for other-than-temporary declines in value by considering a variety of factors such as the earnings capacity of the investment and the fair value of the investment compared to its carrying amount. If the estimated fair value of the investment is less than the carrying amount and the decline in value is considered to be other than temporary, the excess of the carrying amount over the estimated fair value is recognized in the financial statements as an impairment. (q) Leases The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, operating leases are included in operating lease right of use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities on the balance sheet as of December 31, 2019. The Company does not have any finance leases as of December 31, 2019. ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. The Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the lease liabilities, as the rate implicit in the Company’s leases are generally not reasonably determinable. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s leases. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. For short-term operating leases, lease expense is recognized on a straight-line basis over the lease term. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2019 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements – Adopted In February 2016, the FASB issued ASU 2016-02, Leases. This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding ROU asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases ASU 2018-11, Leases (Topic 842) Targeted Improvements, ASU 2018-20, Leases (Topic 842) Narrow-Scope Improvements for Lessors, and ASU 2019-01, Leases (Topic 842) Codification Improvements, to clarify the implementation guidance. This updated guidance provides an optional transition method, which allows for the initial application of the new accounting standard at the adoption date and the recognition of a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the period of adoption. These updates are effective for annual and interim periods beginning after December 15, 2018. The Company adopted the new ASUs on January 1, 2019, using the alternative transition approach and will not restate comparative periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to not reassess contracts to determine if they contain leases, lease classification and initial direct costs. The Company’s application of the new standard resulted in changes to the balance sheet but did not have an impact on our consolidated income statements and statements of cash flows. See Note 25 (“Leases”) for more information. Recent Accounting Pronouncements - Issued, not yet Adopted In June 2016, the FASB issued ASU 2016-13, Credit Losses. This update replaces the incurred loss impairment methodology in current GAAP with a methodology that requires management to estimate an expected lifetime credit loss on financial assets. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees, and net investments in leases, as well as trade receivables. The update also amends the impairment model for available-for-sale debt securities. The forward-looking expected lifetime credit loss model generally will result in the earlier recognition of allowances for losses. For public entities, the update is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company adopted the new ASU on January 1, 2020 using the modified retrospective approach and will not restate comparative periods. Upon the adoption of the standard, the Company expects to recognize an immaterial cumulative-effect adjustment to retained earnings for the expected lifetime credit loss on the financial instruments within the scope of the standard, including accounts receivable, net. Based on the Company’s high turnover and collectability of accounts receivable, as well as the monthly billing process for the majority of revenue, the Company does not expect a significant variance in the recognized loss between the incurred loss impairment methodology under the prior standard and the expected lifetime credit loss model under the update. The financial instruments other than accounts receivable, net that are within the scope of the standard are not materially impacted by the standard. The impact to the consolidated balance sheets is expected to be immaterial in nature and there is no expected impact on the consolidated income statements and statements of cash flows. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For public entities, the update is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. The Company will adopt the update for the financial statements issued for the first quarter of 2020 and does not anticipate a material impact to the consolidated financial statements. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 4. REVENUE RECOGNITION The Company’s main types of revenue contracts are: ● Transaction fees - Transaction fees represent fees charged by the Company for the performance obligation of executing a trade on its markets. These fees can be variable based on trade volume tiered discounts, however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Transaction fees, as well as any tiered volume discounts, are calculated and billed monthly in accordance with the Company’s published fee schedules. Transaction fees are recognized across all segments. The Company also pays liquidity payments to customers based on its published fee schedules. The Company uses these payments to improve the liquidity on its markets and therefore recognizes those payments as a cost of revenue. ● 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. These fees are billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the performance obligation is met. Facilities, systems services and other fees are generally monthly fee-based, although certain services are influenced by trading volume or other defined metrics, while others are based solely on demand. All fees associated with the trading floor are recognized over time in the Options segment. There is no remaining performance obligation after revenue is recognized. This caption is a combination of the previous captions “access fees” and “exchange services and other fees” as the Company migrated all Exchanges to the Company’s current platform. The prior periods presented have been updated to conform to the current period presentation. ● 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 U.S. exchanges based on a known formula. A contract for proprietary market data is entered into and charged on a monthly basis in accordance with the Company’s published fee schedules as the service is provided. Both types of market data are satisfied over time, and revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the Company provides the data. U.S. tape plan market data is recognized in the U.S. 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. The fees charged to customers are based on the fee set by the SEC per notional value of the transaction executed on the Company’s U.S. securities markets. These fees are calculated and billed monthly and are recognized in the U.S. 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 and other miscellaneous regulatory fees and cannot be used for non-regulatory purposes. ● Other revenue - Other revenue primarily includes revenue from various licensing agreements, all fees related to the trade reporting facility operated in the European Equities segment, and revenue associated with advertisements through the Company’s website. All revenue recognized in the income statement is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line and segment (in millions): Corporate European items and Options U.S. Equities Futures Equities Global FX eliminations Total Year Ended December 31, 2019 Transaction fees $ 742.9 $ 744.6 $ 110.2 $ 73.1 $ 45.4 $ — $ 1,716.2 Access and capacity fees 104.1 78.9 15.6 16.5 6.8 — 221.9 Market data fees 55.7 138.1 6.5 12.6 0.6 — 213.5 Regulatory fees 64.0 247.0 0.7 — — — 311.7 Other revenue 16.4 4.5 2.9 8.6 0.2 0.2 32.8 983.1 1,213.1 135.9 110.8 53.0 0.2 2,496.1 Timing of revenue recognition Services transferred at a point in time $ 823.3 $ 996.1 $ 113.8 $ 81.7 $ 45.6 $ 0.2 $ 2,060.7 Services transferred over time 159.8 217.0 22.1 29.1 7.4 — 435.4 983.1 1,213.1 135.9 110.8 53.0 0.2 2,496.1 Year Ended December 31, 2018 Transaction fees $ 835.5 $ 876.4 $ 128.0 $ 97.4 $ 49.6 $ — $ 1,986.9 Access and capacity fees 99.4 75.6 15.1 14.7 6.2 — 211.0 Market data fees 42.9 140.9 6.6 13.1 0.5 — 204.0 Regulatory fees 60.0 273.8 0.1 — — — 333.9 Other revenue 19.7 6.4 — 6.4 0.1 0.4 33.0 1,057.5 1,373.1 149.8 131.6 56.4 0.4 2,768.8 Timing of revenue recognition Services transferred at a point in time $ 915.2 $ 1,156.6 $ 128.1 $ 103.8 $ 49.7 $ 0.4 $ 2,353.8 Services transferred over time 142.3 216.5 21.7 27.8 6.7 — 415.0 1,057.5 1,373.1 149.8 131.6 56.4 0.4 2,768.8 Year Ended December 31, 2017 Transaction fees $ 673.8 $ 659.4 $ 131.7 $ 66.2 $ 33.8 $ — $ 1,564.9 Access and capacity fees 97.3 60.5 9.1 10.6 4.1 — 181.6 Market data fees 41.1 111.0 2.5 9.6 0.3 — 164.5 Regulatory fees 55.4 236.1 — — — — 291.5 Other revenue 15.9 5.5 1.3 3.2 — 0.7 26.6 883.5 1,072.5 144.6 89.6 38.2 0.7 2,229.1 Timing of revenue recognition Services transferred at a point in time $ 745.1 $ 901.0 $ 133.0 $ 69.4 $ 33.8 $ 0.7 $ 1,883.0 Services transferred over time 138.4 171.5 11.6 20.2 4.4 — 346.1 883.5 1,072.5 144.6 89.6 38.2 0.7 2,229.1 Contract liabilities as of December 31, 2019 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 January 1, 2019 Cash Additions Revenue Recognized Balance at December 31, 2019 Liquidity provider sliding scale (1) $ — $ 9.6 $ (9.6) $ — Other, net 8.5 31.7 (35.7) 4.5 Total deferred revenue $ 8.5 $ 41.3 $ (45.3) $ 4.5 (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 | 12 Months Ended |
Dec. 31, 2019 | |
ACQUISITIONS | |
ACQUISITIONS | 5. ACQUISITIONS Bats Global Markets, Inc. On February 28, 2017, pursuant to the Agreement and Plan of Merger, dated as of September 25, 2016 (the “Merger Agreement”), by and among Cboe, Bats, CBOE Corporation, a Delaware corporation and a wholly-owned subsidiary of Cboe (“Merger Sub”), and Cboe Bats, LLC (formerly CBOE V, LLC), a Delaware limited liability company and a wholly-owned subsidiary of Cboe (“Merger LLC”), Cboe completed the merger of Merger Sub with and into Bats and the subsequent merger of Bats with and into Merger LLC. As a result of the Merger, Bats became a wholly-owned subsidiary of Cboe. Other Acquisitions In January 2016, the Company, through its subsidiary Cboe Vest, LLC (“Cboe Vest”), acquired a majority of the outstanding equity of Vest, an asset investment manager focused on Target Outcome Investment strategies. The purchase price consisted of $18.9 million in cash, reflecting payments of $14.9 million to former stockholders and $4.0 million to Vest for newly issued shares, and represented an ownership interest of 60% resulting in the consolidation of Vest operations. The remaining 40% noncontrolling interest was held by the remaining Vest stockholders. The remaining Vest stockholders had a put option that could have been exercised to Vest and Vest had a call option that could have been exercised to the remaining stockholders. The put and call options could have been exercised after five years though they could have been accelerated by certain employment-related actions. The combination of the noncontrolling interest and a redemption feature resulted in a redeemable noncontrolling interest, which was classified outside of permanent equity on the consolidated balance sheet. The Company’s ownership interest decreased in August 2019 which resulted in the deconsolidation of Vest operations and the elimination of the redeemable noncontrolling interest. See Note 7 (“Investments”) for further information on the deconsolidation and Note 16 (“Redeemable Noncontrolling Interest”) for further information on the redeemable noncontrolling interest. In November 2017, the Company completed the acquisition of assets of Silexx Financial Systems, LLC (Silexx) for $9.0 million in cash. Silexx is a developer and operator of a multi-asset order and execution management system. Of the purchase price, $6.7 million was allocated to goodwill, $2.1 million was allocated to intangible assets, and $0.2 million was allocated to working capital. Silexx is included in the Options segment. The Company expensed $48.5 million of acquisition-related costs during the year ended December 31, 2019 that included $19.3 million of compensation-related costs, $10.5 million of impairment of goodwill charges, $6.1 million of impairment of facilities charges, $4.5 million loss on disposal of data processing software, $3.9 million of professional fees, $2.2 million of termination fees related to an assigned lease agreement, and $2.0 million of general and administrative expenses. These expenses relate to Bats and other acquisitions, and are included in acquisition-related costs in the consolidated statements of income. The Company expensed $30.0 million of acquisition-related costs during the year ended December 31, 2018 that included $23.6 million of compensation-related costs, $2.7 million of stock based compensation, $3.0 million of professional fees, and $0.6 million of general and administrative expenses. These expenses relate to Bats and other acquisitions, and are included in acquisition-related costs in the consolidated statements of income. The Company expensed $84.4 million of acquisition-related costs during the year ended December 31, 2017 that included $44.2 million of compensation-related costs, $24.4 million of professional fees, $14.9 million of an impairment of capitalized data processing software, and $0.9 million of facilities expenses. These expenses relate to Bats and other acquisitions, and are included in acquisition-related costs in the consolidated statements of income. |
SEVERANCE
SEVERANCE | 12 Months Ended |
Dec. 31, 2019 | |
SEVERANCE | |
SEVERANCE | 6. SEVERANCE Subsequent to the Bats acquisition, the Company determined that certain employees' positions were redundant. As such, the Company communicated employee termination benefits to these employees. The following is a summary of the employee termination benefits recognized within compensation and benefits in the consolidated statements of income (in millions): Employee Termination Benefits Balance at December 31, 2018 $ 6.1 Termination benefits accrued 10.7 Termination payments made (10.1) Balance at December 31, 2019 $ 6.7 |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENTS | |
INVESTMENTS | 7. INVESTMENTS As of December 31, 2019 and 2018, the Company's investments were comprised of the following (in millions): As of December 31, 2019 2018 Equity method investments: Investment in Signal Trading Systems, LLC $ 12.6 $ 12.4 Investment in EuroCCP 10.3 9.3 Total equity method investments 22.9 21.7 Cost method investments: Investment in OCC 0.3 30.3 Investment in Eris Exchange Holdings, LLC 20.8 20.0 Investment in American Financial Exchange, LLC 8.6 5.9 Investment in Cboe Vest Financial Group, Inc. 2.9 — Other cost method investments 5.7 8.3 Total cost method investments 38.3 64.5 Total investments $ 61.2 $ 86.2 Equity Method Investments Equity method investments include investments in Signal Trading Systems, LLC, a 50% joint venture with FlexTrade System, Inc. to develop and market a multi-asset front-end order entry system, and EuroCCP, a Dutch domiciled clearing house. EuroCCP is one of three interoperable central counterparties, or CCPs, used to clear trades conducted on Cboe Europe Limited’s and Cboe Europe NL’s markets. Cboe Europe Limited owns 20% of EuroCCP and can exercise significant influence over the entity as an equal shareholder with four other investors. Cost Method Investments The carrying amount of cost method investments totaled $38.3 million and $64.5 million as of December 31, 2019 and 2018, respectively, and is included in investments in the consolidated balance sheets. The Company accounts for these investments using the measurement alternative primarily as a result of the Company's inability to exercise significant influence as the Company is a smaller shareholder of these investments and the lack of readily determinable fair values. As of December 31, 2019, cost method investments primarily reflect a 20% investment in OCC and minority investments in American Financial Exchange, LLC, CurveGlobal, Vest, and Eris Exchange Holdings, LLC. In December 2014, OCC announced a newly-formed capital plan, under which each of OCC's existing exchange stockholders agreed to contribute its pro-rata share, based on ownership percentage, of $150 million in equity capital, which would increase OCC's shareholders' equity, and to provide its pro rata share in replenishment capital, up to a maximum of $40 million per exchange stockholder, if certain capital thresholds were to be breached. OCC also adopted policies under the plan with respect to fees, customer refunds, and stockholder dividends, which envisioned an annual dividend payment to the exchange stockholders. On March 3, 2015, in accordance with the plan, Cboe Options contributed $30 million to OCC. That contribution was recorded under investments in the consolidated balance sheets as of December 31, 2018. In 2019 The SEC initially issued a notice of no objection to OCC’s advance notice filing regarding the capital plan and subsequently approved OCC’s proposed rule filing for the capital plan, but certain petitioners appealed the SEC approval order to the U.S. Court of Appeals for the D.C. Circuit. The court ultimately remanded the matter to the SEC, and on February 13, 2019, the SEC issued an order disapproving the proposed rule change implementing OCC’s capital plan. In an effort to achieve compliance with its target capital requirements in the absence of an approved capital plan, OCC has (i) retained funds that otherwise would have been paid to stockholders as dividends and to clearing members as refunds with respect to 2018, and (ii) raised its clearing fees. In connection with the disapproval of the capital plan, OCC returned the capital that had been contributed by its shareholders under the disapproved plan (equal to $30.0 million for Cboe Options) to the respective shareholders in 2019, of which $22.0 million was returned to Cboe Options in the first quarter of 2019 and $8.0 million in the fourth quarter of 2019. With each return of capital described in this paragraph, the Company also incurred a tax expense. OCC agreed to reimburse the Company for part of that tax liability and paid the Company $1.1 million in the third quarter and $0.4 million in the fourth quarter of 2019. OCC did not pay its shareholders any dividend or other return on the retained portion of their capital contributions. As such, the Company reversed the $8.8 million OCC dividend declared in 2018, which was to be paid in 2019, in other income in the consolidated statement of income for the year ended December 31, 2019. The remaining contributed capital has been recorded under investments in the consolidated balance sheet as of December 31, 2019. On January 24, 2020, upon receipt of SEC approval, OCC established a new capital management policy intended to replace the disapproved capital plan. The new capital management policy provides that, if OCC’s equity capital falls below certain defined thresholds, OCC can access additional capital through an operational loss fee charged to clearing members. None of OCC’s shareholders (including Cboe Options) has any obligation to contribute capital to OCC under the new capital management policy, nor does any shareholder have the right to receive dividends from OCC under such policy. In August 2019, the Company’s ownership in Vest was restructured, including a partial sale of its interest to a third-party. As a result of the restructuring, the Company’s ownership and voting interests decreased to less than 20% and less than 5%, respectively, and the Company deconsolidated Vest and changed the accounting methodology of the investment to the cost method. The deconsolidation resulted in a reduction of net assets of $14.5 million and noncontrolling interest of $5.8 million, as well as recognition of $2.9 million investment for the Company’s remaining ownership. The Company recorded an interest-bearing note receivable of $3.7 million for the consideration received from the third-party, which was recognized in other assets, net in the consolidated balance sheet as of December 31, 2019. Additionally, a loss on the sale of $2.0 million was recognized in acquisition-related costs in the consolidated statement of income for the year ended December 31, 2019. See Note 11 (“Goodwill and Intangibles, Net”) for further discussion of the Vest restructuring. In the third quarter of 2019, the Company fulfilled a contractual obligation to American Financial Exchange, LLC to launch AMERIBOR futures. As a result of the fulfillment, an additional 5% ownership of American Financial Exchange, LLC was earned by the Company for an additional investment of $2.7 million. The additional revenue was recorded in the Futures segment and increased the Company’s investment in American Financial Exchange, LLC. |
FINANCIAL INVESTMENTS
FINANCIAL INVESTMENTS | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENTS | |
FINANCIAL INVESTMENTS | 8. FINANCIAL INVESTMENTS The Company’s financial investments with original or acquired maturities longer than three months, but that mature in less than one year from the balance sheet date and any money market funds that are considered cash and cash equivalents are classified as current assets. The Company’s marketable securities are also classified as current assets within financial investments. The Company’s financial investments are summarized as follows (in millions): December 31, 2019 Cost basis Unrealized gains Unrealized losses Fair Value Available-for-sale securities: U.S. Treasury securities $ 47.6 $ — $ — $ 47.6 Trading securities: Marketable securities (1) $ 23.4 $ — $ — $ 23.4 Total financial investments $ 71.0 $ — $ — $ 71.0 December 31, 2018 Cost basis Unrealized gains Unrealized losses Fair Value Available-for-sale securities: U.S. Treasury securities $ 35.7 $ — $ — $ 35.7 Total financial investments $ 35.7 $ — $ — $ 35.7 (1) The marketable securities are primarily mutual funds maintained for non-qualified retirement and benefit plans, also referred to as deferred compensation plan assets. See Note 18 (“Employee Benefit Plan”) for more information . |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 9. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, December 31, 2019 2018 Construction in progress $ 1.2 $ 0.1 Building — 81.7 Furniture and equipment 164.4 161.6 Total property and equipment 165.6 243.4 Less accumulated depreciation (118.6) (171.7) Property and equipment, net $ 47.0 $ 71.7 Depreciation expense using the straight-line method was $24.5 million, $25.1 million and $31.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. As a result of the Merger, there is a reduction in employee workspace needed in Chicago, which led to the decision to market for sale the headquarters location. The Company classified the associated land, building, and certain furniture and equipment of the headquarters location as held for sale, performed an impairment assessment, and ceased depreciation effective May 1, 2019, as the Company anticipates selling the property held for sale in less than twelve months. As of December 31, 2019, the total value of the property classified as property held for sale on the consolidated balance sheet was $21.1 million. The impact of ceasing depreciation of the property held for sale did not result in a material impact to the consolidated financial statements. As a result of the impairment assessment, an impairment charge of $6.1 million was recorded in acquisition-related costs within the Options segment in the accompanying consolidated statements of income. |
OTHER ASSETS, NET
OTHER ASSETS, NET | 12 Months Ended |
Dec. 31, 2019 | |
OTHER ASSETS, NET | |
OTHER ASSETS, NET | 10. OTHER ASSETS, NET Other assets, net consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, December 31, 2019 2018 Software development work in progress $ 2.6 $ 8.7 Data processing software (1) 84.3 219.0 Less accumulated depreciation and amortization (57.2) (193.2) Data processing software, net 29.7 34.5 Other assets (2) 21.9 28.4 Data processing software and other assets, net $ 51.6 $ 62.9 (1) During the fourth quarter of 2019, the Company disposed of data processing software for the technology platform known as Cboe Command, as Cboe Options was migrated to the Company’s current platform on October 7, 2019. As a result of the disposal, a loss on disposal of $4.5 million was recorded in acquisition-related costs within the Options segment in the accompanying consolidated statements of income. (2) At December 31, 2019 and December 31, 2018, the majority of the balance included long-term prepaid assets and notes receivable. The notes receivable included within other assets, net on the consolidated balance sheets relate to the consolidated audit trail (“CAT”), which involves the creation of a comprehensive audit trail that strives to enhance regulators’ ability to monitor trading activity in the U.S. markets through a phased implementation. While the funding of the CAT is ultimately expected to be provided by both SROs (which includes the Exchanges) and industry members, until fee filings associated with the funding model are effective with or approved by the SEC, the funding to date has solely been provided by the SROs. The funding by the SROs has been done in exchange for promissory notes, which are expected to be repaid once such industry member fees are collected. Until the fee filings associated with the funding model are effective with or approved by the SEC, the SROs may continue to incur additional significant costs. Due to circumstances associated with the development of the CAT in the fourth quarter of 2019, the Company estimated a loss associated with the uncollectibility of the promissory notes, and recorded a provision for the notes receivable of $23.4 million. As of December 31, 2019 and December 31, 2018, the notes receivable, net balance was $9.2 million and $20.3 million, respectively. Amortization expense related to data processing software was $13.5 million, $18.9 million, and $17.9 million for the years ended December 31, 2019, 2018, and 2017. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |
GOODWILL AND INTANGIBLE ASSETS, NET | 11. GOODWILL AND INTANGIBLE ASSETS, NET The following table presents the details of goodwill by segment (in millions): U.S. European Corporate Options Equities Equities Global FX and Other Total Balance as of December 31, 2017 $ 239.4 $ 1,740.4 $ 441.6 $ 267.2 $ 18.8 $ 2,707.4 Additions — — — — — — Dispositions — — — — — — Changes in foreign currency exchange rates — — (16.0) — — (16.0) Balance as of December 31, 2018 $ 239.4 $ 1,740.4 $ 425.6 $ 267.2 $ 18.8 $ 2,691.4 Additions — — — — — — Dispositions — — — — (8.3) (8.3) Impairment — — — — (10.5) (10.5) Changes in foreign currency exchange rates — — 9.5 — — 9.5 Balance as of December 31, 2019 $ 239.4 $ 1,740.4 $ 435.1 $ 267.2 $ — $ 2,682.1 Goodwill has been allocated to specific reporting units for purposes of impairment testing - Options, U.S. Equities, European Equities 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. Based on the restructuring of the ownership of Vest during the second quarter of 2019, an impairment test was performed over the carrying value of the goodwill related to the entity as there was an indication that the carrying value after the restructuring would be less than the fair value. The impairment test indicated that the fair value of the Company’s ownership of the acquired entity was less than the carrying value, which resulted in an impairment charge of $10.5 million within the Corporate and Other segment related to Vest in the year ended December 31, 2019. As a result of the deconsolidation of Vest during the year ended December 31, 2019, the remaining goodwill was disposed of within the Corporate and Other segment at December 31, 2019. The following table presents the details of the intangible assets (in millions): U.S. European Corporate Options Equities Equities Global FX and Other Total Balance as of December 31, 2017 $ 198.7 $ 1,071.8 $ 427.0 $ 199.6 $ 5.5 $ 1,902.6 Additions — — — — — — Dispositions — — — — — — Amortization (16.8) (81.5) (27.7) (32.7) (1.3) (160.0) Changes in foreign currency exchange rates — — (22.4) — — (22.4) Balance as of December 31, 2018 $ 181.9 $ 990.3 $ 376.9 $ 166.9 $ 4.2 $ 1,720.2 Additions — — — — — — Dispositions — — — — (3.3) (3.3) Amortization (15.3) (68.9) (24.8) (28.7) (0.9) (138.6) Changes in foreign currency exchange rates — — 11.6 — — 11.6 Balance as of December 31, 2019 $ 166.6 $ 921.4 $ 363.7 $ 138.2 $ — $ 1,589.9 For the years ended December 31, 2019, 2018 and 2017, amortization expense was $138.6 million, $160.0 million and $142.9 million, respectively. The estimated future amortization expense is $121.6 million for 2020, $106.9 million for 2021, $94.4 million for 2022, $83.5 million for 2023 and $63.0 million for 2024. The following tables present the categories of intangible assets at December 31, 2019 and 2018 (in millions): Weighted December 31, 2019 Average U.S. European Corporate Amortization Options Equities Equities Global FX and Other Period (in years) Trading registrations and licenses $ 95.5 $ 572.7 $ 182.2 $ — $ — Indefinite Customer relationships 38.8 222.9 169.7 140.0 — 17 Market data customer relationships 53.6 322.0 63.6 64.4 — 12 Technology 24.8 22.5 23.9 22.5 — 4 Trademarks and tradenames 1.7 6.0 1.9 1.2 — 6 Accumulated amortization (47.8) (224.7) (77.6) (89.9) — $ 166.6 $ 921.4 $ 363.7 $ 138.2 $ — Weighted December 31, 2018 Average U.S. European Corporate Amortization Options Equities Equities Global FX and Other Period (in years) Trading registrations and licenses $ 95.5 $ 572.7 $ 176.0 $ — $ — Indefinite Customer relationships 38.8 222.9 163.9 140.0 3.0 18 Market data customer relationships 53.6 322.0 61.5 64.4 — 13 Technology 24.8 22.5 23.1 22.5 4.0 5 Trademarks and tradenames 1.7 6.0 1.8 1.2 1.0 2 Accumulated amortization (32.5) (155.8) (49.4) (61.2) (3.8) $ 181.9 $ 990.3 $ 376.9 $ 166.9 $ 4.2 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, 2019 December 31, 2018 Compensation and benefit related liabilities $ 35.2 $ 52.4 Termination benefits 6.7 6.1 Royalties 18.6 25.0 Accrued liabilities 77.8 91.8 Marketing fee payable 12.6 10.4 Accounts payable 21.0 12.8 Total accounts payable and accrued liabilities $ 171.9 $ 198.5 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2019 | |
DEBT | |
DEBT | 13. DEBT The Company’s debt consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, 2019 December 31, 2018 $300 million Term Loan Agreement due December 2021, floating rate $ 222.4 $ 271.1 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 645.2 644.5 $300 million fixed rate Senior Notes due June 2019, stated rate of 1.950% — 299.8 Revolving Credit Agreement — — Total Debt $ 867.6 $ 1,215.4 Term Loan Agreement On March 22, 2018, the Company, as borrower, entered into a new 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 provides 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 our option, at either (i) the London Interbank Offered Rate (“LIBOR”) periodically fixed for an interest period (as selected by us) of one, two, three or six months plus a margin (based on our 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 our 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. The Term Loan Agreement, which matures on December 15, 2021, 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 lenders thereunder. The negative covenants include restrictions regarding the incurrence of liens, the incurrence of indebtedness by our subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00. At December 31, 2018, the Company was in compliance with these covenants. The Company repaid $50 million of the outstanding indebtedness of the Term Loan Agreement with cash on hand during the year ended December 31, 2019. Senior Notes On January 12, 2017, the Company entered into an indenture (the “Indenture”), by and between the Company and Wells Fargo Bank, National Association, as trustee, in connection with the issuance of $650 million aggregate principal amount of the Company’s 3.650% Senior Notes due 2027 ("3.650% Senior Notes" or the “Senior Notes”, as the context so requires). 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 June 29, 2017, the Company issued $300 million aggregate principal amount of 1.950% Senior Notes due 2019 (“1.950% Senior Notes” and, together with the 3.650% Senior Notes, the “Senior Notes”), which bear interest at the rate of 1.950% per annum, payable semi-annually in arrears on June 28 and December 28 of each year, commencing December 28, 2017. The Senior Notes are unsecured obligations of the Company and rank equally with all of the Company’s other existing and future unsecured, senior indebtedness, but are effectively junior to the Company’s secured indebtedness, to the extent of the value of the assets securing such indebtedness, and will be structurally subordinated to the secured and unsecured indebtedness of the Company’s subsidiaries. The Company has the option to redeem some or all of the Senior Notes, at any time in whole or from time to time in part, at the redemption prices set forth in the applicable Officer’s Certificate. The Company may also be required to offer to repurchase the Senior Notes upon the occurrence of a Change of Control Triggering Event (as such term is defined in the applicable Officer’s Certificate) at a repurchase price equal to 101% of the aggregate principal amount of Senior Notes to be repurchased. The Company repaid the aggregate principal amount of the 1.950 % Senior Notes in full with cash on hand upon their maturity on June 28, 2019. Indenture Under the Indenture, the Company may issue debt securities, which includes the 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 Senior Notes contains customary restrictions, including a limitation that restricts our ability and the ability of certain of our subsidiaries to create or incur secured debt. Such Indenture also limits certain sale and leaseback transactions and contains customary events of default. At December 31, 2019, the Company was in compliance with these covenants. Revolving Credit Agreement On December 15, 2016, the Company, as borrower, entered into a syndicated Credit Agreement (the “Revolving Credit Agreement”) with Bank of America, N.A., as administrative agent and as swing line lender, certain lenders named therein (the “Revolving Lenders”). The Revolving Credit Agreement provides for a senior unsecured $150 million five-year revolving credit facility (the “Revolving Credit Facility”) that includes a $25 million swing line sub-facility. The Company may also, subject to the agreement of the applicable lenders, increase the commitments under the Revolving Credit Facility by up to $100 million, for a total of $250 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. As of December 31, 2019, 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. As of December 31, 2019, no borrowings were outstanding under the Revolving Credit Agreement. Accordingly, at December 31, 2019, $150 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 our option, at either (i) LIBOR periodically fixed for an interest period (as selected by us) of one, two, three or six months plus a margin (based on our public debt ratings) ranging from 1.00 percent per annum to 1.75 percent per annum or (ii) a daily floating rate based on our prime rate (subject to certain minimums based upon the federal funds effective rate or LIBOR) plus a margin (based on our public debt ratings) ranging from zero percent per annum to 0.75 percent per annum. Subject to certain conditions stated in the Revolving Credit Agreement, the Company may borrow, prepay and reborrow amounts under the Revolving Credit Facility at any time during the term of the Revolving Credit Agreement. The Revolving Credit Agreement will terminate and all amounts owing thereunder will be due and payable on December 15, 2021, unless the commitments are terminated earlier, either at our request 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 our subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00. At December 31, 2019, the Company was in compliance with these covenants. Loan and Notes Payments and Contractual Interest The future expected loan repayments related to the Term Loan Agreement and the 3.650% Senior Notes as of December 31, 2019 are as follows (in millions): 2020 $ — 2021 225.0 2022 — 2023 — Thereafter 650.0 Principal amounts repayable 875.0 Debt issuance costs (3.3) Unamortized discounts on notes (4.1) Total debt outstanding $ 867.6 Interest expense recognized on the Term Loan Agreement and the Senior Notes is included in interest expense, net in the consolidated statements of income, for the years ended December 31, 2019, 2018 and 2017 are as follows (in millions): Year Ended Year Ended Year Ended December 31, December 31, December 31, 2019 2018 2017 Components of interest expense: Contractual interest $ 35.6 $ 38.0 $ 39.0 Amortization of debt discount 0.6 0.7 0.6 Amortization of debt issuance costs 1.6 1.8 3.0 Interest expense $ 37.8 $ 40.5 $ 42.6 Interest income (1.9) (2.3) (1.3) Interest expense, net $ 35.9 $ 38.2 $ 41.3 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | 12 Months Ended |
Dec. 31, 2019 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | 14. ACCUMULATED OTHER COMPREHENSIVE INCOME, NET The following represents the changes in accumulated other comprehensive income (loss) by component (in millions): Foreign currency Unrealized Total Other translation Investment Post-Retirement Comprehensive adjustment Gain/Loss Benefits Income Balance at December 31, 2017 $ 51.3 $ 0.2 $ (0.8) $ 50.7 Other comprehensive loss (39.2) — — (39.2) Balance at December 31, 2018 $ 12.1 $ 0.2 $ (0.8) $ 11.5 Other comprehensive income 26.1 — — 26.1 Balance at December 31, 2019 $ 38.2 $ 0.2 $ (0.8) $ 37.6 |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENT | 15. FAIR VALUE MEASUREMENT Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk. The Company applied FASB ASC 820— Fair Value Measurement and Disclosure ● 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, corroborated by market data or based upon quoted prices in non-active markets. ● Level 3—Unobservable inputs that reflect management’s best assumptions of what market participants would use in valuing the asset or liability. The Company has included a tabular disclosure for financial assets and liabilities that are measured at fair value on a recurring basis in the consolidated balance sheet as of December 31, 2019 and 2018, respectively. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018 (in millions): December 31, 2019 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 47.6 $ 47.6 $ — $ — Marketable securities: Mutual funds 15.7 15.7 — — Money market funds 7.7 7.7 — — Total assets $ 71.0 $ 71.0 $ — $ — Liabilities: Contingent consideration liability to related party $ 2.2 $ — $ — $ 2.2 Total Liabilities $ 2.2 $ — $ — $ 2.2 December 31, 2018 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 35.7 $ 35.7 $ — $ — Total assets $ 35.7 $ 35.7 $ — $ — Liabilities: Contingent consideration liability to related party $ 3.9 $ — $ — $ 3.9 Total Liabilities $ 3.9 $ — $ — $ 3.9 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 rabbi 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. See Note 18 (“Employee Benefit Plan”) for more information. Contingent Consideration Liability In connection with the acquisition of the assets of Silexx Financial Systems, LLC (“Silexx”), the Company acquired a contingent consideration arrangement with the former owners of Silexx. The total fair value of this liability at December 31, 2019 was $2.2 million. The fair values are based on estimates of discounted future cash payments, a significant unobservable input, and are considered a Level 3 measurement. 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 amount of the reporting unit, including its recorded goodwill. Impairment is considered to have occurred if the fair value of the reporting unit is lower than the carrying amount 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 the carrying amount. These measurements are considered Level 3 and these assets are recognized at fair value if they are deemed to be impaired. During the year ended December 31, 2019, a goodwill impairment charge of $10.5 million was recorded within the Corporate and Other segment. As a result of the impairment and subsequent deconsolidation of Vest, the fair value of the goodwill within the Corporate and Other segment was zero as of December 31, 2019. As of December 31, 2018, none of these assets were required to be recorded at fair value since no impairment indicators were present, see Note 11 (“Goodwill and Intangible Assets, Net”). In addition, property held for sale as of December 31, 2019 was also measured at fair value at December 31, 2019. See Note 9 (“Property and Equipment, Net”) for more information on property held for sale. Fair Value of Assets and Liabilities The following table presents the Company’s fair value hierarchy for certain assets and liabilities held by the Company as of December 31, 2019 and 2018 (in millions): December 31, 2019 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities 47.6 47.6 — — Deferred compensation plan assets 23.4 23.4 — — Total assets $ 71.0 $ 71.0 $ — $ — Liabilities: Contingent consideration liability to related party 2.2 — — 2.2 Deferred compensation plan liabilities 23.4 23.4 — — Debt 867.6 — 867.6 — Total liabilities $ 893.2 $ 23.4 $ 867.6 $ 2.2 December 31, 2018 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities 35.7 35.7 — — Total assets $ 35.7 $ 35.7 $ — $ — Liabilities: Contingent consideration liability to related party 3.9 — — 3.9 Debt 1,215.4 — 1,215.4 — Total liabilities $ 1,219.3 $ — $ 1,215.4 $ 3.9 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 carrying amount of debt approximates its fair value based on quoted LIBOR or using a fixed rate at December 31, 2019 and 2018 and is considered a Level 2 measurement. Information on Level 3 Financial Liabilities The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities during the year ended December 31, 2019 and 2018: Level 3 Financial Liabilities for the Year Ended December 31, 2019 Balance at Realized (gains) Beginning of losses during Balance at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities to related party $ 3.9 $ 2.6 $ — $ (4.3) $ 2.2 Total Liabilities $ 3.9 $ 2.6 $ — $ (4.3) $ 2.2 Level 3 Financial Liabilities for the Year Ended December 31, 2018 Balance at Realized (gains) Beginning of losses during Balances at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities to related parties $ 56.6 $ 3.9 $ — $ (56.6) $ 3.9 Total Liabilities $ 56.6 $ 3.9 $ — $ (56.6) $ 3.9 |
REDEEMABLE NONCONTROLLING INTER
REDEEMABLE NONCONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2019 | |
REDEEMABLE NONCONTROLLING INTEREST | |
