Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 24, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2020 | |
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 $0.01 per share | |
Trading Symbol | CBOE | |
Entity Current Reporting Status | Yes | |
Security Exchange Name | CboeBZX | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 108,757,883 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001374310 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 210.1 | $ 229.3 |
Financial investments | 176.5 | 71 |
Accounts receivable, net of $1.0 allowance for credit losses at June 30, 2020 and $0.7 at December 31, 2019 | 376.8 | 234.7 |
Income taxes receivable | 56.8 | |
Other current assets | 17.8 | 15.8 |
Total current assets | 781.2 | 607.6 |
Investments | 61.3 | 61.2 |
Property and equipment, net | 75.6 | 47 |
Property held for sale | 13 | 21.1 |
Operating lease right of use assets | 117.8 | 53.4 |
Goodwill | 2,730.4 | 2,682.1 |
Intangible assets, net | 1,526.2 | 1,589.9 |
Other assets, net | 60.8 | 51.6 |
Total assets | 5,366.3 | 5,113.9 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 216 | 171.9 |
Section 31 fees payable | 247.5 | 99 |
Deferred revenue | 17.3 | 4.5 |
Income taxes payable | 14.9 | 4 |
Current portion of contingent consideration liability | 0.8 | 2.2 |
Total current liabilities | 496.5 | 281.6 |
Long-term debt | 868.6 | 867.6 |
Unrecognized tax benefits | 148.8 | 135.9 |
Deferred income taxes | 384.9 | 399.7 |
Non-current operating lease liabilities | 137.3 | 46.7 |
Contingent consideration liabilities | 19.7 | |
Other non-current liabilities | 24.2 | 26.8 |
Total liabilities | 2,080 | 1,758.3 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and outstanding at March 31, 2020 and December 31, 2019 | ||
Common stock, $0.01 par value: 325,000,000 shares authorized, 125,976,027 and 108,757,176 shares issued and outstanding, respectively at June 30, 2020 and 125,701,889 and 110,656,892 shares issued and outstanding, respectively at December 31, 2019 | 1.2 | 1.2 |
Common stock in treasury, at cost, 17,218,851 shares at June 30, 2020 and 15,044,997 shares at December 31, 2019 | (1,120.5) | (887.1) |
Additional paid-in capital | 2,704.5 | 2,691.3 |
Retained earnings | 1,703.7 | 1,512.6 |
Accumulated other comprehensive income, net | (2.6) | 37.6 |
Total stockholders' equity | 3,286.3 | 3,355.6 |
Total liabilities and stockholders' equity | $ 5,366.3 | $ 5,113.9 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Condensed Consolidated Balance Sheets | ||
Accounts Receivable, Allowance for credit losses | $ 1 | $ 0.7 |
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) | 125,976,027 | 125,701,889 |
Common stock, shares outstanding (in shares) | 108,757,176 | 110,656,892 |
Common stock held in Treasury (in shares) | 17,218,851 | 15,044,997 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 868.7 | $ 620.6 | $ 1,790.2 | $ 1,222.1 |
Cost of revenues: | ||||
Total cost of revenues | 571.8 | 337.4 | 1,135 | 659.5 |
Revenues less cost of revenues | 296.9 | 283.2 | 655.2 | 562.6 |
Operating expenses: | ||||
Compensation and benefits | 54.9 | 52.2 | 108.2 | 100.3 |
Depreciation and amortization | 38 | 43.7 | 78.5 | 90.9 |
Technology support services | 12.5 | 11.8 | 24.4 | 23.7 |
Professional fees and outside services | 12.3 | 19.2 | 27.2 | 35.4 |
Travel and promotional expenses | 0.9 | 3 | 3 | 5.6 |
Facilities costs | 4.1 | 3 | 8.2 | 5.1 |
Acquisition-related costs | 9.4 | 20.8 | 10.2 | 23.1 |
Other expenses | 3.1 | 4.3 | 7.4 | 7.9 |
Total operating expenses | 135.2 | 158 | 267.1 | 292 |
Operating income | 161.7 | 125.2 | 388.1 | 270.6 |
Non-operating (expenses) income: | ||||
Interest expense, net | (7.3) | (10) | (14.6) | (19.9) |
Other income (expense), net | 2.2 | 4.4 | 0.6 | (4.4) |
Income before income tax provision | 156.6 | 119.6 | 374.1 | 246.3 |
Income tax provision | 43 | 35.1 | 103.1 | 67.7 |
Net income | 113.6 | 84.5 | 271 | 178.6 |
Net loss attributable to redeemable noncontrolling interest | 3.8 | 4 | ||
Net income excluding redeemable noncontrolling interest | 113.6 | 88.3 | 271 | 182.6 |
Change in redemption value of redeemable noncontrolling interest | (0.2) | (0.4) | ||
Net income allocated to participating securities | (0.3) | (0.5) | (0.7) | (1.1) |
Net income allocated to common stockholders | $ 113.3 | $ 87.6 | $ 270.3 | $ 181.1 |
Basic earnings per share (in dollars per share) | $ 1.04 | $ 0.79 | $ 2.46 | $ 1.62 |
Diluted earnings per share (in dollars per share) | $ 1.03 | $ 0.78 | $ 2.45 | $ 1.62 |
Basic weighted average shares outstanding (in shares) | 109.5 | 111.5 | 109.9 | 111.5 |
Diluted weighted average shares outstanding (in shares) | 109.6 | 111.6 | 110.1 | 111.6 |
Transaction fees | ||||
Revenues: | ||||
Total revenues | $ 618.3 | $ 426.9 | $ 1,279.8 | $ 856.2 |
Access and capacity fees | ||||
Revenues: | ||||
Total revenues | 55.7 | 54.5 | 113.4 | 108.9 |
Market data fees | ||||
Revenues: | ||||
Total revenues | 58.7 | 51.8 | 114.9 | 103.4 |
Regulatory fees | ||||
Revenues: | ||||
Total revenues | 128.7 | 79.7 | 265.5 | 138.4 |
Other revenue | ||||
Revenues: | ||||
Total revenues | 7.3 | 7.7 | 16.6 | 15.2 |
Liquidity payments | ||||
Cost of revenues: | ||||
Total cost of revenues | 415.6 | 235.8 | 808 | 479.5 |
Routing and clearing | ||||
Cost of revenues: | ||||
Total cost of revenues | 17.7 | 9.2 | 33.7 | 18.4 |
Section 31 fees | ||||
Cost of revenues: | ||||
Total cost of revenues | 119 | 70.3 | 246.4 | 118.5 |
Royalty fees | ||||
Cost of revenues: | ||||
Total cost of revenues | 19.4 | 21.9 | 46.8 | 42.9 |
Other | ||||
Cost of revenues: | ||||
Total cost of revenues | $ 0.1 | $ 0.2 | $ 0.1 | $ 0.2 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 113.6 | $ 84.5 | $ 271 | $ 178.6 |
Other comprehensive (loss) income, net of income tax: | ||||
Foreign currency translation adjustments | (3.5) | (18.1) | (41) | (3.4) |
Unrealized holding losses on financial investments | (0.3) | (0.3) | ||
Post-retirement benefit obligations | 1.1 | 1.1 | ||
Comprehensive income | 110.9 | 66.4 | 230.8 | 175.2 |
Comprehensive loss attributable to redeemable noncontrolling interest | 3.8 | 4 | ||
Comprehensive income excluding redeemable noncontrolling interest | 110.9 | 70.2 | 230.8 | 179.2 |
Change in redemption value of redeemable noncontrolling interest | (0.2) | (0.4) | ||
Comprehensive income allocated to participating securities | (0.3) | (0.5) | (0.7) | (1.1) |
Comprehensive income allocated to common stockholders, net of income tax | $ 110.6 | $ 69.5 | $ 230.1 | $ 177.7 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Changes in Stockholder's Equity - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income, net | Redeemable Noncontrolling Interests | Total |
Beginning balance at Dec. 31, 2018 | $ 1,200 | $ (720,100) | $ 2,660,200 | $ 1,288,200 | $ 11,500 | $ 9,400 | $ 3,241,000 |
Increase (Decrease) in Stockholders' Equity | |||||||
Cash dividends on common stock | (34,800) | (34,800) | |||||
Stock-based compensation | 5,400 | 5,400 | |||||
Exercise of common stock options | 8,100 | 8,100 | |||||
Repurchases of common stock from employee stock plans | (10,000) | (10,000) | |||||
Purchase of common stock | (35,000) | (35,000) | |||||
Shares issued under employee stock purchase plan | 800 | 800 | |||||
Net income excluding noncontrolling interest | 95,400 | 95,400 | |||||
Other comprehensive income (loss) | 14,700 | 14,700 | |||||
Net loss attributable to redeemable noncontrolling interest | (200) | ||||||
Redemption value adjustment of redeemable noncontrolling interest | (200) | 200 | (200) | ||||
Ending balance at Mar. 31, 2019 | 1,200 | (764,300) | 2,673,700 | 1,348,600 | 26,200 | 9,400 | 3,285,400 |
Beginning balance at Dec. 31, 2018 | 1,200 | (720,100) | 2,660,200 | 1,288,200 | 11,500 | 9,400 | 3,241,000 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income excluding noncontrolling interest | 182,600 | ||||||
Ending balance at Jun. 30, 2019 | 1,200 | (764,600) | 2,680,400 | 1,401,900 | 8,100 | 5,800 | 3,327,000 |
Beginning balance at Mar. 31, 2019 | 1,200 | (764,300) | 2,673,700 | 1,348,600 | 26,200 | 9,400 | 3,285,400 |
Increase (Decrease) in Stockholders' Equity | |||||||
Cash dividends on common stock | (34,800) | (34,800) | |||||
Stock-based compensation | 6,300 | 6,300 | |||||
Exercise of common stock options | 400 | 400 | |||||
Repurchases of common stock from employee stock plans | (400) | (400) | |||||
Purchase of common stock | (10) | ||||||
Shares issued under employee stock purchase plan | 100 | 100 | |||||
Net income excluding noncontrolling interest | 88,300 | 88,300 | |||||
Other comprehensive income (loss) | (18,100) | (18,100) | |||||
Net loss attributable to redeemable noncontrolling interest | (3,800) | ||||||
Redemption value adjustment of redeemable noncontrolling interest | (200) | 200 | (200) | ||||
Ending balance at Jun. 30, 2019 | 1,200 | (764,600) | 2,680,400 | 1,401,900 | 8,100 | $ 5,800 | 3,327,000 |
Beginning balance at Dec. 31, 2019 | 1,200 | (887,100) | 2,691,300 | 1,512,600 | 37,600 | 3,355,600 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Cash dividends on common stock | (40,000) | (40,000) | |||||
Stock-based compensation | 8,300 | 8,300 | |||||
Repurchases of common stock from employee stock plans | (13,900) | (13,900) | |||||
Purchase of common stock | (119,500) | (119,500) | |||||
Shares issued under employee stock purchase plan | 100 | 100 | |||||
Net income excluding noncontrolling interest | 157,400 | 157,400 | |||||
Other comprehensive income (loss) | (37,500) | (37,500) | |||||
Ending balance at Mar. 31, 2020 | 1,200 | (1,020,500) | 2,699,700 | 1,629,600 | 100 | 3,310,100 | |
Beginning balance at Dec. 31, 2019 | 1,200 | (887,100) | 2,691,300 | 1,512,600 | 37,600 | 3,355,600 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income excluding noncontrolling interest | 271,000 | ||||||
Other comprehensive income (loss) | (40,200) | ||||||
Ending balance at Jun. 30, 2020 | 1,200 | (1,120,500) | 2,704,500 | 1,703,700 | (2,600) | 3,286,300 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Transition adjustment for adoption of Current Expected Credit Losses standard at January 1, 2020 | (400) | (400) | |||||
Beginning balance at Mar. 31, 2020 | 1,200 | (1,020,500) | 2,699,700 | 1,629,600 | 100 | 3,310,100 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Cash dividends on common stock | (39,500) | (39,500) | |||||
Stock-based compensation | 4,600 | 4,600 | |||||
Exercise of common stock options | 200 | 200 | |||||
Repurchases of common stock from employee stock plans | (200) | (200) | |||||
Purchase of common stock | (99,800) | (99,800) | |||||
Net income excluding noncontrolling interest | 113,600 | 113,600 | |||||
Other comprehensive income (loss) | (2,700) | (2,700) | |||||
Ending balance at Jun. 30, 2020 | $ 1,200 | $ (1,120,500) | $ 2,704,500 | $ 1,703,700 | $ (2,600) | $ 3,286,300 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Changes in Stockholder's Equity (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Condensed Consolidated Statements of Changes in Stockholders' Equity | ||||
Dividends (in dollars per share) | $ 0.36 | $ 0.36 | $ 0.31 | $ 0.31 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows $ in Millions | 6 Months Ended | |
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | |
Cash Flows from Operating Activities: | ||
Net income | $ 271 | $ 178.6 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 78.5 | 90.9 |
Amortization of debt issuance cost and debt discount | 1 | 1.2 |
Change in fair value of contingent consideration | 1.6 | |
Realized gain on available-for-sale securities | (0.4) | (0.7) |
Provision for credit losses | 0.4 | 0.6 |
Provision for deferred income taxes | (11) | (11) |
Stock-based compensation expense | 12.9 | 11.7 |
Impairment of assets held for sale | 8.1 | 6.1 |
Impairment of goodwill | 10.5 | |
Equity in investments | (0.7) | (4.5) |
Changes in assets and liabilities: | ||
Accounts receivable | (144.2) | 41.5 |
Income taxes receivable | 56.8 | |
Other current assets | (1.8) | (5.2) |
Other assets | (12.1) | |
Accounts payable and accrued liabilities | 45.3 | (51.9) |
Section 31 fees payable | 148.5 | 38.1 |
Deferred revenue | 11.6 | 4.6 |
Income taxes payable | 11.1 | (2.5) |
Unrecognized tax benefits | 12.9 | 12.5 |
Other liabilities | 0.4 | (4.5) |
Net cash provided by operating activities | 488.3 | 317.6 |
Cash flows from investing activities: | ||
Acquisitions, net of cash acquired | (66.6) | |
Purchases of available-for-sale financial investments | (154.9) | (61.8) |
Proceeds from maturities of available-for-sale financial investments | 47.3 | 35.5 |
Return of capital from investments | 4.5 | 22 |
Contributions to investments | (4.7) | |
Purchases of property and equipment | (17.2) | (19.1) |
Net cash used in investing activities | (191.6) | (23.4) |
Cash flows from financing activities: | ||
Principal payments of long term debt | (300) | |
Cash dividends paid on common stock | (79.5) | (69.6) |
Repurchases of common stock from employee stock plans | (14.1) | (10.4) |
Exercise of common stock options | 0.2 | 8.5 |
Payment of contingent consideration from acquisition | (2.2) | |
Purchase of common stock | (219.3) | (35) |
Net cash used in financing activities | (314.9) | (406.5) |
Effect of foreign currency exchange rates on cash and cash equivalents | (1) | (1.5) |
Decrease in cash and cash equivalents | (19.2) | (113.8) |
Cash and cash Equivalents: Beginning of Period | 229.3 | 275.1 |
Cash and cash Equivalents: End of Period | 210.1 | 161.3 |
Supplemental disclosure of cash transactions: | ||
Cash paid for income taxes | 33.3 | 67.3 |
Cash paid for interest | 14.4 | $ 16.7 |
Supplemental disclosure of noncash investing activities: | ||
Accounts receivable acquired | 0.7 | |
Other current assets acquired | 0.4 | |
Goodwill acquired | 66.4 | |
Intangible assets acquired | 22.3 | |
Accounts payable and accrued expenses assumed | (1.4) | |
Deferred revenue acquired | (1.3) | |
Contingent consideration related to acquisitions | $ (20.5) |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | 1. ORGANIZATION AND BASIS OF PRESENTATION Cboe Global Markets, Inc. 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, Sarasota Springs, Belfast, Amsterdam, Singapore, Hong Kong, and Ecuador. Basis of Presentation These interim unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates based upon historical experience, observance of trends, information available from outside sources and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year. For those consolidated subsidiaries in which the Company’s ownership is less than 100% and for which the Company has control over the assets and liabilities and the management of the entity, the outside stockholders’ interest is shown as noncontrolling interest. Segment information The Company has five business segments: Options, 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 14 (“Segment Reporting”) for more information. Significant Accounting Policies With the exception of the change in the accounting for expected credit losses as a result of the adoption of Accounting Standards Update (“ASU”) 2016-13 (as discussed below in “Recent Accounting Pronouncements Adopted”), there have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, that are of significance, or potential significance, to the Company. Accounts Receivable, net Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried at amortized cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis and recognizes the total owed from a member firm as accounts receivable, net, and the total owed to a member firm as accounts payable and accrued liabilities in the condensed consolidated balance sheets. On a periodic basis, management evaluates the Company’s accounts receivable and records an allowance for expected credit losses using an aging schedule. The aging schedule applies loss rates based on historical loss information and, as deemed necessary, is adjusted for differences in the nature of the receivables that exist at the reporting date from the historical period. Due to the short-term nature of the accounts receivable, changes in future economic conditions are not expected to have a significant impact on the expected credit losses. The accounts receivable are presented net of allowance for credit losses on the condensed consolidated balance sheets and the associated losses are presented in other operating expenses on the condensed consolidated statements of income. Recent Accounting Pronouncements - Adopted In June 2016, the FASB issued ASU 2016-13, Credit Losses. This update replaces the incurred loss impairment methodology in GAAP with a methodology that requires management to estimate an expected lifetime credit loss on financial assets. This includes accounts receivable and notes receivable, which is included in other assets, net on the condensed consolidated balance sheets. 