Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 10, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 001-34774 | ||
Entity Registrant Name | Cboe Global Markets, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 20-5446972 | ||
Entity Address, Address Line One | 433 West Van Buren Street | ||
Entity Address, City or Town | Chicago | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60607 | ||
City Area Code | 312 | ||
Local Phone Number | 786-5600 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | CBOE | ||
Security Exchange Name | CboeBZX | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 11.7 | ||
Entity Common Stock, Shares Outstanding | 105,742,628 | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | Kansas City, Missouri | ||
Entity Central Index Key | 0001374310 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 432.7 | $ 341.9 |
Financial investments | 91.7 | 37.1 |
Accounts receivable, net of $2.2 allowance for credit losses at December 31, 2022 and $1.0 at December 31, 2021 | 369.8 | 326.9 |
Margin deposits and clearing funds | 543 | 745.9 |
Digital assets - safeguarded assets | 22.9 | |
Income taxes receivable | 48.3 | 42.7 |
Other current assets | 47.6 | 36.8 |
Total current assets | 1,556 | 1,531.3 |
Investments | 253.2 | 245.8 |
Land | 2.3 | 2.3 |
Property and equipment, net | 108.2 | 105.2 |
Operating lease right of use assets | 111.7 | 110.1 |
Goodwill | 3,122.8 | 3,025.4 |
Intangible assets, net | 1,662.8 | 1,668.6 |
Other assets, net | 181.9 | 125.8 |
Total assets | 6,998.9 | 6,814.5 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 420.2 | 295.4 |
Section 31 fees payable | 147.1 | 40.8 |
Deferred revenue | 11.7 | 15.2 |
Margin deposits and clearing funds | 543 | 745.9 |
Digital assets - safeguarded liabilities | 22.9 | |
Income taxes payable | 3.5 | 8.2 |
Current portion of long-term debt | 304.7 | |
Current portion of contingent consideration liabilities | 24.1 | 63.8 |
Total current liabilities | 1,477.2 | 1,169.3 |
Long-term debt | 1,437.3 | 1,299.3 |
Non-current unrecognized tax benefits | 196.1 | 197.9 |
Deferred income taxes | 222.9 | 372.7 |
Non-current operating lease liabilities | 129.3 | 129.2 |
Non-current portion of contingent consideration liabilities | 15 | 6.7 |
Other non-current liabilities | 55.8 | 34.6 |
Total liabilities | 3,533.6 | 3,209.7 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and outstanding at December 31, 2022 and December 31, 2021 | ||
Common stock, $0.01 par value: 325,000,000 shares authorized, 107,670,248 and 105,951,199 shares issued and outstanding, respectively at December 31, 2022 and 108,159,319 and 106,646,498 shares issued and outstanding, respectively at December 31, 2021 | 1.1 | 1.1 |
Common stock in treasury, at cost, 1,719,049 shares at December 31, 2022 and 1,512,821 shares at December 31, 2021 | (131) | (106.8) |
Additional paid-in capital | 1,455.1 | 1,509.4 |
Retained earnings | 2,171.1 | 2,145.5 |
Accumulated other comprehensive (loss) income, net | (31) | 55.6 |
Total stockholders' equity | 3,465.3 | 3,604.8 |
Total liabilities and stockholders' equity | $ 6,998.9 | $ 6,814.5 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Accounts Receivable, Allowance for credit losses | $ 2.2 | $ 1 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 325,000,000 | 325,000,000 |
Common stock, shares issued (in shares) | 107,670,248 | 108,159,319 |
Common stock, shares outstanding (in shares) | 105,951,199 | 106,646,498 |
Common stock held in treasury (in shares) | 1,719,049 | 1,512,821 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues: | |||
Total revenues | $ 3,958.5 | $ 3,494.8 | $ 3,427.1 |
Cost of revenues: | |||
Total cost of revenues | 2,216.8 | 2,018.7 | 2,172.8 |
Revenues less cost of revenues | 1,741.7 | 1,476.1 | 1,254.3 |
Operating expenses: | |||
Compensation and benefits | 363 | 288.5 | 224.9 |
Depreciation and amortization | 166.8 | 167.4 | 158.5 |
Technology support services | 77.7 | 66.7 | 54.5 |
Professional fees and outside services | 89 | 83.7 | 60.6 |
Travel and promotional expenses | 23.7 | 9.7 | 6.6 |
Facilities costs | 25.1 | 22.2 | 17.6 |
Acquisition-related costs | 19.9 | 15.6 | 45.2 |
Goodwill impairment | 460.9 | ||
Other expenses | 26 | 16.4 | 24.2 |
Total operating expenses | 1,252.1 | 670.2 | 592.1 |
Operating income | 489.6 | 805.9 | 662.2 |
Non-operating (expenses) income: | |||
Interest expense, net | (56.4) | (47.4) | (37.6) |
Other (expense) income, net | (0.3) | (2.4) | 35.8 |
Income before income tax provision | 432.9 | 756.1 | 660.4 |
Income tax provision | 197.9 | 227.1 | 192.2 |
Net income | 235 | 529 | 468.2 |
Net income allocated to participating securities | (0.9) | (1.7) | (1.2) |
Net income allocated to common stockholders | $ 234.1 | $ 527.3 | $ 467 |
Basic earnings per share (in dollars per share) | $ 2.20 | $ 4.93 | $ 4.28 |
Diluted earnings per share (in dollars per share) | $ 2.19 | $ 4.92 | $ 4.27 |
Basic weighted average shares outstanding (in shares) | 106.3 | 107 | 109.1 |
Diluted weighted average shares outstanding (in shares) | 106.7 | 107.2 | 109.3 |
Cash and spot markets | |||
Revenues: | |||
Total revenues | $ 1,777.6 | $ 1,660.5 | $ 1,820.1 |
Data and access solutions | |||
Revenues: | |||
Total revenues | 497 | 427.7 | 360.5 |
Derivatives markets | |||
Revenues: | |||
Total revenues | 1,683.9 | 1,406.6 | 1,246.5 |
Liquidity payments | |||
Cost of revenues: | |||
Total cost of revenues | 1,670.2 | 1,650.7 | 1,554.1 |
Routing and clearing | |||
Cost of revenues: | |||
Total cost of revenues | 83.2 | 87.8 | 70.4 |
Section 31 fees | |||
Cost of revenues: | |||
Total cost of revenues | 329.8 | 179.6 | 465 |
Royalty fees and other cost of revenues | |||
Cost of revenues: | |||
Total cost of revenues | $ 133.6 | $ 100.6 | $ 83.3 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 235 | $ 529 | $ 468.2 |
Other comprehensive (loss) income, net of income tax: | |||
Foreign currency translation adjustments | (85.6) | (19.3) | 36.5 |
Unrealized holding losses on financial investments | (0.8) | (0.3) | |
Post-retirement benefit obligations | (0.2) | (0.1) | 1.2 |
Comprehensive income | 148.4 | 509.6 | 505.6 |
Comprehensive income allocated to participating securities | (0.9) | (1.7) | (1.2) |
Comprehensive income allocated to common stockholders, net of income tax | $ 147.5 | $ 507.9 | $ 504.4 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Millions | Common Stock | Treasury Stock | Additional paid-in capital | Retained earnings Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | Accumulated other comprehensive income (loss), net. | Cumulative Effect, Period of Adoption, Adjustment | Total |
Beginning balance at Dec. 31, 2019 | $ 1.2 | $ (887.1) | $ 2,691.3 | $ 0.4 | $ 1,512.6 | $ 37.6 | $ 0.4 | $ 3,355.6 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Cash dividends on common stock | (170.6) | (170.6) | ||||||
Stock-based compensation | 21.7 | 21.7 | ||||||
Exercise of common stock options | 0.2 | 0.2 | ||||||
Repurchases of common stock from employee stock plans | (14.2) | (14.2) | ||||||
Purchase of common stock | (349.1) | (349.1) | ||||||
Shares issued under employee stock purchase plan | 0.1 | 0.1 | ||||||
Net income | 468.2 | 468.2 | ||||||
Other comprehensive income (loss) | 37.4 | 37.4 | ||||||
Ending balance at Dec. 31, 2020 | 1.2 | (1,250.4) | 2,713.3 | 1,809.8 | 75 | 3,348.9 | ||
Increase (Decrease) in Stockholders' Equity | ||||||||
Cash dividends on common stock | (193.3) | (193.3) | ||||||
Stock-based compensation | 0.1 | 26.6 | 26.7 | |||||
Repurchases of common stock from employee stock plans | (6.2) | (6.2) | ||||||
Purchase of common stock | (81.3) | (81.3) | ||||||
Retirement of treasury stock | (0.2) | 1,231.1 | (1,230.9) | |||||
Shares issued under employee stock purchase plan | 0.4 | 0.4 | ||||||
Net income | 529 | 529 | ||||||
Other comprehensive income (loss) | (19.4) | (19.4) | ||||||
Ending balance at Dec. 31, 2021 | 1.1 | (106.8) | 1,509.4 | 2,145.5 | 55.6 | 3,604.8 | ||
Increase (Decrease) in Stockholders' Equity | ||||||||
Cash dividends on common stock | (209.4) | (209.4) | ||||||
Stock-based compensation | 30.7 | 30.7 | ||||||
Repurchases of common stock from employee stock plans | (8.9) | (8.9) | ||||||
Purchase of common stock | (100.9) | (100.9) | ||||||
Retirement of treasury stock | 85.6 | (85.6) | ||||||
Shares issued under employee stock purchase plan | 0.6 | 0.6 | ||||||
Net income | 235 | 235 | ||||||
Other comprehensive income (loss) | (86.6) | (86.6) | ||||||
Ending balance at Dec. 31, 2022 | $ 1.1 | $ (131) | $ 1,455.1 | $ 2,171.1 | $ (31) | $ 3,465.3 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Changes in Stockholders' Equity | |||
Dividends (in dollars per share) | $ 1.96 | $ 1.80 | $ 1.56 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income | $ 235 | $ 529 | $ 468.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 166.8 | 167.4 | 158.5 |
Amortization of debt issuance cost and debt discount | 2.4 | 2.2 | 2 |
Change in contingent consideration | (5.2) | (2.7) | |
Realized gain on available-for-sale financial investments | (0.4) | ||
Provision for accounts receivable credit losses | 1.1 | 0.4 | 0.1 |
Benefit for deferred income taxes | (155.7) | (18.9) | (30.9) |
Provision for notes receivable credit losses | 6.7 | ||
Stock-based compensation expense | 30.7 | 26.6 | 21.7 |
Loss on disposal of property and equipment | 0.3 | 0.4 | |
Impairment of property held for sale | 8.1 | ||
Impairment charge of investment | 10.6 | ||
Goodwill impairment | 460.9 | ||
Equity (earnings) loss in investments | (4.2) | 0.4 | (1.1) |
Impairment of investments | 5.6 | 15.1 | |
Gain on investment | (7.5) | ||
Bargain purchase gain | (32.6) | ||
Changes in assets and liabilities: | |||
Accounts receivable | (49.8) | 12 | (90) |
Restricted cash and cash equivalents and customer bank deposits (included in margin deposits and clearing funds) | (217.5) | (66.2) | 812.1 |
Restricted cash and cash equivalents (included in other current assets) | 4.4 | ||
Income taxes receivable | (5.4) | 10.3 | 5.4 |
Digital assets - safeguarded assets | (22.9) | ||
Other current assets | (4) | (8.8) | (5.1) |
Other assets | (20.8) | (47.4) | (23.4) |
Accounts payable and accrued liabilities | 38.8 | 45 | 59.4 |
Digital assets - safeguarded liabilities | 22.9 | ||
Section 31 fees payable | 106.3 | (112.1) | 53.9 |
Deferred revenue | (4.1) | 4.9 | 4.5 |
Income taxes payable | (3.8) | 3.9 | (1.1) |
Unrecognized tax benefits | 89.1 | 33.2 | 28.8 |
Other liabilities | (12.9) | 7.2 | (1.1) |
Net cash provided by operating activities | 651.1 | 596.8 | 1,458.8 |
Cash flows from investing activities: | |||
Acquisitions, net of cash acquired | (708.3) | (151.5) | (351.5) |
Proceeds from acquisition-related escrow | 0.6 | ||
Contributions to investments | (14.6) | (209.8) | (12.1) |
Purchases of available-for-sale financial investments | (104.7) | (101.2) | (222.5) |
Proceeds from maturities of available-for-sale financial investments | 51.2 | 160.2 | 202.5 |
Proceeds from investments | 1.1 | ||
Proceeds from insurance | 0.5 | ||
Purchases of property and equipment and leasehold improvements | (59.8) | (51) | (47.4) |
Net cash used in investing activities | (835.1) | (352.7) | (430.5) |
Cash flows from financing activities: | |||
Proceeds from long-term debt | 663.6 | 110 | 493.7 |
Principal payments of long-term debt | (220) | (20) | (155) |
Proceeds from credit facility | 70 | ||
Payments of credit facility | (70) | ||
Debt issuance costs | (4.9) | (4.5) | |
Cash dividends on common stock | (209.4) | (193.3) | (170.6) |
Repurchases of common stock from employee stock plans | (8.9) | (6.2) | (14.2) |
Exercise of common stock options | 0.2 | ||
Shares issued under employee stock purchase plan | (0.6) | (0.4) | |
Payments of contingent consideration related to acquisitions | (38.7) | (9.1) | (2.2) |
Proceeds from Cboe Digital syndication | 1.5 | ||
Purchase of common stock | (100.9) | (81.3) | (349.1) |
Net cash provided by (used in) financing activities | 81.7 | (200.3) | (201.7) |
Effect of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents | (10) | (9.1) | 1.6 |
(Decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents | (112.3) | 34.7 | 828.2 |
Cash, cash equivalents, and restricted cash and cash equivalents: Beginning of period | 1,092.2 | 1,057.5 | 229.3 |
Cash, cash equivalents, and restricted cash and cash equivalents: End of period | 979.9 | 1,092.2 | 1,057.5 |
Supplemental disclosure of cash transactions: | |||
Cash paid for income taxes, net of refunds | 271.1 | 209.8 | 191.5 |
Cash paid for interest | 51 | 42.1 | 29.2 |
Supplemental disclosure of noncash investing activities: | |||
Accounts receivable acquired | 4.4 | 3.5 | 11 |
Financial investments acquired | 1.5 | ||
Income taxes receivable acquired | 1.7 | ||
Other current assets acquired | 1.6 | 1 | 5.9 |
Goodwill acquired | 593.5 | 133.6 | 201.2 |
Intangible assets acquired | 164.1 | 73.8 | 247.7 |
Property and equipment, net acquired | 1.6 | 3.1 | 4.4 |
Data processing software and other assets acquired | 2 | ||
Operating lease right of use asset acquired | 1.2 | ||
Other assets, net acquired | 0.5 | 0.9 | |
Accounts payable and accrued liabilities assumed | (6.1) | (1.8) | (16.7) |
Income taxes payable acquired | (0.1) | (1.3) | |
Deferred revenue acquired | (0.6) | (1) | |
Operating lease liability - non-current acquired | (1.2) | ||
Contingent consideration related to acquisitions | (10.1) | (49.6) | (32.7) |
Deferred income taxes acquired | (22.6) | $ (15.6) | $ (6.7) |
Other non-current liabilities acquired | (0.4) | ||
Paycheck Protection Program loan forgiveness | 1.3 | ||
Cboe Digital investor member revenue asset | (19.9) | ||
Cboe Digital option grant liability | $ 21.4 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents: | |||
Cash and cash equivalents | $ 432.7 | $ 341.9 | $ 245.4 |
Restricted cash and cash equivalents (included in margin deposits and clearing funds) | 530.3 | 745.9 | 812.1 |
Restricted cash and cash equivalents (included in other current assets) | 4.2 | 4.4 | |
Customer bank deposits (included in margin deposits and clearing funds) | 12.7 | ||
Total | $ 979.9 | $ 1,092.2 | $ 1,057.5 |
Margin deposits and clearing funds | |||
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents: | |||
Restricted Cash and Cash Equivalents, Statement of Financial Position [Extensible Enumeration] | Margin Deposits And Clearing Funds, Assets | Margin Deposits And Clearing Funds, Assets | Margin Deposits And Clearing Funds, Assets |
Other current assets | |||
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents: | |||
Restricted Cash and Cash Equivalents, Statement of Financial Position [Extensible Enumeration] | Other Assets, Current | Other Assets, Current | Other Assets, Current |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2022 | |
NATURE OF OPERATIONS | |
NATURE OF OPERATIONS | 1. NATURE OF OPERATIONS Cboe Global Markets, Inc. (“Cboe” or “the Company”), a leading provider of market infrastructure and tradable products, delivers cutting-edge trading, clearing and investment solutions to market participants around the world. The Company is committed to operating a trusted, inclusive global marketplace, and to providing leading products, technology and data solutions that enable participants to define a sustainable financial future. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives, FX, and digital assets, across North America, Europe, and Asia Pacific. Cboe’s subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In addition, the Company operates one of the largest stock exchanges by value traded in Europe, and owns Cboe Clear Europe (rebranded from EuroCCP in November of 2022), a leading pan-European equities and derivatives clearinghouse, BIDS Trading, a leading block-trading ATS by volume in the U.S., MATCHNow (operating as TriAct Canada Marketplace LP), a leading equities ATS in Canada, Cboe Australia, an operator of trading venues in Australia, and Cboe Japan, an operator of trading venues in Japan. Cboe also is a leading market globally for ETPs listings and trading. On May 2, 2022, Cboe completed its acquisition of ErisX, subsequently rebranded to Cboe Digital, an operator of a U.S. based digital asset spot market, a regulated futures exchange, and a regulated clearinghouse. On June 1, 2022, Cboe completed its acquisition of NEO, which is a recognized Canadian securities exchange. The Company is headquartered in Chicago with offices in Amsterdam, Belfast, Hong Kong, Kansas City, London, Manila, New York, San Francisco, Sarasota Springs, Singapore, Sydney, Tokyo and Toronto . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles of Accounting These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) as established by FASB. (b) Basis of Presentation The accompanying financial statements are presented on a consolidated basis to include the accounts and transactions of Cboe Global Markets, Inc. and its majority owned subsidiaries and all significant intercompany accounts and transactions have been eliminated. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates based upon historical experience, observance of trends, information available from outside sources and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. Beginning in the first quarter of 2022, the Company updated the financial statement captions within its consolidated statements of income to better reflect the Company’s diversified products, expansive geographical reach, and overall business strategy. Below is a summary of the changes to the financial statement captions. The changes do not have a financial impact on the Company’s reported revenue, revenues less cost of revenues, reported net income, or cash flows from operations. Revenues ● Cash and spot markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s North American Equities, Europe and Asia Pacific, Global FX, and Digital segments. ● Data and access solutions – includes access and capacity fees, proprietary market data fees, and associated other revenue across Cboe’s six segments. ● Derivatives markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s Options, Futures, Europe and Asia Pacific, and Digital segments. Cost of Revenues ● Royalty fees and other cost of revenues – includes royalty fees and other cost of revenues across the Company’s six segments. In prior periods, royalty fees and other cost of revenues were presented as distinct cost of revenues categories. Segment information The Company previously operated five reportable business segments prior to the quarter ended June 30, 2022. As a result of the ErisX acquisition, which was subsequently rebranded to Cboe Digital, as of the quarter ended June 30, 2022, the Company operates six reportable segments: Options, North American Equities, Europe and Asia Pacific, Futures, Global FX, and Digital which is reflective of how the Company's chief operating decision-maker reviews and operates the business. See Note 16 (“Segment Reporting”) for more information. (c) Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of the amounts of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of goodwill, indefinite-lived intangible assets, and unrecognized tax benefits. (d) Cash and Cash Equivalents The Company’s cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains cash at various regulated financial institutions and brokerage firms which, at times, may be in excess of the federal depository insurance limit. The Company’s management regularly monitors these institutions and believes that the potential for future loss is remote. The Company considers liquid investments with original or acquired maturities of three months or less to be cash equivalents. (e) Financial Investments Financial investments are classified as trading or available-for-sale. Trading financial investments represent financial investments held by Cboe Trading that retain the industry-specific accounting classification required for broker-dealers and marketable securities held in a rabbi trust for the Company’s non-qualified retirement and benefit plans. The investments held by the broker-dealer subsidiary are recorded at fair value with changes in unrealized gains and losses reflected within interest expense, net in the consolidated statements of income. The investments held in a trust are recorded at fair value with changes in unrealized gains or losses recorded within other income (expense) and the equal and offsetting charges in the related liability are recorded in compensation and benefits expense in the consolidated statements of income. Available-for-sale financial investments are comprised of the financial investments not held by Cboe Trading, including highly liquid U.S. Treasury securities. Unrealized gains and losses, net of income taxes, are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. Interest on financial investments, including amortization of premiums and accretion of discounts, is recognized as income when earned. Realized gains and losses on financial investments are calculated using the specific identification method and are included in interest expense, net in the accompanying consolidated statements of income. A decline in the fair value of any available-for-sale investment below carrying value that is deemed to be other-than-temporary results in an impairment to reduce the carrying value to realizable value. To determine whether an impairment is other-than-temporary, the Company considers all available information relevant to the collectability of the investment, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates. (f) Accounts Receivable, Net Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried at amortized cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis and recognizes the total owed from a member firm as accounts receivable, net and the total owed to a member firm as accounts payable and accrued liabilities in the consolidated balance sheets. On a periodic basis, management evaluates the Company’s accounts receivable and records an allowance for expected credit losses using an aging schedule. The aging schedule applies loss rates based on historical loss information and, as deemed necessary, is adjusted for differences in the nature of the receivables that exist at the reporting date from the historical period. Due to the short-term nature of the accounts receivable, changes in future economic conditions are not expected to have a significant impact on the expected credit losses. The accounts receivable are presented net of allowance for credit losses on the consolidated balance sheets and the associated losses are presented in other operating expenses on the consolidated statements of income. (g) Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated lives of the assets, generally ranging from three to seven years . Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation of leasehold improvements is calculated using the straight-line method over the shorter of the related lease term or the estimated useful life of the assets. Long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances indicate that the carrying values of the assets may not be recoverable. The Company bases this evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present that would indicate that the carrying value of any asset may not be recoverable, the Company determines whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. In the event of impairment, the Company recognizes a loss for the difference between the carrying value and the estimated value of the asset as measured using quoted market prices or, in the absence of quoted market prices, a discounted cash flow analysis. The Company expenses software development costs as incurred during the preliminary project stage, while capitalizing costs incurred during the application development stage, which includes design, coding, installation and testing activities. (h) Goodwill and Intangible Assets, Net Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of a business acquired. Goodwill is allocated to the Company’s reporting units based on the assignment of the fair values of each reporting unit of the acquired company. The Company tests goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying value may be impaired. Interim impairment testing was performed during the quarter ended June 30, 2022 due to the acquisition of Cboe Digital, resulting in an impairment charge to goodwill. During the quarter ended September 30, 2022 the Company concluded that the factors indicative of impairment were still relevant, resulting in the write-down of the remaining carrying value of goodwill to zero. See Note 10 (“Goodwill, Intangible Assets, Net, and Digital Assets Held”) for additional information. The annual impairment test is performed during the fourth quarter using October 1 carrying values, and if the fair value of the reporting unit is found to be less than the carrying value, an impairment loss is recorded. The Company performed its 2022 annual goodwill impairment test and determined that no additional impairment existed. Intangible assets, net, primarily include acquired trademarks and trade names, customer relationships, strategic alliance agreements, licenses and registrations and non-compete agreements. Intangible assets with finite lives are amortized based on the discounted cash flow method applied over the estimated useful lives of the intangible assets and are tested for impairment if certain events occur indicating that the carrying value may be impaired. Intangible assets deemed to have indefinite useful lives are not amortized, but instead are tested for impairment at least annually, usually concurrently with goodwill. Impairment exists if the fair value of the asset is less than the carrying value, and in that case, an impairment loss is recorded. The Company performed its 2022 annual intangible assets impairment test using October 1, 2022 carrying values and determined that no additional impairment existed, apart from the goodwill impairment mentioned above . (i) Treasury Stock The Company accounts for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in the consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are either available to be redistributed or they are retired. The Company accounts for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in-capital on the consolidated balance sheets. (j) Foreign Currency The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated into U.S. dollars using the exchange rate in effect as of each balance sheet date. Statements of income and cash flow amounts are translated using the average exchange rate during the period. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at the applicable exchange rates are included in accumulated other comprehensive income (loss), net in the accompanying consolidated balance sheets. Foreign currency gains and losses are recorded as other (expense) income, net in the consolidated statements of income. The Company’s operations in the United Kingdom, Amsterdam, Canada, Singapore, Philippines, Hong Kong, Australia and Japan are recorded in Pounds sterling, Euros, Canadian dollars, Singapore dollars, Philippine pesos, Hong Kong dollars, Australian dollars and Japanese Yen, respectively. (k) Income Taxes Deferred taxes are recorded on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the tax benefit from an unrecognized tax benefit only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense is recognized on the full amount of deferred benefits for unrecognized tax benefits. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in the income tax provision within the consolidated statements of income. The Company elected to account for global intangible low-taxed income (“GILTI”) in the period in which it is incurred, and therefore, has not provided any deferred tax impacts of GILTI in the consolidated financial statements. (l) Revenue Recognition For further discussion related to revenue recognition of fees, such as transaction and clearing fees and liquidity payments, access and capacity fees, market data fees, and regulation transaction and Section 31 fees, see Note 4 (“Revenue Recognition”). Concentrations of Revenue and Liquidity Payments For the years ended December 31, 2022, 2021, and 2020, no customer accounted for more than 13% of the Company’s total revenue. No customer is contractually or otherwise obligated to continue to use the Company’s services. The loss of, or a significant reduction of, participation by these customers may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows. The two largest clearing members clear the majority of the market-maker sides of transactions at all of the Company’s U.S. options exchanges. If either of these clearing members were to withdraw from the business of market-maker clearing and market-makers were unable to transfer to another clearing member, this could create significant disruption to the U.S. options markets, including Cboe’s. (m) Earnings Per Share The computation of basic earnings per share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders. The computation of diluted earnings per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method. (n) Stock-Based Compensation The Company grants stock-based compensation to its employees through restricted stock units and grants restricted stock awards to its board members. The Company records stock-based compensation expense for all stock-based compensation granted based on the grant-date fair value. The Company recognizes stock-based compensation expense related to stock-based compensation awards with graded vesting that have a service condition on a straight-line basis over the requisite service period of the entire award. The amount of stock-based compensation expense related to awards of restricted stock and restricted stock units is based on the fair value of Cboe Global Markets, Inc. common stock at the date of grant. The fair value is based on a current market-based transaction of the Company’s common stock. If a market-based transaction of the Company’s common stock is not available, then the fair value is based on an independent third-party valuation using equal weighting of two valuation analysis techniques, discounted cash flows and valuation multiples observed from publicly traded companies in a similar industry. On November 18, 2022, Cboe Digital Holdings Inc. (“Cboe Digital Holdings”) entered into minority interest purchase agreements with certain digital asset industry participants, pursuant to which Cboe Digital Holdings agreed to issue Restricted Common Units in Cboe Digital. Cboe Digital Holdings also entered into a Warrant Agreement to issue Common Units of Cboe Digital in the future. Certain Cboe Digital investor members paid for the Restricted Common Units through the issuance of promissory notes, which are nonrecourse in nature. The issuances of Restricted Common Units are accounted for as in-substance stock options. A certain Cboe Digital investor member paid for the Restricted Common Units in exchange for cash. Expense associated with the Restricted Common Units is recognized as contra-revenue ratably over a five-year period. The Company uses a Black Scholes pricing model to estimate the fair value of the in-substance stock option created by the Restricted Common Units and promissory notes as well as the fair value of the Warrant. Contra-revenue will be recognized while the performance conditions of the Warrant remain probable in conformance with the requirements in ASC 606 – Revenue from Contracts with Customers. Further adjustments will be recognized in each reporting period until performance is complete relating to changes in the fair value of the option and Warrant liabilities in accordance with ASC 718 – Compensation – Stock Compensation. See Note 19 (“Stock-based Compensation”) for additional information. (o) Business Combinations The Company records identifiable assets, liabilities and goodwill acquired in a business combination at fair value at the acquisition date. Additionally, transaction-related costs are expensed in the period incurred. (p) Debt Issuance Costs All costs incurred to issue debt are capitalized as a contra-liability and amortized over the life of the debt using the interest method. (q) Investments The Company generally accounts for investments using the measurement alternative when it owns less than 20% of the outstanding voting stock of a company, there is an absence of readily determinable fair value for the respective investment, and the Company has an inability to exercise significant influence over the investment based upon the respective ownership interests held. The Company recognizes dividend income when declared. In general, the equity method of accounting is used when the Company owns 20% to 50% of the outstanding voting stock of a company and when it is able to exercise significant influence over the operating and financial policies of a company. For equity method investments, the Company records the pro-rata share of earnings or losses each period and records any dividends received as a reduction in the investment balance. The equity method investment is inclusive of other-than-temporary declines in value, recognized by the investee, who considers a variety of factors such as the earnings capacity of the investment and the fair value of the investment compared to its carrying value. If the estimated fair value of the investment is less than the carrying value and the decline in value is considered to be other than temporary, the excess of the carrying value over the estimated fair value is recognized in the financial statements as an impairment. (r) Leases The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, operating leases are included in operating lease right of use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities on the balance sheet as of December 31, 2022. The Company does not have any finance leases as of December 31, 2022. ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. The Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the lease liabilities, as the rate implicit in the Company’s leases are generally not reasonably determinable. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s leases. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. For short-term operating leases, lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet and the Company recognizes lease expense in facilities costs within the consolidated statements of income for these leases on a straight-line basis over the lease term. Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more, and some of which include the Company’s option to terminate the leases within one year . When the implicit rate in the Company’s lease is not reasonably determinable, the Company applies an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. (s) Margin Deposits and Clearing Funds Margin deposits and clearing funds in the form of cash contributions by Cboe Clear Europe’s clearing participants where title has transferred to Cboe Clear Europe are included as current assets with equal and offsetting current liabilities in the consolidated balance sheet. These margin deposits and clearing funds are deposited with De Nederlandsche Bank (“DNB”), can only be used for specified Cboe Clear Europe operations, and fluctuate over time due to changes in deposit requirements. Certain non-cash margin deposits and clearing fund deposits, as well as interoperability fund deposits, are not reflected in the accompanying consolidated balance sheet, as Cboe Clear Europe does not take economic ownership of these balances. Cash held as margin deposits and clearing fund deposits may be invested at an approved bank in accordance with Cboe Clear Europe’s investment policy, and any interest or gain received, or loss incurred on invested funds is recorded in other revenue in the consolidated statements of income. Cboe Clear Digital clears cryptocurrencies from 51 U.S. jurisdictions authorized by license or not subject to licensing. Cboe Clear Digital performs a guarantee function whereby Cboe Clear Digital helps to ensure that the obligations of the transactions it clears are fulfilled. Cboe Clear Digital attempts to mitigate this risk by performing internal compliance and due diligence procedures as well as implementing internal risk controls. Cboe Clear Digital 's due diligence procedures include review of the personal and corporate information, financial position of the member participant, and monitoring of Cboe Clear Digital's risk exposure thresholds. (t) Digital Assets Held The Company determined that digital assets held should be accounted for under ASC 350 – Intangibles – Goodwill and Other, and included on the consolidated balance sheets within intangibles, net. As there is no inherent limit imposed on the useful life of the digital assets, they are classified as indefinite lived intangible assets and are not subject to amortization. Instead, they must be tested for impairment annually or more frequently if events or circumstances change that indicate that it’s more likely than not that the asset is impaired (i.e., if an impairment indicator exists). Therefore, the value of digital assets is determined at the date of acquisition and will only be remeasured in the event the Company concludes impairment exists. The Company will not record any increases in value during the period the digital assets are held; the only gains that will be recorded will be upon disposition (if the proceeds exceed the carrying value at the time of the disposition). (u) Digital Assets – Safeguarded Assets and Liabilities In accordance with the SEC issued Staff Accounting Bulletin 121 (“SAB 121”), the Company recorded a safeguard liability with respect to its obligation to safeguard customers’ digital assets along with a corresponding safeguard asset. The safeguard asset and liability are remeasured at fair value on a recurring basis with no impact to the consolidated statement of income. In the event that the Company or its vendors fail to safeguard the customers’ digital assets, any resulting loss will reduce the safeguard asset with a corresponding loss recorded in other expenses in the consolidated statement of income . |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements – Adopted On March 31, 2022, SAB 121 was issued, which sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard digital assets that an entity holds for its platform users. The guidance requires an entity to recognize a liability for the obligation to safeguard the users’ assets and recognize an associated asset for the digital assets held for users. Both the liability and asset will be measured initially and subsequently at the fair value of the digital assets being safeguarded. The guidance also requires additional disclosures related to the nature and amount of digital assets held on behalf of its platform users, with separate disclosure for each significant digital asset, and the vulnerabilities the entity has due to any concentration in such activities. The guidance, effective for interim or annual periods ending after June 15, 2022, was adopted by the Company as of June 30, 2022. As a result of adopting SAB 121 , the Company recorded digital assets - safeguarded assets, with corresponding digital assets - safeguarded liabilities of $22.4 million, respectively, as of June 30, 2022, with no impact to the consolidated statements of income and cash flows. Recent Accounting Pronouncements – Issued, not yet Adopted There were no applicable material accounting pronouncements that have been issued, but were not yet adopted as of December 31, 2022. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 4. REVENUE RECOGNITION The Company’s main types of revenue contracts consist of the following, which are disaggregated from the consolidated statements of income. ● Transaction and clearing fees - Transaction fees represent fees charged by the Company for meeting the point-in-time performance obligation of executing a trade on its markets. These fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Transaction fees are recognized across all segments. Clearing fees, which include settlement fees, represent fees charged by the Company for meeting the point-in-time performance obligation for transactions cleared and settled by Cboe Clear Europe and Cboe Clear Digital, LLC (formerly Eris Clearing), the derivatives clearing organization for Cboe Digital. Clearing fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Clearing fees are recognized in the Europe and Asia Pacific and Digital segments. Transaction and clearing fees, as well as any tiered volume discounts, are calculated and billed monthly in accordance with the Company’s published fee schedules. ● Access and capacity fees - Access and capacity fees represent fees assessed for the opportunity to trade, including fees for trading-related functionality across all segments, terminal and other equipment rights, maintenance services, trading floor space and telecommunications services. Facilities, systems services and other fees are generally monthly fee-based. These fees are billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the performance obligations are met. All access and capacity fees associated with the trading floor are recognized over time in the Options segment, as the performance obligations are met. ● Market data fees - Market data fees represent the fees received by the Company from the U.S. tape plans and fees charged to customers for proprietary market data. Fees from the U.S. tape plans are collected monthly based on published fee schedules and distributed quarterly to the Exchanges based on a known formula. A contract for proprietary market data is entered into and charged on a monthly basis in accordance with the Company’s published fee schedules as the service is provided. Proprietary market data also includes revenue from various licensing agreements that were previously classified as other revenue prior to January 1, 2022. For the years ended December 31, 2021 and 2020, licensing revenue, which accounted for approximately $12.4 million and $13.1 million, respectively, was not retroactively reclassified to market data fees in the statements of income presented in this Form 10-K. Both types of market data are satisfied over time, and revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the Company provides the data to meet its performance obligation. U.S. tape plan market data is recognized in the North American Equities and Options segments. Proprietary market data fees are recognized across all segments. ● Regulatory fees - There are two types of regulatory fees that the Company recognizes. The first type represents fees collected by the Company to cover the Section 31 fees charged to the Exchanges by the SEC for meeting the point-in-time performance obligation of executing a trade on its markets. The fees charged to customers are based on the fee set by the SEC per notional value of U.S. Equities exchange transactions and per round turn of Options transactions executed on the Company’s U.S. securities markets. These fees are calculated and billed monthly and are recognized in the North American Equities and Options segments. As the Exchanges are responsible for the ultimate payment to the SEC, the Exchanges are considered the principal in these transactions. Regulatory fees also include the options regulatory fee (“ORF”) which supports the Company’s regulatory oversight function in the Options segment, along with other miscellaneous regulatory fees, and neither can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the performance obligation is fulfilled. ● Other revenue - Other revenue primarily includes interest income from clearing operations, all fees related to the trade reporting facility operated in the Europe and Asia Pacific segment, listing fees, and revenue associated with advertisements through the Company’s websites. All revenue recognized in the consolidated statements of income is considered to be revenue from contracts with customers, with the exception of interest income from clearing operations. The following table depicts the disaggregated revenue contract types listed above within each respective financial statement caption in the consolidated statements of income (in millions): Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Year Ended December 31, 2022 Transaction and clearing fees $ 1,375.5 $ — $ 1,563.3 $ 2,938.8 Access and capacity fees — 324.2 — 324.2 Market data fees 80.3 168.7 33.2 282.2 Regulatory fees 280.2 — 84.5 364.7 Other revenue 41.6 4.1 2.9 48.6 $ 1,777.6 $ 497.0 $ 1,683.9 $ 3,958.5 Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Year Ended December 31, 2021 Transaction and clearing fees $ 1,366.5 $ — $ 1,326.6 $ 2,693.1 Access and capacity fees — 280.7 — 280.7 Market data fees 91.6 130.0 30.5 252.1 Regulatory fees 161.6 — 46.7 208.3 Other revenue 40.8 17.0 2.8 60.6 $ 1,660.5 $ 427.7 $ 1,406.6 $ 3,494.8 Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Year Ended December 31, 2020 Transaction and clearing fees $ 1,287.2 $ — $ 1,130.8 $ 2,418.0 Access and capacity fees — 236.7 — 236.7 Market data fees 98.6 105.0 28.4 232.0 Regulatory fees 416.9 — 83.3 500.2 Other revenue 17.4 18.8 4.0 40.2 $ 1,820.1 $ 360.5 $ 1,246.5 $ 3,427.1 The following table depicts the disaggregation of revenue according to segment (in millions): North Corporate American Europe and Items and Options Equities Asia Pacific Futures Global FX Digital Eliminations Total Year Ended December 31, 2022 Transaction and clearing fees $ 1,471.7 $ 1,155.3 $ 161.9 $ 91.6 $ 58.0 $ 0.3 $ — $ 2,938.8 Access and capacity fees 151.7 109.3 34.0 19.9 9.3 — — 324.2 Market data fees 108.7 131.2 33.1 8.0 1.2 — — 282.2 Regulatory fees 84.2 280.2 — 0.3 — — — 364.7 Other revenue 6.9 5.7 35.6 — 0.4 — — 48.6 $ 1,823.2 $ 1,681.7 $ 264.6 $ 119.8 $ 68.9 $ 0.3 $ — $ 3,958.5 Timing of revenue recognition Services transferred at a point in time $ 1,562.8 $ 1,441.2 $ 197.5 $ 91.9 $ 58.4 $ 0.3 $ — $ 3,352.1 Services transferred over time 260.4 240.5 67.1 27.9 10.5 — — 606.4 $ 1,823.2 $ 1,681.7 $ 264.6 $ 119.8 $ 68.9 $ 0.3 $ — $ 3,958.5 Year Ended December 31, 2021 Transaction and clearing fees $ 1,231.2 $ 1,173.1 $ 145.3 $ 95.2 $ 48.3 $ — $ — $ 2,693.1 Access and capacity fees 124.0 98.0 31.2 18.7 8.8 — — 280.7 Market data fees 84.3 134.6 25.6 6.6 1.0 — — 252.1 Regulatory fees 46.6 161.6 — 0.1 — — — 208.3 Other revenue 18.9 3.2 38.2 — — — 0.3 60.6 $ 1,505.0 $ 1,570.5 $ 240.3 $ 120.6 $ 58.1 $ — $ 0.3 $ 3,494.8 Timing of revenue recognition Services transferred at a point in time $ 1,296.7 $ 1,337.9 $ 183.5 $ 95.3 $ 48.3 $ — $ 0.3 $ 2,962.0 Services transferred over time 208.3 232.6 56.8 25.3 9.8 — — 532.8 $ 1,505.0 $ 1,570.5 $ 240.3 $ 120.6 $ 58.1 $ — $ 0.3 $ 3,494.8 Year Ended December 31, 2020 Transaction and clearing fees $ 1,046.3 $ 1,147.2 $ 90.9 $ 84.5 $ 49.1 $ — $ — $ 2,418.0 Access and capacity fees 107.0 84.2 20.6 17.0 7.9 — — 236.7 Market data fees 74.2 137.0 13.4 6.6 0.8 — — 232.0 Regulatory fees 83.4 416.8 — — — — — 500.2 Other revenue 19.2 4.3 15.6 1.1 — — — 40.2 $ 1,330.1 $ 1,789.5 $ 140.5 $ 109.2 $ 57.8 $ — $ — $ 3,427.1 Timing of revenue recognition Services transferred at a point in time $ 1,148.9 $ 1,568.3 $ 106.5 $ 85.6 $ 49.1 $ — $ — $ 2,958.4 Services transferred over time 181.2 221.2 34.0 23.6 8.7 — — 468.7 $ 1,330.1 $ 1,789.5 $ 140.5 $ 109.2 $ 57.8 $ — $ — $ 3,427.1 Contract liabilities as of December 31, 2022 primarily represent prepayments of transaction fees and certain access and capacity and market data fees to the Exchanges. The revenue recognized from contract liabilities and the remaining balance is shown below (in millions): Balance at Cash Revenue Balance at December 31, 2021 Additions Recognized December 31, 2022 Liquidity provider sliding scale (1) $ — $ 7.2 $ (7.2) $ — Other, net 15.3 16.5 (20.1) 11.7 Total deferred revenue $ 15.3 $ 23.7 $ (27.3) $ 11.7 (1) Liquidity providers are eligible to participate in the sliding scale program, which involves prepayment of transaction fees, and to receive reduced fees based on the achievement of certain volume thresholds within a calendar month. These transaction fees are amortized and recorded ratably as the transactions occur over the period . |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | 5. ACQUISITIONS On July 1, 2021, the Company purchased Chi-X, whose wholly-owned subsidiary Chi-X Asia Pacific Holdings Limited was subsequently rebranded to Cboe Asia Pacific. Cboe Asia Pacific is a holding company of alternative market operators and providers of market solutions, which is included in the Company’s Europe and Asia Pacific segment. The acquisition of Chi-X provided the Company with a single point of entry into two key capital markets, Australia and Japan, to help enable it to expand its global equities and market data business into Asia Pacific, bring other products and services to the region, and further expand access to its proprietary product suite in the region. Of the acquisition’s purchase price, $137.0 million was allocated to goodwill, $73.8 million was allocated to intangible assets, $25.7 million was allocated to working capital, and $53.0 million in contingent consideration, which is based on developmental milestones of the acquired business. See below for further discussion of intangible assets acquired. On May 2, 2022, the Company purchased ErisX, which was subsequently rebranded to Cboe Digital. Cboe Digital operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. Ownership of Cboe Digital allows the Company to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency. Eris Innovations Holdings, LLC (formerly Eris Exchange Holdings, LLC) was not a part of this transaction and the Company retains its minority equity ownership interest in Eris Innovations Holdings, LLC. Of the acquisition’s purchase price, $460.9 million was allocated to goodwill, $95.0 million was allocated to intangible assets, and $8.4 million was allocated to working capital. Prior to signing the acquisition agreement, the Company held a minority investment in ErisX. As a result of the acquisition of the remaining portion of ErisX, the Company recognized a $7.5 million gain, reflecting the change in fair value of the minority investment in ErisX as a result of the acquisition, which is included in other (expense) income, net in the consolidated statement of income. Adjustments to the provisional values may occur before the end of the measurement period, a period not to exceed 12 months from the acquisition date, which may include tax and other estimates which will be recorded in the reporting period that the adjustment amounts are determined. See below for further discussion of intangible assets acquired. Additionally, the Company performed impairment testing during the year ended December 31, 2022, as there were market events that indicated it was more likely than not that these assets were impaired, resulting in the recognition of impairment charges to goodwill. See Note 10 (“Goodwill, Intangible Assets, net, and Digital Assets Held”) for more information on the impairments. On June 1, 2022, the Company purchased NEO. NEO is a fintech organization that is comprised of a fully registered Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equities trading and a non-listed securities distribution platform. With ownership of NEO, the Company expects to further grow Canada as a hub for global equities trading, in addition to MATCHNow, the ATS acquired by the Company in 2020. As of December 31, 2022, the allocation of purchase price includes adjustments within the measurement period resulting in a decrease to intangible assets, an increase in net working capital and a reduction in contingent consideration. See the table below for more information about the adjustments made to the NEO purchase price allocation. Additional adjustments to the provisional values may occur before the end of the measurement period, a period not to exceed 12 months from the acquisition date, which may include tax and other estimates which will be recorded in the reporting period that the adjustment amounts are determined. See below for further discussion of intangible assets acquired and Note 15 (“Fair Value Measurement”) for the impact of the allocation adjustments on the Company’s financial liabilities. The following table presents the details of the adjustments made to the initial purchase price allocation for the NEO acquisition during the year ended December 31, 2022 (in millions) : Initial purchase Total Adjusted purchase price allocation adjustments price allocation Goodwill $ 132.4 $ 0.2 $ 132.6 Intangible assets 130.1 (61.0) 69.1 Net working capital (6.9) 16.6 9.7 Contingent consideration (54.3) 44.2 (10.1) The following table presents the details of intangible assets as of the acquisition date, inclusive of purchase price adjustments outlined above (in millions, except as stated). All acquired intangible assets with finite lives are amortized using the straight-line method. Cboe Asia Pacific Useful Life (Years) Cboe Digital Useful Life (Years) NEO Useful Life (Years) Trading registrations and licenses $ 6.2 Indefinite $ 25.0 Indefinite $ 15.1 Indefinite Customer relationships 60.1 30 — 37.4 15 Technology 7.5 2 70.0 10 16.2 7 Trademarks and tradenames — — 0.4 5 Total identifiable intangible assets $ 73.8 $ 95.0 $ 69.1 Acquisition-related costs relate to acquisitions and other strategic opportunities. The Company expensed $19.9 million of acquisition-related costs during the year ended December 31, 2022, all of which related to professional fees and other expenses. These acquisition-related expenses are included in acquisition-related costs in the consolidated statements of income. The Company expensed $15.6 million of acquisition-related costs during the year ended December 31, 2021, which primarily included $15.0 million of professional fees, and $0.6 million of impairment charges related to facilities. These acquisition-related expenses are included in acquisition-related costs in the consolidated statements of income. The Company expensed $45.3 million of acquisition-related costs during the year ended December 31, 2020 that included $22.1 million of professional fees, $15.1 million of impairment charges related to investments, and other expenses and $8.1 million of impairment charges related to facilities. These acquisition-related expenses are included in acquisition-related costs in the consolidated statements of income. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS | |
INVESTMENTS | 6. INVESTMENTS As of December 31, 2022 and 2021, the Company's investments were comprised of the following (in millions) : As of December 31, 2022 2021 Equity method investments: Investment in 7Ridge Investments 3 LP $ 215.4 $ 209.5 Total equity method investments 215.4 209.5 Other equity investments: Investment in Eris Innovations Holdings, LLC 20.0 20.0 Investment in CSD Br 5.9 — Investment in Coin Metrics Inc. 5.0 — Investment in Cboe Vest Financial Group, Inc. 2.9 2.9 Investment in Effective Investing Limited 1.8 — Investment in OCC 0.3 0.3 Investment in American Financial Exchange, LLC — 10.6 Investment in Eris Digital Holdings, LLC — 1.1 Other equity investments 1.9 1.4 Total other equity investments 37.8 36.3 Total investments $ 253.2 $ 245.8 Equity Method Investments The Company’s investment in the 7Ridge Fund, represents a nonconsolidated variable interest entity (“VIE”). The Company has determined that consolidation of the VIE is not required as the Company is not the primary beneficiary of the 7Ridge Fund, as it does not have controlling financial interest and lacks the ability to unilaterally remove the general partner, 7Ridge Investments 3 GP Limited, direct material strategic decisions, or dissolve the entity (i.e. the Company does not have unilateral substantive “kick-out” or “liquidation” rights). The Company’s interest in the 7Ridge Fund is equal to the carrying value of the investment as of December 31, 2022, or $215.4 million, which includes periodic capital contributions to the 7Ridge Fund, as well as the Company’s share of 7Ridge Fund’s profit or loss, including gains or losses arising from the fair value measurement of the investment held by the 7Ridge Fund, booked against the investment account. The carrying value of the investment is included in investments within the consolidated balance sheets. The Company’s maximum loss exposure, in the unlikely event that all of the VIE’s assets become worthless, is limited to the carrying value of Company’s investment. Other Equity Investments In May 2020, Eris Innovations Holdings, LLC (formerly 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. On October 19, 2021, the Company entered into an agreement to acquire all of the outstanding equity interests of Eris Digital Holdings, LLC. However, Innovations Holdings, LLC is not a part of this transaction and the Company retains its minority equity ownership interest in Eris Innovations Holdings, LLC. On September 21, 2021, CurveGlobal Limited (“CurveGlobal”), a minority investment of the Company included within other equity investments, announced plans to wind down the company in January 2022. The Company concluded that the remaining investment in CurveGlobal had no future economic value, and thus, wrote off the investment as of September 30, 2021. CurveGlobal ceased operations on January 28, 2022. The loss related to the write-off was included within other (expense) income, net in the consolidated statements of income. In the second quarter of 2022, the Company invested $5.0 million in a funding raise by Coin Metrics, Inc., a digital asset intelligence and crypto data startup, $5.9 million in a funding raise by CSD Br, a Brazilian bank and financial intermediary, and completed the purchase of ErisX, which was subsequently rebranded to Cboe Digital. Eris Innovations Holdings, LLC was not a part of this transaction and the Company retains its minority equity ownership interest in Eris Innovations Holdings, LLC. See Note 5 (“Acquisitions”) for more information. In the third quarter of 2022, the Company invested $1.8 million in a funding raise by Effective Investing Limited, an emerging global sustainability data provider measuring the social and environmental impact of companies and investment portfolios. In the fourth quarter of 2022 the Company invested an additional $0.1 million in a funding raise by StratiFi Technologies, Inc, a risk management platform that provides a one-stop-shop solution for portfolio risk analysis. The Company previously held a minority stake in StratiFi and the funding raise allowed the Company to maintain it’s current investment percentage. The carrying value of other equity investments is included in investments in the consolidated balance sheets. The Company accounts for these investments using the measurement alternative given the absence of readily determinable fair values for the respective investments and due to the Company’s inability to exercise significant influence over the investments based upon the respective ownership interests held. As of December 31, 2022, other equity investments primarily consist of minority investments in Eris Innovations Holdings, LLC, CSD Br, Coin Metrics Inc., Cboe Vest Financial Group, Inc, Effective Investing Limited, StratiFi Technologies, Inc. and a 20% investment in OCC. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 7. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, December 31, 2022 2021 Construction in progress $ 7.7 $ 17.3 Building 68.8 68.8 Furniture and equipment 291.3 256.5 Total property and equipment 367.8 342.6 Less accumulated depreciation (259.6) (237.4) Property and equipment, net $ 108.2 $ 105.2 Depreciation expense using the straight-line method was $35.3 million, $33.5 million and $26.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. As a result of the Merger, there was a reduction in employee workspace needed in Chicago, which led to the decision to market for sale the former headquarters location. The Company classified the associated land, building, and certain furniture and equipment of the former headquarters location as held for sale, performed an impairment assessment, and ceased depreciation effective May 1, 2019, as the Company anticipated selling the property held for sale in less than twelve months. However, due to the time elapsed since active marketing for sale of the building commenced, the Company reclassified the property to held and used, effective May 1, 2021, and the building was once again subject to depreciation. On April 28, 2022, the Company signed a non-binding letter of intent with an entity interested in purchasing the property, though in the quarter ended September 30, 2022, negotiations with this entity were terminated. The Company has continued discussions with other potential buyers. At this time, the Company has no indications that the property’s classification or carrying value needs to be updated as of December 31, 2022. The property is subject to depreciation as of December 31, 2022. The total value of the property classified as property held and used was $9.8 million, which includes $2.3 million of land and $7.5 million of property and equipment, net on the consolidated balance sheet as of December 31, 2022. |
CREDIT LOSSES
CREDIT LOSSES | 12 Months Ended |
Dec. 31, 2022 | |