REDEEMABLE NONCONTROLLING INTEREST | 16. REDEEMABLE NONCONTROLLING INTEREST Redeemable noncontrolling interest is reported on the consolidated balance sheets in mezzanine equity in Redeemable Noncontrolling Interest. The Company recognizes changes to the redemption value of redeemable noncontrolling interest as they occur and adjusts the carrying value to equal the redemption value at the end of each reporting period. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges or credits against retained earnings, or in the absence of retained earnings, additional paid in capital. The redemption amounts have been estimated based on the fair value of the formerly majority-owned subsidiary Vest. See Note 7 (“Investments”) for more information on the deconsolidation of Vest. For the year ended December 31, 2019, the following reflects changes in our redeemable noncontrolling interest (in millions): Redeemable Balance as of December 31, 2018 $ 9.4 Net loss attributable to redeemable noncontrolling interest (4.1) Redemption value adjustment of redeemable noncontrolling interest 0.5 Deconsolidation of former subsidiary with noncontrolling interest (5.8) Balance as of December 31, 2019 $ — |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2019 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 17. SEGMENT REPORTING The Company reports five business segments: Options, U.S. Equities, Futures, European Equities, and Global FX, which is reflective of how the Company's chief operating decision-maker reviews and operates the business, as discussed in Note 1 (“Nature of Operations”). Segment performance is primarily based on operating income (loss). Our chief operating decision-maker does not review total assets or statements of income below operating income by segments 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 unit based on the decision that those activities should not be used to evaluate the segment's operating performance; however, operating expenses that relate to activities of a specific segment have been allocated to that segment. Options. U.S. Equities. Futures. European Equities. Global FX. Summarized financial data of reportable segments was as follows (in millions): Corporate European items and Options U.S. Equities Futures Equities Global FX eliminations Total Year ended December 31, 2019 Revenues $ 983.1 $ 1,213.1 $ 135.9 $ 110.8 $ 53.0 $ 0.2 $ 2,496.1 Operating income (loss) 334.3 132.5 83.1 20.3 (4.9) (28.1) 537.2 Year ended December 31, 2018 Revenues $ 1,057.5 $ 1,373.1 $ 149.8 $ 131.6 $ 56.4 $ 0.4 $ 2,768.8 Operating income (loss) 390.9 140.5 85.7 24.1 (11.7) (30.1) 599.4 Year ended December 31, 2017 Revenues $ 883.5 $ 1,072.5 $ 144.6 $ 89.6 $ 38.2 $ 0.7 $ 2,229.1 Operating income (loss) 252.2 103.2 126.8 8.9 (12.8) (106.4) 371.9 |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2019 | |
EMPLOYEE BENEFIT PLAN | |
EMPLOYEE BENEFIT PLAN | 18. EMPLOYEE BENEFIT PLAN Cboe 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 Internal Revenue Code. The Deferred Compensation Plan assets, held in a rabbi trust, are subject to the claims of general creditors of the Company and totaled $23.4 million at December 31, 2019. Although the value of the plans are recorded as an asset in financial instruments on the consolidated balance sheets, there are equal and offsetting liabilities in other non-current liabilities. The investment results of these plans have no impact on net income as the investment results are recorded in equal amounts to both other income (expense) and compensation and benefits expense. The Company contributed $11.3 million, $12.4 million, and $7.7 million to the defined contribution plans for the years ended December 31, 2019, 2018, and 2017, respectively. This expense is included in compensation and benefits in the consolidated statements of income. For employees of Cboe Europe Limited, the Company contributes to an employee-selected stakeholder contribution plan. The Company’s contribution amounted to $0.7 million, $0.4 million, and $0.5 million for the years ended December 31, 2019, 2018, and 2017, respectively. This expense is included in compensation and benefits in the consolidated statements of income. |
REGULATORY CAPITAL
REGULATORY CAPITAL | 12 Months Ended |
Dec. 31, 2019 | |
REGULATORY CAPITAL | |
REGULATORY CAPITAL | 19. REGULATORY CAPITAL As a broker-dealer registered with the SEC, Cboe Trading is 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 computes the net capital requirements under the basic method provided for in Rule 15c3-1. As of December 31, 2019, Cboe Trading is required to maintain net capital equal to the greater of 6.67% of aggregate indebtedness items, as defined, or $0.1 million. At December 31, 2019, Cboe Trading had net capital of $13.3 million, which was $12.8 million in excess of its required net capital of $0.5 million. As entities regulated by the FCA, Cboe Europe Limited 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 Limited computes its FRR in accordance with its Financial Risk Assessment, as agreed by the FCA. This FRR was $21.8 million at December 31, 2019. At December 31, 2019, Cboe Europe Limited had capital in excess of its required FRR of $36.2 million. As a Banks, Investment firms, PRUdential (BIPRU) 50k firm, as defined by the Markets in Financial Instruments Directive of the FCA, Cboe Chi-X Europe computes its CRR as the greater of the base requirement of $0.1 million at December 31, 2019, or the summation of the credit risk, market risk and fixed overheads requirements, as defined. At December 31, 2019, Cboe Chi-X Europe had capital in excess of its required CRR of $0.5 million. Cboe Chi-X Europe Limited is currently dormant having ceased offering its routing service in November 2018. On March 8, 2019, Cboe Europe NL received approval from the Dutch Ministry of Finance to operate a RM, a MTF, and an approved publication arrangement in the Netherlands. As a RM, Cboe Europe NL is subject to minimum capital requirements, as established by the Dutch Ministry of Finance in the license of March 8, 2019. As of December 31, 2019, the minimum capital requirement calculated in accordance with the license was $1.6 million. At December 31, 2019, Cboe Europe NL had capital in excess of its requirement of $3.7 million. 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. As of December 31, 2019, CFE had annual projected operating expenses of $56.5 million and had financial resources that exceeded this amount. Additionally, as of December 31, 2019, CFE had projected operating expenses for the upcoming six months of $28.3 million and had unencumbered, liquid financial assets, including a line of credit from Cboe, that exceeded this amount. As a swap execution facility regulated by the CFTC, Cboe SEF 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 must be equal to at least six months of its projected operating costs. As of December 31, 2019, Cboe SEF had annual projected operating expenses of $0.8 million and had financial resources that exceeded this amount. Additionally, as of December 31, 2019, Cboe SEF had projected operating expenses for the upcoming six months of $0.4 million and had unencumbered, liquid financial assets that exceeded this amount. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 20. 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 our long-term incentive plan and award agreements. The Company recognized stock-based compensation expense of $21.8 million, $35.1 million, and $52.6 million for the years ended December 31, 2019, 2018, and 2017 respectively. Stock-based compensation expense is included in compensation and benefits and acquisition-related costs in the consolidated statements of income. The activity in the Company's stock options and restricted stock, consisting of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”), was as follows: Stock Options Summary stock option activity is presented below: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Value Shares Price Term (years) (in millions) Outstanding, December 31, 2017 442,042 $ 25.36 Exercised (72,559) 20.08 Outstanding, December 31, 2018 369,483 $ 26.40 Exercised (358,649) 26.63 Outstanding and exercisable December 31, 2019 10,834 $ 18.59 0.5 $ 1.1 The total intrinsic value of stock options exercised was $26.0 million and $6.4 million for the years ended December 31, 2019 and 2018, respectively. For the year ended December 31, 2019, to satisfy employee’s tax obligations and cash exercise payment due upon the election to exercise 358,649 stock options, the Company purchased 6,323 shares at a cost of $0.6 million. RSAs and RSUs The following table summarizes RSA and RSU activity during the year ended December 31, 2019: Weighted Number of average grant shares date fair value Nonvested stock at December 31, 2018 631,764 $ 85.85 Granted 216,891 93.45 Vested (313,856) 83.25 Forfeited (98,786) 85.50 Nonvested stock at December 31, 2019 436,013 $ 91.58 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 Company 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. Vesting will also accelerate upon a qualified retirement. Qualified retirement eligibility occurs once satisfying 65 years of age and 5 years of service for grants awarded before 2017 and once satisfying 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. Pursuant to the Merger Agreement, each award of restricted Bats common stock (“Bats restricted shares”) granted under any of the Bats Plans that was unvested immediately prior to the effective time of the Merger was assumed by the Company and converted into an award of restricted shares of our common stock, subject to the same terms and conditions (including vesting schedule) that applied to the applicable Bats restricted shares immediately prior to the effective time of the Merger (but taking into account any changes, including any acceleration of vesting of such Bats restricted shares, occurring by reason provided for in the Merger Agreement). In the year ended December 31, 2019, to satisfy employees’ tax obligations upon the vesting of restricted stock, the Company purchased 112,023 shares of common stock totaling $11.0 million as the result of the vesting of 313,856 shares of restricted stock. PSUs The following table summarizes restricted stock unit contingent upon achievement of performance conditions, or PSU, activity during the year ended December 31, 2019: Weighted Number of Average Grant Shares Date Fair Value Nonvested stock at December 31, 2018 151,842 $ 100.81 Granted 86,134 88.22 Vested (69,372) 74.56 Forfeited (36,356) 97.78 Nonvested stock at December 31, 2019 132,248 $ 107.21 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 (2.54)%, three-year volatility (20.5)% and three year correlation with S&P 500 Index (0.29). 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 our 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 our common stock following vesting of the PSU assuming that the participant has been continuously employed during the vesting period, subject to acceleration in the event of a change in control of the Company, or a termination of employment following a change in control, or in the event of a participant’s earlier death or disability. Participants have no voting rights with respect to the PSUs until the issuance of the shares of common stock. Dividends are accrued by the Company and will be paid once the PSUs contingent on the achievement of performance conditions vest. In the year ended December 31, 2019, to satisfy employees’ tax obligations upon the vesting of performance stock, the Company purchased 27,477 shares of common stock totaling $2.6 million as the result of the vesting of 69,372 shares of performance stock. As of December 31, 2019, there were $18.8 million in total unrecognized compensation costs related to restricted stock, restricted stock units, and performance stock units. These costs are expected to be recognized over a weighted average period of 1.6 years. Employee Stock Purchase Plan In May 2018, our stockholders approved our Employee Stock Purchase Plan, (“ESPP”), under which a total of 750,000 shares of our common stock will be made available for purchase to employees. The ESPP is a broad-based plan that permits our employees to contribute up to 10% of wages and base salary to purchase shares of our common stock at a discount, subject to applicable annual Internal Revenue Service limitations. Under our ESPP, a participant may not purchase more than a maximum of 312 shares of our common stock during any single offering period. No participant may accrue options to purchase shares of our common stock at a rate that exceeds $25,000 in fair market value of our 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 market value of the stock on the first day of the applicable offering period or the applicable exercise date. We record compensation expense over the offering period related to the discount that is given to our employees, which totaled $0.4 million and $0.1 million for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, 722,648 shares were reserved for future issuance under the ESPP. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY | |
EQUITY | 21. EQUITY Common Stock The Company’s common stock is listed on Cboe BZX under the trading symbol CBOE. As of December 31, 2019, 325,000,000 shares of our common stock were authorized, $0.01 par value, 125,701,889 and 110,656,892 shares were issued and outstanding, respectively. The holders of common stock are entitled to one vote per share. Common Stock in Treasury, at Cost We account for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in the Consolidated Balance Sheets. Shares repurchased under the Company’s share repurchase program are available to be redistributed. When treasury shares are redistributed, they are recorded at the average cost of the treasury shares acquired. We held 15,044,997 of common stock in treasury as of December 31, 2019 and 13,478,520 shares as of December 31, 2018. Share Repurchase Program In 2011, the board of directors approved an initial authorization for the Company to repurchase shares of its outstanding common stock of $100 million and approved additional authorizations of $100 million in each of 2012, 2013, 2014, 2015 and 2016, $150 million in February 2018, $100 million in August 2018, and $250 million in October 2019 for a total authorization of $1.1 billion. The Company expects to fund repurchases primarily through the use of existing cash balances. The program permits the Company to purchase shares, through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any repurchases at any specific time or situation. Under the program, for the year ended December 31, 2019, the Company repurchased 1,420,654 shares of common stock at an average cost per share of $110.42, totaling $156.9 million. Since inception of the program through December 31, 2019, the Company has repurchased 13,716,009 shares of common stock at an average cost per share of $58.38, totaling $800.8 million. As of December 31, 2019, the Company had $299.2 million of availability remaining under its existing share repurchase authorizations. The table below shows the repurchased shares of our common stock under the Company’s share repurchase program during the periods presented as follows: Average Repurchase Shares Repurchased Price Per Share Amount of Repurchases 2019 Fourth quarter 600,442 $ 115.76 $ 69,505,515 Third quarter 453,319 115.49 52,355,492 Second quarter 100 104.75 10,477 First quarter 366,793 95.36 34,999,992 Total open market common stock repurchases 1,420,654 156,871,476 2018 Fourth quarter — $ — $ — Third quarter 491,899 99.75 49,064,854 Second quarter 468,913 102.92 48,258,926 First quarter 387,142 112.52 43,562,504 Total open market common stock repurchases 1,347,954 140,886,284 2017 Fourth quarter — $ — $ — Third quarter — — — Second quarter — — — First quarter — — — Total open market common stock repurchases — — Purchase of Common Stock from Employees The Company purchased 143,247 shares that were not part of the publicly announced share repurchase authorization from employees for an average price paid per share of $97.22 during the year ended December 31, 2019. These shares consisted of shares retained to cover payroll withholding taxes or option costs in connection with the vesting of restricted stock awards, restricted stock units, performance share awards, and stock option exercises. Preferred Stock The Company has authorized the issuance of 20,000,000 shares of preferred stock, par value $0.01 per share, issuable from time to time in one or more series. For the years ended December 31, 2019, and 2018, the Company had no shares of preferred stock issued or outstanding Dividends During the year ended December 31, 2019 December 31, 2018 Each share of common stock, including restricted stock awards and restricted stock units, is entitled to receive dividend and dividend equivalents, respectively, if, as and when declared by the board of directors of the Company. The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within the discretion of the Company’s board of directors and may be affected by various factors, including our earnings, financial condition, capital requirements, level of indebtedness and other considerations our board of directors deems relevant. Future debt obligations and statutory provisions, among other things, may limit, or in some cases prohibit, our ability to pay dividends. As a holding company, the Company’s ability to declare and continue to pay dividends in the future with respect to its common stock will also be dependent upon the ability of its subsidiaries to pay dividends to it under applicable corporate law. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | 22. INCOME TAXES Net deferred tax assets and liabilities consist of the following as of December 31, 2019 and 2018 (in millions): As of December 31, 2019 2018 Deferred tax assets: Accrued compensation and benefits $ 14.1 $ 17.1 Property, equipment and technology, net 1.9 2.6 Operating leases 13.5 — Other 30.5 20.7 Subtotal 60.0 40.4 Valuation allowance (4.2) (2.0) Total deferred tax assets 55.8 38.4 Deferred tax liabilities: Intangibles (357.6) (380.2) Property, equipment and technology, net (14.5) (17.4) Investments (68.2) (75.3) Operating leases (13.0) — Prepaid expenses or assets (2.2) (2.3) Total deferred tax liabilities (455.5) (475.2) Net deferred tax assets/(liabilities) $ (399.7) $ (436.8) The Company provides a valuation allowance against deferred tax assets if, based on management’s assessment of historical and projected future operating results and other available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. A valuation allowance of $4.2 million was recorded against gross deferred tax assets for certain investments, net operating and capital losses as of December 31, 2019. As of December 31, 2019, we have capital loss carryforwards of $7.9 million, which, if unused, will expire in 2024. The provision for income taxes for the years ended December 31, 2019, 2018 and 2017 consists of the following (in millions): Year Ended December 31, 2019 2018 2017 Current tax expense: Federal $ 98.7 $ 125.1 $ 141.0 State 61.2 58.7 25.8 Foreign 7.9 9.9 5.4 Total current tax expense 167.8 193.7 172.2 Deferred income tax expense: Federal (28.7) (18.4) (227.5) State (3.8) (23.7) (6.5) Foreign (4.7) (5.6) (4.4) Total deferred income tax expense (37.2) (47.7) (238.4) Total $ 130.6 $ 146.0 $ (66.2) The Company considers a portion of its non-U.S. earnings to be indefinitely reinvested outside of the U.S. to the extent these earnings are not subject to U.S. income tax under an anti-deferral tax regime. For the years ended December 31, 2019, 2018, and 2017, income before taxes consists of the following (in millions): Year Ended December 31, 2019 2018 2017 U.S. operations $ 480.0 $ 548.3 $ 326.7 Foreign operations 21.4 22.9 7.7 $ 501.4 $ 571.2 $ 334.4 A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2019, 2018, and 2017 is as follows: Year Ended December 31, 2019 2018 2017 Statutory U.S. federal income tax rate 21.0 % 21.0 % 35.0 % Impact of federal, state and local tax law & rate changes, net — % (3.5) % (55.1) % State taxes, net of federal benefit 5.0 % 5.0 % 4.3 % Uncertain tax positions 2.6 % 6.1 % — % Deduction for Foreign-Derived Intangible Income (1.2) % — — Section 199 deduction — % — % (2.6) % Other, net (1.4) % (3.0) % (1.4) % Effective income tax rate 26.0 % 25.6 % (19.8) % A reconciliation of the beginning and ending uncertain tax positions, excluding interest and penalties, is as follows (in thousands): 2019 2018 2017 Balance as of January 1 $ 102.3 $ 67.8 $ 41.9 Acquired unrecognized tax benefits — — 23.2 Gross increases on tax positions in prior period 3.1 35.0 6.2 Gross decreases on tax positions in prior period (6.3) (19.0) (14.7) Gross increases on tax positions in current period 18.5 19.0 12.7 Lapse of statute of limitations (0.9) (0.5) (1.5) Balance as of December 31 $ 116.7 $ 102.3 $ 67.8 As of December 31, 2019, 2018 and 2017, the Company had $114.9 million, $99.5 million, and $68.2 million, respectively, of uncertain tax positions, net of federal benefit, which, if recognized in the future, would affect the effective income tax rate. Reductions to uncertain tax positions from the lapse of the applicable statutes of limitations and potential audit settlements during the next twelve months are estimated to be approximately $2.4 million. Estimated interest costs and penalties are classified as part of the provision for income taxes in the Company's consolidated statements of income and were $6.6 million, $1.1 million, and $(1.5) million for the periods ended December 31, 2019, 2018 and 2017, respectively. Accrued interest and penalties were $19.2 million, $12.6 million and $11.1 million as of December 31, 2019, 2018 and 2017, respectively. The following table summarizes the tax years that are either currently under audit or remain open and subject to examination by the tax authorities in the most significant jurisdictions in which Cboe operates: U.S. Federal 2008-2019 Illinois 2016-2019 New York 2011-2019 New York City 2011-2019 United Kingdom 2017-2019 The Company petitioned the 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. The Company also filed a complaint on October 5, 2018 with the Court of Federal Claims for a refund of Section 199 claims related to tax years 2008 through 2010. The Company believes the aggregate amount of any additional liabilities that may result from these examinations, if any, will not have a material adverse effect on the financial position, results of operations, or cash flows of the Company. As of December 31, 2019, we have not resolved these matters, and proceedings continue in Tax Court and the Court of Federal Claims. |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2019 | |