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 credit 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 this ASU on January 1, 2020 using the modified retrospective approach and did not restate comparative periods. Upon the adoption of the standard, the Company recognized an immaterial cumulative-effect adjustment to retained earnings for the estimate of current expected credit loss on 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, there was not 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 this ASU. The financial instruments other than accounts receivable, net that are within the scope of the standard were not materially impacted by the standard. The impact to the condensed consolidated balance sheet was immaterial in nature and there was no impact to the condensed consolidated statements of income and 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 adopted this ASU on January 1, 2020 using the prospective approach, which did not result in a material impact to the condensed consolidated financial statements and disclosures. Recent Accounting Pronouncements - Issued, not yet Adopted There are no applicable material accounting pronouncements that have been issued but are not yet adopted as of June 30, 2020. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2020 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 2. REVENUE RECOGNITION The Company’s main types of revenue contracts are: ● Transaction fees - Transaction fees represent fees charged by the Company for meeting the point-in-time performance obligation of executing a trade on its markets. These fees can be variable based on trade volume tiered discounts, however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Transaction fees, 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. ● Access and capacity fees - Access and capacity fees represent fees assessed for the opportunity to trade, including fees for trading-related functionality across all segments, terminal and other equipment rights, maintenance services, trading floor space and telecommunications services. Facilities, systems services and other fees are generally monthly fee-based. These fees are billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the performance obligations are met. All access and capacity fees associated with the trading floor are recognized over time in the Options segment, as the performance obligations are met. ● Market data fees - Market data fees represent the fees received by the Company from the U.S. tape plans and fees charged to customers for proprietary market data. Fees from the U.S. tape plans are collected monthly based on published fee schedules and distributed quarterly to the 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 to meet its performance obligation. 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 for meeting the point-in-time performance obligation of executing a trade on its markets. The fees charged to customers are based on the fee set by the SEC per notional value of U.S. Equities transactions and per round turn of Options transactions executed on the Company’s U.S. securities markets. These fees are calculated and billed monthly and are recognized in the 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, along with other miscellaneous regulatory fees, and neither can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the performance obligation is fulfilled. ● Other revenue - Other revenue primarily includes revenue from various licensing agreements, all fees related to the trade reporting facility operated in the European Equities segment, and revenue associated with advertisements through the Company’s websites. All revenue recognized in the condensed consolidated statements of income is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line and segment (in millions): Corporate U.S. European Global Items and Options Equities Futures Equities FX Eliminations Total Three Months Ended June 30, 2020 Transaction fees $ 250.8 $ 325.1 $ 15.8 $ 15.2 $ 11.4 $ — $ 618.3 Access and capacity fees 23.9 20.9 4.1 4.7 2.1 — 55.7 Market data fees 17.8 35.8 1.7 3.2 0.2 — 58.7 Regulatory fees 21.0 107.7 — — — — 128.7 Other revenue 4.1 1.0 — 2.2 — — 7.3 $ 317.6 $ 490.5 $ 21.6 $ 25.3 $ 13.7 $ — $ 868.7 Timing of revenue recognition Services transferred at a point in time $ 275.9 $ 433.8 $ 15.8 $ 17.4 $ 11.4 $ — $ 754.3 Services transferred over time 41.7 56.7 5.8 7.9 2.3 — 114.4 $ 317.6 $ 490.5 $ 21.6 $ 25.3 $ 13.7 $ — $ 868.7 Three Months Ended June 30, 2019 Transaction fees $ 185.9 $ 182.0 $ 28.3 $ 19.5 $ 11.2 $ — $ 426.9 Access and capacity fees 25.6 19.6 3.8 3.9 1.6 — 54.5 Market data fees 14.0 32.8 1.6 3.2 0.2 — 51.8 Regulatory fees 16.7 63.0 — — — — 79.7 Other revenue 3.9 1.3 0.1 2.1 0.1 0.2 7.7 $ 246.1 $ 298.7 $ 33.8 $ 28.7 $ 13.1 $ 0.2 $ 620.6 Timing of revenue recognition Services transferred at a point in time $ 206.5 $ 246.3 $ 28.4 $ 21.6 $ 11.3 $ 0.2 $ 514.3 Services transferred over time 39.6 52.4 5.4 7.1 1.8 — 106.3 $ 246.1 $ 298.7 $ 33.8 $ 28.7 $ 13.1 $ 0.2 $ 620.6 Corporate U.S. European Global Items and Options Equities Futures Equities FX Eliminations Total Six Months Ended June 30, 2020 Transaction fees $ 535.0 $ 629.1 $ 51.7 $ 37.5 $ 26.5 $ — $ 1,279.8 Access and capacity fees 51.1 40.9 8.1 9.6 3.7 — 113.4 Market data fees 35.0 69.8 3.3 6.4 0.4 — 114.9 Regulatory fees 43.3 222.2 — — — — 265.5 Other revenue 9.7 2.2 — 4.7 — — 16.6 $ 674.1 $ 964.2 $ 63.1 $ 58.2 $ 30.6 $ — $ 1,790.2 Timing of revenue recognition Services transferred at a point in time $ 588.0 $ 853.5 $ 51.7 $ 42.2 $ 26.5 $ — $ 1,561.9 Services transferred over time 86.1 110.7 11.4 16.0 4.1 — 228.3 $ 674.1 $ 964.2 $ 63.1 $ 58.2 $ 30.6 $ — $ 1,790.2 Six Months Ended June 30, 2019 Transaction fees $ 358.6 $ 380.9 $ 52.9 $ 40.6 $ 23.2 $ — $ 856.2 Access and capacity fees 51.6 38.6 7.5 7.9 3.3 — 108.9 Market data fees 27.7 65.7 3.3 6.4 0.3 — 103.4 Regulatory fees 31.2 106.7 0.5 — — — 138.4 Other revenue 8.0 2.6 0.1 4.1 0.2 0.2 15.2 $ 477.1 $ 594.5 $ 64.3 $ 59.0 $ 27.0 $ 0.2 $ 1,222.1 Timing of revenue recognition Services transferred at a point in time $ 397.8 $ 490.2 $ 53.5 $ 44.7 $ 23.4 $ 0.2 $ 1,009.8 Services transferred over time 79.3 104.3 10.8 14.3 3.6 — 212.3 $ 477.1 $ 594.5 $ 64.3 $ 59.0 $ 27.0 $ 0.2 $ 1,222.1 Contract liabilities as of June 30, 2020 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, 2020 Cash Revenue Balance at Liquidity provider sliding scale (1) $ — $ 9.6 $ (4.8) $ 4.8 Other, net 4.5 24.0 (15.8) 12.7 Total deferred revenue $ 4.5 $ 33.6 $ (20.6) $ 17.5 (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 | 6 Months Ended |
Jun. 30, 2020 | |
ACQUISITIONS | |
ACQUISITIONS | 3. ACQUISITIONS On February 3, 2020, the Company purchased Hanweck Associates, LLC (“Hanweck”) and the assets of FT Providers, LLC (“FT Options”). Hanweck and FT Options are both providers of risk analytics market data and included in the Company’s Options segment. On June 1, 2020, the Company purchased the assets of Trade Alert, LLC (“Trade Alert”), a real-time alerts and order flow analysis service provider included in the Company’s Options segment. Of the acquisitions’ purchase price, $66.4 million was allocated to goodwill, $22.3 million was allocated to intangible assets, and $0.5 million was allocated to working capital. In connection with these acquisitions, approximately $20.5 million in contingent consideration related to developmental milestones has been recorded in the Company’s condensed consolidated financial statements. Acquisition-related costs relate to acquisitions and other strategic opportunities, including the Merger. The Company expensed $9.4 million of acquisition-related costs during the three months ended June 30, 2020, which primarily included $8.1 million of impairment charges related to facilities and $1.3 million of professional fees and other expenses. The Company expensed $20.8 million of acquisition-related costs during the three months ended June 30, 2019 that included $10.5 million of impairment of goodwill charges, $6.1 million of impairment charges related to facilities, $2.1 million of compensation-related costs, $1.1 million of termination fees of an assigned lease agreement, and $0.8 million of professional fees. These acquisition-related expenses are included in acquisition-related costs in the condensed consolidated statements of income. The Company expensed $10.2 million of acquisition-related costs during the six months ended June 30, 2020, which primarily included $8.1 million of impairment charges related to facilities and $2.1 million of professional fees and other expenses. The Company expensed $23.1 million of acquisition-related costs during the six months ended June 30, 2019 that included $10.5 million of impairment of goodwill charges, $6.1 million of impairment charges related to facilities, $3.4 million of compensation-related costs, $1.1 million of termination fees of an assigned lease agreement, and $1.8 million of professional fees. These acquisition-related expenses are included in acquisition-related costs in the condensed consolidated statements of income. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2020 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS As of June 30, 2020 and December 31, 2019, the Company’s investments were comprised of the following (in millions): June 30, December 31, 2020 2019 Equity Method Investments: Investment in Signal Trading Systems, LLC $ 12.4 $ 12.6 Investment in EuroCCP 10.2 10.3 Total equity method investments 22.6 22.9 Other Equity Investments: Investment in Eris Exchange Holdings, LLC 20.0 20.8 Investment in American Financial Exchange, LLC 8.6 8.6 Investment in Cboe Vest Financial Group, Inc. 2.9 2.9 Investment in Eris Digital Holdings, LLC 0.8 — Investment in OCC 0.3 0.3 Other equity investments 6.1 5.7 Total other equity investments 38.7 38.3 Total investments $ 61.3 $ 61.2 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. As of June 30, 2020, Cboe Europe Limited owned 20% of EuroCCP and was able to exercise significant influence over the entity as an equal shareholder with four other investors. The Company acquired the remaining 80% interest in EuroCCP on July 1, 2020, see Note 23 (“Subsequent Events”) for more information. Other Equity Investments The carrying amount of other equity investments totaled $38.7 million as of June 30, 2020 and $38.3 million as of December 31, 2019, respectively, and is included in investments in the condensed consolidated balance sheets. The Company accounts for these investments using the measurement alternative given the absence of readily determinable fair values for the respective investments and due to the Company’s inability to exercise significant influence over the investments based upon the respective ownership interests held. As of June 30, 2020, other equity investments primarily reflect a 20% investment in OCC and minority investments in American Financial Exchange, LLC, CurveGlobal, Cboe Vest Financial Group, Inc. (“Vest”), Eris Exchange Holdings, LLC, and Eris Digital Holdings, LLC. The Company’s contributed capital to OCC has been recorded under investments in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. Under OCC’s current capital management policy, which was approved by the SEC on January 24, 2020, 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 capital management policy, nor does any shareholder have the right to receive dividends from OCC under such policy. As such, the Company reversed the $8.8 million OCC dividend declared in 2018, which was to be paid in 2019, in other expense, net in the condensed consolidated statement of income for the six months ended June 30, 2019. 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 to be in line with the other equity investments. 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 interest. Additionally, the Company recorded an interest-bearing note receivable of $3.7 million for the consideration received from the third-party, which was recorded in other assets, net in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. In May 2020, Eris Exchange Holdings, LLC completed a restructuring transaction to spin out Eris Digital Holdings, LLC into a stand-alone entity. The restructuring qualifies as an exchange of ownership interest, though it required no additional consideration exchanged to execute the exchange of units. The restructuring did not result in a change in number of units owned by the Company or a substantial change in the Company’s ownership interest percentage. No gain or loss is recognized as a result of the restructuring. The Company’s investment in Eris Digital Holdings, LLC is included within “Other equity investments” in the above table. |
FINANCIAL INVESTMENTS
FINANCIAL INVESTMENTS | 6 Months Ended |
Jun. 30, 2020 | |
INVESTMENTS | |
FINANCIAL INVESTMENTS | 5. 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 condensed consolidated 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): June 30, 2020 Cost basis Unrealized gains Unrealized losses Fair value Available-for-sale securities: U.S. Treasury securities $ 155.6 $ — $ — $ 155.6 Trading securities: Marketable securities (1) 20.9 — — 20.9 Total financial investments $ 176.5 $ — $ — $ 176.5 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 (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 15 (“Employee Benefit Plans”) for more information. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 6. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, December 31, 2020 2019 Construction in progress $ 33.0 $ 1.2 Furniture and equipment 166.7 164.4 Total property and equipment 199.7 165.6 Less accumulated depreciation (124.1) (118.6) Property and equipment, net $ 75.6 $ 47.0 Depreciation expense using the straight-line method was $6.2 million and $6.1 million for the three months ended June 30, 2020 and 2019, respectively, and $12.4 million and $12.3 million for the six months ended June 30, 2020 and 2019, respectively. As a result of the Merger, there was a reduction in employee workspace needed in Chicago, which led to the decision to market for sale the headquarters location. The Company classified the associated land, building, and certain furniture and equipment of the headquarters location as held for sale, performed an impairment assessment, and ceased depreciation effective May 1, 2019, as the Company anticipates selling the property held for sale. As of June 30, 2020, the total value of the property classified as property held for sale on the condensed consolidated balance sheet was $13.0 million. As a result of an evaluation of the headquarters location’s classification as held for sale during the second quarter of 2020, an impairment assessment was performed and an additional impairment charge of $8.1 was recorded in acquisition-related costs within the Options segment in the accompanying condensed consolidated statements of income. The impact of ceasing depreciation of the property held for sale did not result in a material impact to the condensed consolidated financial statements. |
OTHER ASSETS, NET
OTHER ASSETS, NET | 6 Months Ended |
Jun. 30, 2020 | |
OTHER ASSETS, NET | |
OTHER ASSETS, NET | 8. OTHER ASSETS, NET Other assets, net consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, December 31, 2020 2019 Software development work in progress $ 0.7 $ 2.6 Data processing software 85.9 84.3 Less accumulated depreciation and amortization (59.8) (57.2) Data processing software, net 26.8 29.7 Other assets (1) 34.0 21.9 Other assets, net $ 60.8 $ 51.6 (1) At June 30, 2020 and December 31, 2019, the majority of the balance included long-term prepaid assets and notes receivable. See Note 7 (“Credit Losses”) for more information on the notes receivable included within other assets, net on the condensed consolidated balance sheets. As of June 30, 2020 and December 31, 2019, the notes receivable balance net of allowance for notes receivable credit losses was $21.1 million and $9.2 million, respectively. Amortization expense related to data processing software was $1.7 million and $3.4 million for the three months ended June 30, 2020 and 2019, respectively, and $3.5 million and $6.9 million for the six months ended June 30, 2020 and 2019, respectively. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 6 Months Ended |
Jun. 30, 2020 | |
GOODWILL AND INTANGIBLE ASSETS, NET | |