CREDIT LOSSES | |
CREDIT LOSSES | 8. CREDIT LOSSES Current expected credit losses are estimated for accounts receivable and certain notes receivable. The notes receivable included within other assets, net on the consolidated balance sheets primarily relate to the consolidated audit trail (“CAT”), which involves the creation of an audit trail that strives to enhance regulators’ ability to monitor trading activity in the U.S. markets through a phased implementation. The funding of the CAT is ultimately expected to be provided by both self-regulatory organizations (“SROs”) (which includes the Exchanges) and industry members; however, the funding to date has solely been provided by the SROs in exchange for promissory notes, a portion of which are expected to be repaid once fee filings and plan amendments associated with a funding model are approved by the SEC and such industry member fees are collected by the Consolidated Audit Trail, LLC pursuant to the CAT funding model. Until those fees are collected and remitted, the SROs may continue to incur additional significant costs, including additional promissory notes to fund CAT operations. The allowance for notes receivable credit losses associated with the CAT is calculated using a probability of default methodology that is primarily based on various potential outcomes of the funding model proposals being discussed with the SEC. Accounts receivable represent amounts due from the Company’s member firms. The allowance for accounts receivable credit losses is calculated using an aging schedule. The following represents the changes in allowance for credit losses during the years ended December 31, 2022 and 2021 (in millions): Balance at December 31, 2021 Current period provision for expected credit losses Write-offs charged against the allowance Recoveries collected Balance at December 31, 2022 Allowance for notes receivable credit losses $ 30.1 $ — $ — $ — $ 30.1 Allowance for accounts receivable credit losses 1.0 1.6 (0.1) (0.3) 2.2 Total allowance for credit losses $ 31.1 $ 1.6 $ (0.1) $ (0.3) $ 32.3 Balance at December 31, 2020 Current period provision for expected credit losses Write-offs charged against the allowance Recoveries collected Balance at December 31, 2021 Allowance for notes receivable credit losses $ 30.1 $ — $ — $ — $ 30.1 Allowance for accounts receivable credit losses 0.6 0.7 (0.3) — 1.0 Total allowance for credit losses $ 30.7 $ 0.7 $ (0.3) $ — $ 31.1 |
OTHER ASSETS, NET
OTHER ASSETS, NET | 12 Months Ended |
Dec. 31, 2022 | |
OTHER ASSETS, NET | |
OTHER ASSETS, NET | 9. OTHER ASSETS, NET Other assets, net consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, December 31, 2022 2021 Software development work in progress $ 8.9 $ 5.6 Data processing software 124.2 103.8 Less accumulated depreciation and amortization (78.8) (70.9) Data processing software, net 54.3 38.5 Other assets (1) 127.6 87.3 Other assets, net $ 181.9 $ 125.8 (1) At December 31, 2022 and December 31, 2021, the majority of the balance included long-term prepaid assets and notes receivable. See Note 8 (“Credit Losses”) for more information on the notes receivable included within other assets, net on the consolidated balance sheets. As of December 31, 2022 and December 31, 2021, the notes receivable, net balance was $102.9 million and $79.3 million, respectively. At December 31, 2022, a contra-revenue asset totaling $19.9 million, which arose from the issuance of Cboe Digital Restricted Common Units and Warrants, is included in other assets, net. The issuance of Cboe Digital Restricted Common Units and Warrants is described in Note 19 (“Stock-based Compensation”). Amortization expense related to data processing software was $7.2 million, $7.3 million, and $6.9 million for the years ended December 31, 2022, 2021, and 2020, respectively . |
GOODWILL, INTANGIBLE ASSETS, NE
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD | |
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD | 10. GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD The following table presents the details of goodwill by segment (in millions) : North American Europe and Options Equities Asia Pacific Global FX Digital Total Balance as of December 31, 2020 $ 305.8 $ 1,877.3 $ 444.8 $ 267.2 $ — $ 2,895.1 Adjustment — (0.5) (0.4) — — (0.9) Additions — — 134.0 — — 134.0 Changes in foreign currency exchange rates — 0.1 (2.9) — — (2.8) Balance as of December 31, 2021 $ 305.8 $ 1,876.9 $ 575.5 $ 267.2 $ — $ 3,025.4 Adjustment — 0.2 3.4 — 0.8 4.4 Additions — 132.4 — — 460.1 592.5 Impairment — — — — (460.9) (460.9) Changes in foreign currency exchange rates — (8.7) (29.9) — — (38.6) Balance as of December 31, 2022 $ 305.8 $ 2,000.8 $ 549.0 $ 267.2 $ — $ 3,122.8 Goodwill has been allocated to specific reporting units for purposes of impairment testing - Options, North American Equities, Europe and Asia Pacific, Global FX, and Digital. 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. Following the acquisition of Cboe Digital, which closed on May 2, 2022, in the quarter ended June 30, 2022, negative events and trends in the broader digital asset environment emerged, such as deleveraging and bankruptcies, and certain negative trends in the broader digital asset environment that started in late 2021 intensified, such as the decline in digital asset prices, overall market activity, and market capitalization. Additionally, following the acquisition of Cboe Digital, the efforts to syndicate minority ownership interests in Cboe Digital to potential investors during the quarter ended June 30, 2022 became more challenging, and the outlook for the Digital segment’s future market growth was negatively impacted. The Company considered these developments, in particular the syndication efforts during the quarter ended June 30, 2022, to be potential indications of impairment and performed an interim impairment test for the goodwill recognized in the Digital reporting unit during the quarter ended June 30, 2022. The Company concluded that the carrying value of the reporting unit exceeded its estimated fair value, which considered both market and income approaches, and recorded a goodwill impairment charge of $460.1 million in the consolidated statements of income during the quarter ended June 30, 2022, and also recognized a deferred tax asset of $116.2 million. This deferred tax asset, resulting from the excess of tax-deductible goodwill over book goodwill, relates to future tax deductions the Company expects to realize to reduce potential tax payments on future income. As a result, the carrying value of Cboe Digital decreased by $343.9 million, to $220.0 million as of June 30, 2022. The Company also performed an impairment assessment over the intangible assets recognized as a result of the Cboe Digital acquisition during the quarter ended June 30, 2022, and based on the results of the assessments, determined there was no impairment required as the fair value approximated the carrying value. No other long lived assets were recognized as a result of the acquisition. As a result of the finalization of the net working capital calculation associated with the acquisition of Cboe Digital during the quarter ended September 30, 2022, the Company recorded additional goodwill of $0.8 million. Subsequently, the Company concluded that the indicators of impairment outlined in the previous paragraph continued to be relevant and recorded an additional goodwill impairment charge of $0.8 million in the consolidated statements of income for the three months ended September 30, 2022. The Company determined there were no further impairment indicators for the year ended December 31, 2022. The following table presents the details of the intangible assets by segment (in millions): North American Europe and Options Equities Asia Pacific Global FX Digital Total Balance as of December 31, 2020 $ 173.4 $ 1,055.5 $ 386.8 $ 113.3 $ — $ 1,729.0 Additions — — 73.8 — — 73.8 Amortization (14.3) (64.4) (26.3) (21.6) — (126.6) Changes in foreign currency exchange rates — 0.3 (7.9) — — (7.6) Balance as of December 31, 2021 $ 159.1 $ 991.4 $ 426.4 $ 91.7 $ — $ 1,668.6 Adjustments — (61.0) — — — (61.0) Additions — 130.1 — — 95.9 226.0 Amortization (13.0) (62.1) (25.6) (18.9) (4.7) (124.3) Changes in foreign currency exchange rates — (5.6) (40.9) — — (46.5) Balance as of December 31, 2022 $ 146.1 $ 992.8 $ 359.9 $ 72.8 $ 91.2 $ 1,662.8 For the years ended December 31, 2022, 2021 and 2020, amortization expense was $124.3 million, $126.6 million and $124.8 million, respectively. The estimated future amortization expense is $115.7 million for 2023, $92.5 million for 2024, $76.1 million for 2025, $68.9 million for 2026, and $62.2 million for 2027. The following tables present the categories of intangible assets by segment as of December 31, 2022 and 2021 (in millions, except as stated): Weighted December 31, 2022 Average North American Europe and Amortization Options Equities Asia Pacific Global FX Digital Period (in years) Trading registrations and licenses $ 95.5 $ 605.3 $ 199.5 $ — $ 25.0 Indefinite Customer relationships 46.6 412.8 208.9 140.0 — 16 Market data customer relationships 53.6 322.0 58.4 64.4 — 9 Technology 28.1 56.4 32.8 22.5 70.0 8 Trademarks and tradenames 12.9 8.2 2.3 1.2 — 7 Digital assets held — — — — 0.9 Indefinite Accumulated amortization (90.6) (411.9) (142.0) (155.3) (4.7) $ 146.1 $ 992.8 $ 359.9 $ 72.8 $ 91.2 Weighted December 31, 2021 Average North American Europe and Amortization Options Equities Asia Pacific Global FX Digital Period (in years) Trading registrations and licenses $ 95.5 $ 592.0 $ 221.1 $ — $ — Indefinite Customer relationships 46.6 378.3 232.3 140.0 — 17 Market data customer relationships 53.6 322.0 65.2 64.4 — 10 Technology 28.1 41.1 35.6 22.5 — 5 Trademarks and tradenames 12.9 7.8 2.5 1.2 — 8 Accumulated amortization (77.6) (349.8) (130.3) (136.4) — $ 159.1 $ 991.4 $ 426.4 $ 91.7 $ — Cboe Digital holds customer digital assets in customer accounts, referred to as wallets, either through a third-party custodian, a licensed trust company, or in separate and distinct wallets managed by Cboe Digital. Cboe Digital, together with its third-party custodian, is directly responsible for securing customers’ crypto assets and protecting them from loss or theft. Customer digital assets are held in omnibus wallets for the benefit of customers of Cboe Digital and Cboe Digital maintains the records of the amount and type of digital asset owned by each of its customers in omnibus wallets. The amount of customer digital assets held by Cboe Digital is reflected within digital assets – safeguarded assets and digital assets – safeguarded liabilities in the consolidated balance sheets. In addition, Cboe Digital maintains an immaterial amount of its own digital assets to facilitate customer trading. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, 2022 December 31, 2021 Compensation and benefit-related liabilities $ 90.2 $ 68.6 Royalties 33.3 23.0 Accrued liabilities 87.7 73.3 Rebates payable 75.2 95.3 Marketing fee payable 15.9 15.7 Tax reserves 90.4 — Accounts payable 27.5 19.5 Total accounts payable and accrued liabilities $ 420.2 $ 295.4 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
DEBT | 12. DEBT The Company’s debt consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, 2022 December 31, 2021 Term Loan Agreement due December 2023, floating rate $ 304.7 $ 159.5 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 647.3 646.5 $500 million fixed rate Senior Notes due December 2030, stated rate of 1.625% 494.0 493.3 $300 million fixed rate Senior Notes due March 2032, stated rate of 3.000% 296.0 — Revolving Credit Agreement — — Cboe Clear Europe Credit Facility — — Total debt $ 1,742.0 $ 1,299.3 As described below in further detail, on April 29, 2022 and May 31, 2022, the Company borrowed $190 million and $175 million, respectively, under the Term Loan Agreement (as defined below), in order to fund portions of the acquisitions of ErisX, which was subsequently rebranded to Cboe Digital, and NEO. On March 16, 2022, the Company issued $300 million, in aggregate principal amount, of the Company’s fixed rate Senior Notes due March 2032 in order to partially fund its acquisition of Cboe Digital. As described below in further detail the Company repaid outstanding indebtedness under the Term Loan Agreement totaling $220 million during the year ended December 31, 2022. Term Loan Agreement On March 22, 2018, the Company entered into a Term Loan Credit Agreement (the “Term Loan Agreement”). The Term Loan Agreement matures on December 15, 2023 and initially provided for a senior unsecured term loan facility in an aggregate principal amount of $300 million, which amount was later increased to allow for an additional draw of $110 million on June 25, 2021 in order to fund a portion of the acquisition of Cboe Asia Pacific (formerly Chi-X Asia Pacific Holdings Limited) and was increased on March 29, 2022 to allow for additional delayed draws of $190 million on April 29, 2022 to fund a portion of the Cboe Digital (formerly ErisX) acquisition, and $175 million on May 31, 2022 to fund a portion of the NEO acquisition. On each of August 25, 2022 and September 22, 2022, the Company repaid $50 million, respectively , of outstanding indebtedness under the Term Loan Agreement, and on each of November 1, 2022, December 1, 2022, and December 27, 2022, the Company repaid $40 million, $50 million, and $30 million, respectively, of outstanding indebtedness under the Term Loan Agreement totaling $220 million repaid during the year ended December 31, 2022. Loans under the Term Loan Agreement bear interest, at the Company’s option, at either (i) the Secured Overnight Financing Rate (“SOFR”) as administered by the Federal Reserve Bank of New York (or a successor administrator) plus a margin of 0.65 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 SOFR) plus a margin of 0.50 percent per annum. The Term Loan 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 lenders thereunder. The negative covenants include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants require the Company to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00; provided that the consolidated leverage ratio may, subject to certain triggering events set forth in the Term Loan Agreement, be increased to 4.25 to 1.00 or 4.00 to 1.00 (from 3.50 to 1.00) for four consecutive fiscal quarters following certain acquisitions, provided this increase may be made only once and at the time it exercises such financial covenant step-up, the Company shall be exercising a like step-up under its revolving credit facility. At December 31, 2022, the Company was in compliance with these covenants and did not exercise financial covenant step-up. Senior Notes On January 12, 2017, the Company entered into an indenture (the “Indenture”), by and between the Company and Computershare Trust Company, N.A. (as successor to Wells Fargo Bank, National Association), as trustee, in connection with the issuance of $650 million aggregate principal amount of the Company’s 3.650% Senior Notes due 2027 (“ 3.650% Senior Notes”). The form and terms of the 3.650% Senior Notes were established pursuant to an Officer’s Certificate, dated as of January 12, 2017, supplementing the Indenture. The Company used a portion of the net proceeds from the 3.650% Senior Notes to fund, in part, the Merger, including the payment of related fees and expenses and the repayment of Bats’ existing indebtedness, and the remainder for general corporate purposes. The 3.650% Senior Notes mature on January 12, 2027 and bear interest at the rate of 3.650% per annum, payable semi-annually in arrears on January 12 and July 12 of each year, commencing July 12, 2017. On December 15, 2020, the Company issued $500 million aggregate principal amount of 1.625% Senior Notes due 2030 (" 1.625% Senior Notes"). The form and terms of the 1.625% Senior Notes were established pursuant to an Officer’s Certificate, dated as of December 15, 2020, supplementing the Indenture. The Company used the net proceeds from the 1.625% Senior Notes to finance the acquisition of BIDS Trading, repay a portion of amounts outstanding under the term loan facility and all outstanding indebtedness under the revolving credit facility and the remainder for general corporate purposes, which may include the financing of future acquisitions or the repayment of other outstanding indebtedness. The 1.625% Senior Notes mature on December 15, 2030 and bear interest at the rate of 1.625% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2021. On March 16, 2022, the Company issued $300 million aggregate principal amount of 3.000% Senior Notes due 2032 (“ 3.000% Senior Notes” and, together with the 1.625% Senior Notes and the 3.650% Senior Notes, the “Senior Notes”). The form and terms of the of the 3.000% Senior Notes were established pursuant to an Officer’s Certificate, dated as of March 16, 2022, supplementing the Indenture. The Company used the net proceeds from the 3.000% Senior Notes, together with cash on hand, and the proceeds of additional borrowings, to partially fund its acquisition of ErisX, which was subsequently rebranded to Cboe Digital. The 3.000% Senior Notes mature on March 16, 2032 and bear interest at the rate of 3.000% per annum, payable semi-annually in arrears on March 16 and September 16 of each year, commencing September 16, 2022. The Senior Notes are unsecured obligations of the Company and rank equally with all of the Company’s other existing and future unsecured, senior indebtedness, but are effectively junior to the Company’s secured indebtedness, to the extent of the value of the assets securing such indebtedness, and will be structurally subordinated to the secured and unsecured indebtedness of the Company’s subsidiaries. The Company has the option to redeem some or all of the Senior Notes, at any time in whole or from time to time in part, at the redemption prices set forth in the applicable Officer’s Certificate. The Company may also be required to offer to repurchase the Senior Notes upon the occurrence of a Change of Control Triggering Event (as such term is defined in the applicable Officer’s Certificate) at a repurchase price equal to 101 percent of the aggregate principal amount of Senior Notes to be repurchased. Indenture Under the Indenture, the Company may issue debt securities, which includes the Senior Notes, at any time and from time to time, in one or more series without limitation on the aggregate principal amount. The Indenture governing the Senior Notes contains customary restrictions, including a limitation that restricts the Company’s ability and the ability of certain of the Company’s subsidiaries to create or incur secured debt. Such Indenture also limits certain sale and leaseback transactions and contains customary events of default. At December 31, 2022, the Company was in compliance with these covenants. Revolving Credit Agreement On February 25, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the “Revolving Credit Agreement”), which amended and restated the prior revolving credit agreement. The Revolving Credit Agreement provides for a senior unsecured $400 million three-year revolving credit facility (the “Revolving Credit Facility”) that includes a $25 million swing line sub-facility. The Company may also, subject to the agreement of the applicable lenders, increase the commitments under the Revolving Credit Facility by up to $200 million, for a total of $600 million. Subject to specified conditions, the Company may designate one or more of its subsidiaries as additional borrowers under the Revolving Credit Agreement provided that the Company guarantees all borrowings and other obligations of any such subsidiaries under the Revolving Credit Agreement. As of December 31, 2022, no subsidiaries were designated as additional borrowers. Funds borrowed under the Revolving Credit Agreement may be used to fund working capital and for other general corporate purposes, including the making of any acquisitions the Company may pursue in the ordinary course of its business. As of December 31, 2022, no borrowings were outstanding under the Revolving Credit Agreement. Accordingly, at December 31, 2022, $400 million of borrowing capacity was available for the purposes permitted by the Revolving Credit Agreement. Loans under the Revolving Credit Agreement will bear interest, at the Company’s option, at either (i) the Relevant Date (defined