NET INCOME PER COMMON SHARE | |
NET INCOME PER COMMON SHARE | 23. NET INCOME PER COMMON 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. Additionally, the change in the redemption value for the noncontrolling interest reduces net income allocated to common stockholders. The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share data): Year Ended December 31, (in millions, except per share amounts) 2019 2018 2017 Basic EPS Numerator: Net Income $ 370.8 $ 425.2 $ 400.6 Loss attributable to noncontrolling interest 4.1 1.3 1.1 Net Income excluding noncontrolling interest 374.9 426.5 401.7 Change in redemption value of noncontrolling interest (0.5) (1.3) (1.1) Earnings allocated to participating securities (1.7) (3.1) (3.9) Net Income allocated to common stockholders $ 372.7 $ 422.1 $ 396.7 Basic EPS Denominator: Weighted average shares outstanding 111.4 111.8 107.2 Basic Net Income Per Common Share $ 3.35 $ 3.78 $ 3.70 Diluted EPS Numerator: Net Income $ 370.8 $ 425.2 $ 400.6 Loss attributable to noncontrolling interest 4.1 1.3 1.1 Net Income excluding noncontrolling interest 374.9 426.5 401.7 Change in redemption value of noncontrolling interest (0.5) (1.3) (1.1) Earnings allocated to participating securities (1.7) (3.1) (3.9) Net Income allocated to common stockholders $ 372.7 $ 422.1 $ 396.7 Diluted EPS Denominator: Weighted average shares outstanding 111.4 111.8 107.2 Dilutive common shares issued under stock program 0.4 0.4 0.3 Total dilutive weighted average shares 111.8 112.2 107.5 Diluted Net Income Per Common Share $ 3.34 $ 3.76 $ 3.69 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 net income per common share. |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | 24. COMMITMENTS, CONTINGENCIES, AND GUARANTEES Legal Proceedings As of December 31, 2019, 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 our 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 reasonably possible or probable is based on its assessment of the ultimate outcome of the matter following all appeals. As of December 31, 2019, 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 our earnings in any given reporting period. City of Providence On April 18, 2014, the City of Providence, Rhode Island filed a securities class action lawsuit in the Southern District of New York against Bats and Direct Edge Holdings LLC, as well as 14 other securities exchanges. The action purports to be brought on behalf of all public investors who purchased and/or sold shares of stock in the United States since April 18, 2009 on a registered public stock exchange (“Exchange Defendants”) or a U.S.-based alternate trading venue and were injured as a result of the alleged misconduct detailed in the complaint, which includes allegations that the Exchange Defendants committed fraud through a variety of business practices associated with, among other things, what is commonly referred to as high frequency trading. On May 2, 2014 and May 20, 2014, American European Insurance Company and Harel Insurance Co., Ltd. each filed substantially similar class action lawsuits against the Exchange Defendants which were ultimately consolidated with the City of Providence, Rhode Island securities class action lawsuit. On June 18, 2015, the Southern District of New York (the “Lower Court”) held oral argument on the pending Motion to Dismiss and thereafter, on August 26, 2015, the Lower Court issued an Opinion and Order granting Exchange Defendants’ Motion to Dismiss, dismissing the complaint in full. Plaintiff filed a Notice of Appeal of the dismissal on September 24, 2015 and its appeal brief on January 7, 2016. Respondent's brief was filed on April 7, 2016 and oral argument was held on August 24, 2016. Following oral argument, the Court of Appeals issued an order requesting that the SEC submit an amicus brief on whether the Lower Court had jurisdiction and whether the Exchange Defendants have immunity in the claims alleged. The SEC filed its amicus brief with the Court of Appeals on November 28, 2016 and Plaintiff and the Exchange Defendants filed their respective supplemental response briefs on December 12, 2016. On December 19, 2017, the Court of Appeals reversed the Lower Court’s dismissal and remanded the case back to the Lower Court. On March 13, 2018, the Court of Appeals denied the Exchange Defendants’ motion for re-hearing. The Exchange Defendants filed their opening brief for their motion to dismiss May 18, 2018, Plaintiffs’ response was filed June 15, 2018 and the Exchange Defendants’ reply was filed June 29, 2018. On May 28, 2019, the Lower Court issued an opinion and order denying the Exchange Defendants’ motion to dismiss. On June 17, 2019, the Exchange Defendants filed a motion seeking interlocutory appeal of the May 28, 2019 dismissal order, which was denied July 16, 2019. Exchange Defendants filed their answers on July 25, 2019. Given the preliminary nature of the proceedings, the Company is unable to estimate what, if any, liability may result from this litigation. However, the Company believes that the claims are without merit and intends to litigate the matter vigorously. SIFMA Securities Industry Financial Markets Association (“SIFMA”) has filed a number of denial of access applications with the SEC to set aside proposed rule changes to establish or modify fees for Cboe Options, C2, BZX, BYX, EDGX and EDGA (the “Exchanges”) market data products and related services (the “Challenged Fees”). The Challenged Fees were held in abeyance pending a decision, which was issued by the SEC on October 16, 2018, on a separate SIFMA denial of access application regarding fees proposed by Nasdaq and the NYSE for their respective market data products. In a second order entered on October 16, 2018, the SEC issued an order (the “Order”) that remanded the stayed Challenged Fees and ordered the Exchanges to: (i) within six months of the Order, provide notice to the SEC of developed or identified fair procedures for assessing the Challenged Fees (the “Procedures”) and (ii) within one year of the Order, apply the Procedures to the Challenged Fees and submit to the SEC a record explaining the Exchanges’ conclusions. On October 26, 2018, the Exchanges filed a motion to reconsider the Order with the SEC. On November 21, 2018, the Exchanges filed with the SEC a joinder motion to NYSE’s prior motion for stay of the Order. On December 3, 2018, SIFMA filed a response to NYSE’s motion for stay. Nasdaq withdrew its motion to reconsider the Order with the SEC on December 4, 2018, and on December 5, 2018, filed a Petition for Review with the Court of Appeals for the D.C. Circuit (the “D.C. Circuit”). On December 14, 2018, the SEC denied the motion for stay but tolled the compliance date set forth in the remand order until ruling is made on the motion to reconsider. The Exchanges and NYSE filed on January 4, 2019 a motion to intervene in the Nasdaq Petition for Review to ensure the ability to participate in the case; the motion to intervene was granted on January 25, 2019. On the same day, SIFMA filed a motion with the D.C. Circuit moving to dismiss or hold in abeyance the Petition for Review. The Exchanges and NYSE submitted on February 6, 2019 a statement of issues for consideration in connection with the Petition for Review pending before the D.C. Circuit. On March 29, 2019, the D.C. Circuit issued an order indicating that SIFMA’s motion to dismiss will be considered with the underlying merits of the Petition for Review. On May 7, 2019, the SEC denied the Exchanges and NYSE’s motion for reconsideration of the Order. The SEC also further tolled the effectiveness of the remand order subject to the resolution of the substantive SIFMA case against Nasdaq and NYSE Arca that is already before the D.C. Circuit. On June 17, 2019, the Exchanges filed a petition for review of the May 7, 2019 SEC order denying reconsideration of the Order with the D.C. Circuit and of the Order. The Exchanges’ joint opening brief was filed on October 23, 2019. Oral arguments were held on February 18, 2020. An adverse ruling in that matter or a subsequent appeal could adversely affect exchange market data fees. However, the Company believes that the claims are without merit and intends to litigate the matter vigorously. The Company is unable to estimate what, if any, liability may result from this litigation. 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. Plaintiffs have indicated to the federal district court for the Northern District of Illinois that they intend to seek leave of the court to take an immediate appeal. The Company currently believes that the claims are without merit and intends to litigate the matter vigorously. The Company is unable to estimate what, if any, liability may result from this litigation. Other As self-regulatory organizations under the jurisdiction of the SEC, Cboe Options, C2, BZX, BYX, EDGX and EDGA are subject to routine reviews and inspections by the SEC. As a designated contract market under the jurisdiction of the CFTC, CFE is subject to routine reviews and inspections by the CFTC. Cboe SEF, LLC is a swap execution facility registered with the CFTC and subject to routine reviews and inspections by the CFTC. Cboe Trading is 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 as well as the Division of Enforcement seeking information about our compliance with our obligations as a self-regulatory organization, the federal securities laws as well as our members’ compliance with the federal securities laws. In addition, while Cboe Europe Limited and Cboe Chi-X Europe 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 both companies are domiciled in the U.K., it is likely that any action would be taken in the U.K. courts in relation to litigation or by the FCA 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 our consolidated financial condition, results of operations, liquidity or capital resources. See also Note 10 (“Other Assets, Net”) for information on promissory notes related to the CAT. See also Note 22 (“Income Taxes”). Contractual Obligations See Note 25 (“Leases”) for information on lease obligations. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | 25. LEASES The Company currently leases office space, data centers and remote network operations centers under non-cancelable operating leases with third parties as of December 31, 2019. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one In September 2019, the Company signed a new lease to secure approximately 185,000 square feet of office space within the Old Post Office building in Chicago, Illinois, which will serve as the Company’s new global headquarters. The initial term of the lease will be 187 months from the accounting commencement date, which is expected to be in the first quarter of 2020. 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 $98.8 million. See Note 9 (“Property and Equipment, Net”) for information on the current headquarters location. Additionally, in September 2019, the Company signed a new lease to secure approximately 40,000 square feet of office space within the Chicago Board of Trade Building in Chicago, Illinois, where the Company plans to build a new trading floor and office space. The initial term of the lease will be 150 months from the accounting commencement date, which is expected to be in the second quarter of 2020. 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 $17.1 million. The following table presents the supplemental balance sheet information related to leases for the year ended December 31, 2019 (in millions): December 31, 2019 Operating lease right of use assets $ 53.4 Total leased assets $ 53.4 Accrued liabilities $ 8.7 Non-current operating lease liabilities 46.7 Total leased liabilities $ 55.4 The following table presents operating lease costs and other information as of and for the year ended December 31, 2019 (in millions, except as stated): Year Ended December 31, 2019 Operating lease costs (1) $ 12.4 Lease term and discount rate information: Weighted average remaining lease term (years) 9.2 Weighted average discount rate 3.5 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 11.2 Right-of-use assets obtained in exchange for lease liabilities (2) 22.1 (1) Includes short-term lease and variable lease costs, which are immaterial. (2) Ex cludes right-of-use assets and lease liabilities recognized upon adoption of $40.3 million and $42.8 million, respectively. The total rent expense related to lease obligations, reflected in technology support services and facilities costs line items on the consolidated statements of income, for the years ended December 31, 2019, 2018, and 2017 were $12.4 million, $10.1 million, and $7.6 million, respectively. The maturities of the lease liabilities are as follows as of December 31, 2019 (in millions): December 31, 2019 2020 $ 10.4 2021 10.0 2022 9.3 2023 7.8 2024 3.5 After 2024 (1) 24.2 Total lease payments $ 65.2 Less: Interest (9.8) Present value of lease liabilities $ 55.4 (1) Total lease payments include $20.4 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $115.9 million of legally binding lease payments for leases signed but will commence after December 31, 2019. |
QUARTERLY DATA (UNAUDITED)
QUARTERLY DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY DATA (UNAUDITED) | |
QUARTERLY DATA (UNAUDITED) | 26. QUARTERLY DATA (UNAUDITED) First Second Third Fourth Year ended December 31, 2019 (in millions, except per share data) Quarter Quarter Quarter Quarter Revenue less cost of revenues $ 279.4 $ 283.2 $ 294.0 $ 280.3 Operating income 145.4 125.2 147.4 119.2 Net income 94.1 84.5 105.9 86.3 Net income allocated to common stockholders 93.5 87.6 105.5 86.1 Basic earnings per share $ 0.84 $ 0.79 $ 0.95 $ 0.78 Diluted earnings per share $ 0.84 $ 0.78 $ 0.94 $ 0.77 First Second Third Fourth Year ended December 31, 2018 (in millions, except per share data) Quarter Quarter Quarter Quarter Revenue less cost of revenues $ 328.5 $ 283.5 $ 270.5 $ 334.4 Operating income 167.7 129.1 126.1 176.5 Net income 118.1 83.0 85.7 138.4 Net income allocated to common stockholders 117.3 82.4 85.0 137.4 Basic earnings per share $ 1.04 $ 0.74 $ 0.76 $ 1.23 Diluted earnings per share $ 1.04 $ 0.73 $ 0.76 $ 1.23 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 27. SUBSEQUENT EVENTS On February 11, 2020, the Company's board of directors declared a quarterly cash dividend of $0.36 per share. The dividend is payable on March 13, 2020 to stockholders of record at the close of business on March 2, 2020. On February 19, 2020, the Company granted 163,261 RSUs and 42,173 PSUs to certain officers and employees at a fair value of $120.44 per share, the closing price of the Company’s stock on the grant date. The shares have a three year vesting period based on achievement of certain service, performance and/or market conditions and vesting accelerates upon the occurrence of a termination of employment following a change in control of the Company or in the event of earlier death, disability or qualified retirement. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | (b) Basis of Presentation The accompanying financial statements are presented on a consolidated basis to include the accounts and transactions of Cboe Global Markets, Inc. and its majority owned subsidiaries and all significant intercompany accounts and transactions have been eliminated. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, valuation of redeemable noncontrolling interest and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates based upon historical experience, observance of trends, information available from outside sources and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. For those consolidated subsidiaries in which the Company’s ownership is less than 100% and for which the Company has control over the assets and liabilities and the management of the entity, the outside stockholders’ interests are shown as non-controlling interest. |
Segment information | Segment information The Company has five business segments: Options, U.S. Equities, Futures, European Equities, and Global FX, which is reflective of how the Company’s chief operating decision-maker reviews and operates the business. See Note 17 (“Segment Reporting”) for more information. |
Use of Estimates | (c) Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of the amounts of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of goodwill, indefinite-lived intangible assets, and unrecognized tax benefits. |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents The Company’s cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains cash at various financial institutions and brokerage firms which, at times, may be in excess of the federal depository insurance limit. The Company’s management regularly monitors these institutions and believes that the potential for future loss is remote. The Company considers all liquid investments with original or acquired maturities of three months or less to be cash equivalents. |
Financial Investments | (e) Financial Investments Financial investments are classified as trading or available-for-sale. Trading financial investments represent financial investments held by the Company’s broker-dealer subsidiary that retain the industry-specific accounting classification required for broker-dealers and marketable securities held in a rabbi trust for the Company’s non-qualified retirement and benefit plans. The investments held by the broker-dealer subsidiary are recorded at fair value with changes in unrealized gains and losses reflected within interest expense, net in the consolidated statements of income. The investments held in a rabbi trust are recorded at fair value with changes in unrealized gains or losses recorded within other income (expense) and the equal and offsetting charges in the related liability are recorded in compensation and benefits expense in the consolidated statements of income. Available-for-sale financial investments are comprised of the financial investments not held by the broker-dealer subsidiary, including highly liquid U.S. Treasury securities. Unrealized gains and losses, net of income taxes, are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. Interest on financial investments, including amortization of premiums and accretion of discounts, is recognized as income when earned. Realized gains and losses on financial investments are calculated using the specific identification method and are included in interest expense, net in the accompanying consolidated statements of income. A decline in the fair value of any available-for-sale investment below carrying amount that is deemed to be other-than-temporary results in an impairment to reduce the carrying amount to realizable value. To determine whether an impairment is other-than-temporary, the Company considers all available information relevant to the collectability of the investment, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates. |
Accounts Receivable, Net | (f) Accounts Receivable, Net Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried at cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis and recognizes the total owed from a member firm as an asset and the total owed to a member firm as a liability. On a periodic basis, management evaluates the Company’s receivables and determines an appropriate allowance for uncollectible accounts receivable based on anticipated collections. In circumstances where a specific customer’s inability to meet its financial obligations is probable, the Company records a specific provision for uncollectible accounts against amounts due to reduce the receivable to the amount the Company estimates will be collected. Once the Company determines an allowance for an uncollectible account is necessary, interest on the receivable ceases to be accrued. |
Property and Equipment, Net | (g) Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated lives of the assets, generally ranging from three Long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. The Company bases this evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present that would indicate that the carrying amount of any asset may not be recoverable, the Company determines whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. In the event of impairment, the Company recognizes a loss for the difference between the carrying amount and the estimated value of the asset as measured using quoted market prices or, in the absence of quoted market prices, a discounted cash flow analysis. The Company expenses software development costs as incurred during the preliminary project stage, while capitalizing costs incurred during the application development stage, which includes design, coding, installation and testing activities. |