GOODWILL AND INTANGIBLE ASSETS, NET | 9. GOODWILL AND INTANGIBLE ASSETS, NET The following table presents the details of goodwill by segment (in millions): U.S. European Options Equities Equities Global FX Total Balance as of December 31, 2019 $ 239.4 $ 1,740.4 $ 435.1 $ 267.2 $ 2,682.1 Additions 66.4 — — — 66.4 Changes in foreign currency exchange rates — — (18.1) — (18.1) Balance as of June 30, 2020 $ 305.8 $ 1,740.4 $ 417.0 $ 267.2 $ 2,730.4 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. The following table presents the details of the intangible assets (in millions): U.S. European Options Equities Equities Global FX Total Balance as of December 31, 2019 $ 166.6 $ 921.4 $ 363.7 $ 138.2 $ 1,589.9 Additions 22.3 — — — 22.3 Amortization (7.8) (30.5) (11.5) (12.8) (62.6) Changes in foreign currency exchange rates — — (23.4) — (23.4) Balance as of June 30, 2020 $ 181.1 $ 890.9 $ 328.8 $ 125.4 $ 1,526.2 For the three months ended June 30, 2020 and 2019, amortization expense was $30.1 million and $34.2 million, respectively. For the six months ended June 30, 2020 and 2019, amortization expense was $62.6 million and $71.7 million, respectively. The estimated future amortization expense is $60.0 million for the remainder of 2020, $108.0 million for 2021, $95.6 million for 2022, $84.9 million for 2023, $63.9 million for 2024, and $53.7 million for 2025. The following tables present the categories of intangible assets as of June 30, 2020 and December 31, 2019 (in millions): Weighted June 30, 2020 Average U.S. European Amortization Options Equities Equities Global FX Period (in years) Trading registrations and licenses $ 95.5 $ 572.7 $ 170.4 $ — Indefinite Customer relationships 46.6 222.9 158.7 140.0 17 Market data customer relationships 53.6 322.0 59.5 64.4 12 Technology 28.1 22.5 22.3 22.5 4 Trademarks and tradenames 12.9 6.0 1.8 1.2 9 Accumulated amortization (55.6) (255.2) (83.9) (102.7) $ 181.1 $ 890.9 $ 328.8 $ 125.4 Weighted December 31, 2019 Average U.S. European Amortization Options Equities Equities Global FX 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 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2020 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 December 31, 2019 Compensation and benefit-related liabilities $ 30.0 $ 35.2 Termination benefits 0.6 6.7 Royalties 17.5 18.6 Accrued liabilities 137.7 77.8 Marketing fee payable 18.0 12.6 Accounts payable 12.2 21.0 Total accounts payable and accrued liabilities $ 216.0 $ 171.9 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2020 | |
DEBT | |
DEBT | 11. DEBT The Company’s debt consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 December 31, 2019 $300 million Term Loan Agreement due December 2021, floating rate $ 223.0 $ 222.4 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 645.6 645.2 Revolving Credit Agreement — — Total debt $ 868.6 $ 867.6 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 the Company’s option, at either (i) the London Interbank Offered Rate (“LIBOR”) periodically fixed for an interest period (as selected by the Company) of one, two, three or six months plus a margin (based on 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, including cross-defaults from the Company’s other indebtedness, and indemnification provisions in favor of the lenders thereunder. The negative covenants include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants require the Company to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00. At June 30, 2020, the Company was in compliance with these covenants. On May 29, 2020, the Company amended the Term Loan Agreement to, among other items, (i) permit liens on assets of the EuroCCP settlement and clearing business that secures indebtedness incurred in support of its settlement and clearing activities, and permit the Company’s subsidiaries to incur such indebtedness, provided that such amounts are repaid within 35 days; and (ii) provide that the LIBOR, as used in the Term Loan Agreement, may be succeeded by one or more secured overnight financing rates (“SOFR”) published by the Federal Reserve Bank of New York or another alternate benchmark rate giving due consideration to any evolving or then-existing convention for similar agreements. 3.650% Senior Notes On January 12, 2017, the Company entered into an indenture (the “Indenture”), by and between the Company and Wells Fargo Bank, National Association, as trustee, in connection with the issuance of $650 million aggregate principal amount of the Company’s 3.650% Senior Notes due 2027 (“3.650% Senior Notes”). The form and terms of the 3.650% Senior Notes were established pursuant to an Officer’s Certificate, dated as of January 12, 2017, supplementing the Indenture. The Company used a portion of the net proceeds from the 3.650% Senior Notes to fund, in part, the Merger, including the payment of related fees and expenses and the repayment of Bats’ existing indebtedness, and the remainder for general corporate purposes. The 3.650% Senior Notes mature on January 12, 2027 and bear interest at the rate of 3.650% per annum, payable semi-annually in arrears on January 12 and July 12 of each year, commencing July 12, 2017. The 3.650% 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 3.650% Senior Notes, at any time in whole or from time to time in part, at the redemption prices set forth in the Officer’s Certificate. The Company may also be required to offer to repurchase the 3.650% Senior Notes upon the occurrence of a Change of Control Triggering Event (as such term is defined in the Officer’s Certificate) at a repurchase price equal to 101% of the aggregate principal amount of 3.650% Senior Notes to be repurchased. Indenture Under the Indenture, the Company may issue debt securities, which includes the 3.650% Senior Notes, at any time and from time to time, in one or more series without limitation on the aggregate principal amount. The Indenture governing the 3.650% Senior Notes contains customary restrictions, including a limitation that restricts the Company’s ability and the ability of certain of the Company’s subsidiaries to create or incur secured debt. Such Indenture also limits certain sale and leaseback transactions and contains customary events of default. At June 30, 2020, 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, as administrative agent and as swing line lender, as well as 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 June 30, 2020, 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 June 30, 2020, no borrowings were outstanding under the Revolving Credit Agreement. Accordingly, at June 30, 2020, $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 the Company’s option, at either (i) LIBOR periodically fixed for an interest period (as selected by the Company) of one, two, three or six months plus a margin (based on the Company’s public debt ratings) ranging from 1.00 percent per annum to 1.75 percent per annum or (ii) a daily floating rate based on the prime rate (subject to certain minimums based upon the federal funds effective rate or LIBOR) plus a margin (based on the Company’s public debt ratings) ranging from zero percent per annum to 0.75 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 the Company’s 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, including cross-defaults from the Company’s other indebtedness, and indemnification provisions in favor of the Revolving Lenders. The negative covenants include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants require the Company to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00. At June 30, 2020, the Company was in compliance with these covenants. On May 29, 2020, the Company amended the Revolving Credit Agreement to, among other items, (i) permit liens on assets of the EuroCCP settlement and clearing business that secures indebtedness incurred in support of its settlement and clearing activities, and permit the Company’s subsidiaries to incur such indebtedness, provided that such amounts are repaid within 35 days; and (ii) provide that the LIBOR, as used in the Revolving Credit Agreement, may be succeeded by one or more secured overnight financing rates (“SOFR”) published by the Federal Reserve Bank of New York or another alternate benchmark rate giving due consideration to any evolving or then-existing convention for similar agreements. 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 June 30, 2020 are as follows (in millions): Remainder of 2020 $ — 2021 225.0 2022 — 2023 — 2024 — Thereafter 650.0 Principal amounts repayable 875.0 Debt issuance cost (2.6) Unamortized discounts on notes (3.8) Total debt outstanding $ 868.6 Interest expense recognized on the Term Loan Agreement and the 3.650% Senior Notes is included in interest expense, net in the condensed consolidated statements of income, for the three and six months ended June 30, 2020 and 2019 is as follows (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Components of interest expense: Contractual interest $ 6.9 $ 9.9 $ 14.4 $ 19.7 Amortization of debt discount 0.1 0.1 0.3 0.3 Amortization of debt issuance costs 0.4 0.5 0.7 0.9 Interest expense $ 7.4 $ 10.5 $ 15.4 $ 20.9 Interest income (0.1) (0.5) (0.8) (1.0) Interest expense, net $ 7.3 $ 10.0 $ 14.6 $ 19.9 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | 6 Months Ended |
Jun. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | 12. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME, NET The following represents the changes in accumulated other comprehensive (loss) income, net by component (in millions): Foreign Total Accumulated Currency Unrealized Other Translation Investment Post-Retirement Comprehensive Adjustment Gain (Loss) Benefits Income (Loss) Balance at December 31, 2019 $ 38.2 $ 0.2 $ (0.8) $ 37.6 Other comprehensive (loss) income (41.0) (0.3) 1.1 (40.2) Balance at June 30, 2020 $ (2.8) $ (0.1) $ 0.3 $ (2.6) |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 6 Months Ended |
Jun. 30, 2020 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENT | 13. FAIR VALUE MEASUREMENT Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk. The Company applied FASB ASC 820, Fair Value Measurement, which provides guidance for using fair value to measure assets and liabilities by defining fair value and establishing the framework for measuring fair value. ASC 820 applies to financial and nonfinancial instruments that are measured and reported on a fair value basis. The three-level hierarchy of fair value measurements is based on whether the inputs to those measurements are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The fair-value hierarchy requires the use of observable market data when available and consists of the following levels: ● Level 1—Unadjusted inputs based on quoted markets for identical assets or liabilities. ● Level 2—Observable inputs, either direct or indirect, not including Level 1 measurements, corroborated by market data or based upon quoted prices in non-active markets. ● Level 3—Unobservable inputs that reflect management’s best assumptions of what market participants would use in valuing the asset or liability. The Company has included a tabular disclosure for financial assets and liabilities that are measured at fair value on a recurring basis in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. 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 June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 155.6 $ 155.6 $ — $ — Marketable securities: Mutual funds 13.1 13.1 — — Money market funds 7.8 7.8 — — Total assets $ 176.5 $ 176.5 $ — $ — Liabilities: Contingent consideration liabilities $ 20.5 $ — $ — $ 20.5 Total Liabilities $ 20.5 $ — $ — $ 20.5 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 liabilities $ 2.2 $ — $ — $ 2.2 Total Liabilities $ 2.2 $ — $ — $ 2.2 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 15 (“Employee Benefit Plans”) for more information. Contingent Consideration Liabilities In connection with the acquisition of Hanweck and acquisition of assets of FT Options and Trade Alert, the Company entered into contingent consideration arrangements with the former owners. The total fair value of the liabilities at June 30, 2020 was $20.5 million. That value is based on the Company’s estimate of the likelihood that certain performance targets in the respective acquisition agreements will be accomplished. Because the fair value measurements relating to the contingent consideration liabilities are subject to management judgment, measurement uncertainty is inherent in the valuation of the contingent consideration liabilities as of the reporting date. Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is immaterial as of June 30, 2020. 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. In connection with the annual impairment evaluation of goodwill and indefinite life intangibles, impairment is considered to have occurred if the fair value of the reporting unit is lower than the carrying 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 its carrying amount. The Company did not perform an impairment test during the three months ended June 30, 2020, as there were no market events that would indicate it was more likely than not that these assets were impaired. These measurements are considered Level 3 and these assets are recognized at fair value if they are deemed to be impaired. Equity investments without readily determinable fair values that are valued using the measurement alternative are measured at fair value on a non-recurring basis. During the six months ended June 30, 2020, no observable transactions or impairments impacted the measurements of the investments accounted for as other equity investments. In addition, property held for sale as of June 30, 2020 was also measured at fair value, less selling costs at June 30, 2020. See Note 6 (“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 June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 155.6 $ 155.6 $ — $ — Deferred compensation plan assets 20.9 20.9 — — Total assets $ 176.5 $ 176.5 $ — $ — Liabilities: Contingent consideration liabilities $ 20.5 $ — $ — $ 20.5 Deferred compensation plan liabilities 20.9 20.9 — — Debt 868.6 — 868.6 — Total liabilities $ 910.0 $ 20.9 $ 868.6 $ 20.5 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 liabilities $ 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 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 June 30, 2020 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 three and six months ended June 30, 2020. Level 3 Financial Liabilities for the Three Months Ended June 30, 2020 Balance at Realized (gains) Beginning of losses during Balance at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities $ 17.5 $ — $ 3.0 $ — $ 20.5 Total Liabilities $ 17.5 $ — $ 3.0 $ — $ 20.5 Level 3 Financial Liabilities for the Six Months Ended June 30, 2020 Balance at Realized (gains) Beginning of losses during Balance at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities $ 2.2 $ — $ 20.5 $ (2.2) $ 20.5 Total Liabilities $ 2.2 $ — $ 20.5 $ (2.2) $ 20.5 |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2020 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 14. 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 (“Organization and Basis of Presentation”). Segment performance is primarily evaluated based on operating income (loss). The Company’s chief operating decision-maker does not use segment-level assets or income and expenses below operating income (loss) as key performance metrics; therefore, such information is not presented below. The Company has aggregated all of its corporate costs, as well as other business ventures, within the Corporate Items and Eliminations totals based on the decision that those activities should not be used to evaluate the operating performance of the segments; however, operating expenses that relate to activities of a specific segment have been allocated to that segment. Options. 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 Three Months Ended June 30, 2020 Revenues $ 317.6 $ 490.5 $ 21.6 $ 25.3 $ 13.7 $ — $ 868.7 Operating income (loss) 93.4 55.9 8.3 5.4 1.1 (2.4) 161.7 Three Months Ended June 30, 2019 Revenues $ 246.1 $ 298.7 $ 33.8 $ 28.7 $ 13.1 $ 0.2 $ 620.6 Operating income (loss) 80.1 36.4 19.4 5.7 (1.6) (14.8) 125.2 Corporate European Items and Options U.S. Equities Futures Equities Global FX Eliminations Total Six Months Ended June 30, 2020 Revenues $ 674.1 $ 964.2 $ 63.1 $ 58.2 $ 30.6 $ — $ 1,790.2 Operating income (loss) 236.8 104.9 35.2 14.9 4.1 (7.8) 388.1 Six Months Ended June 30, 2019 Revenues $ 477.1 $ 594.5 $ 64.3 $ 59.0 $ 27.0 $ 0.2 $ 1,222.1 Operating income (loss) 167.1 74.0 37.7 11.5 (2.0) (17.7) 270.6 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2020 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 15. EMPLOYEE BENEFIT PLANS Employees are eligible to participate in the Cboe Options SMART Plan (“SMART Plan”). The SMART Plan is a defined contribution plan, which is qualified under Internal Revenue Code Section 401(k). In addition, eligible employees may participate in the Supplemental Employee Retirement Plan, Executive Retirement Plan and Deferred Compensation Plan. Effective January 1, 2017, the Executive Retirement Plan is closed to new executive officers and employees. Each plan is a defined contribution plan that is non-qualified under the Internal Revenue Code. The Deferred Compensation Plan assets, held in a rabbi trust, are subject to the claims of general creditors of the Company and totaled $20.9 million and $23.4 million at June 30, 2020 and December 31, 2019, respectively. Although the value of the plans are recorded in financial investments on the condensed consolidated balance sheets, there are equal and offsetting liabilities in other non-current liabilities. The investment results of these plans have no impact on net income as the investment results are recorded in equal amounts to both other expense, net and compensation and benefits expense in the condensed consolidated statements of income. The Company contributed $2.6 million and $3.6 million to the defined contribution plans for the three months ended June 30, 2020 and 2019, respectively, and $4.1 million and $5.2 million to the defined contribution plans for the six months ended June 30, 2020 and 2019, respectively. This expense is included in compensation and benefits in the condensed 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 $0.2 million and $0.1 million for the three months ended June 30, 2020 and 2019, respectively, and $0.4 million and $0.4 million for the six months ended June 30, 2020 and 2019, respectively. This expense is included in compensation and benefits in the condensed consolidated statements of income. |