herein) plus a margin (based on the Company’s public debt ratings) ranging from 0.75 percent per annum to 1.25 percent per annum or (ii) a daily fluctuating rate based on the administrative agent’s prime rate (subject to certain minimums based upon the federal funds effective rate or Term SOFR), which is subject to a 1 percent floor, plus a margin (based on the Company’s public debt ratings) ranging from zero percent per annum to 0.25 percent per annum. “Relevant Rate” means with respect to any committed borrowing or swingline borrowing denominated in (a) Dollars, Term SOFR plus a spread adjustment of 0.10 percent per annum, (b) Sterling, SONIA plus a spread adjustment of 0.0326 percent per annum and (c) Euros, EURIBOR, as applicable, provided that each Relevant Rate is subject to a 0 percent floor. Subject to certain conditions stated in the Revolving Credit Agreement, the Company and any subsidiaries designated as additional borrowers may borrow, prepay and reborrow amounts under the Revolving Credit Facility at any time during the term of the Revolving Credit Agreement. The Revolving Credit Agreement will terminate and all amounts owing thereunder will be due and payable on February 25, 2027, unless the commitments are terminated earlier, either at the request of the Company or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events). The Revolving Credit Agreement contains customary representations, warranties, and affirmative and negative covenants for facilities of its type, including financial covenants, events of default and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants require the Company to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00; provided that the consolidated leverage ratio may, subject to certain triggering events set forth in the Revolving Credit Agreement, be increased to 4.25 to 1.00 for one occasion and 4.00 to 1.00 on another occasion, in each case, for four consecutive fiscal quarters; provided that, prior to the exercise of the second such financial covenant step-up, the maximum consolidated leverage ratio shall have returned to a level of 3.50 to 1.00 for at least two consecutive fiscal quarters. At December 31, 2022, the Company was in compliance with these covenants and did not exercise financial covenant step-up. Cboe Clear Europe Credit Facility On July 1, 2020, EuroCCP (subsequently rebranded to Cboe Clear Europe), as borrower, the Company, as guarantor, entered into a Facility Agreement (the “Facility” or “Cboe Clear Europe Credit Facility”) with Bank of America Merrill Lynch International Designated Activity Company, as co-ordinator, facility agent, lender, sole lead arranger and sole bookrunner, Citibank N.A., as security agent, and certain other lenders named therein. The Facility was further amended and restated, as described below. The Facility initially provided for a €1.5 billion committed syndicated multicurrency revolving and swingline credit facility (i) that is available to be drawn by Cboe Clear Europe (formerly EuroCCP) (as borrower) towards (a) financing unsettled amounts in connection with the settlement of transactions in securities and other items processed through Cboe Clear Europe’s clearing system and (b) financing any other liability or liquidity requirement of Cboe Clear Europe incurred in the operation of its clearing system and (ii) under which the scheduled interest and fees on borrowings (but not the principal amount of any borrowings) are guaranteed by the Company. Subject to certain conditions, Cboe Clear Europe was initially able to increase the commitments under the Facility by up to €500 million, to a total of €2.0 billion. Borrowings under the Facility are secured by cash, eligible government bonds and eligible equity assets deposited by Cboe Clear Europe into secured accounts. In addition, Cboe Clear Europe must ensure that at all times the aggregate of (a) each clearing participant’s contribution to the relevant clearing fund, (b) each clearing participant’s margin amount and (c) any cash equities purchased using the proceeds of the assets described in (a) and (b), less the amount of any such clearing participant contribution, margin amount or cash equities which have been transferred to (or secured in favor of) any provider of settlement or custody services to Cboe Clear Europe, is not less than €500 million. Initially, borrowings under the Facility’s revolving loans and non-U.S. dollar swingline loans bear interest at the relevant floating base rate plus a margin of 1.75 percent per annum and (subject to certain conditions) borrowings under the Facility’s U.S. dollar swingline loans bear interest as the higher of the relevant agent’s prime commercial lending rate for U.S. dollars and 0.5 percent per annum over the federal funds effective rate. A commitment fee of 0.30 percent per annum is payable on the unused and uncalled amount of the Facility during the availability period. Subject to certain conditions stated in the Facility, Cboe Clear Europe may borrow, prepay and reborrow amounts under the Facility at any time during the term of the Facility. The Facility will terminate and all amounts owing thereunder will be due and payable on 364 days from the date of the agreement, unless the commitments are terminated earlier, either at the request of Cboe Clear Europe or, if an event of default occurs, by the Lenders (or automatically in the case of certain bankruptcy-related events). The Facility contains customary representations, warranties and covenants for facilities of its type, including events of default of the Company and Cboe Clear Europe and indemnification provisions in favor of the Lenders. In particular, the covenants include restrictions regarding the incurrence of liens by Cboe Clear Europe and its subsidiaries, and an event of default will be triggered if Cboe Clear Europe ceases its business, subject to certain exceptions in each case. There is also a requirement for the net worth of (a) the Company to be no less than $1.75 billion on the date of each drawdown and delivery of compliance certificates and (b) Cboe Clear Europe initially to be the higher of €24 million and any such amount required for Cboe Clear Europe to meet minimum liquidity regulations under applicable regulation at all times. On July 1, 2021, the Facility was amended and restated to, among other items: (i) extend the term of the Facility until June 30, 2022; (ii) update benchmark rates for U.S. dollar swingline loans and alternative term rates for revolving loans; (iii) remove references to LIBOR and clarified procedures to calculate interest rates; (iv) reduce the minimum tangible net worth requirement from €24 million to €20 million; (v) include a new tranche in the revolving and swingline facilities to increase access to certain currencies; (vi) update the borrowing base calculations to more accurately reflect the collateral held by Cboe Clear Europe; and (vii) modify certain other provisions to incorporate updates in applicable laws and regulations. On June 30, 2022, the Facility was further amended and restated to, among other items: (i) extend the term of the Facility until June 29, 2023; (ii) lower the interest rate margin from 1.75 percent per annum to 1.60 percent per annum; (iii) revise certain of the representations the Company makes pursuant to the Facility; (iv) increase the minimum tangible net worth requirement from €20 million to €30 million; (v) reduce the aggregate commitment under the Facility from €1.5 billion to €1.25 billion; (vi) reduce the aggregate commitment under the Facility, after the accordion increase, from €2.0 billion to €1.75 billion; and (vii) modify certain other provisions to incorporate updates in applicable laws and regulations. As of December 31, 2022, no borrowings were outstanding under the Facility. Accordingly, at December 31, 2022, €1.25 billion of borrowing capacity was available for the purposes permitted by the Facility. At December 31, 2022, the Company and Cboe Clear Europe were in compliance with applicable covenants. Small Business Administration’s Paycheck Protection Program On May 1, 2020, prior to Cboe’s acquisition of Cboe Digital, Cboe Digital (formerly ErisX) received $1.3 million of proceeds from a loan issued under either the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") under section 7(a)(36) of the Small Business Act or the SBA's Paycheck Protection Program Second Draw Loans under Section 7(a)(37) of the SBA. On May 26, 2022, the PPP loan was forgiven and no further balance is due. Loan and Notes Payments and Contractual Interest The future expected loan repayments related to the Term Loan Agreement and the Senior Notes as of December 31, 2022 are as follows (in millions): 2023 $ 305.0 2024 — 2025 — 2026 — Thereafter 1,450.0 Principal amounts repayable 1,755.0 Debt issuance costs (7.0) Unamortized discounts on notes (6.0) Total debt outstanding $ 1,742.0 Interest expense recognized on the Term Loan Agreement, the Senior Notes, and the Revolving Credit Agreement is included in interest expense, net in the consolidated statements of income. The Company is also obligated to pay commitment fees under the terms of the Revolving Credit Agreement, Term Loan Agreement and Facility, which are also included in interest expense, net. Interest expense, net recognized in the consolidated statements of income for the years ended December 31, 2022, 2021 and 2020 are as follows (in millions): Year Ended Year Ended Year Ended December 31, December 31, December 31, 2022 2021 2020 Components of interest expense: Contractual interest $ 57.6 $ 45.7 $ 35.3 Amortization of debt discount and issuance costs 2.4 2.3 3.4 Interest expense $ 60.0 $ 48.0 $ 38.7 Interest income (3.6) (0.6) (1.1) Interest expense, net $ 56.4 $ 47.4 $ 37.6 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET | 12 Months Ended |
Dec. 31, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET | 13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET The following represents the changes in accumulated other comprehensive income (loss), net by component (in millions): Foreign Currency Unrealized Total Accumulated Other Translation Investment Post-Retirement Comprehensive Adjustment Gain/Loss Benefits Income (Loss), Net Balance at December 31, 2020 $ 74.7 $ (0.1) $ 0.4 $ 75.0 Other comprehensive loss (19.3) — (0.1) (19.4) Balance at December 31, 2021 $ 55.4 $ (0.1) $ 0.3 $ 55.6 Other comprehensive loss (85.6) (0.8) (0.2) (86.6) Balance at December 31, 2022 $ (30.2) $ (0.9) $ 0.1 $ (31.0) |
CLEARING OPERATIONS
CLEARING OPERATIONS | 12 Months Ended |
Dec. 31, 2022 | |
CLEARING OPERATIONS | |
CLEARING OPERATIONS | 14. CLEARING OPERATIONS Cboe Clear Europe Cboe Clear Europe (formerly EuroCCP) is a European equities central counterparty that provides post-trade services to stock exchanges, MTFs, over-the-counter (“OTC”) equities trades and an equity index derivatives exchange. Cboe Clear Europe clears equities from eighteen European markets and the United States, as well as Depositary Receipts, ETFs, and exchange traded currencies (“ETCs”). In September 2021 Cboe Clear Europe began clearing equity index derivatives for ten European markets. Through a novation process, Cboe Clear Europe becomes the buyer for every seller and the seller for every buyer, thereby protecting clearing participants from counterparty risk and allowing the settlement of trades in the event of a clearing participant default. Cboe Clear Europe only assumes the guarantor role if it has an equal and offsetting claim against a clearing participant. For the period ended December 31, 2022, there have been no events of default for which a liability is required to be recognized in accordance with GAAP. Clearing Participant Deposits Cboe Clear Europe generally requires all clearing participants to deposit collateral to help mitigate Cboe Clear Europe’s exposure to credit risk in the event that a clearing participant fails to meet a financial or contractual obligation. Margin Deposits Margin deposits, which are predominately in the form of cash and cash equivalents, are deposits made by each clearing participant to Cboe Clear Europe to cover some or all of the credit risk of its failure to fulfill its obligations in the trade. Cboe Clear Europe maintains and manages all cash deposits related to margin deposits. Substantially all risks and rewards of margin deposit ownership, including net interest income, belong to Cboe Clear Europe and are recorded in other revenue on the consolidated statements of income. In the event of a default, Cboe Clear Europe can access the defaulting participant’s margin deposits to cover the defaulting participant’s losses. For more information, see “Default and Liquidity Waterfalls” below. Clearing Funds The clearing fund mutualizes the risk of default among all clearing participants. Depending on their membership, clearing participants contribute to the cash-equity and/or derivatives segment of the clearing fund. Although the entire clearing fund is available to cover potential losses in the event that the margin deposits and the clearing fund deposits of a defaulting clearing participant are inadequate to fulfill that clearing participant’s outstanding financial obligations, the clearing fund first uses the product class segment of the Clearing Fund in which the defaulting participants was active (see “Default and Liquidity Waterfalls” below). In the event of a default, Cboe Clear Europe is generally required to liquidate the defaulting clearing participant’s open positions. To the extent that the positions remain open, Cboe Clear Europe is required to assume the defaulting clearing participant’s obligations related to the open positions. Clearing participants are required to make contributions to the clearing fund that are proportional to their risk exposure in the form of cash or non-cash contributions, which generally consist of highly liquid securities. Interoperability Fund For the cash equity business line, Cboe Clear Europe has entered into interoperable arrangements with two other central counterparties (“CCPs”). Under these arrangements, margin is paid to, and received from, the other CCPs. The interoperability fund consists of collateral pledged by Cboe Clear Europe to the other interoperable CCPs, to cover margin calls Cboe Clear Europe received from other interoperable CCPs. For Cboe Clear Europe, the collateral pledged by the clearing participants is maintained in an interoperability fund designated account. Cboe Clear Europe does not have any economic interest or ownership in the collateral; therefore, these balances are not included in the consolidated balance sheets. The following tables present the Company’s total clearing participant deposits as of December 31, 2022 and December 31, 2021 (in millions) : December 31, 2022 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 426.9 $ 338.2 $ 765.1 Clearing funds 103.4 38.6 142.0 Interoperability funds (1) 376.0 89.3 465.3 Total $ 906.3 $ 466.1 $ 1,372.4 December 31, 2021 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 600.0 $ 287.0 $ 887.0 Clearing funds 145.9 41.9 187.8 Interoperability funds (1) 423.3 92.6 515.9 Total $ 1,169.2 $ 421.5 $ 1,590.7 (1) These amounts are not reflected in the consolidated balance sheets, as Cboe Clear Europe does not take economic ownership of these balances. Default and Liquidity Waterfalls The default waterfall is the priority order in which the capital resources are expected to be utilized in the event of a default where the defaulting clearing participant’s collateral would not be sufficient to cover the cost to liquidate its portfolio. If a default occurs and the defaulting clearing participant’s collateral, including margin deposits and clearing fund deposits, are depleted, then additional capital is utilized in the following order: • Cboe Clear Europe dedicated own resources: The Cboe Clear Europe default waterfall first utilizes its own dedicated resources ahead of clearing fund contributions of non-defaulting clearing participants, up to 25% of Cboe Clear Europe capital requirements discussed in Note 18 (“Regulatory Capital”). • Clearing fund: Second, the Cboe Clear Europe default waterfall utilizes traditional CCP risk mutualization, in the event that default losses fully exhaust Cboe Clear Europe’s dedicated own resources amount, whereby contributions applicable to a particular product class are applied first to any loss attributable to that product class. • Pro rata contributions: Third, if the default losses caused cannot be covered by the first two layers, the non-defaulting clearing participants shall on demand make additional payments to Cboe Clear Europe on a pro rata basis in proportion to the amount of their clearing fund contributions to cover any such remaining losses, which is limited to an amount equal to twice their clearing fund contribution as established under Cboe Clear Europe’s rules and regulations. In this scenario, contributions applicable to a particular product class are first applied to any losses attributable to that product class. In addition to the default waterfall, the liquidity waterfall is the priority order in which the liquidity resources are expected to be utilized for Cboe Clear Europe’s ordinary course business operations and in situations when additional liquidity resources and liquidity measures may be activated in case of a potential liquidity shortfall. Liquidity, intraday or overnight, is mainly required for securities settlement. In ordinary course business circumstances, liquidity resources include the collateral directly deposited with Cboe Clear Europe, FX swap arrangements, and reverse repurchase agreements, as well as the use of the Facility . Cboe Clear Digital Cboe Clear Digital is a digital asset clearinghouse and central counterparty that provides clearing and settlement of digital asset trades. Cboe Clear Digital clears cryptocurrencies from 51 U.S. jurisdictions authorized by license or not subject to licensing. Cboe Clear Digital performs a guarantee function whereby Cboe Clear Digital helps to ensure that the obligations of the transactions it clears are fulfilled. Cboe Clear Digital attempts to mitigate this risk by performing internal compliance and due diligence procedures as well as implementing internal risk controls. Cboe Clear Digital 's due diligence procedures include review of the personal and corporate information, financial position of the member participant, and monitoring of Cboe Clear Digital's risk exposure thresholds. As of December 31, 2022, Cboe Clear Digital does not expect a material loss concerning credit risk on any member participant. The Company includes customer cash deposits on the consolidated balance sheets in margin deposits and clearing funds and includes customer digital assets on the consolidated balance sheets in digital assets - safeguarded assets, with a corresponding offset in digital assets - safeguarded liabilities. Additional details on safeguarded digital assets held can be found in Note 2 (“Summary of Significant Accounting Policies”). The table below presents the Company’s cash deposits and safeguarded digital assets held on behalf of its customers for the purposes of supporting clearing transactions as of December 31, 2022 (in millions): December 31, 2022 Customer bank deposits $ 12.7 Digital assets - safeguarded assets 22.9 Total $ 35.6 The following table depicts the Company’s valuation of digital assets – safeguarded assets and safeguarded liabilities as of December 31, 2022: Digital Asset Number of Units Valuation per Unit Fair value (in millions) Bitcoin ("BTC") 717 $ 16,540 $ 11.8 Ethereum ("ETH") 6,362 1,199 7.6 Litecoin ("LTC") 17,873 70 1.3 Bitcoin Cash ("BCH") 6,883 97 0.7 USD Coin ("USDC") 1,516,479 1 1.5 $ 22.9 |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | 15. FAIR VALUE MEASUREMENT Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk. The Company applied 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 consolidated balance sheets as of December 31, 2022 and 2021, respectively. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021 (in millions): December 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 64.2 $ 64.2 $ — $ — Marketable securities (1): Mutual funds 15.3 15.3 — — Money market funds 12.2 12.2 — — Digital assets - safeguarded assets 22.9 22.9 — — Total Assets $ 114.6 $ 114.6 $ — $ — Liabilities: Contingent consideration liabilities $ 39.1 $ — $ — $ 39.1 Digital assets - safeguarded liabilities 22.9 22.9 — — Cboe Digital restricted common units liability (2) 15.5 — — 15.5 Cboe Digital warrant liability (2) 5.9 — — 5.9 Total Liabilities $ 83.4 $ 22.9 $ — $ 60.5 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 9.1 $ 9.1 $ — $ — Marketable securities (1): Mutual funds 18.4 18.4 — — Money market funds 9.6 9.6 — — Total Assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Total Liabilities $ 70.5 $ — $ — $ 70.5 ____________________________________ (1) These amounts are reflected within financial investments in the consolidated balance sheets. (2) These amounts are reflected within other non-current liabilities in the consolidated balance sheets. The following is a description of the Company’s valuation methodologies used for instruments measured at fair value on a recurring basis: Financial Investments Financial investments consist of highly liquid U.S. Treasury securities, and marketable securities held in a trust for the Company’s non-qualified retirement and benefit plans, also referred to as deferred compensation plan assets. The deferred compensation plan assets have an equal and offsetting deferred compensation plan liability based on the value of the deferred compensation plan assets. These securities are valued by obtaining feeds from a number of live data sources, including active market makers and inter dealer brokers and therefore categorized as Level 1. No material adjustments were made to the carrying value of financial investments for the period ended December 31, 2022. See Note 17 (“Employee Benefit Plans”) for more information. Digital Assets – Safeguarded Assets and Liabilities Digital assets – safeguarded assets and liabilities consist of Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and USD Coin. The Company has determined the principal marketplace for digital assets to be the spot market of Cboe Digital Exchange, LLC (“Cboe Digital Exchange”). The Company valued digital assets – safeguarded assets, and digital assets – safeguarded liabilities by using the closing prices at 4:00pm Central Standard Time on Cboe Digital Exchange’s spot market (“Cboe Digital spot market”) as of December 31, 2022. These inputs are categorized in the fair value hierarchy as Level 1 as the marketplace is considered active. See Note 14 (“Clearing Operations”) for additional details regarding digital assets held. Contingent Consideration Liabilities In connection with the acquisitions of Hanweck Associates, LLC (“Hanweck”), MATCHNow, Cboe Asia Pacific, and NEO, as well as the acquisition of assets of FT Providers, LLC (“FT Options”) and Trade Alert, LLC (“Trade Alert”), the Company entered into contingent consideration arrangements with the sellers. The total fair value of the liabilities at December 31, 2022 was $39.1 million. That value is based on the Company’s estimate of the likelihood that certain performance targets in the respective acquisition agreements are expected to be accomplished. See Note 5 (“Acquisitions”) for more information on the adjustment to contingent consideration liabilities during the year ended December, 31, 2022. In connection with the contingent consideration arrangements, the Company paid a total of $38.7 million in contingent consideration to the sellers of Hanweck, FT Options, MATCHNow, TradeAlert, and Cboe Asia Pacific during the year ended December 31, 2022. Additionally, MATCHNow contingent consideration expired in December, 2022, and the remaining balance was not achieved, and thus written off and resulted in an operating gain of $5.2 million for the Company. Because the fair value measurements relating to the contingent consideration liabilities are subject to management judgment, measurement uncertainty is inherent in the valuation of the contingent consideration liabilities as of the reporting date. Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is immaterial as of December 31, 2022. Cboe Digital Syndication Liabilities On November 18, 2022, Cboe Digital Holdings Inc. (“Cboe Digital Holdings”) entered into minority interest purchase agreements with certain digital asset industry participants, pursuant to which Cboe Digital Holdings agreed to issue Restricted Common Units in Cboe Digital. Cboe Digital Holdings also entered into a Warrant Agreement to issue Common Units of Cboe Digital in the future. Certain Cboe Digital investor members paid for the Restricted Common Units through the issuance of promissory notes, which are nonrecourse in nature and are accounted for as in-substance stock options. Expense associated with the Restricted Common Units is recognized as contra-revenue ratably over a five-year period. The Company uses a Black Scholes option pricing model to estimate the fair value of the in-substance stock option created by the Restricted Common Units and promissory notes as well as the fair value of the Warrant. Contra-revenue will be recognized while the performance conditions of the Warrant remain probable in conformance with the requirements in ASC 606 – Revenue from Contracts with Customers. Further adjustments will be recognized in each reporting period until performance is complete relating to changes in the fair value of the option and Warrant liabilities in accordance with ASC 718 – Compensation – Stock Compensation. Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is immaterial as of December 31, 2022. See Note 19 (“Stock-based Compensation”) for more information. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets, such as goodwill and intangible assets, are measured at fair value on a non-recurring basis. For goodwill, the process involves using a market approach and income approach (using discounted estimated cash flows) to determine the fair value of each reporting unit on a stand-alone basis. That fair value is compared to the carrying value of the reporting unit, including its recorded goodwill. In connection with the annual impairment evaluation of goodwill and indefinite lived intangibles, impairment is considered to have occurred if the fair value of the reporting unit is lower than the carrying value of the reporting unit. See “Digital Assets Held” below and Note 2 (“Summary of Significant Accounting Policies”) for discussion of valuation considerations specific to digital assets held. For the other intangible assets, the process also involves using a discounted cash flow method to determine the fair value of each intangible asset. Impairment is considered to have occurred if the fair value of the intangible asset is lower than its carrying value. These measurements are considered Level 3 and these assets are recognized at fair value if they are deemed to be impaired. The Company performed impairment testing during the quarter ended June 30, 2022, as there were market events that indicated it was more likely than not that these assets were impaired, resulting in the recognition of an impairment charge to goodwill related to Cboe Digital. Subsequently, the Company concluded that the indicators of impairment observed during the quarter ended June 30, 2022, continued to be relevant and recorded additional goodwill impairment in the consolidated statements of income for the three months ended September 30, 2022. The Company determined there were no further impairment indicators for the period ended December 31, 2022. See Note 10 (“Goodwill, Intangible Assets, net, and Digital Assets Held”) for more information on the impairment. Equity investments without readily determinable fair values that are valued using the measurement alternative are measured at fair value on a non-recurring basis. See Note 6 (“Investments”) for more information. During the year ended December 31, 2022, the Company recorded an impairment charge on its investments in American Financial Exchange, LLC. No observable transactions or impairments impacted the measurements of the investments accounted for as other equity investments. See Note 6 (“Investments”) for more information. Fair Value of Assets and Liabilities The following tables present the Company’s fair value hierarchy for certain assets and liabilities held by the Company as of December 31, 2022 and 2021 (in millions): December 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 64.2 $ 64.2 $ — $ — Deferred compensation plan assets (1) 27.5 27.5 — — Digital assets - safeguarded assets 22.9 22.9 — — Digital assets held (2) 0.9 0.9 — — Total assets $ 115.5 $ 115.5 $ — $ — Liabilities: Contingent consideration liabilities $ 39.1 $ — $ — $ 39.1 Deferred compensation plan liabilities (3) 27.5 27.5 — — Digital assets - safeguarded liabilities 22.9 22.9 — — Cboe Digital restricted common units liability (3) 15.5 — — 15.5 Cboe Digital warrant liability (3) 5.9 — — 5.9 Debt 1,573.9 — 1,573.9 — Total liabilities $ 1,684.8 $ 50.4 $ 1,573.9 $ 60.5 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 9.1 $ 9.1 $ — $ — Deferred compensation plan assets (1) 28.0 28.0 — — Total assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Deferred compensation plan liabilities (3) 28.0 28.0 — — Debt 1,333.6 — 1,333.6 — Total liabilities $ 1,432.1 $ 28.0 $ 1,333.6 $ 70.5 ________________________________________ (1) These amounts are reflected within financial investments in the consolidated balance sheets. (2) These amounts are reflected within intangible assets, net in the consolidated balance sheets. (3) These amounts are reflected within other non-current liabilities in the consolidated balance sheets. Certain financial assets and liabilities, including cash and cash equivalents, accounts receivable, income tax receivable, accounts payable and Section 31 fees payable, and notes receivable are not measured at fair value on a recurring basis, but the carrying values approximate fair value due to their liquid or short-term nature. Debt The debt balance consists of fixed rate Senior Notes and a floating rate Term Loan Agreement. The fair values of the Senior Notes are classified as Level 2 under the fair value hierarchy and are estimated using prevailing market quotes. The fair value of the Term Loan Agreement was determined by utilizing a discounted cash flow analysis and is considered a Level 2 measurement. At December 31, 2022 and 2021, the fair values of the Company’s debt obligations were as follows (in millions): Fair Value December 31, 2022 December 31, 2021 Term Loan Agreement $ 306.3 $ 160.1 3.650% Senior Notes 623.6 702.6 1.625% Senior Notes 390.7 470.9 3.000% Senior Notes 253.3 — Digital Assets Held Digital assets held, which are included within intangible assets, net in the consolidated balance sheets, are valued following a review of exchange prices for each specific digital asset throughout the period ended December 31, 2022. The Company will impair to the lowest observable value during the period for each digital asset type in accordance with Cboe Digital’s policy, which states that the Company values digital assets held by using the closing prices at 4:00pm Central Standard Time on Cboe Digital Exchange’s spot market, which the Company determined is the principal marketplace for digital assets. As part of Cboe Digital’s pricing policy, the closing price on Cboe Digital’s spot market is compared to three other exchanges (Coinbase, Bitstamp, and Kraken) to assess for reasonableness. These inputs are categorized in the fair value hierarchy as Level 1 as the marketplace is considered active. Information on Level 3 Financial Liabilities The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities during the year ended December 31, 2022 and 2021 (in millions): Level 3 Financial Liabilities for the Year Ended December 31, 2022 Balance at Realized (gains) Foreign Beginning of losses during Currency Balance at Period period Adjustments Additions Settlements Translation End of Period Liabilities: Contingent consideration liabilities $ 70.5 $ (5.2) $ (44.3) $ 57.7 $ (38.7) $ (0.9) $ 39.1 Cboe Digital restricted common units liability — — — 15.5 — — 15.5 Cboe Digital warrant liability — — — 5.9 — — 5.9 Total Liabilities $ 70.5 $ (5.2) $ (44.3) $ 79.1 $ (38.7) $ (0.9) $ 60.5 Level 3 Financial Liabilities for the Year Ended December 31, 2021 Balance at Realized (gains) Foreign Beginning of losses during Currency Balances at Period period Adjustments Additions Settlements Translation End of Period Liabilities Contingent consideration liabilities $ 32.7 $ (2.7) $ — $ 49.6 $ (9.1) $ — $ 70.5 Total Liabilities $ 32.7 $ (2.7) $ — $ 49.6 $ (9.1) $ — $ 70.5 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 16. SEGMENT REPORTING The Company previously operated five reportable business segments prior to the quarter ended June 30, 2022. As a result of the acquisition of ErisX, subsequently rebranded to Cboe Digital, as of June 30, 2022, the Company operates six reportable segments: Options, North American Equities, Europe and Asia Pacific, Futures, Global FX, and Digital which is reflective of how the Company's chief operating decision-maker reviews and operates the business, as discussed in Note 1 (“Nature of Operations”). Segment performance is primarily evaluated based on operating income (loss). The Company’s chief operating decision-maker does not use segment-level assets or income and expenses below operating income (loss) as key performance metrics; therefore, such information is not presented below. The Company has aggregated all of its corporate costs, as well as other business ventures, within the Corporate Items and Eliminations totals based on the decision that those activities should not be used to evaluate the operating performance of the segments; however, operating expenses that relate to activities of a specific segment have been allocated to that segment. Options. The Options segment includes options on market indices (“index options”), as well as on the stocks of individual corporations (“equity options”), and options on ETPs, such as exchange-traded funds (“ETFs”) and exchange-traded notes (“ETNs”), which are “multi-listed” options and listed on a non-exclusive basis. These options are eligible to trade, as applicable, on Cboe Options, C2, BZX, EDGX, and/or other U.S. national security exchanges. Cboe Options is the Company’s primary options market and offers trading in listed options through a single system that integrates electronic trading and traditional open outcry trading on the Cboe Options trading floor in Chicago. C2 Options, BZX Options, and EDGX Options are all-electronic options exchanges, and typically operate with different market models and fee structures than Cboe Options. The Options segment also includes applicable market data fees generated from the consolidated tape plans, the licensing of proprietary options market data, index licensing, and access and capacity services. North American Equities. The North American Equities segment includes listed U.S. equities and ETP transaction services that occur on fully electronic exchanges owned and operated by BZX, BYX, EDGX, and EDGA, equities transactions that occur on the BIDS Trading platform, and Canadian equities and other transaction services that occur on or through the MATCHNow ATS, and NEO, as of the June 1, 2022 acquisition. The North American Equities segment also includes listing services on NEO exchange, ETP listings on BZX, the Cboe Global Markets, Inc. common stock listing, applicable market data fees generated from the consolidated tape plans, the licensing of proprietary equities market data, routing services, and access and capacity services. Europe and Asia Pacific. The Europe and Asia Pacific segment includes the pan-European listed equities and derivatives transaction services, ETPs, exchange-traded commodities, and international depository receipts that are hosted on MTFs operated by Cboe Europe Equities (Cboe Europe and Cboe NL equities exchanges) and Cboe Europe Derivatives (“CEDX”). It also includes the ETP listings business on RMs and clearing activities of Cboe Clear Europe, as well as the equities transaction services of Cboe Australia and Cboe Japan, operators of trading venues in Australia and Japan, respectively. This segment was previously referred to as the European Equities segment but was updated to the Europe segment in the first quarter of 2021 as a result of the launch of Cboe Europe Derivatives, a pan-European derivatives platform in September 2021. The segment was subsequently updated to Europe and Asia Pacific to reflect the acquisition of Chi-X in July 2021. Cboe Europe operates lit and dark books, a periodic auctions book, and Cboe BIDS Europe, a Large-in-Scale (“LIS”) trading negotiation facility for UK symbols. Cboe NL, launched in October 2019 and based in Amsterdam, operates similar business functionality to that offered by Cboe Europe, and provides for trading only in European Economic Area (“EEA”) symbols. The new Cboe Europe Derivatives venue offers futures and options based on Cboe Europe equity indices. This segment also includes Cboe Europe, Cboe NL, CEDX, Cboe Australia and Cboe Japan revenue generated from the licensing of proprietary market data and from access and capacity services. Futures. The Futures segment includes transaction services provided by CFE, a fully electronic futures exchange, which includes offerings for trading of VIX futures and other futures products, the licensing of proprietary market data, as well as access and capacity services. Global FX. The Global FX segment includes institutional FX trading services that occur on the Cboe FX fully electronic trading platform, non-deliverable forward FX transactions (“NDFs”) offered for execution on Cboe SEF and Cboe Swiss, transaction services that occur on the electronic trading system for U.S government securities executed by Cboe Fixed Income, as well as revenue generated from the licensing of proprietary market data and from access and capacity services. Digital. The Digital segment includes Cboe Digital, an operator of a U.S. based digital asset spot market and a regulated futures exchange, and Cboe Clear Digital, a regulated clearinghouse, as well as revenue generated from the licensing of proprietary market data and from access and capacity services. Summarized financial data of reportable segments was as follows (in millions): North Corporate American Europe and Items and Options Equities Asia Pacific Futures Global FX Digital Eliminations Total Year ended December 31, 2022 Revenues $ 1,823.2 $ 1,681.7 $ 264.6 $ 119.8 $ 68.9 $ 0.3 $ — $ 3,958.5 Operating income (loss) 740.5 146.6 38.1 55.2 8.8 (491.4) (8.2) 489.6 Year ended December 31, 2021 Revenues $ 1,505.0 $ 1,570.5 $ 240.3 $ 120.6 $ 58.1 $ — $ 0.3 $ 3,494.8 Operating income (loss) 538.0 156.1 56.0 66.0 2.7 — (12.9) 805.9 Year ended December 31, 2020 Revenues $ 1,330.1 $ 1,789.5 $ 140.5 $ 109.2 $ 57.8 $ — $ — $ 3,427.1 Operating income (loss) 430.4 159.5 33.5 53.8 6.0 — (21.0) 662.2 Geographical Information The following represents our revenues less cost of revenues based on jurisdiction (in millions): United States Non-U.S. Total Revenues less cost of revenues: Year ended December 31, 2022 $ 1,531.3 $ 210.4 $ 1,741.7 Year ended December 31, 2021 $ 1,286.9 $ 189.2 $ 1,476.1 Year ended December 31, 2020 $ 1,139.9 $ 114.4 $ 1,254.3 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 17. EMPLOYEE BENEFIT PLANS Eligible U.S. employees, which includes employees of Cboe Digital, as of the acquisition date, are eligible to participate in the Cboe Options SMART Plan (“SMART Plan”). The SMART Plan is a defined contribution plan, which is qualified under Internal Revenue Code Section 401(k). In addition, eligible employees may participate in the Supplemental Employee Retirement Plan, Executive Retirement Plan and Deferred Compensation Plan. Effective January 1, 2017, the Executive Retirement Plan is closed to new executive officers and employees. Each plan is a defined contribution plan that is non-qualified under the Internal Revenue Code. The Deferred Compensation Plan assets, held in a trust, are subject to the claims of general creditors of the Company and totaled $27.5 million at December 31, 2022. Although the value of the plan is recorded in financial investments on the consolidated balance sheets, there is an equal and offsetting liability in other non-current liabilities. The investment results of these plans have no impact on net income as the investment results are recorded in equal amounts to both other expense, net and compensation and benefits expense in the consolidated statements of income. The Company contributed $14.4 million, $11.8 million, and $10.5 million to the defined contribution plans for the years ended December 31, 2022, 2021, and 2020, respectively. Eligible employees outside of the U.S., which includes employees of Cboe Europe, Cboe NL, Cboe Clear Europe, MATCHNow, BIDS, Cboe Asia Pacific, and NEO, as of the respective acquisition dates, are eligible to participate in various employee-selected stakeholder contribution plans or plans covered by local jurisdictions or by applicable laws. The Company’s contribution amounted to $3.0 million, $2.3 million, and $1.6 million for the years ended December 31, 2022, 2021, and 2020, respectively. This expense is included in compensation and benefits in the consolidated statements of income. Prior to the end of 2022, the Company’s Board of Directors approved cash and equity deferred compensation plans for Directors, that will be maintained by the Company, in which eligible Directors may, starting January 1, 2023, contribute a percentage of their cash and equity compensation and defer income taxes thereon. |