Goodwill and Intangible Assets, Net | (h) Goodwill and Intangible Assets, Net Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of a business acquired. Goodwill is allocated to the Company’s reporting units based on the assignment of the fair values of each reporting unit of the acquired company. The Company tests goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying value may be impaired. The impairment test is performed during the fourth quarter using October 1 st no Intangible assets, net, primarily include acquired trademarks and trade names, customer relationships, strategic alliance agreements, licenses and registrations and non-compete agreements. Intangible assets with finite lives are amortized based on the discounted cash flow method applied over the estimated useful lives of the intangible assets and are tested for impairment if certain events occur indicating that the carry value may be impaired. Intangible assets deemed to have indefinite useful lives are not amortized, but instead are tested for impairment at least annually, usually concurrently with goodwill. Impairment exists if the fair value of the asset is less than the carrying amount, and in that case, an impairment loss is recorded. The Company performed its 2019 annual intangible assets impairment test using October 1, 2019 carrying values and determined that no impairment existed. |
Foreign Currency | (i) Foreign Currency The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated into U.S. dollars using the exchange rate in effect as of each balance sheet date. Statements of income and cash flow amounts are translated using the average exchange rate during the period. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at the applicable exchange rates are included in accumulated other comprehensive income (loss), net in the balance sheet. Foreign currency gains and losses are recorded as other income, net in the consolidated statements of income. The Company’s operations in the United Kingdom, Singapore, and Hong Kong are recorded in Pounds sterling, Singapore dollars, and Hong Kong dollars, respectively. |
Income Taxes | (j) Income Taxes Deferred taxes are recorded on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense is recognized on the full amount of deferred benefits for uncertain tax positions. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in the income tax provision within the consolidated statements of income. We have elected to account for global intangible low-taxed income (“GILTI”) in the period in which it is incurred, and therefore, have not provided any deferred tax impacts of GILTI in our consolidated financial statements. |
Revenue Recognition | (k) Revenue Recognition For further discussion related to revenue recognition of fees, such as transaction fees and liquidity payments, access and capacity fees, market data fees, and regulation transaction and Section 31 fees, see Note 4 (“Revenue Recognition”). |
Concentrations of Revenue and Liquidity Payments | Concentrations of Revenue and Liquidity Payments For the years ended December 31, 2019, 2018, and 2017, two members accounted for 18%, 23%, and 17%, respectively, of the Company’s transaction fees. No member accounted for more than 15% of the Company’s total revenue during the years ended December 31, 2019, 2018, and 2017. For the years ended December 31, 2019, 2018, and 2017, No member is contractually or otherwise obligated to continue to use the Company’s services. The loss of, or a significant reduction of, participation by these members may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows. The two largest clearing members mentioned above clear the majority of the market-maker sides of transactions at all of the Company’s U.S. options exchanges. If either of these clearing members were to withdraw from the business of market-maker clearing and market-makers were unable to transfer to another clearing member, this could create significant disruption to the U.S. options markets, including ours. |
Earnings Per Share | (l) Earnings Per Share The computation of basic earnings per share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders. The computation of diluted earnings per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method. |
Stock Based Compensation | (m) Stock-Based Compensation The Company grants stock-based compensation to its employees through awards of restricted stock units. In connection with the acquisition of Bats, Bats previously awarded stock options and restricted stock awards. The Company records stock-based compensation expense for all stock-based compensation granted based on the grant-date fair value. The Company recognizes stock-based compensation expense related to stock-based compensation awards with graded vesting that have a service condition on a straight-line basis over the requisite service period of the entire award. In connection with the acquisition of Bats, as discussed in Note 20 (“Stock-Based Compensation’) in further detail, each outstanding Bats stock option granted under any of the Bats Plans that was outstanding immediately prior to the effective time of the acquisition of Bats was converted into an option to purchase our common stock, on the same terms and conditions (including vesting schedule) as were applicable to such Bats stock option. All stock options are currently vested. In addition, each award of Bats restricted shares granted under any of the Bats Plans that was unvested immediately prior to the effective time of the acquisition of Bats was assumed by the Company and converted into an award of restricted shares of our common stock, subject to the same terms and conditions (including vesting schedule) that applied to the applicable Bats restricted shares. The amount of stock-based compensation expense related to awards of restricted stock and restricted stock units is based on the fair value of Cboe Global Markets, Inc. common stock at the date of grant. The fair value is based on a current market-based transaction of the Company’s common stock. If a market-based transaction of the Company’s common stock is not available, then the fair value is based on an independent third-party valuation using equal weighting of two valuation analysis techniques, discounted cash flows and valuation multiples observed from publicly traded companies in a similar industry. |
Business Combinations | (n) Business Combinations The Company records identifiable assets, liabilities and goodwill acquired in a business combination at fair value at the acquisition date. Additionally, transaction-related costs are expensed in the period incurred. |
Debt Issuance Costs | (o) Debt Issuance Costs All costs incurred to issue debt are capitalized as a contra-liability and amortized over the life of the loan using the interest method. |
Cost and Equity Method Investments | (p) Cost and Equity Method Investments The Company uses the cost method to account for a non-marketable equity investment in an entity that it does not control and for which it does not have the ability to exercise significant influence over an entity’s operating and financial policies. When it does not have a controlling financial interest in an entity but can exercise significant influence over the entity's operating and financial policies, such investment is accounted for using the equity method. The Company recognizes dividend income when declared. In general, the equity method of accounting is used when the Company owns 20% to 50% of the outstanding voting stock of a company and when it is able to exercise significant influence over the operating and financial policies of a company. The Company has an investment where it has significant influence and as such accounts for the investments under the equity method of accounting. For equity method investments, the Company records the pro-rata share of earnings or losses each period and records any dividends received as a reduction in the investment balance. The equity method investment is evaluated for other-than-temporary declines in value by considering a variety of factors such as the earnings capacity of the investment and the fair value of the investment compared to its carrying amount. If the estimated fair value of the investment is less than the carrying amount and the decline in value is considered to be other than temporary, the excess of the carrying amount over the estimated fair value is recognized in the financial statements as an impairment. |
Leases | (q) Leases The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, operating leases are included in operating lease right of use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities on the balance sheet as of December 31, 2019. The Company does not have any finance leases as of December 31, 2019. ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. The Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the lease liabilities, as the rate implicit in the Company’s leases are generally not reasonably determinable. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s leases. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. For short-term operating leases, lease expense is recognized on a straight-line basis over the lease term. |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – Adopted In February 2016, the FASB issued ASU 2016-02, Leases. This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding ROU asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases ASU 2018-11, Leases (Topic 842) Targeted Improvements, ASU 2018-20, Leases (Topic 842) Narrow-Scope Improvements for Lessors, and ASU 2019-01, Leases (Topic 842) Codification Improvements, to clarify the implementation guidance. This updated guidance provides an optional transition method, which allows for the initial application of the new accounting standard at the adoption date and the recognition of a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the period of adoption. These updates are effective for annual and interim periods beginning after December 15, 2018. The Company adopted the new ASUs on January 1, 2019, using the alternative transition approach and will not restate comparative periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to not reassess contracts to determine if they contain leases, lease classification and initial direct costs. The Company’s application of the new standard resulted in changes to the balance sheet but did not have an impact on our consolidated income statements and statements of cash flows. See Note 25 (“Leases”) for more information. Recent Accounting Pronouncements - Issued, not yet Adopted In June 2016, the FASB issued ASU 2016-13, Credit Losses. This update replaces the incurred loss impairment methodology in current GAAP with a methodology that requires management to estimate an expected lifetime credit loss on financial assets. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees, and net investments in leases, as well as trade receivables. The update also amends the impairment model for available-for-sale debt securities. The forward-looking expected lifetime credit loss model generally will result in the earlier recognition of allowances for losses. For public entities, the update is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company adopted the new ASU on January 1, 2020 using the modified retrospective approach and will not restate comparative periods. Upon the adoption of the standard, the Company expects to recognize an immaterial cumulative-effect adjustment to retained earnings for the expected lifetime credit loss on the financial instruments within the scope of the standard, including accounts receivable, net. Based on the Company’s high turnover and collectability of accounts receivable, as well as the monthly billing process for the majority of revenue, the Company does not expect a significant variance in the recognized loss between the incurred loss impairment methodology under the prior standard and the expected lifetime credit loss model under the update. The financial instruments other than accounts receivable, net that are within the scope of the standard are not materially impacted by the standard. The impact to the consolidated balance sheets is expected to be immaterial in nature and there is no expected impact on the consolidated income statements and statements of cash flows. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For public entities, the update is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. The Company will adopt the update for the financial statements issued for the first quarter of 2020 and does not anticipate a material impact to the consolidated financial statements. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE RECOGNITION | |
Schedule of disaggregation of revenue | Corporate European items and Options U.S. Equities Futures Equities Global FX eliminations Total Year Ended December 31, 2019 Transaction fees $ 742.9 $ 744.6 $ 110.2 $ 73.1 $ 45.4 $ — $ 1,716.2 Access and capacity fees 104.1 78.9 15.6 16.5 6.8 — 221.9 Market data fees 55.7 138.1 6.5 12.6 0.6 — 213.5 Regulatory fees 64.0 247.0 0.7 — — — 311.7 Other revenue 16.4 4.5 2.9 8.6 0.2 0.2 32.8 983.1 1,213.1 135.9 110.8 53.0 0.2 2,496.1 Timing of revenue recognition Services transferred at a point in time $ 823.3 $ 996.1 $ 113.8 $ 81.7 $ 45.6 $ 0.2 $ 2,060.7 Services transferred over time 159.8 217.0 22.1 29.1 7.4 — 435.4 983.1 1,213.1 135.9 110.8 53.0 0.2 2,496.1 Year Ended December 31, 2018 Transaction fees $ 835.5 $ 876.4 $ 128.0 $ 97.4 $ 49.6 $ — $ 1,986.9 Access and capacity fees 99.4 75.6 15.1 14.7 6.2 — 211.0 Market data fees 42.9 140.9 6.6 13.1 0.5 — 204.0 Regulatory fees 60.0 273.8 0.1 — — — 333.9 Other revenue 19.7 6.4 — 6.4 0.1 0.4 33.0 1,057.5 1,373.1 149.8 131.6 56.4 0.4 2,768.8 Timing of revenue recognition Services transferred at a point in time $ 915.2 $ 1,156.6 $ 128.1 $ 103.8 $ 49.7 $ 0.4 $ 2,353.8 Services transferred over time 142.3 216.5 21.7 27.8 6.7 — 415.0 1,057.5 1,373.1 149.8 131.6 56.4 0.4 2,768.8 Year Ended December 31, 2017 Transaction fees $ 673.8 $ 659.4 $ 131.7 $ 66.2 $ 33.8 $ — $ 1,564.9 Access and capacity fees 97.3 60.5 9.1 10.6 4.1 — 181.6 Market data fees 41.1 111.0 2.5 9.6 0.3 — 164.5 Regulatory fees 55.4 236.1 — — — — 291.5 Other revenue 15.9 5.5 1.3 3.2 — 0.7 26.6 883.5 1,072.5 144.6 89.6 38.2 0.7 2,229.1 Timing of revenue recognition Services transferred at a point in time $ 745.1 $ 901.0 $ 133.0 $ 69.4 $ 33.8 $ 0.7 $ 1,883.0 Services transferred over time 138.4 171.5 11.6 20.2 4.4 — 346.1 883.5 1,072.5 144.6 89.6 38.2 0.7 2,229.1 |
Schedule of revenue recognized from contract liabilities and the remaining balance | Balance at January 1, 2019 Cash Additions Revenue Recognized Balance at December 31, 2019 Liquidity provider sliding scale (1) $ — $ 9.6 $ (9.6) $ — Other, net 8.5 31.7 (35.7) 4.5 Total deferred revenue $ 8.5 $ 41.3 $ (45.3) $ 4.5 (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. |
SEVERANCE (Tables)
SEVERANCE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SEVERANCE | |
Summary of employee termination benefits recognized | The following is a summary of the employee termination benefits recognized within compensation and benefits in the consolidated statements of income (in millions): Employee Termination Benefits Balance at December 31, 2018 $ 6.1 Termination benefits accrued 10.7 Termination payments made (10.1) Balance at December 31, 2019 $ 6.7 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENTS | |
Schedule of equity and cost method investments | As of December 31, 2019 and 2018, the Company's investments were comprised of the following (in millions): As of December 31, 2019 2018 Equity method investments: Investment in Signal Trading Systems, LLC $ 12.6 $ 12.4 Investment in EuroCCP 10.3 9.3 Total equity method investments 22.9 21.7 Cost method investments: Investment in OCC 0.3 30.3 Investment in Eris Exchange Holdings, LLC 20.8 20.0 Investment in American Financial Exchange, LLC 8.6 5.9 Investment in Cboe Vest Financial Group, Inc. 2.9 — Other cost method investments 5.7 8.3 Total cost method investments 38.3 64.5 Total investments $ 61.2 $ 86.2 |
FINANCIAL INVESTMENTS (Tables)
FINANCIAL INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENTS | |
Schedule of Financial Investments | December 31, 2019 Cost basis Unrealized gains Unrealized losses Fair Value Available-for-sale securities: U.S. Treasury securities $ 47.6 $ — $ — $ 47.6 Trading securities: Marketable securities (1) $ 23.4 $ — $ — $ 23.4 Total financial investments $ 71.0 $ — $ — $ 71.0 December 31, 2018 Cost basis Unrealized gains Unrealized losses Fair Value Available-for-sale securities: U.S. Treasury securities $ 35.7 $ — $ — $ 35.7 Total financial investments $ 35.7 $ — $ — $ 35.7 (1) The marketable securities are primarily mutual funds maintained for non-qualified retirement and benefit plans, also referred to as deferred compensation plan assets. See Note 18 (“Employee Benefit Plan”) for more information . |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of Property and Equipment, Net | Property and equipment consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, December 31, 2019 2018 Construction in progress $ 1.2 $ 0.1 Building — 81.7 Furniture and equipment 164.4 161.6 Total property and equipment 165.6 243.4 Less accumulated depreciation (118.6) (171.7) Property and equipment, net $ 47.0 $ 71.7 |
OTHER ASSETS, NET (Tables)
OTHER ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER ASSETS, NET | |
Schedule of Other Assets, Net | Other assets, net consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, December 31, 2019 2018 Software development work in progress $ 2.6 $ 8.7 Data processing software (1) 84.3 219.0 Less accumulated depreciation and amortization (57.2) (193.2) Data processing software, net 29.7 34.5 Other assets (2) 21.9 28.4 Data processing software and other assets, net $ 51.6 $ 62.9 (1) During the fourth quarter of 2019, the Company disposed of data processing software for the technology platform known as Cboe Command, as Cboe Options was migrated to the Company’s current platform on October 7, 2019. As a result of the disposal, a loss on disposal of $4.5 million was recorded in acquisition-related costs within the Options segment in the accompanying consolidated statements of income. (2) At December 31, 2019 and December 31, 2018, the majority of the balance included long-term prepaid assets and notes receivable. The notes receivable included within other assets, net on the consolidated balance sheets relate to the consolidated audit trail (“CAT”), which involves the creation of a comprehensive audit trail that strives to enhance regulators’ ability to monitor trading activity in the U.S. markets through a phased implementation. While the funding of the CAT is ultimately expected to be provided by both SROs (which includes the Exchanges) and industry members, until fee filings associated with the funding model are effective with or approved by the SEC, the funding to date has solely been provided by the SROs. The funding by the SROs has been done in exchange for promissory notes, which are expected to be repaid once such industry member fees are collected. Until the fee filings associated with the funding model are effective with or approved by the SEC, the SROs may continue to incur additional significant costs. Due to circumstances associated with the development of the CAT in the fourth quarter of 2019, the Company estimated a loss associated with the uncollectibility of the promissory notes, and recorded a provision for the notes receivable of $23.4 million. As of December 31, 2019 and December 31, 2018, the notes receivable, net balance was $9.2 million and $20.3 million, respectively. |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |
Schedule of goodwill details by segment | The following table presents the details of goodwill by segment (in millions): U.S. European Corporate Options Equities Equities Global FX and Other Total Balance as of December 31, 2017 $ 239.4 $ 1,740.4 $ 441.6 $ 267.2 $ 18.8 $ 2,707.4 Additions — — — — — — Dispositions — — — — — — Changes in foreign currency exchange rates — — (16.0) — — (16.0) Balance as of December 31, 2018 $ 239.4 $ 1,740.4 $ 425.6 $ 267.2 $ 18.8 $ 2,691.4 Additions — — — — — — Dispositions — — — — (8.3) (8.3) Impairment — — — — (10.5) (10.5) Changes in foreign currency exchange rates — — 9.5 — — 9.5 Balance as of December 31, 2019 $ 239.4 $ 1,740.4 $ 435.1 $ 267.2 $ — $ 2,682.1 |
Schedule of details of intangible assets | The following table presents the details of the intangible assets (in millions): U.S. European Corporate Options Equities Equities Global FX and Other Total Balance as of December 31, 2017 $ 198.7 $ 1,071.8 $ 427.0 $ 199.6 $ 5.5 $ 1,902.6 Additions — — — — — — Dispositions — — — — — — Amortization (16.8) (81.5) (27.7) (32.7) (1.3) (160.0) Changes in foreign currency exchange rates — — (22.4) — — (22.4) Balance as of December 31, 2018 $ 181.9 $ 990.3 $ 376.9 $ 166.9 $ 4.2 $ 1,720.2 Additions — — — — — — Dispositions — — — — (3.3) (3.3) Amortization (15.3) (68.9) (24.8) (28.7) (0.9) (138.6) Changes in foreign currency exchange rates — — 11.6 — — 11.6 Balance as of December 31, 2019 $ 166.6 $ 921.4 $ 363.7 $ 138.2 $ — $ 1,589.9 |
Schedule of categories of intangible assets | The following tables present the categories of intangible assets at December 31, 2019 and 2018 (in millions): Weighted December 31, 2019 Average U.S. European Corporate Amortization Options Equities Equities Global FX and Other Period (in years) Trading registrations and licenses $ 95.5 $ 572.7 $ 182.2 $ — $ — Indefinite Customer relationships 38.8 222.9 169.7 140.0 — 17 Market data customer relationships 53.6 322.0 63.6 64.4 — 12 Technology 24.8 22.5 23.9 22.5 — 4 Trademarks and tradenames 1.7 6.0 1.9 1.2 — 6 Accumulated amortization (47.8) (224.7) (77.6) (89.9) — $ 166.6 $ 921.4 $ 363.7 $ 138.2 $ — Weighted December 31, 2018 Average U.S. European Corporate Amortization Options Equities Equities Global FX and Other Period (in years) Trading registrations and licenses $ 95.5 $ 572.7 $ 176.0 $ — $ — Indefinite Customer relationships 38.8 222.9 163.9 140.0 3.0 18 Market data customer relationships 53.6 322.0 61.5 64.4 — 13 Technology 24.8 22.5 23.1 22.5 4.0 5 Trademarks and tradenames 1.7 6.0 1.8 1.2 1.0 2 Accumulated amortization (32.5) (155.8) (49.4) (61.2) (3.8) $ 181.9 $ 990.3 $ 376.9 $ 166.9 $ 4.2 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, 2019 December 31, 2018 Compensation and benefit related liabilities $ 35.2 $ 52.4 Termination benefits 6.7 6.1 Royalties 18.6 25.0 Accrued liabilities 77.8 91.8 Marketing fee payable 12.6 10.4 Accounts payable 21.0 12.8 Total accounts payable and accrued liabilities $ 171.9 $ 198.5 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