REGULATORY CAPITAL
REGULATORY CAPITAL | 6 Months Ended |
Jun. 30, 2020 | |
REGULATORY CAPITAL | |
REGULATORY CAPITAL | 16. 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 June 30, 2020, 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 June 30, 2020, Cboe Trading had net capital of $6.1 million, which was $5.0 million in excess of its required net capital of $1.1 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 $21.7 million at June 30, 2020. At June 30, 2020, Cboe Europe Limited had capital in excess of its required FRR of $17.5 million. In accordance with the Markets in Financial Instruments Directive of the FCA requirements, Cboe Chi-X Europe computes its CRR as the greater of the base requirement of $0.1 million at June 30, 2020, or the summation of the credit risk, market risk and fixed overheads requirements, as defined. At June 30, 2020, Cboe Chi-X Europe had capital in excess of its required CRR of $0.3 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 dated March 8, 2019. As of June 30, 2020, the minimum capital requirement calculated in accordance with the license was $1.4 million. At June 30, 2020, Cboe Europe NL had capital in excess of its requirement of $4.4 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 June 30, 2020, CFE had annual projected operating expenses of $58.8 million and had financial resources that exceeded this amount. Additionally, as of June 30, 2020, CFE had projected operating expenses for the upcoming six months of $29.4 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 June 30, 2020, Cboe SEF had annual projected operating expenses of $0.7 million and had financial resources that exceeded this amount. Additionally, as of June 30, 2020, 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 | 6 Months Ended |
Jun. 30, 2020 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 17. STOCK-BASED COMPENSATION Stock-based compensation is based on the fair value of the award on the date of grant, which is recognized over the related service period, net of actual forfeitures. The service period is the period over which the related service is performed, which is generally the same as the vesting period. Vesting may be accelerated for certain officers and employees as a result of attaining certain age and service based requirements in the Company’s long-term incentive plan and award agreements. The Company recognized stock-based compensation expense of $4.6 million and $6.3 million for the three months ended June 30, 2020 and 2019, respectively, and $12.9 million and $11.7 million for the six months ended June 30, 2020 and 2019, respectively. Stock-based compensation expense is included in compensation and benefits and acquisition-related costs in the condensed consolidated statements of income. The activity in the Company’s stock options and restricted stock, consisting of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) for the six months ended June 30, 2020 was as follows: Stock Options The following table summarizes stock options activity during the six months ended June 30, 2020: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Value Shares Price Term (years) (in millions) Outstanding and exercisable, December 31, 2019 10,834 $ 18.59 Exercised 10,834 18.59 Outstanding and exercisable, June 30, 2020 — $ — — $ — The total intrinsic value of stock options exercised was $0.9 million and $22.4 million for the six months ended June 30, 2020 and 2019, respectively. RSAs and RSUs The following table summarizes RSA and RSU activity during the six months ended June 30, 2020: Weighted Number of Average Grant Shares Date Fair Value Nonvested stock at December 31, 2019 436,013 $ 92.47 Granted 183,731 117.43 Vested (268,187) 88.07 Forfeited (11,080) 105.47 Nonvested stock at June 30, 2020 340,477 $ 108.98 RSAs granted to non-employee members of the board of directors have a one-year vesting period and vesting accelerates upon the occurrence of a change in control of the Company. Unvested portions of the RSAs will be forfeited if the director leaves the board of directors prior to the applicable vesting date. The RSAs have voting rights and entitle the holder to receive dividends. RSUs entitle the holder to one share of common stock upon vesting, typically vest over a three year period, and vesting accelerates upon the occurrence of a change in control or a termination of employment following a change in control, or in the event of a participant’s earlier death or disability. Vesting will also accelerate upon a qualified retirement. Qualified retirement eligibility occurs once a holder is at least 55 years of age and has completed at least 10 years of service for grants awarded in and after 2017. Unvested RSUs will be forfeited if the officer, or employee, leaves the Company prior to the applicable vesting date, except in limited circumstances. The RSUs have no voting rights but entitle the holder to receive dividend equivalents. In connection with the Merger, 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 agreement related to the Merger). During the six months ended June 30, 2020, to satisfy employees’ tax obligations upon the vesting of restricted stock, the Company purchased 99,358 shares of common stock totaling $11.7 million as the result of the vesting of 268,187 shares of restricted stock. PSUs The following table summarizes restricted stock units contingent upon achievement of performance conditions, also known as PSUs, activity during the six months ended June 30, 2020: Weighted Number of Average Grant Shares Date Fair Value Nonvested stock at December 31, 2019 132,248 $ 105.75 Granted 72,975 125.62 Vested (48,053) 108.91 Forfeited (34,504) 109.85 Nonvested stock at June 30, 2020 122,666 $ 115.18 PSUs include awards related to earnings per share during the performance period as well as awards related to total shareholder return during the performance period. The Company used the Monte Carlo valuation model method to estimate the fair value of the total shareholder return PSUs which incorporated the following assumptions: risk-free interest rate (1.36)%, three-year volatility (21.0)% and three-year correlation with S&P 500 Index (0.25). Each of these performance shares has a performance condition under which the number of units ultimately awarded will vary from 0% to 200% of the original grant, with each unit representing the contingent right to receive one share of the Company’s common stock. The vesting period for the PSUs contingent on the achievement of performance conditions is three years. For each of the performance awards, the PSUs will be settled in shares of the Company’s common stock following vesting of the PSU assuming that the participant has been continuously employed during the vesting period, subject to acceleration in the event of a change in control of the Company, or a termination of employment following a change in control, or in the event of a participant’s earlier death or disability. Participants have no voting rights with respect to the PSUs until the issuance of the shares of common stock. Dividends are accrued by the Company and will be paid after the associated performance conditions are achieved and the PSUs are settled in shares of the Company’s common stock. In the six months ended June 30, 2020, to satisfy employees’ tax obligations upon the vesting of PSUs, the Company purchased 19,456 shares of common stock totaling $2.4 million as the result of the vesting of 48,053 PSUs. As of June 30, 2020, there were $30.9 million in total unrecognized compensation costs related to restricted stock, RSUs, and PSUs. These costs are expected to be recognized over a weighted average period of 2.0 years. Employee Stock Purchase Plan In May 2018, the Company’s stockholders approved an Employee Stock Purchase Plan, (“ESPP”), under which a total of 750,000 shares of the Company’s common stock was made available for purchase to employees. The ESPP is a broad-based plan that permits employees to contribute up to 10% of wages and base salary to purchase shares of the Company’s common stock at a discount, subject to applicable annual Internal Revenue Service limitations. Under the ESPP, a participant may not purchase more than a maximum of 312 shares of the Company’s common stock during any single offering period. No participant may accrue options to purchase shares of the Company’s common stock at a rate that exceeds $25,000 in fair market value of the Company’s common stock (determined at the time such options are granted) for each calendar year in which such rights are outstanding at any time. The exercise price per share of common stock shall be 90% (for eligible U.S. employees) or 85% (for eligible international employees) of the lesser of the fair value of the stock on the first day of the applicable offering period or the applicable exercise date. The Company records compensation expense over the offering period related to the discount that is given to employees, which totaled $0.1 million and $0.1 million for the three months ended June 30, 2020 and 2019, respectively, and $0.2 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, 710,103 shares were reserved for future issuance under the ESPP. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
EQUITY | |
EQUITY | 18. EQUITY Common Stock The Company’s common stock is listed on Cboe BZX under the trading symbol CBOE. As of June 30, 2020, 325,000,000 shares of common stock were authorized, $0.01 par value, and 125,976,027 and 108,757,176 shares were issued and outstanding, respectively. As of December 31, 2019, 325,000,000 shares of common stock were authorized, $0.01 par value, and 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 The Company accounts for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in the condensed consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are available to be redistributed. When treasury shares are redistributed, they are recorded at the average cost of the treasury shares acquired. The Company held 17,218,851 and 15,044,997 shares of common stock in treasury as of June 30, 2020 and December 31, 2019, respectively. Share Repurchase Program In 2011, the board of directors approved an initial authorization for the Company to repurchase shares of its outstanding common stock of $100 million and 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, $250 million in October 2019, and $250 million in June 2020, for a total authorization of $1.4 billion. The Company expects to fund repurchases primarily through the use of existing cash balances. The program permits the Company to purchase shares, through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any repurchases at any specific time or situation. The table below shows the repurchased shares of common stock under the Company’s share repurchase program during the periods presented as follows: Three Months Ended June 30, 2020 2019 Number of shares of common stock repurchased 992,159 100 Average price paid per share $ 100.54 $ 104.75 Total purchase price (in millions) $ 99.8 $ 0.01 Since inception of the program through June 30, 2020, the Company has repurchased 15,771,049 shares of common stock at an average cost per share of $64.68, totaling $1.0 billion. As of June 30, 2020 and 2019, the Company had $329.9 million and $171.1 million of availability remaining under its existing share repurchase authorizations, respectively. Purchase of Common Stock from Employees The Company purchased 2,667 and 5,179 shares that were not part of the publicly announced share repurchase authorization from employees for an average price paid per share of $100.68 and $105.21 during the three months ended June 30, 2020 and 2019, respectively. These shares consisted of shares retained to cover payroll withholding taxes or option costs in connection with the vesting of RSAs, RSUs, PSUs, 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. As of June 30, 2020, and December 31 2019, the Company had no shares of preferred stock issued or outstanding. Dividends During the three months ended June 30, 2020, the Company declared and paid paid Each share of common stock, including RSAs, RSUs, and PSUs, is entitled to receive dividend and dividend equivalents, respectively, if, as and when declared by the board of directors of the Company. The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within the discretion of the Company’s board of directors and may be affected by various factors, including 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 | 6 Months Ended |
Jun. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | 19. INCOME TAXES The Company records income tax expense during interim periods based on the best estimate of the full year’s income tax rate as adjusted for discrete items, if any, that are taken into account in the relevant interim period. Each quarter, the Company updates its estimate of the annual effective income tax rate and any change in the estimated rate is recorded on a cumulative basis. The effective income tax rate from continuing operations was 27.5% and 29.3% for the three months ended June 30, 2020 and 2019, respectively, and 27.6% and 27.5% for the six months ended June 30, 2020 and 2019, respectively. For the three months ended June 30, 2020, the Company recognized a lower effective tax rate due to the benefit of foreign-derived intangible income compared to the same period in 2019. The effective tax rate for the six months ended June 30, 2020 was higher than the comparable period the prior year due to excess tax benefits recognized in 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 U.S. Tax Court set the trial to start on April 20, 2020, but due to the COVID-19 public emergency, the U.S. Tax Court struck the April 20, 2020 trial date and suspended all other deadlines. 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 June 30, 2020, we have not resolved these matters, and proceedings continue in Tax Court and the Court of Federal Claims. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 20. EARNINGS PER SHARE The computation of basic net income per common share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders. The computation of diluted net income per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method. 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) for the three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (in millions, except per share amounts) 2020 2019 2020 2019 Basic earnings per share numerator: Net income $ 113.6 $ 84.5 $ 271.0 $ 178.6 Loss attributable to noncontrolling interest — 3.8 — 4.0 Net income excluding noncontrolling interest 113.6 88.3 271.0 182.6 Change in redemption value of noncontrolling interest — (0.2) — (0.4) Earnings allocated to participating securities (0.3) (0.5) (0.7) (1.1) Net income allocated to common stockholders $ 113.3 $ 87.6 $ 270.3 $ 181.1 Basic earnings per share denominator: Weighted average shares outstanding 109.5 111.5 109.9 111.5 Basic earnings per share $ 1.04 $ 0.79 $ 2.46 $ 1.62 Diluted earnings per share numerator: Net income $ 113.6 $ 84.5 $ 271.0 $ 178.6 Loss attributable to noncontrolling interest — 3.8 — 4.0 Net income excluding noncontrolling interest 113.6 88.3 271.0 182.6 Change in redemption value of noncontrolling interest — (0.2) — (0.4) Earnings allocated to participating securities (0.3) (0.5) (0.7) (1.1) Net income allocated to common stockholders $ 113.3 $ 87.6 $ 270.3 $ 181.1 Diluted earnings per share denominator: Weighted average shares outstanding 109.5 111.5 109.9 111.5 Dilutive potential common shares outstanding 0.1 0.1 0.2 0.1 Total dilutive weighted average shares 109.6 111.6 110.1 111.6 Diluted earnings per share $ 1.03 $ 0.78 $ 2.45 $ 1.62 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 | 6 Months Ended |