REGULATORY CAPITAL
REGULATORY CAPITAL | 12 Months Ended |
Dec. 31, 2022 | |
REGULATORY CAPITAL | |
REGULATORY CAPITAL | 18. REGULATORY CAPITAL As broker-dealers registered with the SEC, Cboe Trading, BIDS Trading, and Cboe Fixed Income are subject to the SEC’s Uniform Net Capital Rule (“Rule 15c3-1”), which requires the maintenance of minimum net capital, as defined therein. The SEC’s requirement also provides that equity capital may not be withdrawn or a cash dividend paid if certain minimum net capital requirements are not met. Cboe Trading, BIDS Trading, and Cboe Fixed Income compute the net capital requirements under the basic method provided for in Rule 15c3-1. As of December 31, 2022, Cboe Trading and BIDS Trading were required to maintain net capital equal to the greater of 6.67% of aggregate indebtedness items, as defined, or $0.1 million. As a broker-dealer in its first 12 months of operations, Cboe Fixed Income was required to maintain net capital equal to the greater of 12.5% of aggregate indebtedness items, as defined, or $5.0 thousand. As entities regulated by the FCA, Cboe Europe is subject to the Financial Resource Requirement (“FRR”) and Cboe Chi-X Europe is subject to the Capital Resources Requirement (“CRR”). As a RIE, Cboe Europe computes its FRR in accordance with its Financial Risk Assessment, as agreed by the FCA. In accordance with the Markets in Financial Instruments Directive of the FCA requirements, Cboe Chi-X Europe computes its CRR as the greater of the base requirement of $0.1 million as of December 31, 2022, or the summation of the credit risk, market risk and fixed overheads requirements, as defined. On March 8, 2019, Cboe NL received approval from the Dutch Ministry of Finance to operate a RM, a MTF, and an approved publication arrangement in the Netherlands. As a RM, Cboe NL is subject to minimum capital requirements, as established by the Dutch Ministry of Finance in the license dated March 8, 2019. Cboe Clear Europe was granted authorization under European Market Infrastructure Regulation (“EMIR”) by the National Competent Authority, DNB. Cboe Clear Europe is required by the EMIR, to maintain a minimum amount of capital to reflect an estimate of the capital required to wind down or restructure the activities of the clearinghouse, cover operational, legal and business risks and to reserve capital to meet credit, counterparty and market risks not covered by the clearing participants’ collateral and clearing funds. The self-regulatory organization formerly known as IIROC and now known as the New Self-Regulatory Organization of Canada (the “Canadian SRO”) sets and monitors regulatory capital requirements for MATCHNow to protect its clients and counterparties. MATCHNow is required to maintain a prescribed minimum level of risk adjusted capital in accordance with such requirements as IIROC may from time to time prescribe. As a designated contract market regulated by the CFTC, CFE is required to meet two capital adequacy tests: (i) its financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating costs. The amounts presented below represent the greater of the two capital adequacy requirements. As a swap execution facility regulated by the CFTC, Cboe SEF is required to meet two capital adequacy tests: (i) its financial resources must exceed at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets must be equal to the greater of: (a) three months of projected operating costs or (b) its projected wind-down costs. The amounts presented below represent the greater of the two capital adequacy requirements. As a designated contract organization regulated by the CFTC, Cboe Digital Exchange, LLC is required to meet two capital adequacy tests: (i) its financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating costs. The amounts presented below represent the greater of the two capital adequacy requirements. As a derivatives clearing organization regulated by the CFTC, Cboe Clear Digital, LLC is required to meet two capital adequacy tests: (i) its financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating costs. The amounts presented below represent the greater of the two capital adequacy requirements. NEO is regulated by the Ontario Securities Commission (“OSC”). NEO is required to maintain sufficient financial resources for the proper performance of its functions and to meet its responsibilities. NEO must calculate the following financial ratios monthly: (i) current ratio, (ii) a debt to cash flow ratio, and (iii) a financial leverage ratio. NEO must report the monthly calculations to the OSC on a quarterly basis. Cboe Australia is regulated by the Australian Securities and Investments Commission (“ASIC”). Cboe Australia is required to maintain sufficient financial resources to operate the market properly in accordance with Section 794A(d) of the Corporations Act, which Cboe Australia satisfies by maintaining a prudent cash reserve, which must be equal to at least six months of its projected operating expenses. Cboe Japan is regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”). Cboe Japan is required to maintain a minimum level of regulatory capital ratio of 120% in accordance with such requirements prescribed by the JFSA and JSDA. The following table presents the Company’s subsidiaries with regulatory capital requirements discussed above, as well as the actual and minimum regulatory capital requirements of the subsidiary as of December 31, 2022 (in millions): Minimum Subsidiary Regulatory Authority Actual Requirement Cboe Trading FINRA/SEC $ 17.3 $ 1.2 BIDS Trading FINRA/SEC 8.0 0.5 Cboe Fixed Income Markets FINRA/SEC 3.9 0.5 Cboe Europe FCA 50.8 27.7 Cboe Chi-X Europe FCA 0.3 0.1 Cboe NL Dutch Authority for Financial Markets 13.1 6.4 Cboe Clear Europe DNB 63.7 39.3 MATCHNow IIROC 4.7 0.2 CFE CFTC 58.7 44.1 Cboe SEF CFTC 2.4 1.3 Cboe Digital Exchange CFTC 10.6 4.1 Cboe Clear Digital CFTC 21.2 5.4 Cboe Australia ASIC 8.3 4.2 Cboe Japan JFSA 12.9 3.2 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 19. STOCK-BASED COMPENSATION Stock-based compensation is based on the fair value of the award on the date of grant, which is recognized over the related service period, net of actual forfeitures. The service period is the period over which the related service is performed, which is generally the same as the vesting period. Vesting may be accelerated for certain officers and employees as a result of attaining certain age and service based requirements in the Company’s long-term incentive plan and award agreements. The Company recognized stock-based compensation expense of $30.7 million, $26.6 million, and $21.7 million for the years ended December 31, 2022, 2021, and 2020, respectively. Stock-based compensation expense relating to employee and director awards is included in compensation and benefits and acquisition-related costs in the consolidated statements of income. Stock-based compensation expense relating to awards granted to customers of Cboe Digital are recorded as contra-revenue. The activity in the Company's stock options and restricted stock, consisting of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”), was as follows: Stock Options Summary stock option activity is presented below: Weighted Number of average exercise Shares price Outstanding, January 1, 2020 $ 10,834 $ 18.59 Exercised 10,834 18.59 Outstanding, December 31, 2020 $ — $ — Exercised — — Outstanding, December 31, 2021 $ — $ — Exercised — — Outstanding and exercisable December 31, 2022 $ — $ — All outstanding stock options were exercised during the year ended December 31, 2020. The total intrinsic value of stock options exercised in the year ended December 31, 2020 was $0.9 million. RSAs and RSUs The following table summarizes RSA and RSU activity during the year ended December 31, 2022: Weighted Number of average grant shares date fair value Nonvested stock at January 1, 2020 436,013 $ 91.58 Granted 193,912 115.89 Vested (272,258) 88.32 Forfeited (15,585) 106.70 Nonvested stock at December 31, 2020 342,082 $ 108.40 Granted 298,084 92.32 Vested (166,598) 106.13 Forfeited (30,249) 97.01 Nonvested stock at December 31, 2021 443,319 $ 99.22 Granted 369,037 119.97 Vested (201,457) 99.87 Forfeited (54,837) 106.07 Nonvested stock at December 31, 2022 556,062 $ 112.07 RSAs granted to non-employee members of the Board of Directors have a one-year vesting period and vesting accelerates upon the occurrence of a change in control of the Company. Unvested portions of the RSAs will be forfeited if the director leaves the Board of Directors prior to the applicable vesting date. The RSAs have voting rights and entitle the holder to receive dividends. RSUs entitle the holder to one share of common stock upon vesting, typically vest over a three year period, and vesting accelerates upon the occurrence of a change in control or a termination of employment following a change in control or in the event of a participant’s earlier death or disability. Vesting will also accelerate upon a qualified retirement where applicable and permitted. Where applicable and permitted, qualified retirement eligibility occurs once achieving 55 years of age and 10 years of service for grants awarded in and after 2017. Unvested RSUs will be forfeited if the officer, or employee leaves the Company prior to the applicable vesting date, except in limited circumstances. The RSUs have no voting rights but entitle the holder to receive dividend equivalents. In the year ended December 31, 2022, to satisfy employees’ tax obligations upon the vesting of restricted stock, the Company purchased 68,872 shares of common stock totaling $8.2 million as the result of the vesting of 183,573 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 year ended December 31, 2022: Weighted Number of average grant Shares date fair value Nonvested stock at January 1, 2020 132,248 $ 107.21 Granted 72,975 125.62 Vested (48,053) 108.91 Forfeited (34,504) 109.85 Nonvested stock at December 31, 2020 122,666 $ 115.18 Granted 71,302 98.32 Vested (29,468) 111.45 Forfeited (12,090) 110.20 Nonvested stock at December 31, 2021 152,410 $ 108.41 Granted 64,668 141.41 Vested (16,834) 96.00 Forfeited (33,542) 95.40 Nonvested stock at December 31, 2022 166,702 $ 125.08 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 for awards granted in February 2022: risk-free interest rate ( 1.75 )%, three-year volatility ( 32.2 )% and three-year correlation with S&P 500 Index ( 0.51 ), and incorporated the following assumptions for awards granted in May 2022: risk-free interest rate ( 2.88 )%, three-year volatility ( 32.8% )% and three-year correlation with S&P 500 Index ( 0.52 ). Each of these performance shares has a performance condition under which the number of units ultimately awarded will vary from 0% to 200% of the original grant, with each unit representing the contingent right to receive one share of the Company’s common stock. The vesting period for the PSUs contingent on the achievement of performance conditions is three years . For each of the performance awards, the PSUs will be settled in shares of the Company’s common stock following vesting of the PSU assuming that the participant has been continuously employed during the vesting period, subject to acceleration in the event of a change in control of the Company, or a termination of employment following a change in control, or in the event of a participant’s earlier death or disability. Participants have no voting rights with respect to the PSUs until the issuance of the shares of common stock. Dividends are accrued by the Company and will be paid once the PSUs contingent on the achievement of performance conditions vest. In the year ended December 31, 2022, to satisfy employees’ tax obligations upon the vesting of performance stock, the Company purchased 5,245 shares of common stock totaling $0.6 million as the result of the vesting of 16,834 shares of performance stock. As of December 31, 2022, there were $36.9 million in total unrecognized compensation costs related to restricted stock, restricted stock units, and performance stock units. These costs are expected to be recognized over a weighted average period of 1.9 years. Employee Stock Purchase Plan In May 2018, the Company’s stockholders approved an Employee Stock Purchase Plan, (“ESPP”), under which a total of 750,000 shares of the Company’s common stock will be made available for purchase to employees. The ESPP is a broad-based plan that permits employees to contribute up to 10% of wages and base salary to purchase shares of the Company’s common stock at a discount, subject to applicable annual Internal Revenue Service limitations. Under the ESPP, a participant may not purchase more than a maximum of 312 shares of the Company’s common stock during any single offering period. No participant may accrue options to purchase shares of the Company’s common stock at a rate that exceeds $25,000 in fair market value of the Company’s common stock (determined at the time such options are granted) for each calendar year in which such rights are outstanding at any time. The exercise price per share of common stock shall be 85% following September 15, 2022, and 90% prior to September 15, 2022 (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 $0.6 million, $0.4 million, and $0.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, 617,805 shares were reserved for future issuance under the ESPP . Cboe Digital Restricted Common Units On November 18, 2022, Cboe Digital Holdings entered into minority interest purchase agreements with certain digital asset industry participants, pursuant to which Cboe Digital Holdings agreed to issue 185 Restricted Common Units in Cboe Digital. In addition, certain investor members and their affiliates are our customers, including trading permit holders, trading privilege holders, participants, and members. Certain Cboe Digital investor members paid for the Restricted Common Units through the issuance of promissory notes, which are nonrecourse in nature. The issuances of Restricted Common Units for nonrecourse promissory notes are accounted for as in-substance stock options. The promissory notes generally bear interest at a rate of 5% per annum and mature upon the earlier of the sale of vested Restricted Common Units, or either November 18, 2032 or November 18, 2037. A certain Cboe Digital investor member paid for the Restricted Common Units in exchange for cash. The following table summarizes the option activity during the year ended December 31, 2022 (in millions, except number of shares and contractual term): Weighted Weighted average Number of average Aggregate remaining shares exercise price intrinsic value contractual term Outstanding, January 1, 2022 — $ — $ — — Granted 185 0.3 — 6 years Vested — — — — Outstanding and exercisable December 31, 2022 185 $ 0.3 $ — 6 years Vesting of Restricted Common Units is based on certain conditions relating to the participation and performance of the Cboe Digital investor members on the Cboe Digital platforms, generally over a five-year period. Performance is generally measured based on participation on the Cboe Digital platforms and the investor members maintaining certain average daily volumes on the platforms. Due to the existence of an option for investor members to sell their shares immediately after vesting, the options are liability classified. The options expire upon the maturity of the promissory notes, which is either November 18, 2032 or November 18, 2037, unless the options are exercised. The cost associated with the options will be recognized as contra-revenue, net of actual forfeitures and based on the continued probability of the satisfaction of performance conditions ratably over the vesting period. For the year ended December 31, 2022, zero contra-revenue related to the options grants was recognized. As of December 31, 2022, $14.0 million of contra-revenue related to the options grants is included in Other assets, net within the consolidated balance sheets and is expected to be recognized in net revenue in the consolidated statements of income over the remaining contractual term. Changes in the fair value of the options, subsequent to the grant date, is recognized as other revenue or expense in the period in which the fair value of the options changes. The Company uses a Black Scholes pricing model to estimate the fair value of the in-substance stock options which incorporated the following assumptions as of December 31, 2022: risk-free interest rate range ( 3.88 to 3.95 )%, expected dividend rate ( 0 )%, expected volatility ( 60 )%, and expected term of five to seven years . For the year ended December 31, 2022, there was no change in the fair value of the options grants since the grant date. Cboe Digital Warrants On November 18, 2022, Cboe Digital Holdings entered into a Warrant Agreement with an investor member to acquire up to 80 Common Units of Cboe Digital, subject to certain vesting events. The investor member is a customer of Cboe Digital. The vesting of the Warrant is based upon the achievement of certain conditions relating to the service provided by the investor member over a two-year period, of which some conditions represent conditions that are not service, performance, or market conditions and, therefore, the Warrant is liability classified. As of December 31, 2022, no portion of the Warrant has vested. The cost associated with the Warrant will be recognized as contra-revenue ratably throughout the expected life of the Warrant before exercise. For the year ended December 31, 2022, zero contra-revenue related to the Warrant was recognized. As of December 31, 2022, $5.9 million of contra-revenue related to the Warrant is included in Other assets, net within the consolidated balance sheets and is expected to be recognized in net revenue in the consolidated statements of income over the remaining life of the Warrant. The following table summarizes the Warrant activity during the year ended December 31, 2022 (in millions, except number of shares): Weighted Number of average shares exercise price Outstanding, January 1, 2022 — $ — Granted 80 0.2 Vested — — Outstanding and exercisable December 31, 2022 80 $ 0.2 Changes in the fair value of the Warrant, subsequent to the grant date, is recognized as other revenue or expense in the period in which the fair value of the Warrant changes. The Company uses a Black Scholes pricing model to estimate the fair value of the Warrant which incorporated the following assumptions as of December 31, 2022: risk-free interest rate ( 3.95 )%, expected dividend rate ( 0 )%, expected volatility ( 60 )%, and expected term of five years . For the year ended December 31, 2022, there was no change in the fair value of the Warrant since the grant date. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
EQUITY | |