DEBT | |
Schedule of debt | The Company’s debt consisted of the following as of December 31, 2019 and 2018 (in millions): December 31, 2019 December 31, 2018 $300 million Term Loan Agreement due December 2021, floating rate $ 222.4 $ 271.1 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 645.2 644.5 $300 million fixed rate Senior Notes due June 2019, stated rate of 1.950% — 299.8 Revolving Credit Agreement — — Total Debt $ 867.6 $ 1,215.4 |
Schedule of maturities of long-term debt | The future expected loan repayments related to the Term Loan Agreement and the 3.650% Senior Notes as of December 31, 2019 are as follows (in millions): 2020 $ — 2021 225.0 2022 — 2023 — Thereafter 650.0 Principal amounts repayable 875.0 Debt issuance costs (3.3) Unamortized discounts on notes (4.1) Total debt outstanding $ 867.6 |
Schedule of interest expense | Interest expense recognized on the Term Loan Agreement and the Senior Notes is included in interest expense, net in the consolidated statements of income, for the years ended December 31, 2019, 2018 and 2017 are as follows (in millions): Year Ended Year Ended Year Ended December 31, December 31, December 31, 2019 2018 2017 Components of interest expense: Contractual interest $ 35.6 $ 38.0 $ 39.0 Amortization of debt discount 0.6 0.7 0.6 Amortization of debt issuance costs 1.6 1.8 3.0 Interest expense $ 37.8 $ 40.5 $ 42.6 Interest income (1.9) (2.3) (1.3) Interest expense, net $ 35.9 $ 38.2 $ 41.3 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | |
Schedule of Accumulated Other Comprehensive Income, Net | The following represents the changes in accumulated other comprehensive income (loss) by component (in millions): Foreign currency Unrealized Total Other translation Investment Post-Retirement Comprehensive adjustment Gain/Loss Benefits Income Balance at December 31, 2017 $ 51.3 $ 0.2 $ (0.8) $ 50.7 Other comprehensive loss (39.2) — — (39.2) Balance at December 31, 2018 $ 12.1 $ 0.2 $ (0.8) $ 11.5 Other comprehensive income 26.1 — — 26.1 Balance at December 31, 2019 $ 38.2 $ 0.2 $ (0.8) $ 37.6 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
Schedule of fair value hierarchy for assets measured at fair value on a recurring basis | The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018 (in millions): December 31, 2019 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 47.6 $ 47.6 $ — $ — Marketable securities: Mutual funds 15.7 15.7 — — Money market funds 7.7 7.7 — — Total assets $ 71.0 $ 71.0 $ — $ — Liabilities: Contingent consideration liability to related party $ 2.2 $ — $ — $ 2.2 Total Liabilities $ 2.2 $ — $ — $ 2.2 December 31, 2018 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 35.7 $ 35.7 $ — $ — Total assets $ 35.7 $ 35.7 $ — $ — Liabilities: Contingent consideration liability to related party $ 3.9 $ — $ — $ 3.9 Total Liabilities $ 3.9 $ — $ — $ 3.9 |
Schedule of fair value hierarchy of financial instruments held | The following table presents the Company’s fair value hierarchy for certain assets and liabilities held by the Company as of December 31, 2019 and 2018 (in millions): December 31, 2019 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities 47.6 47.6 — — Deferred compensation plan assets 23.4 23.4 — — Total assets $ 71.0 $ 71.0 $ — $ — Liabilities: Contingent consideration liability to related party 2.2 — — 2.2 Deferred compensation plan liabilities 23.4 23.4 — — Debt 867.6 — 867.6 — Total liabilities $ 893.2 $ 23.4 $ 867.6 $ 2.2 December 31, 2018 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities 35.7 35.7 — — Total assets $ 35.7 $ 35.7 $ — $ — Liabilities: Contingent consideration liability to related party 3.9 — — 3.9 Debt 1,215.4 — 1,215.4 — Total liabilities $ 1,219.3 $ — $ 1,215.4 $ 3.9 |
Summary of changes in the fair value of level 3 financial liabilities | Level 3 Financial Liabilities for the Year Ended December 31, 2019 Balance at Realized (gains) Beginning of losses during Balance at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities to related party $ 3.9 $ 2.6 $ — $ (4.3) $ 2.2 Total Liabilities $ 3.9 $ 2.6 $ — $ (4.3) $ 2.2 Level 3 Financial Liabilities for the Year Ended December 31, 2018 Balance at Realized (gains) Beginning of losses during Balances at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities to related parties $ 56.6 $ 3.9 $ — $ (56.6) $ 3.9 Total Liabilities $ 56.6 $ 3.9 $ — $ (56.6) $ 3.9 |
REDEEMABLE NONCONTROLLING INT_2
REDEEMABLE NONCONTROLLING INTEREST (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REDEEMABLE NONCONTROLLING INTEREST | |
Schedule of Redeemable Noncontrolling Interest | For the year ended December 31, 2019, the following reflects changes in our redeemable noncontrolling interest (in millions): Redeemable Balance as of December 31, 2018 $ 9.4 Net loss attributable to redeemable noncontrolling interest (4.1) Redemption value adjustment of redeemable noncontrolling interest 0.5 Deconsolidation of former subsidiary with noncontrolling interest (5.8) Balance as of December 31, 2019 $ — |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SEGMENT REPORTING | |
Summarized Financial Information by Reportable Segment | Summarized financial data of reportable segments was as follows (in millions): Corporate European items and Options U.S. Equities Futures Equities Global FX eliminations Total Year ended December 31, 2019 Revenues $ 983.1 $ 1,213.1 $ 135.9 $ 110.8 $ 53.0 $ 0.2 $ 2,496.1 Operating income (loss) 334.3 132.5 83.1 20.3 (4.9) (28.1) 537.2 Year ended December 31, 2018 Revenues $ 1,057.5 $ 1,373.1 $ 149.8 $ 131.6 $ 56.4 $ 0.4 $ 2,768.8 Operating income (loss) 390.9 140.5 85.7 24.1 (11.7) (30.1) 599.4 Year ended December 31, 2017 Revenues $ 883.5 $ 1,072.5 $ 144.6 $ 89.6 $ 38.2 $ 0.7 $ 2,229.1 Operating income (loss) 252.2 103.2 126.8 8.9 (12.8) (106.4) 371.9 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
STOCK-BASED COMPENSATION | |
Summary of stock option activity | Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Value Shares Price Term (years) (in millions) Outstanding, December 31, 2017 442,042 $ 25.36 Exercised (72,559) 20.08 Outstanding, December 31, 2018 369,483 $ 26.40 Exercised (358,649) 26.63 Outstanding and exercisable December 31, 2019 10,834 $ 18.59 0.5 $ 1.1 |
Summary of restricted stock activity | Weighted Number of average grant shares date fair value Nonvested stock at December 31, 2018 631,764 $ 85.85 Granted 216,891 93.45 Vested (313,856) 83.25 Forfeited (98,786) 85.50 Nonvested stock at December 31, 2019 436,013 $ 91.58 |
Summary of performance-based restricted stock unit | Weighted Number of Average Grant Shares Date Fair Value Nonvested stock at December 31, 2018 151,842 $ 100.81 Granted 86,134 88.22 Vested (69,372) 74.56 Forfeited (36,356) 97.78 Nonvested stock at December 31, 2019 132,248 $ 107.21 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY | |
Summary of repurchased shares of the company's common stock under the share repurchase program | Average Repurchase Shares Repurchased Price Per Share Amount of Repurchases 2019 Fourth quarter 600,442 $ 115.76 $ 69,505,515 Third quarter 453,319 115.49 52,355,492 Second quarter 100 104.75 10,477 First quarter 366,793 95.36 34,999,992 Total open market common stock repurchases 1,420,654 156,871,476 2018 Fourth quarter — $ — $ — Third quarter 491,899 99.75 49,064,854 Second quarter 468,913 102.92 48,258,926 First quarter 387,142 112.52 43,562,504 Total open market common stock repurchases 1,347,954 140,886,284 2017 Fourth quarter — $ — $ — Third quarter — — — Second quarter — — — First quarter — — — Total open market common stock repurchases — — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of net deferred tax liabilities | Net deferred tax assets and liabilities consist of the following as of December 31, 2019 and 2018 (in millions): As of December 31, 2019 2018 Deferred tax assets: Accrued compensation and benefits $ 14.1 $ 17.1 Property, equipment and technology, net 1.9 2.6 Operating leases 13.5 — Other 30.5 20.7 Subtotal 60.0 40.4 Valuation allowance (4.2) (2.0) Total deferred tax assets 55.8 38.4 Deferred tax liabilities: Intangibles (357.6) (380.2) Property, equipment and technology, net (14.5) (17.4) Investments (68.2) (75.3) Operating leases (13.0) — Prepaid expenses or assets (2.2) (2.3) Total deferred tax liabilities (455.5) (475.2) Net deferred tax assets/(liabilities) $ (399.7) $ (436.8) |
Schedule of provision for income taxes | The provision for income taxes for the years ended December 31, 2019, 2018 and 2017 consists of the following (in millions): Year Ended December 31, 2019 2018 2017 Current tax expense: Federal $ 98.7 $ 125.1 $ 141.0 State 61.2 58.7 25.8 Foreign 7.9 9.9 5.4 Total current tax expense 167.8 193.7 172.2 Deferred income tax expense: Federal (28.7) (18.4) (227.5) State (3.8) (23.7) (6.5) Foreign (4.7) (5.6) (4.4) Total deferred income tax expense (37.2) (47.7) (238.4) Total $ 130.6 $ 146.0 $ (66.2) |
Schedule of income from continuing operations before taxes | For the years ended December 31, 2019, 2018, and 2017, income before taxes consists of the following (in millions): Year Ended December 31, 2019 2018 2017 U.S. operations $ 480.0 $ 548.3 $ 326.7 Foreign operations 21.4 22.9 7.7 $ 501.4 $ 571.2 $ 334.4 |
Schedule of reconciliation of the statutory federal income tax rate to the effective income tax rate | A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2019, 2018, and 2017 is as follows: Year Ended December 31, 2019 2018 2017 Statutory U.S. federal income tax rate 21.0 % 21.0 % 35.0 % Impact of federal, state and local tax law & rate changes, net — % (3.5) % (55.1) % State taxes, net of federal benefit 5.0 % 5.0 % 4.3 % Uncertain tax positions 2.6 % 6.1 % — % Deduction for Foreign-Derived Intangible Income (1.2) % — — Section 199 deduction — % — % (2.6) % Other, net (1.4) % (3.0) % (1.4) % Effective income tax rate 26.0 % 25.6 % (19.8) % |
Schedule of reconciliation of beginning and ending uncertain tax positions | A reconciliation of the beginning and ending uncertain tax positions, excluding interest and penalties, is as follows (in thousands): 2019 2018 2017 Balance as of January 1 $ 102.3 $ 67.8 $ 41.9 Acquired unrecognized tax benefits — — 23.2 Gross increases on tax positions in prior period 3.1 35.0 6.2 Gross decreases on tax positions in prior period (6.3) (19.0) (14.7) Gross increases on tax positions in current period 18.5 19.0 12.7 Lapse of statute of limitations (0.9) (0.5) (1.5) Balance as of December 31 $ 116.7 $ 102.3 $ 67.8 |
Schedule of tax years currently under audit or remain open and subject to examination by the tax authorities | U.S. Federal 2008-2019 Illinois 2016-2019 New York 2011-2019 New York City 2011-2019 United Kingdom 2017-2019 |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NET INCOME PER COMMON 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 (in millions, except per share data): Year Ended December 31, (in millions, except per share amounts) 2019 2018 2017 Basic EPS Numerator: Net Income $ 370.8 $ 425.2 $ 400.6 Loss attributable to noncontrolling interest 4.1 1.3 1.1 Net Income excluding noncontrolling interest 374.9 426.5 401.7 Change in redemption value of noncontrolling interest (0.5) (1.3) (1.1) Earnings allocated to participating securities (1.7) (3.1) (3.9) Net Income allocated to common stockholders $ 372.7 $ 422.1 $ 396.7 Basic EPS Denominator: Weighted average shares outstanding 111.4 111.8 107.2 Basic Net Income Per Common Share $ 3.35 $ 3.78 $ 3.70 Diluted EPS Numerator: Net Income $ 370.8 $ 425.2 $ 400.6 Loss attributable to noncontrolling interest 4.1 1.3 1.1 Net Income excluding noncontrolling interest 374.9 426.5 401.7 Change in redemption value of noncontrolling interest (0.5) (1.3) (1.1) Earnings allocated to participating securities (1.7) (3.1) (3.9) Net Income allocated to common stockholders $ 372.7 $ 422.1 $ 396.7 Diluted EPS Denominator: Weighted average shares outstanding 111.4 111.8 107.2 Dilutive common shares issued under stock program 0.4 0.4 0.3 Total dilutive weighted average shares 111.8 112.2 107.5 Diluted Net Income Per Common Share $ 3.34 $ 3.76 $ 3.69 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
Schedule of supplemental balance sheet | The following table presents the supplemental balance sheet information related to leases for the year ended December 31, 2019 (in millions): December 31, 2019 Operating lease right of use assets $ 53.4 Total leased assets $ 53.4 Accrued liabilities $ 8.7 Non-current operating lease liabilities 46.7 Total leased liabilities $ 55.4 |
Schedule of lease cost and other information | The following table presents operating lease costs and other information as of and for the year ended December 31, 2019 (in millions, except as stated): Year Ended December 31, 2019 Operating lease costs (1) $ 12.4 Lease term and discount rate information: Weighted average remaining lease term (years) 9.2 Weighted average discount rate 3.5 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 11.2 Right-of-use assets obtained in exchange for lease liabilities (2) 22.1 (1) Includes short-term lease and variable lease costs, which are immaterial. (2) Ex cludes right-of-use assets and lease liabilities recognized upon adoption of $40.3 million and $42.8 million, respectively. |
Schedule of maturities of lease liabilities | The maturities of the lease liabilities are as follows as of December 31, 2019 (in millions): December 31, 2019 2020 $ 10.4 2021 10.0 2022 9.3 2023 7.8 2024 3.5 After 2024 (1) 24.2 Total lease payments $ 65.2 Less: Interest (9.8) Present value of lease liabilities $ 55.4 (1) Total lease payments include $20.4 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $115.9 million of legally binding lease payments for leases signed but will commence after December 31, 2019. |
QUARTERLY DATA (UNAUDITED) (Tab
QUARTERLY DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY DATA (UNAUDITED) | |
Summary of quarterly data | First Second Third Fourth Year ended December 31, 2019 (in millions, except per share data) Quarter Quarter Quarter Quarter Revenue less cost of revenues $ 279.4 $ 283.2 $ 294.0 $ 280.3 Operating income 145.4 125.2 147.4 119.2 Net income 94.1 84.5 105.9 86.3 Net income allocated to common stockholders 93.5 87.6 105.5 86.1 Basic earnings per share $ 0.84 $ 0.79 $ 0.95 $ 0.78 Diluted earnings per share $ 0.84 $ 0.78 $ 0.94 $ 0.77 First Second Third Fourth Year ended December 31, 2018 (in millions, except per share data) Quarter Quarter Quarter Quarter Revenue less cost of revenues $ 328.5 $ 283.5 $ 270.5 $ 334.4 Operating income 167.7 129.1 126.1 176.5 Net income 118.1 83.0 85.7 138.4 Net income allocated to common stockholders 117.3 82.4 85.0 137.4 Basic earnings per share $ 1.04 $ 0.74 $ 0.76 $ 1.23 Diluted earnings per share $ 1.04 $ 0.73 $ 0.76 $ 1.23 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)itemsegment | Dec. 31, 2018item | Dec. 31, 2017item | |
Property and Equipment, Net | |||
Number of reportable segments | segment | 5 | ||
Goodwill impairment from annual impairment test | $ | $ 0 | ||
Intangible assets impairment loss | $ | $ 0 | ||
Minimum | |||
Property and Equipment, Net | |||
Useful life (in years) | 3 years | ||
Maximum | |||
Property and Equipment, Net | |||
Useful life (in years) | 7 years | ||
Transaction fees | Customer Risk | |||
Property and Equipment, Net | |||
Number of members | 2 | 2 | 2 |
Concentration risk (as a percent) | 18.00% | 23.00% | 17.00% |
Revenue | Customer Risk | |||
Property and Equipment, Net | |||
Number of members | 0 | 0 | 0 |
Concentration risk (as a percent) | 15.00% | 15.00% | 15.00% |
Liquidity payments | Customer Risk | |||
Property and Equipment, Net | |||
Number of members | 0 | 0 | 0 |
Concentration risk (as a percent) | 15.00% | 15.00% | 15.00% |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of revenue by product line and Segment (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting Information | |||
Number of types of regulatory fees the Company recognizes | item | 2 | ||
Revenues | $ 2,496.1 | $ 2,768.8 | $ 2,229.1 |
Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 2,060.7 | 2,353.8 | 1,883 |
Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 435.4 | 415 | 346.1 |
Corporate Items and Eliminations | |||
Segment Reporting Information | |||
Revenues | 0.2 | 0.4 | 0.7 |
Corporate Items and Eliminations | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 0.2 | 0.4 | 0.7 |
Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 983.1 | 1,057.5 | 883.5 |
Options | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 823.3 | 915.2 | 745.1 |
Options | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 159.8 | 142.3 | 138.4 |
U.S. Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 1,213.1 | 1,373.1 | 1,072.5 |
U.S. Equities | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 996.1 | 1,156.6 | 901 |
U.S. Equities | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 217 | 216.5 | 171.5 |
Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 135.9 | 149.8 | 144.6 |
Futures | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 113.8 | 128.1 | 133 |
Futures | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 22.1 | 21.7 | 11.6 |
European Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 110.8 | 131.6 | 89.6 |
European Equities | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 81.7 | 103.8 | 69.4 |
European Equities | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 29.1 | 27.8 | 20.2 |
Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 53 | 56.4 | 38.2 |
Global FX | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 45.6 | 49.7 | 33.8 |
Global FX | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 7.4 | 6.7 | 4.4 |
Transaction fees | |||
Segment Reporting Information | |||
Revenues | 1,716.2 | 1,986.9 | 1,564.9 |
Transaction fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 742.9 | 835.5 | 673.8 |
Transaction fees | U.S. Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 744.6 | 876.4 | 659.4 |
Transaction fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 110.2 | 128 | 131.7 |
Transaction fees | European Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 73.1 | 97.4 | 66.2 |
Transaction fees | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 45.4 | 49.6 | 33.8 |
Access and capacity fees | |||
Segment Reporting Information | |||
Revenues | 221.9 | 211 | 181.6 |
Access and capacity fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 104.1 | 99.4 | 97.3 |
Access and capacity fees | U.S. Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 78.9 | 75.6 | 60.5 |
Access and capacity fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 15.6 | 15.1 | 9.1 |
Access and capacity fees | European Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 16.5 | 14.7 | 10.6 |
Access and capacity fees | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 6.8 | 6.2 | 4.1 |
Market data fees | |||
Segment Reporting Information | |||
Revenues | 213.5 | 204 | 164.5 |
Market data fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 55.7 | 42.9 | 41.1 |
Market data fees | U.S. Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 138.1 | 140.9 | 111 |
Market data fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 6.5 | 6.6 | 2.5 |
Market data fees | European Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 12.6 | 13.1 | 9.6 |
Market data fees | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 0.6 | 0.5 | 0.3 |
Regulatory fees | |||
Segment Reporting Information | |||
Revenues | 311.7 | 333.9 | 291.5 |
Regulatory fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 64 | 60 | 55.4 |
Regulatory fees | U.S. Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 247 | 273.8 | 236.1 |
Regulatory fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 0.7 | 0.1 | |
Other revenue | |||
Segment Reporting Information | |||
Revenues | 32.8 | 33 | 26.6 |
Other revenue | Corporate Items and Eliminations | |||
Segment Reporting Information | |||
Revenues | 0.2 | 0.4 | 0.7 |
Other revenue | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 16.4 | 19.7 | 15.9 |
Other revenue | U.S. Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 4.5 | 6.4 | 5.5 |
Other revenue | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 2.9 | 1.3 | |
Other revenue | European Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 8.6 | 6.4 | $ 3.2 |
Other revenue | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | $ 0.2 | $ 0.1 |
REVENUE RECOGNITION - Rollforwa
REVENUE RECOGNITION - Rollforward of contract liabilities (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | $ 8.5 |
Cash Additions | 41.3 |
Revenue Recognition | (45.3) |
Ending Balance | 4.5 |
Liquidity provider sliding scale | |
Revenue recognized from contract liabilities and remaining balance | |
Cash Additions | 9.6 |
Revenue Recognition | (9.6) |
Other, net | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | 8.5 |
Cash Additions | 31.7 |
Revenue Recognition | (35.7) |
Ending Balance | $ 4.5 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Nov. 30, 2017 | Jan. 31, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Acquisitions | |||||
Purchase price paid in cash | $ 18.9 | ||||
Payments to former stockholders | 14.9 | ||||
Payments to newly issued shareholders | $ 4 | ||||
Ownership interest percentage | 0.60% | ||||