Jun. 30, 2020 | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | 21. COMMITMENTS, CONTINGENCIES AND GUARANTEES Legal Proceedings As of June 30, 2020, the Company was subject to the various legal proceedings and claims discussed below, as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and the Company discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the condensed consolidated financial statements to not be misleading. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. The Company’s assessment of whether a loss is remote, reasonably possible, or probable is based on its assessment of the ultimate outcome of the matter following all appeals. As of June 30, 2020, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these legal proceedings and claims, regulatory reviews, inspections or other legal proceedings, if any, has been incurred. While the consequences of certain unresolved proceedings are not presently determinable, the outcome of any proceeding is inherently uncertain and an adverse outcome from certain matters could have a material effect on the financial position, results of operations, or cash flows of the Company in any given reporting period. Except as set forth herein, there have been no material changes during the period covered by this Form 10-Q from the legal proceedings disclosures in the Annual Report on Form 10-K for the year ended December 31, 2019. 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. The discovery period in the matter commenced and is scheduled to continue through 2020. 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. NASDAQ and NYSE filed petitions for review (“PFRs”) with the Court of Appeals for the D.C. Circuit (“D.C. Circuit”) seeking to appeal the SEC’s opinion (“Bellwether Case”). On June 5, 2020, the D.C. Circuit granted the PFRs and vacated the SEC’s finding that SIFMA could challenge generally applicable market data fees as a denial of access under Section 19(d) of the Exchange Act. 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 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, the SEC’s response was filed on November 22, 2019, the Exchanges’ joint reply was filed on December 20, 2019 and final briefs were filed on January 10, 2020. Oral arguments were held on February 18, 2020. On June 5, 2020, the D.C. Circuit remanded the Order to the SEC for reconsideration in light of the Bellwether Case opinion, i.e., that generally applicable market data fees may not be challenged as a denial of access under Section 19(d) of the Exchange Act. 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. On April 21, 2020, the federal district court for the Northern District of Illinois granted plaintiffs’ motion to certify the January 27, 2020 dismissal order for an immediate appeal. On May 19, 2020, plaintiffs filed a notice of appeal with the Court of Appeals for the Seventh Circuit (“7 th th Other As self-regulatory organizations under the jurisdiction of the SEC, Cboe Options, C2, BZX, BYX, EDGX and EDGA are subject to routine reviews and inspections by the SEC. As a designated contract market under the jurisdiction of the CFTC, CFE is subject to routine rule enforcement reviews and examinations by the CFTC. Cboe SEF, LLC is a swap execution facility registered with the CFTC and subject to routine rule enforcement reviews and examinations by the CFTC. Cboe Trading 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 and the CFTC’s Division of Market Oversight as well as the SEC Division of Enforcement and CFTC Division of Enforcement seeking information about the Company’s compliance with its obligations as a self-regulatory organization under the federal securities laws and Commodity Exchange Act as well as members’ compliance with the federal securities laws and Commodity Exchange Act. In addition, while Cboe Europe 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 the Company’s financial position, results of operations, liquidity or capital resources. See also Note 7 (“Credit Losses”) for information on promissory notes related to the CAT. See also Note 19 (“Income Taxes”). Contractual Obligations See Note 22 (“Leases”) for information on lease obligations. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
LEASES | 22. LEASES The Company currently leases office space, data centers, remote network operations centers, and equipment under non-cancelable operating leases with third parties as of June 30, 2020 facilities costs within the condensed consolidated statements of income for these leases on a straight-line basis over the lease term. Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one 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 is 187 months from the accounting commencement date, January 13, 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 6 (“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 is 150 months from the accounting commencement date, May 1, 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 as of June 30, 2020 and December 31, 2019, respectively (in millions): June 30, December 31, 2020 2019 Operating lease right of use assets $ 117.8 $ 53.4 Total leased assets $ 117.8 $ 53.4 Accrued liabilities $ 10.7 $ 8.7 Non-current operating lease liabilities 137.3 46.7 Total leased liabilities $ 148.0 $ 55.4 The following table presents operating lease costs and other information as of and for the three and six months ended June 30, 2020 and 2019, respectively (in millions, except as stated): Three Months Ended Six Months Ended 2020 2019 2020 2019 Operating lease costs (1) $ 5.0 $ 3.2 $ 9.8 $ 6.8 Lease term and discount rate information: Weighted average remaining lease term (years) 12.8 9.5 Weighted average discount rate 3.4 % 3.5 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 2.6 $ 2.7 $ 5.4 $ 4.8 Lease incentive for leasehold improvements 4.8 — 25.2 — Right-of-use assets obtained in exchange for lease liabilities (2) 6.7 0.1 70.9 19.0 (1) Includes short-term lease and variable lease costs, which are immaterial. (2) Excludes right-of-use assets and lease liabilities recognized upon adoption of the lease accounting standard in 2019 of $40.3 million and $42.8 million, respectively. The maturities of the lease liabilities are as follows as of June 30, 2020 (in millions): June 30, 2020 Remainder of 2020 $ 7.4 2021 16.3 2022 16.9 2023 15.7 2024 11.6 After 2024 118.2 Total lease payments (1) $ 186.1 Less: Interest (38.1) Present value of lease liabilities $ 148.0 (1) Total lease payments include $ 20.4 million related to options to extend lease terms that are reasonably certain of being exercised . |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 23. SUBSEQUENT EVENTS On July 1, 2020, the Company acquired the remaining 80% interest in European Central Counterparty N.V. (“EuroCCP”). In connection with the acquisition, EuroCCP, as borrower, the Company, as guarantor of scheduled interest and fees on borrowings (but not the principal amount of any borrowings), entered into a Euro 1.5 billion committed syndicated multicurrency revolving and swingline credit facility agreement (the “Facility”) with Bank of America Merrill Lynch International Designated Activity Company, as co-ordinator, facility agent, lender, sole lead arranger and sole bookrunner, Citibank N.A., as security agent, and certain other lenders named therein. no billion of borrowing capacity was available for the purposes permitted by the Facility. There have been no additional subsequent events that would require disclosure in, or adjustment to, the condensed consolidated financial statements as of and for the six months ended June 30, 2020. |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Basis of Presentation | Basis of Presentation These interim unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates based upon historical experience, observance of trends, information available from outside sources and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year. For those consolidated subsidiaries in which the Company’s ownership is less than 100% and for which the Company has control over the assets and liabilities and the management of the entity, the outside stockholders’ interest is shown as noncontrolling interest. |
Segment information | 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 14 (“Segment Reporting”) for more information. |
Significant Accounting Policies | Significant Accounting Policies With the exception of the change in the accounting for expected credit losses as a result of the adoption of Accounting Standards Update (“ASU”) 2016-13 (as discussed below in “Recent Accounting Pronouncements Adopted”), there have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, that are of significance, or potential significance, to the Company. |
Accounts Receivable, Net | Accounts Receivable, net Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried at amortized cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis and recognizes the total owed from a member firm as accounts receivable, net, and the total owed to a member firm as accounts payable and accrued liabilities in the condensed consolidated balance sheets. On a periodic basis, management evaluates the Company’s accounts receivable and records an allowance for expected credit losses using an aging schedule. The aging schedule applies loss rates based on historical loss information and, as deemed necessary, is adjusted for differences in the nature of the receivables that exist at the reporting date from the historical period. Due to the short-term nature of the accounts receivable, changes in future economic conditions are not expected to have a significant impact on the expected credit losses. The accounts receivable are presented net of allowance for credit losses on the condensed consolidated balance sheets and the associated losses are presented in other operating expenses on the condensed consolidated statements of income. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - Adopted In June 2016, the FASB issued ASU 2016-13, Credit Losses. This update replaces the incurred loss impairment methodology in GAAP with a methodology that requires management to estimate an expected lifetime credit loss on financial assets. This includes accounts receivable and notes receivable, which is included in other assets, net on the condensed consolidated balance sheets. 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 credit 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 this ASU on January 1, 2020 using the modified retrospective approach and did not restate comparative periods. Upon the adoption of the standard, the Company recognized an immaterial cumulative-effect adjustment to retained earnings for the estimate of current expected credit loss on 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, there was not 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 this ASU. The financial instruments other than accounts receivable, net that are within the scope of the standard were not materially impacted by the standard. The impact to the condensed consolidated balance sheet was immaterial in nature and there was no impact to the condensed consolidated statements of income and 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 adopted this ASU on January 1, 2020 using the prospective approach, which did not result in a material impact to the condensed consolidated financial statements and disclosures. Recent Accounting Pronouncements - Issued, not yet Adopted There are no applicable material accounting pronouncements that have been issued but are not yet adopted as of June 30, 2020. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
REVENUE RECOGNITION | |
Schedule of disaggregation of revenue | Corporate U.S. European Global Items and Options Equities Futures Equities FX Eliminations Total Three Months Ended June 30, 2020 Transaction fees $ 250.8 $ 325.1 $ 15.8 $ 15.2 $ 11.4 $ — $ 618.3 Access and capacity fees 23.9 20.9 4.1 4.7 2.1 — 55.7 Market data fees 17.8 35.8 1.7 3.2 0.2 — 58.7 Regulatory fees 21.0 107.7 — — — — 128.7 Other revenue 4.1 1.0 — 2.2 — — 7.3 $ 317.6 $ 490.5 $ 21.6 $ 25.3 $ 13.7 $ — $ 868.7 Timing of revenue recognition Services transferred at a point in time $ 275.9 $ 433.8 $ 15.8 $ 17.4 $ 11.4 $ — $ 754.3 Services transferred over time 41.7 56.7 5.8 7.9 2.3 — 114.4 $ 317.6 $ 490.5 $ 21.6 $ 25.3 $ 13.7 $ — $ 868.7 Three Months Ended June 30, 2019 Transaction fees $ 185.9 $ 182.0 $ 28.3 $ 19.5 $ 11.2 $ — $ 426.9 Access and capacity fees 25.6 19.6 3.8 3.9 1.6 — 54.5 Market data fees 14.0 32.8 1.6 3.2 0.2 — 51.8 Regulatory fees 16.7 63.0 — — — — 79.7 Other revenue 3.9 1.3 0.1 2.1 0.1 0.2 7.7 $ 246.1 $ 298.7 $ 33.8 $ 28.7 $ 13.1 $ 0.2 $ 620.6 Timing of revenue recognition Services transferred at a point in time $ 206.5 $ 246.3 $ 28.4 $ 21.6 $ 11.3 $ 0.2 $ 514.3 Services transferred over time 39.6 52.4 5.4 7.1 1.8 — 106.3 $ 246.1 $ 298.7 $ 33.8 $ 28.7 $ 13.1 $ 0.2 $ 620.6 Corporate U.S. European Global Items and Options Equities Futures Equities FX Eliminations Total Six Months Ended June 30, 2020 Transaction fees $ 535.0 $ 629.1 $ 51.7 $ 37.5 $ 26.5 $ — $ 1,279.8 Access and capacity fees 51.1 40.9 8.1 9.6 3.7 — 113.4 Market data fees 35.0 69.8 3.3 6.4 0.4 — 114.9 Regulatory fees 43.3 222.2 — — — — 265.5 Other revenue 9.7 2.2 — 4.7 — — 16.6 $ 674.1 $ 964.2 $ 63.1 $ 58.2 $ 30.6 $ — $ 1,790.2 Timing of revenue recognition Services transferred at a point in time $ 588.0 $ 853.5 $ 51.7 $ 42.2 $ 26.5 $ — $ 1,561.9 Services transferred over time 86.1 110.7 11.4 16.0 4.1 — 228.3 $ 674.1 $ 964.2 $ 63.1 $ 58.2 $ 30.6 $ — $ 1,790.2 Six Months Ended June 30, 2019 Transaction fees $ 358.6 $ 380.9 $ 52.9 $ 40.6 $ 23.2 $ — $ 856.2 Access and capacity fees 51.6 38.6 7.5 7.9 3.3 — 108.9 Market data fees 27.7 65.7 3.3 6.4 0.3 — 103.4 Regulatory fees 31.2 106.7 0.5 — — — 138.4 Other revenue 8.0 2.6 0.1 4.1 0.2 0.2 15.2 $ 477.1 $ 594.5 $ 64.3 $ 59.0 $ 27.0 $ 0.2 $ 1,222.1 Timing of revenue recognition Services transferred at a point in time $ 397.8 $ 490.2 $ 53.5 $ 44.7 $ 23.4 $ 0.2 $ 1,009.8 Services transferred over time 79.3 104.3 10.8 14.3 3.6 — 212.3 $ 477.1 $ 594.5 $ 64.3 $ 59.0 $ 27.0 $ 0.2 $ 1,222.1 |
Schedule of revenue recognized from contract liabilities and the remaining balance | The revenue recognized from contract liabilities and the remaining balance is shown below (in millions): Balance at January 1, 2020 Cash Revenue Balance at Liquidity provider sliding scale (1) $ — $ 9.6 $ (4.8) $ 4.8 Other, net 4.5 24.0 (15.8) 12.7 Total deferred revenue $ 4.5 $ 33.6 $ (20.6) $ 17.5 (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. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
INVESTMENTS | |
Schedule of investments | As of June 30, 2020 and December 31, 2019, the Company’s investments were comprised of the following (in millions): June 30, December 31, 2020 2019 Equity Method Investments: Investment in Signal Trading Systems, LLC $ 12.4 $ 12.6 Investment in EuroCCP 10.2 10.3 Total equity method investments 22.6 22.9 Other Equity Investments: Investment in Eris Exchange Holdings, LLC 20.0 20.8 Investment in American Financial Exchange, LLC 8.6 8.6 Investment in Cboe Vest Financial Group, Inc. 2.9 2.9 Investment in Eris Digital Holdings, LLC 0.8 — Investment in OCC 0.3 0.3 Other equity investments 6.1 5.7 Total other equity investments 38.7 38.3 Total investments $ 61.3 $ 61.2 |
FINANCIAL INVESTMENTS (Tables)
FINANCIAL INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
INVESTMENTS | |
Schedule of Financial Investments | June 30, 2020 Cost basis Unrealized gains Unrealized losses Fair value Available-for-sale securities: U.S. Treasury securities $ 155.6 $ — $ — $ 155.6 Trading securities: Marketable securities (1) 20.9 — — 20.9 Total financial investments $ 176.5 $ — $ — $ 176.5 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 (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 15 (“Employee Benefit Plans”) for more information. |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, December 31, 2020 2019 Construction in progress $ 33.0 $ 1.2 Furniture and equipment 166.7 164.4 Total property and equipment 199.7 165.6 Less accumulated depreciation (124.1) (118.6) Property and equipment, net $ 75.6 $ 47.0 |
CREDIT LOSSES (Tables)
CREDIT LOSSES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
CREDIT LOSSES | |
Schedule of changes in allowance for credit losses | Balance at January 1, 2020 Current period provision for expected credit losses Write-offs charged against the allowance Recoveries collected Balance at June 30, 2020 Allowance for notes receivable credit losses $ 23.4 $ — $ — $ — $ 23.4 Allowance for accounts receivable credit losses 1.1 (0.1) — — 1.0 Total allowance for credit losses $ 24.5 $ (0.1) $ — $ — $ 24.4 |
OTHER ASSETS, NET (Tables)
OTHER ASSETS, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
OTHER ASSETS, NET | |
Schedule of Other Assets, Net | Other assets, net consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, December 31, 2020 2019 Software development work in progress $ 0.7 $ 2.6 Data processing software 85.9 84.3 Less accumulated depreciation and amortization (59.8) (57.2) Data processing software, net 26.8 29.7 Other assets (1) 34.0 21.9 Other assets, net $ 60.8 $ 51.6 (1) At June 30, 2020 and December 31, 2019, the majority of the balance included long-term prepaid assets and notes receivable. See Note 7 (“Credit Losses”) for more information on the notes receivable included within other assets, net on the condensed consolidated balance sheets. As of June 30, 2020 and December 31, 2019, the notes receivable balance net of allowance for notes receivable credit losses was $21.1 million and $9.2 million, respectively. |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 Options Equities Equities Global FX Total Balance as of December 31, 2019 $ 239.4 $ 1,740.4 $ 435.1 $ 267.2 $ 2,682.1 Additions 66.4 — — — 66.4 Changes in foreign currency exchange rates — — (18.1) — (18.1) Balance as of June 30, 2020 $ 305.8 $ 1,740.4 $ 417.0 $ 267.2 $ 2,730.4 |
Schedule of details of intangible assets | The following table presents the details of the intangible assets (in millions): U.S. European Options Equities Equities Global FX Total Balance as of December 31, 2019 $ 166.6 $ 921.4 $ 363.7 $ 138.2 $ 1,589.9 Additions 22.3 — — — 22.3 Amortization (7.8) (30.5) (11.5) (12.8) (62.6) Changes in foreign currency exchange rates — — (23.4) — (23.4) Balance as of June 30, 2020 $ 181.1 $ 890.9 $ 328.8 $ 125.4 $ 1,526.2 |
Schedule of categories of intangible assets | The following tables present the categories of intangible assets as of June 30, 2020 and December 31, 2019 (in millions): Weighted June 30, 2020 Average U.S. European Amortization Options Equities Equities Global FX Period (in years) Trading registrations and licenses $ 95.5 $ 572.7 $ 170.4 $ — Indefinite Customer relationships 46.6 222.9 158.7 140.0 17 Market data customer relationships 53.6 322.0 59.5 64.4 12 Technology 28.1 22.5 22.3 22.5 4 Trademarks and tradenames 12.9 6.0 1.8 1.2 9 Accumulated amortization (55.6) (255.2) (83.9) (102.7) $ 181.1 $ 890.9 $ 328.8 $ 125.4 Weighted December 31, 2019 Average U.S. European Amortization Options Equities Equities Global FX 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 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 December 31, 2019 Compensation and benefit-related liabilities $ 30.0 $ 35.2 Termination benefits 0.6 6.7 Royalties 17.5 18.6 Accrued liabilities 137.7 77.8 Marketing fee payable 18.0 12.6 Accounts payable 12.2 21.0 Total accounts payable and accrued liabilities $ 216.0 $ 171.9 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
DEBT | |
Schedule of debt | The Company’s debt consisted of the following as of June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 December 31, 2019 $300 million Term Loan Agreement due December 2021, floating rate $ 223.0 $ 222.4 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 645.6 645.2 Revolving Credit Agreement — — Total debt $ 868.6 $ 867.6 |
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 June 30, 2020 are as follows (in millions): Remainder of 2020 $ — 2021 225.0 2022 — 2023 — 2024 — Thereafter 650.0 Principal amounts repayable 875.0 Debt issuance cost (2.6) Unamortized discounts on notes (3.8) Total debt outstanding $ 868.6 |
Schedule of interest expense | Interest expense recognized on the Term Loan Agreement and the 3.650% Senior Notes is included in interest expense, net in the condensed consolidated statements of income, for the three and six months ended June 30, 2020 and 2019 is as follows (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Components of interest expense: Contractual interest $ 6.9 $ 9.9 $ 14.4 $ 19.7 Amortization of debt discount 0.1 0.1 0.3 0.3 Amortization of debt issuance costs 0.4 0.5 0.7 0.9 Interest expense $ 7.4 $ 10.5 $ 15.4 $ 20.9 Interest income (0.1) (0.5) (0.8) (1.0) Interest expense, net $ 7.3 $ 10.0 $ 14.6 $ 19.9 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET | |
Schedule of Accumulated Other Comprehensive Income, Net | The following represents the changes in accumulated other comprehensive (loss) income, net by component (in millions): Foreign Total Accumulated Currency Unrealized Other Translation Investment Post-Retirement Comprehensive Adjustment Gain (Loss) Benefits Income (Loss) Balance at December 31, 2019 $ 38.2 $ 0.2 $ (0.8) $ 37.6 Other comprehensive (loss) income (41.0) (0.3) 1.1 (40.2) Balance at June 30, 2020 $ (2.8) $ (0.1) $ 0.3 $ (2.6) |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 155.6 $ 155.6 $ — $ — Marketable securities: Mutual funds 13.1 13.1 — — Money market funds 7.8 7.8 — — Total assets $ 176.5 $ 176.5 $ — $ — Liabilities: Contingent consideration liabilities $ 20.5 $ — $ — $ 20.5 Total Liabilities $ 20.5 $ — $ — $ 20.5 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 liabilities $ 2.2 $ — $ — $ 2.2 Total Liabilities $ 2.2 $ — $ — $ 2.2 |
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 June 30, 2020 and December 31, 2019 (in millions): June 30, 2020 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities $ 155.6 $ 155.6 $ — $ — Deferred compensation plan assets 20.9 20.9 — — Total assets $ 176.5 $ 176.5 $ — $ — Liabilities: Contingent consideration liabilities $ 20.5 $ — $ — $ 20.5 Deferred compensation plan liabilities 20.9 20.9 — — Debt 868.6 — 868.6 — Total liabilities $ 910.0 $ 20.9 $ 868.6 $ 20.5 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 liabilities $ 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 |
Summary of changes in the fair value of level 3 financial liabilities | The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities during the three and six months ended June 30, 2020. Level 3 Financial Liabilities for the Three Months Ended June 30, 2020 Balance at Realized (gains) Beginning of losses during Balance at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities $ 17.5 $ — $ 3.0 $ — $ 20.5 Total Liabilities $ 17.5 $ — $ 3.0 $ — $ 20.5 Level 3 Financial Liabilities for the Six Months Ended June 30, 2020 Balance at Realized (gains) Beginning of losses during Balance at Period period Additions Settlements End of Period Liabilities Contingent consideration liabilities $ 2.2 $ — $ 20.5 $ (2.2) $ 20.5 Total Liabilities $ 2.2 $ — $ 20.5 $ (2.2) $ 20.5 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 Three Months Ended June 30, 2020 Revenues $ 317.6 $ 490.5 $ 21.6 $ 25.3 $ 13.7 $ — $ 868.7 Operating income (loss) 93.4 55.9 8.3 5.4 1.1 (2.4) 161.7 Three Months Ended June 30, 2019 Revenues $ 246.1 $ 298.7 $ 33.8 $ 28.7 $ 13.1 $ 0.2 $ 620.6 Operating income (loss) 80.1 36.4 19.4 5.7 (1.6) (14.8) 125.2 Corporate European Items and Options U.S. Equities Futures Equities Global FX Eliminations Total Six Months Ended June 30, 2020 Revenues $ 674.1 $ 964.2 $ 63.1 $ 58.2 $ 30.6 $ — $ 1,790.2 Operating income (loss) 236.8 104.9 35.2 14.9 4.1 (7.8) 388.1 Six Months Ended June 30, 2019 Revenues $ 477.1 $ 594.5 $ 64.3 $ 59.0 $ 27.0 $ 0.2 $ 1,222.1 Operating income (loss) 167.1 74.0 37.7 11.5 (2.0) (17.7) 270.6 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 and exercisable, December 31, 2019 10,834 $ 18.59 Exercised 10,834 18.59 Outstanding and exercisable, June 30, 2020 — $ — — $ — |
Summary of restricted stock activity | Weighted Number of Average Grant Shares Date Fair Value Nonvested stock at December 31, 2019 436,013 $ 92.47 Granted 183,731 117.43 Vested (268,187) 88.07 Forfeited (11,080) 105.47 Nonvested stock at June 30, 2020 340,477 $ 108.98 |
Summary of performance-based restricted stock unit | Weighted Number of Average Grant Shares Date Fair Value Nonvested stock at December 31, 2019 132,248 $ 105.75 Granted 72,975 125.62 Vested (48,053) 108.91 Forfeited (34,504) 109.85 Nonvested stock at June 30, 2020 122,666 $ 115.18 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
EQUITY | |
Summary of repurchased shares of the company's common stock under the share repurchase program | Three Months Ended June 30, 2020 2019 Number of shares of common stock repurchased 992,159 100 Average price paid per share $ 100.54 $ 104.75 Total purchase price (in millions) $ 99.8 $ 0.01 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
EARNINGS PER SHARE | |
Reconciliation of basic and diluted net income per common share | Three Months Ended June 30, Six Months Ended June 30, (in millions, except per share amounts) 2020 2019 2020 2019 Basic earnings per share numerator: Net income $ 113.6 $ 84.5 $ 271.0 $ 178.6 Loss attributable to noncontrolling interest — 3.8 — 4.0 Net income excluding noncontrolling interest 113.6 88.3 271.0 182.6 Change in redemption value of noncontrolling interest — (0.2) — (0.4) Earnings allocated to participating securities (0.3) (0.5) (0.7) (1.1) Net income allocated to common stockholders $ 113.3 $ 87.6 $ 270.3 $ 181.1 Basic earnings per share denominator: Weighted average shares outstanding 109.5 111.5 109.9 111.5 Basic earnings per share $ 1.04 $ 0.79 $ 2.46 $ 1.62 Diluted earnings per share numerator: Net income $ 113.6 $ 84.5 $ 271.0 $ 178.6 Loss attributable to noncontrolling interest — 3.8 — 4.0 Net income excluding noncontrolling interest 113.6 88.3 271.0 182.6 Change in redemption value of noncontrolling interest — (0.2) — (0.4) Earnings allocated to participating securities (0.3) (0.5) (0.7) (1.1) Net income allocated to common stockholders $ 113.3 $ 87.6 $ 270.3 $ 181.1 Diluted earnings per share denominator: Weighted average shares outstanding 109.5 111.5 109.9 111.5 Dilutive potential common shares outstanding 0.1 0.1 0.2 0.1 Total dilutive weighted average shares 109.6 111.6 110.1 111.6 Diluted earnings per share $ 1.03 $ 0.78 $ 2.45 $ 1.62 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
Schedule of supplemental balance sheet | The following table presents the supplemental balance sheet information related to leases as of June 30, 2020 and December 31, 2019, respectively (in millions): June 30, December 31, 2020 2019 Operating lease right of use assets $ 117.8 $ 53.4 Total leased assets $ 117.8 $ 53.4 Accrued liabilities $ 10.7 $ 8.7 Non-current operating lease liabilities 137.3 46.7 Total leased liabilities $ 148.0 $ 55.4 |
Schedule of lease cost and other information | The following table presents operating lease costs and other information as of and for the three and six months ended June 30, 2020 and 2019, respectively (in millions, except as stated): Three Months Ended Six Months Ended 2020 2019 2020 2019 Operating lease costs (1) $ 5.0 $ 3.2 $ 9.8 $ 6.8 Lease term and discount rate information: Weighted average remaining lease term (years) 12.8 9.5 Weighted average discount rate 3.4 % 3.5 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 2.6 $ 2.7 $ 5.4 $ 4.8 Lease incentive for leasehold improvements 4.8 — 25.2 — Right-of-use assets obtained in exchange for lease liabilities (2) 6.7 0.1 70.9 19.0 (1) Includes short-term lease and variable lease costs, which are immaterial. (2) Excludes right-of-use assets and lease liabilities recognized upon adoption of the lease accounting standard in 2019 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 June 30, 2020 (in millions): June 30, 2020 Remainder of 2020 $ 7.4 2021 16.3 2022 16.9 2023 15.7 2024 11.6 After 2024 118.2 Total lease payments (1) $ 186.1 Less: Interest (38.1) Present value of lease liabilities $ 148.0 (1) Total lease payments include $ 20.4 million related to options to extend lease terms that are reasonably certain of being exercised . |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION - Segment information (Details) | 6 Months Ended |
Jun. 30, 2020segment | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Number of reportable segments | 5 |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of revenue by product line and Segment (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | |
Segment Reporting Information | ||||
Number of types of regulatory fees the Company recognizes | item | 2 | |||
Revenues | $ 868.7 | $ 620.6 | $ 1,790.2 | $ 1,222.1 |
Services transferred at a point in time | ||||
Segment Reporting Information | ||||
Revenues | 754.3 | 514.3 | 1,561.9 | 1,009.8 |
Services transferred over time | ||||
Segment Reporting Information | ||||
Revenues | 114.4 | 106.3 | 228.3 | 212.3 |
Corporate Items and Eliminations | ||||
Segment Reporting Information | ||||
Revenues | 0.2 | 0.2 | ||
Corporate Items and Eliminations | Services transferred at a point in time | ||||
Segment Reporting Information | ||||
Revenues | 0.2 | 0.2 | ||
Options | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 317.6 | 246.1 | 674.1 | 477.1 |
Options | Operating Segments | Services transferred at a point in time | ||||
Segment Reporting Information | ||||
Revenues | 275.9 | 206.5 | 588 | 397.8 |
Options | Operating Segments | Services transferred over time | ||||
Segment Reporting Information | ||||
Revenues | 41.7 | 39.6 | 86.1 | 79.3 |
U.S. Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 490.5 | 298.7 | 964.2 | 594.5 |
U.S. Equities | Operating Segments | Services transferred at a point in time | ||||
Segment Reporting Information | ||||
Revenues | 433.8 | 246.3 | 853.5 | 490.2 |
U.S. Equities | Operating Segments | Services transferred over time | ||||
Segment Reporting Information | ||||
Revenues | 56.7 | 52.4 | 110.7 | 104.3 |
Futures | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 21.6 | 33.8 | 63.1 | 64.3 |
Futures | Operating Segments | Services transferred at a point in time | ||||
Segment Reporting Information | ||||
Revenues | 15.8 | 28.4 | 51.7 | 53.5 |
Futures | Operating Segments | Services transferred over time | ||||
Segment Reporting Information | ||||
Revenues | 5.8 | 5.4 | 11.4 | 10.8 |
European Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 25.3 | 28.7 | 58.2 | 59 |
European Equities | Operating Segments | Services transferred at a point in time | ||||
Segment Reporting Information | ||||
Revenues | 17.4 | 21.6 | 42.2 | 44.7 |
European Equities | Operating Segments | Services transferred over time | ||||
Segment Reporting Information | ||||
Revenues | 7.9 | 7.1 | 16 | 14.3 |
Global FX | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 13.7 | 13.1 | 30.6 | 27 |
Global FX | Operating Segments | Services transferred at a point in time | ||||
Segment Reporting Information | ||||
Revenues | 11.4 | 11.3 | 26.5 | 23.4 |
Global FX | Operating Segments | Services transferred over time | ||||
Segment Reporting Information | ||||
Revenues | 2.3 | 1.8 | 4.1 | 3.6 |
Transaction fees | ||||
Segment Reporting Information | ||||
Revenues | 618.3 | 426.9 | 1,279.8 | 856.2 |
Transaction fees | Options | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 250.8 | 185.9 | 535 | 358.6 |
Transaction fees | U.S. Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 325.1 | 182 | 629.1 | 380.9 |
Transaction fees | Futures | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 15.8 | 28.3 | 51.7 | 52.9 |
Transaction fees | European Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 15.2 | 19.5 | 37.5 | 40.6 |
Transaction fees | Global FX | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 11.4 | 11.2 | 26.5 | 23.2 |
Access and capacity fees | ||||
Segment Reporting Information | ||||
Revenues | 55.7 | 54.5 | 113.4 | 108.9 |
Access and capacity fees | Options | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 23.9 | 25.6 | 51.1 | 51.6 |
Access and capacity fees | U.S. Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 20.9 | 19.6 | 40.9 | 38.6 |
Access and capacity fees | Futures | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 4.1 | 3.8 | 8.1 | 7.5 |
Access and capacity fees | European Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 4.7 | 3.9 | 9.6 | 7.9 |
Access and capacity fees | Global FX | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 2.1 | 1.6 | 3.7 | 3.3 |
Market data fees | ||||
Segment Reporting Information | ||||
Revenues | 58.7 | 51.8 | 114.9 | 103.4 |
Market data fees | Options | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 17.8 | 14 | 35 | 27.7 |
Market data fees | U.S. Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 35.8 | 32.8 | 69.8 | 65.7 |