Acquisition-related costs | $ 48.5 | $ 30 | $ 84.4 | ||
Compensation and benefits | 199 | 228.8 | 201.4 | ||
Goodwill Impairment Charge | 10.5 | ||||
Professional fees | 68.3 | 68.3 | 66 | ||
Stock-based compensation expense | 21.8 | 35.1 | 52.6 | ||
Facilities expenses | 11 | 11.5 | 10.3 | ||
Vest Financial Group Inc. | |||||
Acquisitions | |||||
Noncontrolling interest percentage | 0.40% | ||||
Term of put and call options | 5 years | ||||
Bats Global Markets, Inc. | |||||
Acquisitions | |||||
Acquisition-related costs | 48.5 | 30 | 84.4 | ||
Compensation and benefits | 19.3 | 23.6 | 44.2 | ||
Goodwill Impairment Charge | 10.5 | ||||
Impairment of Facilities Charges | 6.1 | ||||
Professional fees | 3.9 | 3 | 24.4 | ||
Lease termination costs | 2.2 | ||||
General and administrative expenses | 2 | 0.6 | |||
Stock-based compensation expense | $ 2.7 | ||||
Impairment of capitalized data processing software | $ 4.5 | 14.9 | |||
Facilities expenses | $ 0.9 | ||||
Silexx Financial Systems | |||||
Acquisitions | |||||
Consideration transferred | $ 9 | ||||
Goodwill | 6.7 | ||||
Intangibles | 2.1 | ||||
Working capital | $ 0.2 |
SEVERANCE (Details)
SEVERANCE (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Restructuring Reserve | |
Beginning balance | $ 6.1 |
Termination benefits accrued | 10.7 |
Termination payments made | (10.1) |
Ending balance | $ 6.7 |
INVESTMENTS - Schedule of inves
INVESTMENTS - Schedule of investments (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Aug. 31, 2019 | Dec. 31, 2018 |
Schedule of Cost and Equity Method Investments | |||
Equity Method | $ 22.9 | $ 21.7 | |
Other Equity Investments | 38.3 | $ 2.9 | 64.5 |
Total Investments | 61.2 | 86.2 | |
Investment in Signal Trading Systems, LLC | |||
Schedule of Cost and Equity Method Investments | |||
Equity Method | 12.6 | 12.4 | |
Investment in EuroCCP | |||
Schedule of Cost and Equity Method Investments | |||
Equity Method | 10.3 | 9.3 | |
Investment in OCC | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 0.3 | 30.3 | |
Investment in Eris Exchange Holdings, LLC | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 20.8 | 20 | |
Investment in American Financial Exchange, LLC | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 8.6 | 5.9 | |
Investment in Cboe Vest Financial Group, Inc. | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 2.9 | ||
Other cost method investments | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | $ 5.7 | $ 8.3 |
INVESTMENTS - Equity method inv
INVESTMENTS - Equity method investments (Details) | Dec. 31, 2019item |
Schedule of Equity Method Investments | |
Number of central counterparties | 3 |
Investment in EuroCCP | Cboe Europe Equities | |
Schedule of Equity Method Investments | |
Ownership percentage | 20.00% |
Number of other investors | 4 |
Investment in Signal Trading Systems, LLC | |
Schedule of Equity Method Investments | |
Ownership percentage | 50.00% |
INVESTMENTS - Other Equity Inve
INVESTMENTS - Other Equity Investments (Details) - USD ($) $ in Millions | Feb. 13, 2019 | Mar. 03, 2015 | Feb. 26, 2015 | Aug. 31, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Other Equity Investments | ||||||||||
Other Equity Investments | $ 2.9 | $ 38.3 | $ 38.3 | $ 64.5 | ||||||
Contributions | $ 2.7 | |||||||||
Proceeds from reimbursement of tax liability | 0.4 | $ 1.1 | ||||||||
Decrease in net assets due to deconsolidation | 14.5 | |||||||||
Noncontrolling Interest, Decrease from Deconsolidation | 5.8 | |||||||||
Interest bearing notes receivable | 3.7 | |||||||||
Deconsolidation gain or loss | $ 2 | (2) | ||||||||
Percentage of additional ownership acquired | 5.00% | |||||||||
Payments to Acquire Investments, Total | $ 2.7 | |||||||||
Maximum | ||||||||||
Other Equity Investments | ||||||||||
Ownership percentage | 20.00% | |||||||||
Percentage of voting interest | 5.00% | |||||||||
Investment in OCC | ||||||||||
Other Equity Investments | ||||||||||
Other Equity Investments | 0.3 | $ 0.3 | 30.3 | |||||||
Percentage of equity securities | 20.00% | |||||||||
Contribution requirement | $ 150 | |||||||||
Contribution requirement, shareholder cap | $ 40 | |||||||||
Contributions | $ 30 | |||||||||
Dividends received | $ 0 | $ 6 | $ 5 | |||||||
Returned portion of contributed capital | $ 8 | $ 22 | $ 30 | |||||||
Reversal of dividend declared | $ 8.8 | |||||||||
Payments to Acquire Investments, Total | $ 30 |
FINANCIAL INVESTMENTS (Details)
FINANCIAL INVESTMENTS (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Financial Investments | ||
Cost basis | $ 71 | $ 35.7 |
Total Fair Value | 71 | 35.7 |
U.S. Treasury securities | ||
Available-for-sale: | ||
Cost basis | 47.6 | 35.7 |
Fair value | 47.6 | $ 35.7 |
Other securities | ||
Available-for-sale: | ||
Cost basis | 23.4 | |
Fair value | $ 23.4 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment, Net | |||
Total property and equipment | $ 165.6 | $ 243.4 | |
Less accumulated depreciation | (118.6) | (171.7) | |
Property and equipment, net | 47 | 71.7 | |
Depreciation expense | 24.5 | 25.1 | $ 31.3 |
Property classified as property held for sale | 21.1 | ||
Impairment charge | 6.1 | ||
Construction in progress | |||
Property and Equipment, Net | |||
Total property and equipment | 1.2 | 0.1 | |
Building | |||
Property and Equipment, Net | |||
Total property and equipment | 81.7 | ||
Furniture and equipment | |||
Property and Equipment, Net | |||
Total property and equipment | $ 164.4 | $ 161.6 |
OTHER ASSETS, NET - Schedule of
OTHER ASSETS, NET - Schedule of other assets, net (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets | ||||
Less accumulated depreciation and amortization | $ (57.2) | $ (57.2) | $ (193.2) | |
Data processing software, net | 29.7 | 29.7 | 34.5 | |
Other assets | 21.9 | 21.9 | 28.4 | |
Data processing software and other assets, net | 51.6 | 51.6 | 62.9 | |
Provision for uncollectibility of promissory notes receivable | 23.4 | 23.4 | ||
Notes receivable | 9.2 | 9.2 | 20.3 | |
Amortization | 138.6 | 160 | $ 142.9 | |
Options | ||||
Finite-Lived Intangible Assets | ||||
Amortization | 15.3 | 16.8 | ||
Software development work in progress | ||||
Finite-Lived Intangible Assets | ||||
Software | 2.6 | 2.6 | 8.7 | |
Data processing software | ||||
Finite-Lived Intangible Assets | ||||
Software | 84.3 | 84.3 | 219 | |
Amortization | $ 13.5 | $ 18.9 | $ 17.9 | |
Data processing software | Options | ||||
Finite-Lived Intangible Assets | ||||
Loss on disposal of data processing software | $ 4.5 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill by segment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | ||
Balance at beginning of the year | $ 2,691.4 | $ 2,707.4 |
Dispositions | (8.3) | |
Impairment | (10.5) | |
Changes in foreign currency exchange rates | 9.5 | (16) |
Balance at end of the year | 2,682.1 | 2,691.4 |
Impairment of goodwill | 10.5 | |
Options | ||
Goodwill | ||
Balance at beginning of the year | 239.4 | 239.4 |
Balance at end of the year | 239.4 | 239.4 |
U.S. Equities | ||
Goodwill | ||
Balance at beginning of the year | 1,740.4 | 1,740.4 |
Balance at end of the year | 1,740.4 | 1,740.4 |
European Equities | ||
Goodwill | ||
Balance at beginning of the year | 425.6 | 441.6 |
Changes in foreign currency exchange rates | 9.5 | (16) |
Balance at end of the year | 435.1 | 425.6 |
Global FX | ||
Goodwill | ||
Balance at beginning of the year | 267.2 | 267.2 |
Balance at end of the year | 267.2 | 267.2 |
Corporate and Other | ||
Goodwill | ||
Balance at beginning of the year | 18.8 | 18.8 |
Dispositions | (8.3) | |
Impairment | (10.5) | |
Balance at end of the year | $ 18.8 | |
Impairment of goodwill | $ 10.5 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of intangible assets by segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-lived Intangible Assets | |||
Balance at beginning of the year | $ 1,720.2 | $ 1,902.6 | |
Dispositions | (3.3) | ||
Amortization | (138.6) | (160) | $ (142.9) |
Changes in foreign currency exchange rates | 11.6 | (22.4) | |
Balance at end of the year | 1,589.9 | 1,720.2 | 1,902.6 |
Options | |||
Finite-lived Intangible Assets | |||
Balance at beginning of the year | 181.9 | 198.7 | |
Amortization | (15.3) | (16.8) | |
Balance at end of the year | 166.6 | 181.9 | 198.7 |
U.S. Equities | |||
Finite-lived Intangible Assets | |||
Balance at beginning of the year | 990.3 | 1,071.8 | |
Amortization | (68.9) | (81.5) | |
Balance at end of the year | 921.4 | 990.3 | 1,071.8 |
European Equities | |||
Finite-lived Intangible Assets | |||
Balance at beginning of the year | 376.9 | 427 | |
Amortization | (24.8) | (27.7) | |
Changes in foreign currency exchange rates | 11.6 | (22.4) | |
Balance at end of the year | 363.7 | 376.9 | 427 |
Global FX | |||
Finite-lived Intangible Assets | |||
Balance at beginning of the year | 166.9 | 199.6 | |
Amortization | (28.7) | (32.7) | |
Balance at end of the year | 138.2 | 166.9 | 199.6 |
Corporate and Other | |||
Finite-lived Intangible Assets | |||
Balance at beginning of the year | 4.2 | 5.5 | |
Dispositions | (3.3) | ||
Amortization | (0.9) | (1.3) | |
Balance at end of the year | $ 4.2 | $ 5.5 | |
Futures | |||
Finite-lived Intangible Assets | |||
Balance at end of the year | $ 0 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Estimated Future Amortization (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |||
Amortization | $ 138.6 | $ 160 | $ 142.9 |
Amortization expense | |||
2020 | 121.6 | ||
2021 | 106.9 | ||
2022 | 94.4 | ||
2023 | 83.5 | ||
2024 | $ 63 |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of intangible assets by category (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets | |||
Intangible assets, net | $ 1,589.9 | $ 1,720.2 | $ 1,902.6 |
Customer relationships | Weighted Average | |||
Finite-Lived Intangible Assets | |||
Amortization period (in years) | 17 years | 18 years | |
Market data customer relationships | Weighted Average | |||
Finite-Lived Intangible Assets | |||
Amortization period (in years) | 12 years | 13 years | |
Technology | Weighted Average | |||
Finite-Lived Intangible Assets | |||
Amortization period (in years) | 4 years | 5 years | |
Trademarks and tradenames | Weighted Average | |||
Finite-Lived Intangible Assets | |||
Amortization period (in years) | 6 years | 2 years | |
Options | |||
Finite-Lived Intangible Assets | |||
Accumulated amortization | $ (47.8) | $ (32.5) | |
Intangible assets, net | 166.6 | 181.9 | 198.7 |
Options | Customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 38.8 | 38.8 | |
Options | Market data customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 53.6 | 53.6 | |
Options | Technology | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 24.8 | 24.8 | |
Options | Trademarks and tradenames | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 1.7 | 1.7 | |
Options | Trading registrations and licenses | |||
Finite-Lived Intangible Assets | |||
Indefinite-lived intangible assets, gross | 95.5 | 95.5 | |
U.S. Equities | |||
Finite-Lived Intangible Assets | |||
Accumulated amortization | (224.7) | (155.8) | |
Intangible assets, net | 921.4 | 990.3 | 1,071.8 |
U.S. Equities | Customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 222.9 | 222.9 | |
U.S. Equities | Market data customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 322 | 322 | |
U.S. Equities | Technology | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 22.5 | 22.5 | |
U.S. Equities | Trademarks and tradenames | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 6 | 6 | |
U.S. Equities | Trading registrations and licenses | |||
Finite-Lived Intangible Assets | |||
Indefinite-lived intangible assets, gross | 572.7 | 572.7 | |
European Equities | |||
Finite-Lived Intangible Assets | |||
Accumulated amortization | (77.6) | (49.4) | |
Intangible assets, net | 363.7 | 376.9 | 427 |
European Equities | Customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 169.7 | 163.9 | |
European Equities | Market data customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 63.6 | 61.5 | |
European Equities | Technology | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 23.9 | 23.1 | |
European Equities | Trademarks and tradenames | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 1.9 | 1.8 | |
European Equities | Trading registrations and licenses | |||
Finite-Lived Intangible Assets | |||
Indefinite-lived intangible assets, gross | 182.2 | 176 | |
Global FX | |||
Finite-Lived Intangible Assets | |||
Accumulated amortization | (89.9) | (61.2) | |
Intangible assets, net | 138.2 | 166.9 | 199.6 |
Global FX | Customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 140 | 140 | |
Global FX | Market data customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 64.4 | 64.4 | |
Global FX | Technology | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 22.5 | 22.5 | |
Global FX | Trademarks and tradenames | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | $ 1.2 | 1.2 | |
Corporate and Other | |||
Finite-Lived Intangible Assets | |||
Accumulated amortization | (3.8) | ||
Intangible assets, net | 4.2 | $ 5.5 | |
Corporate and Other | Customer relationships | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 3 | ||
Corporate and Other | Technology | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | 4 | ||
Corporate and Other | Trademarks and tradenames | |||
Finite-Lived Intangible Assets | |||
Finite-lived intangible assets, gross | $ 1 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - Schedule of accounts payable and accrued liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||
Compensation and benefit-related liabilities | $ 35.2 | $ 52.4 |
Termination benefits | 6.7 | 6.1 |
Royalties | 18.6 | 25 |
Accrued liabilities | 77.8 | 91.8 |
Marketing fee payable | 12.6 | 10.4 |
Accounts payable | 21 | 12.8 |
Total accounts payable and accrued liabilities | $ 171.9 | $ 198.5 |
DEBT - Schedule of long-term de
DEBT - Schedule of long-term debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jun. 28, 2019 | Dec. 31, 2018 | Mar. 22, 2018 | Jun. 29, 2017 | Jan. 12, 2017 |
Debt Instrument | ||||||
Total debt | $ 867.6 | $ 1,215.4 | ||||
Term Loan Agreement | ||||||
Debt Instrument | ||||||
Total debt | 222.4 | 271.1 | ||||
Debt instrument face amount | 300 | $ 300 | ||||
3.650% Senior Notes | ||||||
Debt Instrument | ||||||
Total debt | 645.2 | 644.5 | ||||
Debt instrument face amount | $ 650 | $ 650 | ||||
Interest rate (as a percent) | 3.65% | 3.65% | ||||
1.950% Senior Notes | ||||||
Debt Instrument | ||||||
Total debt | $ 299.8 | |||||
Debt instrument face amount | $ 300 | $ 300 | ||||
Interest rate (as a percent) | 1.95% | 1.95% | 1.95% | |||
Revolving Credit Agreement | ||||||
Debt Instrument | ||||||
Total debt | $ 0 |
DEBT (Details)
DEBT (Details) $ in Millions | Mar. 22, 2018USD ($) | Dec. 15, 2016USD ($)subsidiary | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($)subsidiary | Dec. 31, 2017USD ($) | Jun. 28, 2019 | Jun. 29, 2017USD ($) | Jan. 12, 2017USD ($) |
Debt Instrument | ||||||||
Proceeds from long-term debt | $ 300 | $ 1,943.9 | ||||||
Repayments of outstanding indebtedness | $ 350 | 325 | $ 700 | |||||
Borrowings outstanding | 867.6 | 1,215.4 | ||||||
Line of Credit | ||||||||
Debt Instrument | ||||||||
Credit facility, maximum borrowing capacity | $ 25 | |||||||
Term Loan Agreement | ||||||||
Debt Instrument | ||||||||
Debt instrument face amount | $ 300 | $ 300 | ||||||
Proceeds from long-term debt | $ 300 | |||||||
Up-front fee (as percent) | 0.05 | |||||||
Minimum consolidated interest ratio | 4 | |||||||
Maximum consolidated leverage ratio | 3.50 | |||||||
Repayments of outstanding indebtedness | $ 50 | |||||||
Borrowings outstanding | $ 222.4 | 271.1 | ||||||
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% | |||||||
3.650% Senior Notes | ||||||||
Debt Instrument | ||||||||
Debt instrument face amount | $ 650 | $ 650 | ||||||
Interest rate (as a percent) | 3.65% | 3.65% | ||||||
Redemption price | 101.00% | |||||||
Borrowings outstanding | $ 645.2 | $ 644.5 | ||||||
Revolving Credit Agreement | ||||||||
Debt Instrument | ||||||||
Minimum consolidated interest ratio | 4 | |||||||
Maximum consolidated leverage ratio | 3.50 | |||||||
Credit facility, maximum borrowing capacity | $ 150 | |||||||
Term of facility | 5 years | |||||||
Maximum borrowing capacity, increase limit | $ 100 | |||||||
Maximum borrowing capacity, total with increase | $ 250 | |||||||
Number of subsidiaries designated as additional borrowers | subsidiary | 0 | |||||||
Borrowings outstanding | $ 0 | |||||||
Borrowing capacity available | $ 150 | |||||||
Revolving Credit Agreement | Minimum | ||||||||
Debt Instrument | ||||||||
Number of subsidiaries that may be designated as additional borrowers | subsidiary | 1 | |||||||
Revolving Credit Agreement | LIBOR | Minimum | ||||||||
Debt Instrument | ||||||||
Interest rate margin (as a percent) | 1.00% | |||||||
Revolving Credit Agreement | LIBOR | Maximum | ||||||||
Debt Instrument | ||||||||
Interest rate margin (as a percent) | 1.75% | |||||||
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) | 0.75% | |||||||
1.950% Senior Notes | ||||||||
Debt Instrument | ||||||||
Debt instrument face amount | $ 300 | $ 300 | ||||||
Interest rate (as a percent) | 1.95% | 1.95% | 1.95% | |||||
Borrowings outstanding | $ 299.8 |
DEBT - Schedule of debt repayme
DEBT - Schedule of debt repayments (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Long-term Debt | ||
2021 | $ 225 | |
Thereafter | 650 | |
Principal amounts repayable | 875 | |
Debt issuance cost | (3.3) | |
Unamortized discount on notes | (4.1) | |
Total debt outstanding | $ 867.6 | $ 1,215.4 |
DEBT - Schedule of Interest Exp
DEBT - Schedule of Interest Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
DEBT | |||
Contractual interest | $ 35.6 | $ 38 | $ 39 |
Amortization of debt discount | 0.6 | 0.7 | 0.6 |
Amortization of debt issuance cost. | 1.6 | 1.8 | 3 |
Interest expense | 37.8 | 40.5 | 42.6 |
Interest income | (1.9) | (2.3) | (1.3) |
Interest expense, net | $ 35.9 | $ 38.2 | $ 41.3 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
AOCI Rollforward | |||
Beginning balance | $ 3,241 | $ 3,110.6 | $ 317.9 |
Other comprehensive income (loss) | 26.1 | (39.2) | 51.5 |
Ending balance | 3,355.6 | 3,241 | 3,110.6 |
Accumulated Other Comprehensive Income, net | |||
AOCI Rollforward | |||
Beginning balance | 11.5 | 50.7 | (0.8) |
Other comprehensive income (loss) | 26.1 | (39.2) | 51.5 |
Ending balance | 37.6 | 11.5 | 50.7 |
Foreign Currency Translation | |||
AOCI Rollforward | |||
Beginning balance | 12.1 | 51.3 | |
Other comprehensive income (loss) | 26.1 | (39.2) | |
Ending balance | 38.2 | 12.1 | 51.3 |
Unrealized Investment Gain/Loss | |||
AOCI Rollforward | |||
Beginning balance | 0.2 | 0.2 | |
Ending balance | 0.2 | 0.2 | 0.2 |
Post-Retirement Benefits | |||
AOCI Rollforward | |||
Beginning balance | (0.8) | (0.8) | |
Ending balance | $ (0.8) | $ (0.8) | $ (0.8) |
FAIR VALUE MEASUREMENT - Schedu
FAIR VALUE MEASUREMENT - Schedule of fair value hierarchy for assets measured at fair value on a recurring basis (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Total assets | $ 71 | $ 35.7 |
Liabilities: | ||
Contingent consideration liability to related party | 2.2 | 3.9 |
Total liabilities | 893.2 | 1,219.3 |
Level 1 | ||
Assets: | ||
Total assets | 71 | 35.7 |
Liabilities: | ||
Total liabilities | 23.4 | |
Level 2 | ||
Liabilities: | ||
Total liabilities | 867.6 | 1,215.4 |
Level 3 | ||
Liabilities: | ||
Contingent consideration liability to related party | 2.2 | 3.9 |
Total liabilities | 2.2 | 3.9 |
Recurring | ||
Assets: | ||
Total assets | 71 | 35.7 |
Liabilities: | ||
Contingent consideration liability to related party | 2.2 | |
Total liabilities | 2.2 | 3.9 |
Recurring | Mutual funds | ||
Assets: | ||
Total assets | 15.7 | |
Recurring | Money market funds | ||
Assets: | ||
Total assets | 7.7 | |
Liabilities: | ||
Contingent consideration liability to related party | 3.9 | |
Recurring | U.S. Treasury securities | ||
Assets: | ||
Assets | 35.7 | |
Total assets | 47.6 | |
Recurring | Level 1 | ||
Assets: | ||
Total assets | 71 | 35.7 |
Recurring | Level 1 | Mutual funds | ||
Assets: | ||
Total assets | 15.7 | |
Recurring | Level 1 | Money market funds | ||
Assets: | ||
Total assets | 7.7 | |
Recurring | Level 1 | U.S. Treasury securities | ||
Assets: | ||
Assets | 35.7 | |
Total assets | 47.6 | |
Recurring | Level 3 | ||
Liabilities: | ||
Contingent consideration liability to related party | 2.2 | |
Total liabilities | $ 2.2 | 3.9 |
Recurring | Level 3 | Money market funds | ||
Liabilities: | ||
Contingent consideration liability to related party | $ 3.9 |
FAIR VALUE MEASUREMENT - Sche_2
FAIR VALUE MEASUREMENT - Schedule of fair value hierarchy of financial instruments held (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Financial investments | $ 47.6 | $ 35.7 |
Deferred compensation assets | 23.4 | |
Total assets | 71 | 35.7 |
Liabilities: | ||
Contingent consideration liability to related party | 2.2 | 3.9 |
Deferred compensation liabilities | 23.4 | |
Debt | 867.6 | 1,215.4 |
Total liabilities | 893.2 | 1,219.3 |
Level 1 | ||
Assets: | ||
Financial investments | 47.6 | 35.7 |
Deferred compensation assets | 23.4 | |
Total assets | 71 | 35.7 |
Liabilities: | ||
Deferred compensation liabilities | 23.4 | |
Total liabilities | 23.4 | |
Level 2 | ||
Liabilities: | ||
Debt | 867.6 | 1,215.4 |
Total liabilities | 867.6 | 1,215.4 |
Level 3 | ||
Liabilities: | ||
Contingent consideration liability to related party | 2.2 | 3.9 |
Total liabilities | $ 2.2 | $ 3.9 |
FAIR VALUE MEASUREMENT - Narrat
FAIR VALUE MEASUREMENT - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information | |||
Impairment of goodwill | $ 10.5 | ||
Goodwill | 2,682.1 | $ 2,691.4 | $ 2,707.4 |
Fair value of goodwill | 0 | ||
Corporate Items and Eliminations | |||
Segment Reporting Information | |||