Market data fees | Futures | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 1.7 | 1.6 | 3.3 | 3.3 |
Market data fees | European Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 3.2 | 3.2 | 6.4 | 6.4 |
Market data fees | Global FX | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 0.2 | 0.2 | 0.4 | 0.3 |
Regulatory fees | ||||
Segment Reporting Information | ||||
Revenues | 128.7 | 79.7 | 265.5 | 138.4 |
Regulatory fees | Options | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 21 | 16.7 | 43.3 | 31.2 |
Regulatory fees | U.S. Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 107.7 | 63 | 222.2 | 106.7 |
Regulatory fees | Futures | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 0.5 | |||
Other revenue | ||||
Segment Reporting Information | ||||
Revenues | 7.3 | 7.7 | 16.6 | 15.2 |
Other revenue | Corporate Items and Eliminations | ||||
Segment Reporting Information | ||||
Revenues | 0.2 | 0.2 | ||
Other revenue | Options | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 4.1 | 3.9 | 9.7 | 8 |
Other revenue | U.S. Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 1 | 1.3 | 2.2 | 2.6 |
Other revenue | Futures | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | 0.1 | 0.1 | ||
Other revenue | European Equities | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | $ 2.2 | 2.1 | $ 4.7 | 4.1 |
Other revenue | Global FX | Operating Segments | ||||
Segment Reporting Information | ||||
Revenues | $ 0.1 | $ 0.2 |
REVENUE RECOGNITION - Rollforwa
REVENUE RECOGNITION - Rollforward of contract liabilities (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | $ 4.5 |
Cash Additions | 33.6 |
Revenue Recognition | (20.6) |
Ending Balance | 17.5 |
Liquidity provider sliding scale | |
Revenue recognized from contract liabilities and remaining balance | |
Cash Additions | 9.6 |
Revenue Recognition | (4.8) |
Ending Balance | 4.8 |
Other, net | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | 4.5 |
Cash Additions | 24 |
Revenue Recognition | (15.8) |
Ending Balance | $ 12.7 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Millions | Feb. 03, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Acquisitions | ||||||
Compensation and benefits | $ 54.9 | $ 52.2 | $ 108.2 | $ 100.3 | ||
Acquisition-related costs | 9.4 | 20.8 | 10.2 | 23.1 | ||
Professional fees | 12.3 | 19.2 | 27.2 | 35.4 | ||
Goodwill | 66.4 | |||||
Contingent consideration liabilities | 20.5 | 20.5 | $ 2.2 | |||
Impairment of goodwill | 10.5 | |||||
Acquisitions | ||||||
Acquisitions | ||||||
Compensation and benefits | 2.1 | 3.4 | ||||
Acquisition-related costs | 9.4 | 20.8 | 10.2 | 23.1 | ||
Professional fees | 1.3 | 0.8 | 2.1 | 1.8 | ||
Impairment of goodwill | 10.5 | 10.5 | ||||
Impairment facilities charges | $ 8.1 | 6.1 | $ 8.1 | 6.1 | ||
Lease termination fees | $ 1.1 | $ 1.1 | ||||
Hanweck, FT Options and Trade Alert | ||||||
Acquisitions | ||||||
Goodwill | $ 66.4 | |||||
Intangibles | 22.3 | |||||
Working capital | 0.5 | |||||
Contingent consideration liabilities | $ 20.5 |
INVESTMENTS - Schedule of inves
INVESTMENTS - Schedule of investments (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Aug. 31, 2019 |
Schedule of Cost and Equity Method Investments | |||
Equity Method | $ 22.6 | $ 22.9 | |
Other Equity Investments | 38.7 | 38.3 | |
Total Investments | 61.3 | 61.2 | |
Investment in Signal Trading Systems, LLC | |||
Schedule of Cost and Equity Method Investments | |||
Equity Method | 12.4 | 12.6 | |
EuroCCP | |||
Schedule of Cost and Equity Method Investments | |||
Equity Method | 10.2 | 10.3 | |
Investment in Eris Exchange Holdings, LLC | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 20 | 20.8 | |
Investment in American Financial Exchange, LLC | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 8.6 | 8.6 | |
Investment in Cboe Vest Financial Group, Inc. | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 2.9 | 2.9 | $ 2.9 |
Eris Digital Holdings, LLC | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 0.8 | ||
Investment in OCC | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | 0.3 | 0.3 | |
Other cost method investments | |||
Schedule of Cost and Equity Method Investments | |||
Other Equity Investments | $ 6.1 | $ 5.7 |
INVESTMENTS - Equity method inv
INVESTMENTS - Equity method investments (Details) | Jul. 01, 2020 | Jun. 30, 2020item |
Schedule of Equity Method Investments | ||
Number of central counterparties | 3 | |
EuroCCP | Cboe Europe Limited | ||
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% | |
Subsequent Event | EuroCCP | Cboe Europe Limited | ||
Schedule of Equity Method Investments | ||
Remaining ownership percentage acquired | 80 |
INVESTMENTS - Other Equity Inve
INVESTMENTS - Other Equity Investments (Details) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | |
Aug. 31, 2019 | Jun. 30, 2020 | Dec. 31, 2019 | |
Other Equity Investments | |||
Other Equity Investments | $ 38.7 | $ 38.3 | |
Investment in OCC | |||
Other Equity Investments | |||
Other Equity Investments | $ 0.3 | 0.3 | |
Percentage of equity securities | 20.00% | ||
Investment in OCC | Other expense | |||
Other Equity Investments | |||
Dividend reversed | $ 8.8 | ||
Investment in Cboe Vest Financial Group, Inc. | |||
Other Equity Investments | |||
Other Equity Investments | $ 2.9 | $ 2.9 | $ 2.9 |
Decrease in net assets due to deconsolidation | 14.5 | ||
Noncontrolling Interest, Decrease from Deconsolidation | 5.8 | ||
Interest bearing notes receivable | $ 3.7 | ||
Investment in Cboe Vest Financial Group, Inc. | Maximum | |||
Other Equity Investments | |||
Ownership percentage | 20.00% | ||
Percentage of voting interest | 5.00% |
FINANCIAL INVESTMENTS (Details)
FINANCIAL INVESTMENTS (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Financial Investments | ||
Cost basis | $ 176.5 | $ 71 |
Total Fair Value | 176.5 | 71 |
U.S. Treasury securities | ||
Available-for-sale: | ||
Cost basis | 155.6 | 47.6 |
Fair value | 155.6 | 47.6 |
Other securities | ||
Available-for-sale: | ||
Cost basis | 20.9 | 23.4 |
Fair value | $ 20.9 | $ 23.4 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Property and Equipment, Net | |||||
Total property and equipment | $ 199.7 | $ 199.7 | $ 165.6 | ||
Less accumulated depreciation | (124.1) | (124.1) | (118.6) | ||
Property and equipment, net | 75.6 | 75.6 | 47 | ||
Depreciation expense | 6.2 | $ 6.1 | 12.4 | $ 12.3 | |
Property classified as property held for sale | 13 | 13 | 21.1 | ||
Options | |||||
Property and Equipment, Net | |||||
Impairment charge | 8.1 | ||||
Construction in progress | |||||
Property and Equipment, Net | |||||
Total property and equipment | 33 | 33 | 1.2 | ||
Furniture and equipment | |||||
Property and Equipment, Net | |||||
Total property and equipment | $ 166.7 | $ 166.7 | $ 164.4 |
CREDIT LOSSES (Details)
CREDIT LOSSES (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Credit losses | |
Balance, at beginning of period | $ 24.5 |
Current period provision for expected credit losses | (0.1) |
Balance, at end of period | 24.4 |
Notes receivable | |
Credit losses | |
Balance, at beginning of period | 23.4 |
Balance, at end of period | 23.4 |
Accounts receivable | |
Credit losses | |
Balance, at beginning of period | 1.1 |
Current period provision for expected credit losses | (0.1) |
Balance, at end of period | $ 1 |
OTHER ASSETS, NET - Schedule of
OTHER ASSETS, NET - Schedule of other assets, net (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets | |||||
Less accumulated depreciation and amortization | $ (59.8) | $ (59.8) | $ (57.2) | ||
Data processing software, net | 26.8 | 26.8 | 29.7 | ||
Other assets | 34 | 34 | 21.9 | ||
Data processing software and other assets, net | 60.8 | 60.8 | 51.6 | ||
Notes receivable | 21.1 | 21.1 | 9.2 | ||
Amortization | 30.1 | $ 34.2 | 62.6 | $ 71.7 | |
Software development work in progress | |||||
Finite-Lived Intangible Assets | |||||
Software | 0.7 | 0.7 | 2.6 | ||
Data processing software | |||||
Finite-Lived Intangible Assets | |||||
Software | 85.9 | 85.9 | $ 84.3 | ||
Amortization | $ 1.7 | $ 3.4 | $ 3.5 | $ 6.9 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill by segment (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill | |
Balance at beginning of the year | $ 2,682.1 |
Additions | 66.4 |
Changes in foreign currency exchange rates | (18.1) |
Balance at end of the year | 2,730.4 |
Options | |
Goodwill | |
Balance at beginning of the year | 239.4 |
Additions | 66.4 |
Balance at end of the year | 305.8 |
U.S. Equities | |
Goodwill | |
Balance at beginning of the year | 1,740.4 |
Balance at end of the year | 1,740.4 |
European Equities | |
Goodwill | |
Balance at beginning of the year | 435.1 |
Changes in foreign currency exchange rates | (18.1) |
Balance at end of the year | 417 |
Global FX | |
Goodwill | |
Balance at beginning of the year | 267.2 |
Balance at end of the year | 267.2 |
Futures | |
Goodwill | |
Balance at end of the year | $ 0 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of intangible assets by segment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Finite-lived Intangible Assets | ||||
Balance at beginning of the year | $ 1,589.9 | |||
Additions | 22.3 | |||
Amortization | $ (30.1) | $ (34.2) | (62.6) | $ (71.7) |
Changes in foreign currency exchange rates | (23.4) | |||
Balance at end of the year | 1,526.2 | 1,526.2 | ||
Options | ||||
Finite-lived Intangible Assets | ||||
Balance at beginning of the year | 166.6 | |||
Additions | 22.3 | |||
Amortization | (7.8) | |||
Balance at end of the year | 181.1 | 181.1 | ||
U.S. Equities | ||||
Finite-lived Intangible Assets | ||||
Balance at beginning of the year | 921.4 | |||
Amortization | (30.5) | |||
Balance at end of the year | 890.9 | 890.9 | ||
European Equities | ||||
Finite-lived Intangible Assets | ||||
Balance at beginning of the year | 363.7 | |||
Amortization | (11.5) | |||
Changes in foreign currency exchange rates | (23.4) | |||
Balance at end of the year | 328.8 | 328.8 | ||
Global FX | ||||
Finite-lived Intangible Assets | ||||
Balance at beginning of the year | 138.2 | |||
Amortization | (12.8) | |||
Balance at end of the year | $ 125.4 | $ 125.4 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Estimated Future Amortization (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
GOODWILL AND INTANGIBLE ASSETS, NET | ||||
Amortization | $ 30.1 | $ 34.2 | $ 62.6 | $ 71.7 |
Amortization expense | ||||
Future amortization expense, remainder of 2020 | 60 | 60 | ||
2021 | 108 | 108 | ||
2022 | 95.6 | 95.6 | ||
2023 | 84.9 | 84.9 | ||
2024 | 63.9 | 63.9 | ||
2025 | $ 53.7 | $ 53.7 |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of intangible assets by category (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets | ||
Intangible assets, net | $ 1,526.2 | $ 1,589.9 |
Customer relationships | Weighted Average | ||
Finite-Lived Intangible Assets | ||
Amortization period (in years) | 17 years | 17 years |
Market data customer relationships | Weighted Average | ||
Finite-Lived Intangible Assets | ||
Amortization period (in years) | 12 years | 12 years |
Technology | Weighted Average | ||
Finite-Lived Intangible Assets | ||
Amortization period (in years) | 4 years | 4 years |
Trademarks and tradenames | Weighted Average | ||
Finite-Lived Intangible Assets | ||
Amortization period (in years) | 9 years | 6 years |
Options | ||
Finite-Lived Intangible Assets | ||
Accumulated amortization | $ (55.6) | $ (47.8) |
Intangible assets, net | 181.1 | 166.6 |
Options | Customer relationships | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 46.6 | 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 | 28.1 | 24.8 |
Options | Trademarks and tradenames | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 12.9 | 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 | (255.2) | (224.7) |
Intangible assets, net | 890.9 | 921.4 |
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 | (83.9) | (77.6) |
Intangible assets, net | 328.8 | 363.7 |
European Equities | Customer relationships | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 158.7 | 169.7 |
European Equities | Market data customer relationships | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 59.5 | 63.6 |
European Equities | Technology | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 22.3 | 23.9 |
European Equities | Trademarks and tradenames | ||
Finite-Lived Intangible Assets | ||
Finite-lived intangible assets, gross | 1.8 | 1.9 |
European Equities | Trading registrations and licenses | ||
Finite-Lived Intangible Assets | ||
Indefinite-lived intangible assets, gross | 170.4 | 182.2 |
Global FX | ||
Finite-Lived Intangible Assets | ||
Accumulated amortization | (102.7) | (89.9) |
Intangible assets, net | 125.4 | 138.2 |
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 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - Schedule of accounts payable and accrued liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||
Compensation and benefit-related liabilities | $ 30 | $ 35.2 |
Termination benefits | 0.6 | 6.7 |
Royalties | 17.5 | 18.6 |
Accrued liabilities | 137.7 | 77.8 |
Marketing fee payable | 18 | 12.6 |
Accounts payable | 12.2 | 21 |
Total accounts payable and accrued liabilities | $ 216 | $ 171.9 |
DEBT - Schedule of long-term de
DEBT - Schedule of long-term debt (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Mar. 22, 2018 | Jan. 12, 2017 |
Debt Instrument | ||||
Total debt | $ 868.6 | $ 867.6 | ||
Term Loan Agreement | ||||
Debt Instrument | ||||
Total debt | 223 | 222.4 | ||
Debt instrument face amount | 300 | $ 300 | ||
3.650% Senior Notes | ||||
Debt Instrument | ||||
Total debt | 645.6 | $ 645.2 | ||
Debt instrument face amount | $ 650 | $ 650 | ||
Interest rate (as a percent) | 3.65% | 3.65% | ||
Revolving Credit Agreement | ||||
Debt Instrument | ||||
Total debt | $ 0 |
DEBT (Details)
DEBT (Details) $ in Millions | Mar. 22, 2018USD ($) | Dec. 15, 2016USD ($)subsidiary | Jun. 30, 2020USD ($)subsidiary | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Jan. 12, 2017USD ($) |
Debt Instrument | ||||||
Repayments of outstanding indebtedness | $ 300 | |||||
Borrowings outstanding | $ 868.6 | $ 867.6 | ||||
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 | |||||
Borrowings outstanding | $ 223 | 222.4 | ||||
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 | $ 645.6 | $ 645.2 | ||||
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% |
DEBT - Schedule of debt repayme
DEBT - Schedule of debt repayments (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Long-term Debt | ||
2021 | $ 225 | |
Thereafter | 650 | |
Principal amounts repayable | 875 | |
Debt issuance cost | (2.6) | |
Unamortized discount on notes | (3.8) | |
Total debt outstanding | $ 868.6 | $ 867.6 |
DEBT - Schedule of Interest Exp
DEBT - Schedule of Interest Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
DEBT | ||||
Contractual interest | $ 6.9 | $ 9.9 | $ 14.4 | $ 19.7 |
Amortization of debt discount | 0.1 | 0.1 | 0.3 | 0.3 |
Amortization of debt issuance cost. | 0.4 | 0.5 | 0.7 | 0.9 |
Interest expense | 7.4 | 10.5 | 15.4 | 20.9 |
Interest income | (0.1) | (0.5) | (0.8) | (1) |
Interest expense, net | $ 7.3 | $ 10 | $ 14.6 | $ 19.9 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | |
AOCI Rollforward | |||||
Beginning balance | $ 3,310.1 | $ 3,355.6 | $ 3,285.4 | $ 3,241 | $ 3,355.6 |
Other comprehensive income (loss) | (2.7) | (37.5) | (18.1) | 14.7 | |
Ending balance | 3,286.3 | 3,310.1 | 3,327 | 3,285.4 | 3,286.3 |
Accumulated Other Comprehensive Income, net | |||||
AOCI Rollforward | |||||
Beginning balance | 0.1 | 37.6 | 26.2 | 11.5 | 37.6 |
Other comprehensive income (loss) | (2.7) | (37.5) | (18.1) | 14.7 | (40.2) |
Ending balance | (2.6) | 0.1 | $ 8.1 | $ 26.2 | (2.6) |
Foreign Currency Translation | |||||
AOCI Rollforward | |||||
Beginning balance | 38.2 | 38.2 | |||
Other comprehensive income (loss) | (41) | ||||
Ending balance | (2.8) | (2.8) | |||
Unrealized Investment Gain/Loss | |||||
AOCI Rollforward | |||||
Beginning balance | 0.2 | 0.2 | |||
Other comprehensive income (loss) | (0.3) | ||||
Ending balance | (0.1) | (0.1) | |||
Post-Retirement Benefits | |||||
AOCI Rollforward | |||||
Beginning balance | $ (0.8) | (0.8) | |||
Other comprehensive income (loss) | 1.1 | ||||
Ending balance | $ 0.3 | $ 0.3 |
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 | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Total assets | $ 176.5 | $ 71 |
Liabilities: | ||
Contingent consideration liabilities | 20.5 | 2.2 |
Total liabilities | 910 | 893.2 |
Level 1 | ||
Assets: | ||
Total assets | 176.5 | 71 |
Liabilities: | ||
Total liabilities | 20.9 | 23.4 |
Level 2 | ||
Liabilities: | ||
Total liabilities | 868.6 | 867.6 |
Level 3 | ||
Liabilities: | ||
Contingent consideration liabilities | 20.5 | 2.2 |
Total liabilities | 20.5 | 2.2 |
Recurring | ||