Impairment of goodwill | $ 10.5 |
FAIR VALUE MEASUREMENT - Summar
FAIR VALUE MEASUREMENT - Summary of changes in the fair value of the company's Level 3 financial liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Changes in fair value of level 3 financial liabilities | ||
Balance at the beginning of the period | $ 3.9 | $ 56.6 |
Realized (gains) losses during period | 2.6 | 3.9 |
Settlements | (4.3) | |
Balance at the end of the period | 2.2 | 3.9 |
Contingent consideration liability to related party | ||
Changes in fair value of level 3 financial liabilities | ||
Balance at the beginning of the period | 3.9 | 56.6 |
Realized (gains) losses during period | 2.6 | 3.9 |
Settlements | (4.3) | |
Balance at the end of the period | $ 2.2 | 3.9 |
Level 3 | ||
Changes in fair value of level 3 financial liabilities | ||
Settlements | (56.6) | |
Level 3 | Contingent consideration liability to related party | ||
Changes in fair value of level 3 financial liabilities | ||
Settlements | $ (56.6) |
REDEEMABLE NONCONTROLLING INT_3
REDEEMABLE NONCONTROLLING INTEREST (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Increase (Decrease) in Redeemable Noncontrolling Interest | |||
Beginning balance | $ 9.4 | ||
Ending balance | $ 9.4 | ||
Redeemable Noncontrolling Interests | |||
Increase (Decrease) in Redeemable Noncontrolling Interest | |||
Beginning balance | 9.4 | ||
Net loss attributable to redeemable noncontrolling interest | (4.1) | (1.3) | $ (1.1) |
Redemption value adjustment of redeemable noncontrolling interest | 0.5 | ||
Deconsolidation of former subsidiary with noncontrolling interest | $ (5.8) | ||
Ending balance | $ 9.4 |
SEGMENT REPORTING - Summarized
SEGMENT REPORTING - Summarized financial information by reportable segment (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting Information | |||||||||||
Number of reportable segments | segment | 5 | ||||||||||
Revenues | $ 2,496.1 | $ 2,768.8 | $ 2,229.1 | ||||||||
Operating income (loss) | $ 119.2 | $ 147.4 | $ 125.2 | $ 145.4 | $ 176.5 | $ 126.1 | $ 129.1 | $ 167.7 | 537.2 | 599.4 | 371.9 |
Operating Segments | Options | |||||||||||
Segment Reporting Information | |||||||||||
Revenues | 983.1 | 1,057.5 | 883.5 | ||||||||
Operating income (loss) | 334.3 | 390.9 | 252.2 | ||||||||
Operating Segments | U.S. Equities | |||||||||||
Segment Reporting Information | |||||||||||
Revenues | 1,213.1 | 1,373.1 | 1,072.5 | ||||||||
Operating income (loss) | 132.5 | 140.5 | 103.2 | ||||||||
Operating Segments | Futures | |||||||||||
Segment Reporting Information | |||||||||||
Revenues | 135.9 | 149.8 | 144.6 | ||||||||
Operating income (loss) | 83.1 | 85.7 | 126.8 | ||||||||
Operating Segments | European Equities | |||||||||||
Segment Reporting Information | |||||||||||
Revenues | 110.8 | 131.6 | 89.6 | ||||||||
Operating income (loss) | 20.3 | 24.1 | 8.9 | ||||||||
Operating Segments | Global FX | |||||||||||
Segment Reporting Information | |||||||||||
Revenues | 53 | 56.4 | 38.2 | ||||||||
Operating income (loss) | (4.9) | (11.7) | (12.8) | ||||||||
Corporate Items and Eliminations | |||||||||||
Segment Reporting Information | |||||||||||
Revenues | 0.2 | 0.4 | 0.7 | ||||||||
Operating income (loss) | $ (28.1) | $ (30.1) | $ (106.4) |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SMART Plan | |||
Defined Contribution Plan | |||
Balance amount in the plan | $ 23.4 | ||
Company contribution amount | 11.3 | $ 12.4 | $ 7.7 |
Cboe Europe Equities Employee Selected Stakeholder Contribution Plan | |||
Defined Contribution Plan | |||
Company contribution amount | $ 0.7 | $ 0.4 | $ 0.5 |
REGULATORY CAPITAL (Details)
REGULATORY CAPITAL (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cboe 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 |
Net capital | 13.3 |
Excess net capital | 12.8 |
Required net capital | 0.5 |
Cboe Europe Equities | |
Regulatory Requirement | |
Financial resources requirement | 21.8 |
Capital in excess of financial resources requirement | 36.2 |
Cboe Chi-X Europe | |
Regulatory Requirement | |
Capital resources requirement | 0.1 |
Capital in excess of capital resources requirement | 0.5 |
Cboe Europe B.V | |
Regulatory Requirement | |
Capital in excess of financial resources requirement | 3.7 |
Minimum capital requirement | 1.6 |
Cboe SEF | |
Regulatory Requirement | |
Annual operating expenses for swap execution facility capital adequacy tests | 0.8 |
XX month operating expenses for swap execution facility capital adequacy tests | 0.4 |
CFE | |
Regulatory Requirement | |
Annual operating expenses for registered futures exchange capital adequacy tests | 56.5 |
XX month operating expenses for registered futures exchange capital adequacy tests | $ 28.3 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Stock-based compensation expense | $ 21.8 | $ 35.1 | $ 52.6 |
Options exercised (in shares) | 358,649 | 72,559 | |
Payments for the purchase of shares to satisfy the employee income tax withholdings (in shares) | $ 11 | $ 20.9 | $ 26.1 |
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Units ultimately expected to be awarded | 200.00% | ||
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total intrinsic value of stock options exercised | $ 26 | $ 6.4 | |
Shares purchased to satisfy the employee income tax withholdings (in shares) | 6,323 | ||
Payments for the purchase of shares to satisfy the employee income tax withholdings (in shares) | $ 0.6 | ||
Restricted Stock and Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Shares purchased to satisfy the employee income tax withholdings (in shares) | 112,023 | ||
Payments for the purchase of shares to satisfy the employee income tax withholdings (in shares) | $ 11 | ||
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 prior to 2017 | 65 years | ||
Qualified retirement eligibility number of years of service for grants awarded prior to 2017 | 5 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 | ||
Vested (in shares) | 313,856 | ||
Restricted Stock and Restricted Stock Units | Director | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting period | 1 year | ||
Performance-Based Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Payments for the purchase of shares to satisfy the employee income tax withholdings (in shares) | $ 2.6 | ||
Number of shares of common stock of which unit is convertible (in shares) | 1 | ||
Vesting period | 3 years | ||
Vested (in shares) | 69,372 | ||
Risk-free interest rate | 2.54% | ||
Volatility time period | 3 years | ||
Expected volatility | 20.50% | ||
Correlation to S&P 500 Index time period | 3 years | ||
Correlation with S&P index | 0.29% | ||
Unrecognized compensation expense | $ 18.8 | ||
Performance-Based Restricted Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Units ultimately expected to be awarded | 0.00% | ||
Performance Based Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Shares purchased to satisfy the employee income tax withholdings (in shares) | 27,477 | ||
Vested (in shares) | 69,372 | ||
Unrecognized compensation expense, period for recognition | 1 year 7 months 6 days |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Beginning balance (in shares) | 369,483 | 442,042 |
Exercised (in shares) | (358,649) | (72,559) |
Ending balance (in shares) | 10,834 | 369,483 |
Weighted Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 26.40 | $ 25.36 |
Exercised (in dollars per share) | 26.63 | 20.08 |
Ending balance (in dollars per share) | $ 18.59 | $ 26.40 |
Weighted Average Remaining Contractual Term (years) | ||
Outstanding | 6 months | |
Aggregate Intrinsic Value (in millions) | ||
Ending balance | $ 1.1 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted stock activity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
May 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Stock Purchase Plan | ||||
Compensation expense | $ 21,800,000 | $ 35,100,000 | $ 52,600,000 | |
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 | $ 400,000 | $ 100,000 | ||
Shares were reserved for future issuance | 722,648 | |||
ESPP | US | ||||
Employee Stock Purchase Plan | ||||
Exercise price per share of common stock as a percent of fair market value | 90.00% | |||
ESPP | International | ||||
Employee Stock Purchase Plan | ||||
Exercise price per share of common stock as a percent of fair market value | 85.00% | |||
Restricted Stock and Restricted Stock Units | ||||
Number of shares | ||||
Beginning balance (in shares) | 631,764 | |||
Granted (in shares) | 216,891 | |||
Vested (in shares) | (313,856) | |||
Forfeited (in shares) | (98,786) | |||
Ending balance (in shares) | 436,013 | 631,764 | ||
Weighted average grant date fair value | ||||
Beginning balance (in USD per share) | $ 85.85 | |||
Granted (in dollars per share) | 93.45 | |||
Vested (in USD per share) | 83.25 | |||
Forfeited (in USD per share) | 85.50 | |||
Ending balance (in USD per share) | $ 91.58 | $ 85.85 | ||
Performance-Based Restricted Stock Units | ||||
Number of shares | ||||
Beginning balance (in shares) | 151,842 | |||
Granted (in shares) | 86,134 | |||
Vested (in shares) | (69,372) | |||
Forfeited (in shares) | (36,356) | |||
Ending balance (in shares) | 132,248 | 151,842 | ||
Weighted average grant date fair value | ||||
Beginning balance (in USD per share) | $ 100.81 | |||
Granted (in dollars per share) | 88.22 | |||
Vested (in USD per share) | 74.56 | |||
Forfeited (in USD per share) | 97.78 | |||
Ending balance (in USD per share) | $ 107.21 | $ 100.81 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||||||||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2019 | Aug. 31, 2018 | Feb. 28, 2018 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Common Stock | ||||||||||||
Common stock, shares authorized (in shares) | 325,000,000 | 325,000,000 | ||||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||||
Common stock, shares issued (in shares) | 125,701,889 | 125,080,496 | ||||||||||
Common stock, shares outstanding (in shares) | 110,656,892 | 111,601,976 | ||||||||||
Common Stock in Treasury, at Cost | ||||||||||||
Common stock held in Treasury (in shares) | 15,044,997 | 13,478,520 | ||||||||||
Share Repurchase Program | ||||||||||||
Authorized amount | $ 1,100 | $ 250 | $ 100 | $ 150 | $ 100 | $ 100 | $ 100 | $ 100 | $ 100 | $ 100 | ||
Availability remaining under existing share repurchase authorizations | $ 299.2 | |||||||||||
Purchase of Common Stock from Employees | ||||||||||||
Stock repurchased from employee stock plans (in shares) | 143,247 | |||||||||||
Average price paid per share (in dollars per share) | $ 97.22 | |||||||||||
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||||||||||||
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 | ||||||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||||
Preferred stock, shares issued (in shares) | 0 | 0 | ||||||||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||||||||||
Dividends | ||||||||||||
Cash dividends per share, declared (in dollars per share) | $ 1.34 | $ 1.16 | $ 1.04 | |||||||||
Cash dividends per share, paid (in dollars per share) | $ 1.34 | $ 1.16 | ||||||||||
Aggregate payout | $ 150 | $ 130.3 | $ 118.1 |
EQUITY - Share Repurchase Progr
EQUITY - Share Repurchase Program (Details) - USD ($) | 3 Months Ended | 12 Months Ended | 108 Months Ended | |||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | |
Share Repurchase Program | ||||||||||
Shares Repurchased (in shares) | 600,442 | 453,319 | 100 | 366,793 | 491,899 | 468,913 | 387,142 | 1,420,654 | 1,347,954 | 13,716,009 |
Average Repurchase Price Per Share | $ 115.76 | $ 115.49 | $ 104.75 | $ 95.36 | $ 99.75 | $ 102.92 | $ 112.52 | $ 110.42 | $ 58.38 | |
Amount of Repurchases | $ 69,505,515 | $ 52,355,492 | $ 10,477 | $ 34,999,992 | $ 49,064,854 | $ 48,258,926 | $ 43,562,504 | $ 156,871,476 | $ 140,886,284 | $ 800,800,000 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets and liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Accrued compensation and benefits | $ 14.1 | $ 17.1 |
Property, equipment and technology, net | 1.9 | 2.6 |
Operating leases | 13.5 | |
Other | 30.5 | 20.7 |
Subtotal | 60 | 40.4 |
Valuation allowance | (4.2) | (2) |
Total deferred tax assets | 55.8 | 38.4 |
Deferred tax liabilities: | ||
Intangibles | (357.6) | (380.2) |
Property, equipment and technology, net | (14.5) | (17.4) |
Investments | (68.2) | (75.3) |
Operating leases | (13) | |
Prepaid expenses or assets | (2.2) | (2.3) |
Total deferred tax liabilities | (455.5) | (475.2) |
Net deferred tax assets/(liabilities) | $ (399.7) | $ (436.8) |
INCOME TAXES - Components of in
INCOME TAXES - Components of income tax expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current tax expense: | |||
Federal | $ 98.7 | $ 125.1 | $ 141 |
State | 61.2 | 58.7 | 25.8 |
Foreign | 7.9 | 9.9 | 5.4 |
Total current tax expense | 167.8 | 193.7 | 172.2 |
Deferred income tax expense: | |||
Federal | (28.7) | (18.4) | (227.5) |
State | (3.8) | (23.7) | (6.5) |
Foreign | (4.7) | (5.6) | (4.4) |
Total deferred income tax expense | (37.2) | (47.7) | (238.4) |
Total | $ 130.6 | $ 146 | $ (66.2) |
INCOME TAXES - Deferred income
INCOME TAXES - Deferred income tax liability, net (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
INCOME TAXES | |||
U.S. operations | $ 480 | $ 548.3 | $ 326.7 |
Foreign operations | 21.4 | 22.9 | 7.7 |
Income before income tax provision (benefit) | $ 501.4 | $ 571.2 | $ 334.4 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory federal income tax rate to the effective income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
INCOME TAXES | |||
Statutory federal income tax rate | 21.00% | 21.00% | 35.00% |
Change in income tax rate (percent) | (3.50%) | (55.10%) | |
State income tax rate, net of federal income tax effect | 5.00% | 5.00% | 4.30% |
Uncertain tax positions | 2.60% | 6.10% | |
Deduction for Foreign Derived Intangible Income | (1.20%) | ||
Section 199 deductions | (2.60%) | ||
Other, net | (1.40%) | (3.00%) | (1.40%) |
Effective tax rate | 26.00% | 25.60% | (19.80%) |
INCOME TAXES - Reconciliation_2
INCOME TAXES - Reconciliation of the beginning and ending uncertain tax positions (Details) 10K - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
INCOME TAXES | |||
Uncertain tax positions, beginning balance | $ 102.3 | $ 67.8 | $ 41.9 |
Acquired unrecognized tax benefits | 23.2 | ||
Gross increases on tax positions in prior period | 3.1 | 35 | 6.2 |
Gross decreases on tax positions in prior period | (6.3) | (19) | (14.7) |
Gross increases on tax positions in current period | 18.5 | 19 | 12.7 |
Lapse of statute of limitations | (0.9) | (0.5) | (1.5) |
Uncertain tax positions, ending balance | $ 116.7 | $ 102.3 | $ 67.8 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income taxes | ||||
Valuation allowance | $ 4.2 | |||
Unrecognized tax positions that would affect the annual effective tax rate | 114.9 | $ 99.5 | $ 68.2 | |
Lapse of statute of limitations | 0.9 | 0.5 | 1.5 | |
Estimated interest costs and penalties | 6.6 | 1.1 | (1.5) | |
Accrued interest and penalties | $ 19.2 | $ 12.6 | $ 11.1 | |
Statutory federal income tax rate | 21.00% | 21.00% | 35.00% | |
Capital Loss Carryforward [Member] | ||||
Income taxes | ||||
Capital loss forwards which, if unused, will expire in 2024 | $ 7.9 | $ 7.9 | ||
Forecast | ||||
Income taxes | ||||
Lapse of statute of limitations | $ 2.4 |
NET INCOME PER COMMON SHARE (De
NET INCOME PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Basic and Diluted EPS Numerator: | |||||||||||
Net income | $ 86.3 | $ 105.9 | $ 84.5 | $ 94.1 | $ 138.4 | $ 85.7 | $ 83 | $ 118.1 | $ 370.8 | $ 425.2 | $ 400.6 |
Net loss attributable to noncontrolling interest | 4.1 | 1.3 | 1.1 | ||||||||
Net income excluding noncontrolling interest | 374.9 | 426.5 | 401.7 | ||||||||
Change in redemption value of noncontrolling interest | (0.5) | (1.3) | (1.1) | ||||||||
Earnings allocated to participating securities | (1.7) | (3.1) | (3.9) | ||||||||
Net income allocated to common stockholders | $ 86.1 | $ 105.5 | $ 87.6 | $ 93.5 | $ 137.4 | $ 85 | $ 82.4 | $ 117.3 | $ 372.7 | $ 422.1 | $ 396.7 |
Basic EPS Denominator: | |||||||||||
Weighted average shares outstanding (in shares) | 111.4 | 111.8 | 107.2 | ||||||||
Basic Net Income Per Common Share (in dollars per share) | $ 0.78 | $ 0.95 | $ 0.79 | $ 0.84 | $ 1.23 | $ 0.76 | $ 0.74 | $ 1.04 | $ 3.35 | $ 3.78 | $ 3.70 |
Diluted EPS Denominator: | |||||||||||
Weighted average shares outstanding (in shares) | 111.4 | 111.8 | 107.2 | ||||||||
Dilutive common shares issued under stock program (in shares) | 0.4 | 0.4 | 0.3 | ||||||||
Total dilutive weighted average shares (in shares) | 111.8 | 112.2 | 107.5 | ||||||||
Diluted Net Income Per Common Share (in dollars per share) | $ 0.77 | $ 0.94 | $ 0.78 | $ 0.84 | $ 1.23 | $ 0.76 | $ 0.73 | $ 1.04 | $ 3.34 | $ 3.76 | $ 3.69 |
COMMITMENTS, CONTINGENCIES, A_2
COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Details) - Pending Litigation | Sep. 28, 2018claim | Apr. 18, 2014item |
City of Providence | ||
Loss Contingencies | ||
The number of other securities exchanges a lawsuit has been filed against | item | 14 | |
VIX Litigation | ||
Loss Contingencies | ||
Number of Commodity Exchange Act claims | claim | 3 |
LEASES (Details)
LEASES (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)ft² | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Leases | |||
Options to renew | true | ||
Option to terminate | true | ||
Additional right of use assets | $ 22.1 | ||
Minimum lease payments | 65.2 | ||
Technology support services | |||
Leases | |||
Rent expense | $ 12.4 | ||
Rent expense | $ 10.1 | $ 7.6 | |
Old Post Office building in Chicago, Illinois | |||
Leases | |||
Area of office space leased | ft² | 185,000 | ||
Initial term of lease | 187 months | ||
Renewal Term | 60 months | ||
Minimum lease payments | $ 98.8 | ||
Office Space in Chicago Board of Trade Building | |||
Leases | |||
Area of office space leased | ft² | 40,000 | ||
Initial term of lease | 150 months | ||
Renewal Term | 60 months | ||
Minimum lease payments | $ 17.1 | ||
Minimum | |||
Leases | |||
Renewal term | 1 year | ||
Maximum | |||
Leases | |||
Renewal term | 5 years | ||
Option to terminate period | 1 year |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet (Details) $ in Millions | Dec. 31, 2019USD ($) |
LEASES | |
Operating lease right of use assets | $ 53.4 |
Financial position | us-gaap:OtherAssetsNoncurrent |
Current operating leased liabilities | $ 8.7 |
Financial position | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent |
Non-current operating lease liabilities | $ 46.7 |
Financial position | us-gaap:OperatingLeaseLiabilityNoncurrent |
Total lease liabilities | $ 55.4 |
Financial position | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent us-gaap:OperatingLeaseLiabilityNoncurrent |
LEASES - Lease Costs and Other
LEASES - Lease Costs and Other Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Jan. 01, 2019 | |
Leases | ||
Operating lease costs | $ 12.4 | |
Weighted average remaining lease term (years) | 9 years 2 months 12 days | |
Weighted average discount rate | 0.035% | |
Cash paid for amounts included in the measurement of lease liabilities | $ 11.2 | |
Right-of-use assets obtained in exchange for lease liabilities | 22.1 | |
Operating lease right of use assets | 53.4 | |
Operating lease liabilities recognized upon adoption | $ 55.4 | |
Restatement Adjustment | ||
Leases | ||
Operating lease right of use assets | $ 40.3 | |
Operating lease liabilities recognized upon adoption | $ 42.8 |
LEASES - Maturities (Details)
LEASES - Maturities (Details) $ in Millions | Dec. 31, 2019USD ($) |
Maturities of Lease Liabilities | |
2020 | $ 10.4 |
2021 | 10 |
2022 | 9.3 |
2023 | 7.8 |
2024 | 3.5 |
After 2024 | 24.2 |
Total lease payments | 65.2 |
Less: Interest | (9.8) |
Present value of lease liabilities | $ 55.4 |
LEASES - Others (Details)
LEASES - Others (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
LEASES | |
Minimum lease payments related to option to extend term | $ 20.4 |
Minimum lease payments for leases will commence after December 31, 2019 | $ 115.9 |
QUARTERLY DATA (UNAUDITED) (Det
QUARTERLY DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
QUARTERLY DATA (UNAUDITED) | |||||||||||
Revenues less cost of revenues | $ 280.3 | $ 294 | $ 283.2 | $ 279.4 | $ 334.4 | $ 270.5 | $ 283.5 | $ 328.5 | $ 1,136.9 | $ 1,216.9 | $ 995.6 |
Operating income | 119.2 | 147.4 | 125.2 | 145.4 | 176.5 | 126.1 | 129.1 | 167.7 | 537.2 | 599.4 | 371.9 |
Net income | 86.3 | 105.9 | 84.5 | 94.1 | 138.4 | 85.7 | 83 | 118.1 | 370.8 | 425.2 | 400.6 |
Net Income allocated to common stockholders | $ 86.1 | $ 105.5 | $ 87.6 | $ 93.5 | $ 137.4 | $ 85 | $ 82.4 | $ 117.3 | $ 372.7 | $ 422.1 | $ 396.7 |
Basic earnings per share (in dollars per share) | $ 0.78 | $ 0.95 | $ 0.79 | $ 0.84 | $ 1.23 | $ 0.76 | $ 0.74 | $ 1.04 | $ 3.35 | $ 3.78 | $ 3.70 |
Diluted earnings per share (in dollars per share) | $ 0.77 | $ 0.94 | $ 0.78 | $ 0.84 | $ 1.23 | $ 0.76 | $ 0.73 | $ 1.04 | $ 3.34 | $ 3.76 | $ 3.69 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - $ / shares | Feb. 19, 2020 | Feb. 11, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Subsequent Events | |||||
Dividends (in dollars per share) | $ 1.34 | $ 1.16 | $ 1.04 | ||
Performance-Based Restricted Stock Units | |||||
Subsequent Events | |||||
Granted (in shares) | 86,134 | ||||
Granted (in dollars per share) | $ 88.22 | ||||
Vesting period | 3 years | ||||
Subsequent Event | |||||
Subsequent Events | |||||
Dividends (in dollars per share) | $ 0.36 | ||||
Subsequent Event | Restricted Stock Units | |||||
Subsequent Events | |||||
Granted (in shares) | 163,261 | ||||
Granted (in dollars per share) | $ 120.44 | ||||
Vesting period | 3 years | ||||
Subsequent Event | Performance-Based Restricted Stock Units | |||||
Subsequent Events | |||||
Granted (in shares) | 42,173 |