Assets: | ||
Total assets | 176.5 | 71 |
Liabilities: | ||
Contingent consideration liabilities | 20.5 | 2.2 |
Total liabilities | 20.5 | 2.2 |
Recurring | U.S. Treasury securities | ||
Assets: | ||
Total assets | 155.6 | 47.6 |
Recurring | Marketable securities | Mutual funds | ||
Assets: | ||
Total assets | 13.1 | 15.7 |
Recurring | Marketable securities | Money market funds | ||
Assets: | ||
Total assets | 7.8 | 7.7 |
Recurring | Level 1 | ||
Assets: | ||
Total assets | 176.5 | 71 |
Recurring | Level 1 | U.S. Treasury securities | ||
Assets: | ||
Total assets | 155.6 | 47.6 |
Recurring | Level 1 | Marketable securities | Mutual funds | ||
Assets: | ||
Total assets | 13.1 | 15.7 |
Recurring | Level 1 | Marketable securities | Money market funds | ||
Assets: | ||
Total assets | 7.8 | 7.7 |
Recurring | Level 3 | ||
Liabilities: | ||
Contingent consideration liabilities | 20.5 | 2.2 |
Total liabilities | $ 20.5 | $ 2.2 |
FAIR VALUE MEASUREMENT - Sche_2
FAIR VALUE MEASUREMENT - Schedule of fair value hierarchy of financial instruments held (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Financial investments | $ 155.6 | $ 47.6 |
Deferred compensation plan assets | 20.9 | 23.4 |
Total assets | 176.5 | 71 |
Liabilities: | ||
Contingent consideration liabilities | 20.5 | 2.2 |
Deferred compensation plan liabilities | 20.9 | 23.4 |
Debt | 868.6 | 867.6 |
Total liabilities | 910 | 893.2 |
Level 1 | ||
Assets: | ||
Financial investments | 155.6 | 47.6 |
Deferred compensation plan assets | 20.9 | 23.4 |
Total assets | 176.5 | 71 |
Liabilities: | ||
Deferred compensation plan liabilities | 20.9 | 23.4 |
Total liabilities | 20.9 | 23.4 |
Level 2 | ||
Liabilities: | ||
Debt | 868.6 | 867.6 |
Total liabilities | 868.6 | 867.6 |
Level 3 | ||
Liabilities: | ||
Contingent consideration liabilities | 20.5 | 2.2 |
Total liabilities | $ 20.5 | $ 2.2 |
FAIR VALUE MEASUREMENT - Narrat
FAIR VALUE MEASUREMENT - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Segment Reporting Information | ||
Contingent consideration liabilities | $ 20.5 | $ 2.2 |
Recurring | ||
Segment Reporting Information | ||
Contingent consideration liabilities | $ 20.5 | $ 2.2 |
FAIR VALUE MEASUREMENT - Summar
FAIR VALUE MEASUREMENT - Summary of changes in the fair value of the company's Level 3 financial liabilities (Details) - Level 3 - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Changes in fair value of level 3 financial liabilities | ||
Balance at the beginning of the period | $ 17.5 | $ 2.2 |
Additions | 3 | 20.5 |
Settlements | (2.2) | |
Balance at the end of the period | 20.5 | 20.5 |
Contingent consideration liabilities | ||
Changes in fair value of level 3 financial liabilities | ||
Balance at the beginning of the period | 17.5 | 2.2 |
Additions | 3 | 20.5 |
Settlements | (2.2) | |
Balance at the end of the period | $ 20.5 | $ 20.5 |
SEGMENT REPORTING - Summarized
SEGMENT REPORTING - Summarized financial information by reportable segment (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | |
Segment Reporting Information | ||||
Number of reportable segments | segment | 5 | |||
Revenues | $ 868.7 | $ 620.6 | $ 1,790.2 | $ 1,222.1 |
Operating income (loss) | 161.7 | 125.2 | 388.1 | 270.6 |
Operating Segments | Options | ||||
Segment Reporting Information | ||||
Revenues | 317.6 | 246.1 | 674.1 | 477.1 |
Operating income (loss) | 93.4 | 80.1 | 236.8 | 167.1 |
Operating Segments | U.S. Equities | ||||
Segment Reporting Information | ||||
Revenues | 490.5 | 298.7 | 964.2 | 594.5 |
Operating income (loss) | 55.9 | 36.4 | 104.9 | 74 |
Operating Segments | Futures | ||||
Segment Reporting Information | ||||
Revenues | 21.6 | 33.8 | 63.1 | 64.3 |
Operating income (loss) | 8.3 | 19.4 | 35.2 | 37.7 |
Operating Segments | European Equities | ||||
Segment Reporting Information | ||||
Revenues | 25.3 | 28.7 | 58.2 | 59 |
Operating income (loss) | 5.4 | 5.7 | 14.9 | 11.5 |
Operating Segments | Global FX | ||||
Segment Reporting Information | ||||
Revenues | 13.7 | 13.1 | 30.6 | 27 |
Operating income (loss) | 1.1 | (1.6) | 4.1 | (2) |
Corporate Items and Eliminations | ||||
Segment Reporting Information | ||||
Revenues | 0.2 | 0.2 | ||
Operating income (loss) | $ (2.4) | $ (14.8) | $ (7.8) | $ (17.7) |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
SMART Plan | |||||
Defined Contribution Plan | |||||
Total assets in the trust | $ 20.9 | $ 23.4 | |||
Company contribution amount | $ 2.6 | $ 3.6 | 4.1 | $ 5.2 | |
Cboe Europe Equities Employee Selected Stakeholder Contribution Plan | |||||
Defined Contribution Plan | |||||
Company contribution amount | $ 0.2 | $ 0.1 | $ 0.4 | $ 0.4 |
REGULATORY CAPITAL (Details)
REGULATORY CAPITAL (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
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 | 6.1 |
Excess net capital | 5 |
Required net capital | 1.1 |
Cboe Europe Limited | |
Regulatory Requirement | |
Financial resources requirement | 21.7 |
Capital in excess of financial resources requirement | 17.5 |
Cboe Chi-X Europe | |
Regulatory Requirement | |
Capital resources requirement | 0.1 |
Capital in excess of capital resources requirement | 0.3 |
Cboe Europe B.V | |
Regulatory Requirement | |
Capital in excess of financial resources requirement | 4.4 |
Minimum capital requirement | 1.4 |
Cboe SEF | |
Regulatory Requirement | |
Annual operating expenses for swap execution facility capital adequacy tests | 0.7 |
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 | 58.8 |
XX month operating expenses for registered futures exchange capital adequacy tests | $ 29.4 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock-based compensation expense | $ 4.6 | $ 6.3 | $ 12.9 | $ 11.7 |
Options exercised (in shares) | 10,834 | |||
Payments for the purchase of shares to satisfy the employee income tax withholdings (in shares) | $ 14.1 | 10.4 | ||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Total intrinsic value of stock options exercised | $ 0.9 | $ 22.4 | ||
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) | 99,358 | |||
Payments for the purchase of shares to satisfy the employee income tax withholdings (in shares) | $ 11.7 | |||
Number of shares of common stock of which unit is convertible (in shares) | 1 | 1 | ||
Vesting period | 3 years | |||
Qualified retirement eligibility age for grants awarded in and after 2017 | 55 years | |||
Qualified retirement eligibility number of years of service for grants awarded in and after 2017 | 10 years | |||
Vested (in shares) | 268,187 | |||
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 | ||||
Shares purchased to satisfy the employee income tax withholdings (in shares) | 19,456 | |||
Payments for the purchase of shares to satisfy the employee income tax withholdings (in shares) | $ 2.4 | |||
Number of shares of common stock of which unit is convertible (in shares) | 1 | 1 | ||
Vesting period | 3 years | |||
Vested (in shares) | 48,053 | 48,053 | ||
Risk-free interest rate | 1.36% | |||
Volatility time period | 3 years | |||
Expected volatility | 21.00% | |||
Correlation to S&P 500 Index time period | 3 years | |||
Correlation with S&P index | 0.25% | |||
Unrecognized compensation expense | $ 30.9 | $ 30.9 | ||
Unrecognized compensation expense, period for recognition | 2 years | |||
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 | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Units ultimately expected to be awarded | 200.00% |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock option activity (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of Shares | |
Beginning balance (in shares) | shares | 10,834 |
Exercised (in shares) | shares | (10,834) |
Weighted Average Exercise Price | |
Beginning balance (in dollars per share) | $ / shares | $ 18.59 |
Exercised (in dollars per share) | $ / shares | $ 18.59 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted stock activity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
May 31, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Employee Stock Purchase Plan | |||||
Compensation expense | $ 4,600,000 | $ 6,300,000 | $ 12,900,000 | $ 11,700,000 | |
ESPP | |||||
Employee Stock Purchase Plan | |||||
Number of shares of common stock made available for purchase to employees | 750,000 | ||||
Maximum percentage of annual salary that an employee is permitted to utilize to purchase stock | 10.00% | ||||
Maximum number of shares that a participant can purchase during any single offering period | 312 | ||||
Maximum fair market value of stock an employee can purchase under the plan per calendar year | $ 25,000 | ||||
Compensation expense | $ 100,000 | $ 100,000 | $ 200,000 | $ 200,000 | |
Shares were reserved for future issuance | 710,103 | 710,103 | |||
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) | 436,013 | ||||
Granted (in shares) | 183,731 | ||||
Vested (in shares) | (268,187) | ||||
Forfeited (in shares) | (11,080) | ||||
Ending balance (in shares) | 340,477 | 340,477 | |||
Weighted average grant date fair value | |||||
Beginning balance (in USD per share) | $ 92.47 | ||||
Granted (in dollars per share) | 117.43 | ||||
Vested (in USD per share) | 88.07 | ||||
Forfeited (in USD per share) | 105.47 | ||||
Ending balance (in USD per share) | $ 108.98 | $ 108.98 | |||
Performance-Based Restricted Stock Units | |||||
Number of shares | |||||
Beginning balance (in shares) | 132,248 | ||||
Granted (in shares) | 72,975 | ||||
Vested (in shares) | (48,053) | (48,053) | |||
Forfeited (in shares) | (34,504) | ||||
Ending balance (in shares) | 122,666 | 122,666 | |||
Weighted average grant date fair value | |||||
Beginning balance (in USD per share) | $ 105.75 | ||||
Granted (in dollars per share) | 125.62 | ||||
Vested (in USD per share) | 108.91 | ||||
Forfeited (in USD per share) | 109.85 | ||||
Ending balance (in USD per share) | $ 115.18 | $ 115.18 |
EQUITY (Details)
EQUITY (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 114 Months Ended | ||||
Jun. 30, 2020USD ($)Vote / shares$ / sharesshares | Mar. 31, 2020USD ($)$ / shares | Jun. 30, 2019USD ($)$ / sharesshares | Mar. 31, 2019USD ($)$ / shares | Jun. 30, 2020USD ($)Vote / shares$ / sharesshares | Dec. 31, 2019$ / sharesshares | |
Common Stock | ||||||
Common stock, shares authorized (in shares) | 325,000,000 | 325,000,000 | 325,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||
Common stock, shares issued (in shares) | 125,976,027 | 125,976,027 | 125,701,889 | |||
Common stock, shares outstanding (in shares) | 108,757,176 | 108,757,176 | 110,656,892 | |||
Common stock, votes per share | Vote / shares | 1 | 1 | ||||
Common Stock in Treasury, at Cost | ||||||
Common stock held in Treasury (in shares) | 17,218,851 | 17,218,851 | 15,044,997 | |||
Share Repurchase Program | ||||||
Treasury Stock, Shares, Acquired | 992,159 | 100 | 15,771,049 | |||
Treasury Stock Acquired, Average Cost Per Share | $ / shares | $ 100.54 | $ 104.75 | $ 64.68 | |||
Treasury Stock, Value, Acquired, Cost Method | $ | $ 99,800 | $ 119,500 | $ 10 | $ 35,000 | $ 1,000 | |
Availability remaining under existing share repurchase authorizations | $ | $ 329,900 | $ 171,100 | $ 329,900 | |||
Purchase of Common Stock from Employees | ||||||
Stock repurchased from employee stock plans (in shares) | 2,667 | 5,179 | ||||
Average price paid per share (in dollars per share) | $ / shares | $ 100.68 | $ 105.21 | ||||
Preferred stock | ||||||
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 | 20,000,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | |||
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | |||
Dividends | ||||||
Cash dividends per share, declared (in dollars per share) | $ / shares | $ 0.36 | $ 0.36 | 0.31 | $ 0.31 | ||
Cash dividends per share, paid (in dollars per share) | $ / shares | $ 0.36 | $ 0.31 | ||||
Aggregate payout | $ | $ 39,500 | $ 40,000 | $ 34,800 | $ 34,800 |
EQUITY - Share Repurchase Progr
EQUITY - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | 114 Months Ended | |||||||||||
Jun. 30, 2020 | Oct. 31, 2019 | Aug. 31, 2018 | Feb. 28, 2018 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jun. 30, 2020 | |
Share Repurchase Program | |||||||||||||||
Stock repurchase amount authorized during period | $ 250,000 | $ 250,000 | $ 100,000 | $ 150,000 | $ 100,000 | $ 100,000 | $ 100,000 | $ 100,000 | $ 100,000 | $ 100,000 | |||||
Authorized amount | $ 1,400,000 | $ 1,400,000 | $ 1,400,000 | ||||||||||||
Number of shares of common stock repurchased | 992,159 | 100 | 15,771,049 | ||||||||||||
Average price paid per share | $ 100.54 | $ 104.75 | $ 64.68 | ||||||||||||
Total purchase price | $ 99,800 | $ 119,500 | $ 10 | $ 35,000 | $ 1,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
INCOME TAXES | ||||
Effective tax rate | 27.50% | 29.30% | 27.60% | 27.50% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Basic and Diluted EPS Numerator: | |||||
Net income | $ 113.6 | $ 84.5 | $ 271 | $ 178.6 | |
Net loss attributable to redeemable noncontrolling interest | 3.8 | 4 | |||
Net income excluding redeemable noncontrolling interest | 113.6 | $ 157.4 | 88.3 | 271 | 182.6 |
Change in redemption value of redeemable noncontrolling interest | (0.2) | (0.4) | |||
Earnings allocated to participating securities | (0.3) | (0.5) | (0.7) | (1.1) | |
Net income allocated to common stockholders | $ 113.3 | $ 87.6 | $ 270.3 | $ 181.1 | |
Basic EPS Denominator: | |||||
Weighted average shares outstanding (in shares) | 109.5 | 111.5 | 109.9 | 111.5 | |
Basic Net Income Per Common Share (in dollars per share) | $ 1.04 | $ 0.79 | $ 2.46 | $ 1.62 | |
Diluted EPS Denominator: | |||||
Weighted average shares outstanding (in shares) | 109.5 | 111.5 | 109.9 | 111.5 | |
Dilutive common shares issued under stock program (in shares) | 0.1 | 0.1 | 0.2 | 0.1 | |
Total dilutive weighted average shares (in shares) | 109.6 | 111.6 | 110.1 | 111.6 | |
Diluted Net Income Per Common Share (in dollars per share) | $ 1.03 | $ 0.78 | $ 2.45 | $ 1.62 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (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 | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Sep. 30, 2019USD ($)ft² | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Leases | |||
Options to renew | true | ||
Additional right of use assets | $ 6.7 | ||
Additional operating lease liabilities | 13.5 | $ 13.5 | |
Lease incentive for leasehold improvements | 4.8 | 25.2 | |
Minimum lease payments | $ 186.1 | $ 186.1 | |
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 | 1 year | |
Maximum | |||
Leases | |||
Renewal term | 5 years | 5 years | |
Option to terminate period | 1 year |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
LEASES | ||
Operating lease right of use assets | $ 117.8 | $ 53.4 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | |
Current operating leased liabilities | $ 10.7 | 8.7 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent | |
Non-current operating lease liabilities | $ 137.3 | 46.7 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OperatingLeaseLiabilityNoncurrent | |
Total lease liabilities | $ 148 | $ 55.4 |
LEASES - Lease Costs and Other
LEASES - Lease Costs and Other Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Jan. 01, 2019 | |
Leases | ||||||
Operating lease costs | $ 5 | $ 3.2 | $ 9.8 | $ 6.8 | ||
Weighted average remaining lease term (years) | 12 years 9 months 18 days | 9 years 6 months | 12 years 9 months 18 days | 9 years 6 months | ||
Weighted average discount rate | 3.40% | 3.50% | 3.40% | 3.50% | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 2.6 | $ 2.7 | $ 5.4 | $ 4.8 | ||
Lease incentive for leasehold improvements | 4.8 | 25.2 | ||||
Right-of-use assets obtained in exchange for lease liabilities | 6.7 | $ 0.1 | 70.9 | $ 19 | ||
Operating lease right of use assets | 117.8 | 117.8 | $ 53.4 | |||
Operating lease liabilities recognized upon adoption | $ 148 | $ 148 | $ 55.4 | |||
ASU 2016-02 | 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) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Maturities of Lease Liabilities | ||
Remainder of 2020 | $ 7.4 | |
2021 | 16.3 | |
2022 | 16.9 | |
2023 | 15.7 | |
2024 | 11.6 | |
After 2024 | 118.2 | |
Total lease payments | 186.1 | |
Less: Interest | (38.1) | |
Present value of lease liabilities | 148 | $ 55.4 |
Minimum lease payments related to option to extend term | $ 20.4 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions, € in Billions | Jul. 31, 2020EUR (€) | Jul. 01, 2020EUR (€) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Subsequent Events | ||||
Borrowings outstanding | $ | $ 868.6 | $ 867.6 | ||
Subsequent Event | Facility | ||||
Subsequent Events | ||||
Debt instrument face amount | € 1.5 | |||
Borrowings outstanding | € 0 | |||
Borrowing capacity available | € 1.5 | |||
Subsequent Event | EuroCCP | ||||
Subsequent Events | ||||
Ownership interest percentage | 80.00% |