EQUITY | 20. EQUITY Common Stock The Company’s common stock is listed on Cboe BZX under the trading symbol CBOE. As of December 31, 2022, 325,000,000 shares of the Company’s common stock were authorized, $0.01 par value, and 107,670,248 and 105,951,199 shares were issued and outstanding, respectively. The holders of common stock are entitled to one vote per share. Common Stock in Treasury, at Cost The Company accounts for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in the consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are retired or they are available to be redistributed. When treasury shares are redistributed, they are recorded at the average cost of the treasury shares acquired. When treasury shares are retired, they are removed from the common stock in treasury balance. The Company held 1,719,049 and 1,512,821 shares of common stock in treasury as of December 31, 2022 and December 31, 2021, respectively. On December 21, 2022, the Board of Directors approved the retirement of 744,127 shares of treasury stock These shares represent shares that were repurchased as part of the Company's share repurchase program since December, 2021. The retirement was recorded as a decrease to treasury stock, common stock, and additional paid in capital on the consolidated balance sheets. Share Repurchase Program In 2011, the Board of Directors approved an initial authorization for the Company to repurchase shares of its outstanding common stock of $100 million and subsequently approved additional authorizations, for a total authorization of $1.6 billion. The Company expects to fund repurchases primarily through the use of existing cash balances. The program permits the Company to purchase shares, through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any repurchases at any specific time or situation. On August 16, 2022, President Biden signed into law H.R. 5376 (commonly known as the “Inflation Reduction Act of 2022” or simply the “IRA”). Tax measures contained in the IRA include, among other items, an excise tax of 1% on corporate stock buy-backs. The IRA imposes a new 1% excise tax on repurchases of stock by domestic corporations with stock traded on established securities markets. The amount on which the tax is imposed is reduced by the value of any stock issued by such corporation during the tax year and the tax generally applies to stock buy-back transactions occurring after December 31, 2022. This new tax is not expected to result in a material impact to the Company. Under the program, for the year ended December 31, 2022, the Company has repurchased 876,238 shares of common stock at an average cost per share of $115.20 , totaling $100.9 million. Since inception of the program through December 31, 2022, the Company has repurchased 18,948,367 shares of common stock at an average cost per share of $70.30 , totaling $1.3 billion. As of December 31, 2022, the Company had $217.9 million of availability remaining under its existing share repurchase authorizations. The table below shows the repurchased shares of common stock under the Company’s share repurchase program during the periods presented as follows: Average Repurchase Amount of Repurchases Shares Repurchased Price Per Share (in millions) 2022 Fourth quarter 132,111 $ 116.07 $ 15.3 Third quarter — — — Second quarter 147,139 106.12 15.6 First quarter 596,988 117.25 70.0 Total open market common stock repurchases 876,238 100.9 2021 Fourth quarter — $ — $ — Third quarter — — — Second quarter 331,373 101.57 33.7 First quarter 490,632 96.97 47.6 Total open market common stock repurchases 822,005 81.3 2020 Fourth quarter 1,013,709 $ 86.79 $ 88.0 Third quarter 465,366 89.92 41.8 Second quarter 992,159 100.54 99.8 First quarter 1,062,881 112.46 119.5 Total open market common stock repurchases 3,534,115 349.1 Purchase of Common Stock from Employees The Company purchased 74,117 and 63,911 shares that were not part of the publicly announced share repurchase authorization from employees for an average price paid per share of $119.45 and $97.19 during the years ended December 31, 2022 and 2021, respectively. These shares consisted of shares retained to cover payroll withholding taxes or option costs in connection with the vesting of restricted stock awards, restricted stock units, and performance share awards. Preferred Stock The Company has authorized the issuance of 20,000,000 shares of preferred stock, par value $0.01 per share, issuable from time to time in one or more series. For the years ended December 31, 2022, and 2021, the Company had no shares of preferred stock issued or outstanding . Dividends During the year ended December 31, 2022 , the Company declared and paid cash dividends per share of $1.96, for an aggregate payout of $209.4 million. During the year ended December 31, 2021 , the Company declared and paid cash dividends per share of $1.80 , for an aggregate payout of $193.3 million. Each share of common stock, including RSAs, RSUs, and PSUs, is entitled to receive dividend and dividend equivalents, respectively, if, as and when declared by the Board of Directors of the Company. The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within the discretion of the Company’s Board of Directors and may be affected by various factors, including earnings, financial condition, capital requirements, level of indebtedness and other considerations the Board of Directors deems relevant. Future debt obligations and statutory provisions, among other things, may limit, or in some cases prohibit, the Company’s ability to pay dividends. As a holding company, the Company’s ability to declare and continue to pay dividends in the future with respect to its common stock will also be dependent upon the ability of its subsidiaries to pay dividends to it under applicable corporate law . |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 21. INCOME TAXES Net deferred tax assets and liabilities consist of the following as of December 31, 2022 and 2021 (in millions): As of December 31, 2022 2021 Deferred tax assets: Accrued compensation and benefits $ 16.1 $ 14.7 Property, equipment and technology, net 16.0 2.8 Investments 95.1 — Operating leases 37.1 33.5 Other 75.7 54.4 Subtotal 240.0 105.4 Valuation allowance (17.5) (12.2) Total deferred tax assets 222.5 93.2 Deferred tax liabilities: Intangibles (390.1) (372.4) Property, equipment and technology, net (20.4) (19.8) Investments — (44.3) Prepaid expenses or assets (4.4) (4.7) Operating leases (28.2) (24.7) Total deferred tax liabilities (443.1) (465.9) Net deferred tax liabilities $ (220.6) $ (372.7) The Company provides a valuation allowance against deferred tax assets if, based on management’s assessment of historical and projected future operating results and other available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. A valuation allowance of $17.5 million and $12.2 million was recorded against gross deferred tax assets for certain investments, net operating and capital losses as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company has capital loss carryforwards of $9.4 million, which, if unused, will expire in 2024. The Company considers its non-U.S. earnings to be indefinitely reinvested outside of the U.S. to the extent these earnings are not subject to U.S. income tax under an anti-deferral tax regime. As of December 31, 2022, the cumulative amount of undistributed earnings in these subsidiaries is $84.4 million. Given our intent to reinvest these earnings for an indefinite period of time, the Company has not accrued a deferred tax liability on these earnings. A determination of an unrecognized deferred tax liability related to these earnings is not practicable. The provision for income taxes for the years ended December 31, 2022, 2021 and 2020 consists of the following (in millions): Year Ended December 31, 2022 2021 2020 Current tax expense: Federal $ 210.4 $ 148.4 $ 143.7 State 130.2 83.4 70.5 Foreign 13.0 14.2 8.9 Total current tax expense 353.6 246.0 223.1 Deferred income tax (benefit) expense: Federal (126.2) (24.3) (25.2) State (22.7) (7.3) (9.1) Foreign (6.8) 12.7 3.4 Total deferred income tax benefit (155.7) (18.9) (30.9) Total $ 197.9 $ 227.1 $ 192.2 For the years ended December 31, 2022, 2021, and 2020, income before taxes consists of the following (in millions): Year Ended December 31, 2022 2021 2020 U.S. operations $ 401.3 $ 714.0 $ 601.9 Foreign operations 31.6 42.1 58.5 Total $ 432.9 $ 756.1 $ 660.4 A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2022, 2021, and 2020 is as follows: Year Ended December 31, 2022 2021 2020 Statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % Impact of federal, state and local tax law & rate changes, net (0.5) % 1.9 % (0.2) % State taxes, net of federal benefit 4.5 % 4.3 % 4.2 % Uncertain tax positions 20.6 % 3.2 % 2.9 % Deduction for foreign-derived intangible income (1.0) % (0.6) % (1.1) % Valuation allowance 0.6 % — % 0.8 % Other, net 0.5 % 0.2 % 1.5 % Effective income tax rate 45.7 % 30.0 % 29.1 % A reconciliation of the beginning and ending unrecognized tax benefits, excluding interest and penalties, is as follows (in millions): 2022 2021 2020 Balance as of January 1 $ 162.1 $ 138.6 $ 116.7 Gross increases on unrecognized tax benefits in prior period 21.8 3.4 3.3 Gross decreases on unrecognized tax benefits in prior period — (0.2) — Gross increases on unrecognized tax benefits in current period 32.9 26.5 24.3 Settlements (3.7) — — Lapse of statute of limitations (1.0) (6.2) (5.7) Balance as of December 31 $ 212.1 $ 162.1 $ 138.6 As of December 31, 2022, 2021 and 2020, the Company had $177.1 million, $162.1 million, and $137.4 million, respectively, of unrecognized tax benefits, net of federal benefit, which, if recognized in the future, would affect the effective income tax rate. Reductions to unrecognized tax benefits from the lapse of the applicable statutes of limitations and potential audit settlements during the next twelve months are estimated to be approximately $52.4 million. Estimated interest costs and penalties are classified as part of the provision for income taxes in the Company's consolidated statements of income and were $39.1 million, $9.7 million, and $6.9 million, for the periods ended December 31, 2022, 2021 and 2020, respectively. Accrued interest and penalties were $74.4 million, $35.8 million and $26.1 million as of December 31, 2022, 2021 and 2020, respectively. The following table summarizes the tax years that are either currently under audit or remain open and subject to examination by the tax authorities in the most significant jurisdictions in which Cboe operates: U.S. Federal 2008-2016, 2019-2022 California 2015-2022 Illinois 2019-2022 New York 2015-2022 New York City 2015-2022 United Kingdom 2019-2022 Netherlands 2016-2022 The Company petitioned the U.S. Tax Court on January 13, 2017, May 7, 2018, and November 29, 2018 for a redetermination of IRS notices of deficiency for Cboe and certain of its subsidiaries for tax years 2011 through 2015 related to its Section 199 deduction claims. These petitions resulted in the establishment of three cases before the U.S. Tax Court. The Company also filed a complaint on October 9, 2018 with the Court of Federal Claims for a refund of Section 199 claims related to tax years 2008 through 2010, the complaint resulted in the establishment of a single case before the Court of Federal Claims. The first case that went to trial involved certain subsidiaries related to electronic trading for tax years 2011 through 2013. The U.S. Tax Court held the trial remotely from May 24, 2021 to June 1, 2021. On March 31, 2022, the U.S. Tax Court issued its decision rejecting the Company’s basis for its Petition (the “Section 199 Opinion”). On May 26, 2022, the U.S. Tax Court entered its decision, which gave effect to the Section 199 Opinion. On August 12, 2022, the Company filed a notice of appeal with the U.S. Court of Appeals for the 10th Circuit, and briefing is underway. Two cases remain pending in U.S. Tax Court, as does the case pending before the Court of Federal Claims. Trial dates in those cases have not been established. One of the two cases pending before the U.S. Tax Court involves certain subsidiaries (different from those that were involved in the first case that went to trial) related to trading for tax years 2011 through 2013. On August 26, 2022, the IRS filed a motion for partial summary judgment, and briefing has concluded. On February 2, 2023, the U.S. Tax Court issued an order denying the IRS’s motion for partial summary judgement. As a result of the Section 199 Opinion, the Company’s Section 199 positions no longer meet the recognition threshold provided by ASC 740 – 10. Accordingly, in the first quarter of 2022, the Company increased its provision for income taxes in order to fully reserve for the expected aggregate amount of additional liabilities that the Company currently expects would result from these cases if they were all decided against the Company. Tax measures contained in the IRA, among other items, a corporate alternative minimum tax of 15%. The new 15% corporate alternative minimum tax is based on the “adjusted financial statement income” of certain large corporations reporting at least $1 billion average adjusted pre-tax net income on their consolidated financial statements for tax years beginning after December 31, 2022. This new tax is not expected to result in a material impact to the Company. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 22. EARNINGS PER SHARE The computation of basic net income per common share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders. The computation of diluted net income per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method. The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2022, 2021, and 2020 (in millions, except per share data): Year Ended December 31, 2022 2021 2020 Basic earnings per share numerator: Net income $ 235.0 $ 529.0 $ 468.2 Net income allocated to participating securities (0.9) (1.7) (1.2) Net income allocated to common stockholders $ 234.1 $ 527.3 $ 467.0 Basic earnings per share denominator: Weighted average shares outstanding 106.3 107.0 109.1 Basic earnings per share $ 2.20 $ 4.93 $ 4.28 Diluted earnings per share numerator: Net income $ 235.0 $ 529.0 $ 468.2 Net income allocated to participating securities (0.9) (1.7) (1.2) Net income allocated to common stockholders $ 234.1 $ 527.3 $ 467.0 Diluted earnings per share denominator: Weighted average shares outstanding 106.3 107.0 109.1 Dilutive common shares issued under stock program 0.4 0.2 0.2 Total dilutive weighted average shares 106.7 107.2 109.3 Diluted earnings per share $ 2.19 $ 4.92 $ 4.27 For the periods presented, the Company did not have shares of stock-based compensation that would have an anti-dilutive effect on the computation of diluted earnings per share . |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | |
COMMITMENTS, CONTINGENCIES, AND GUARANTEES | 23. COMMITMENTS, CONTINGENCIES, AND GUARANTEES Legal Proceedings As of December 31, 2022, the Company was subject to various legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and the Company discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the consolidated financial statements to not be misleading. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. The Company’s assessment of whether a loss is remote, reasonably possible, or probable is based on its assessment of the ultimate outcome of the matter following all appeals. As of December 31, 2022, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these legal proceedings and claims, regulatory reviews, inspections or other legal proceedings, if any, has been incurred. While the consequences of certain unresolved proceedings are not presently determinable, the outcome of any proceeding is inherently uncertain and an adverse outcome from certain matters could have a material effect on the financial position, results of operations, or cash flows of the Company in any given reporting period. 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, and Cboe Digital Exchange are subject to routine rule enforcement reviews and examinations by the CFTC. As a derivatives clearing organization under the jurisdiction of the CFTC, Cboe Clear Digital is also subject to routine audits and examinations by state regulators. 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, BIDS Trading and Cboe Fixed Income are subject to reviews and inspections by FINRA. The Company has from time to time received inquiries and investigative requests from the SEC’s Division of Examinations and the CFTC’s Division of Market Oversight as well as the SEC Division of Enforcement and CFTC Division of Enforcement seeking information about the Company’s compliance with its obligations as a self-regulatory organization under the federal securities laws and Commodity Exchange Act as well as members’ compliance with the federal securities laws and Commodity Exchange Act. In addition, while Cboe Europe, Cboe Chi-X Europe, Cboe Clear Europe, Cboe NL, Cboe Australia, Cboe Japan, MATCHNow, and NEO have not been the subject of any material litigation or regulatory investigation in the past, there is always the possibility of such action in the future. As Cboe Europe and Cboe Chi-X Europe are domiciled in the UK, it is likely that any action would be taken in the UK courts in relation to litigation or by the FCA in relation to any regulatory enforcement action. As Cboe Clear Europe is domiciled in the Netherlands, it is likely that any action would be taken in the Dutch courts in relation to litigation or by the DNB or Dutch Authority for Financial Markets in relation to any regulatory enforcement action. For Cboe NL, also domiciled in the Netherlands, it is likely that any actions would be taken in the Dutch courts in relation to litigation or Dutch Authority for Financial Markets in relation to any regulatory enforcement action. As Cboe Australia is domiciled in Australia, it is likely that any action would be taken in the Australian courts in relation to litigation or by the ASIC, in relation to any regulatory enforcement action. As Cboe Japan is domiciled in Japan, it is likely that any action would be taken in the Japanese courts in relation to litigation or by the JFSA or the JSDA in relation to any regulatory enforcement action. As MATCHNow and NEO are domiciled in Canada, it is likely that any action would be taken in the Canadian courts in relation to litigation or by the IIROC or Canadian SRO in relation to any regulatory enforcement action. Cboe Digital has committed to securely store all crypto assets it holds on behalf of users. As such, Cboe Digital may be liable to its users for losses arising from theft or loss of user private keys. Cboe Digital has no reason to believe it will incur any expense associated with such potential liability because (i) it has no known or historical experience of claims to use as a basis of measurement, (ii) it accounts for and continually verifies the amount of crypto assets within its control, and (iii) it has established security around custodial private keys to minimize the risk of theft or loss. There were no loss events impacting safeguarded assets caused by the theft or loss of digital asset user private keys as of December 31, 2022. As such, the Company had not recorded a liability at December 31, 2022. The Company is also currently a party to various other legal proceedings in addition to those already mentioned. Management does not believe that the likely outcome of any of these other reviews, inspections, investigations or other legal proceedings is expected to have a material impact on the Company’s financial position, results of operations, liquidity or capital resources. See also Note 8 (“Credit Losses”) for information on promissory notes related to the CAT. See also Note 21 (“Income Taxes”). Contractual Obligations The Company has contractual obligations related to licensing agreements with various licensors, some of which included fixed fees and/or variable fees calculated using agreed upon contracted rates and reported cleared volumes. Certain licensing agreements contain annual minimum fee requirements that total between $15.0 and $16.0 million each year for the next five years . NEO has purchase obligations primarily related to software development activities of $1.8 million in total over the next three years . See Note 14 (“Clearing Operations”) for information on the clearinghouse exposure guarantees for Cboe Clear Europe and Cboe Clear Digital. See Note 24 (“Leases”) for information on lease obligations. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES. | |
LEASES | 24. LEASES The Company currently leases office space, data centers, remote network operations centers, and equipment under non-cancelable operating leases with third parties as of December 31, 2022. Certain leases include one or more options to renew , with renewal terms that can extend the lease term from one to five years or more, and some of which include the Company’s option to terminate the leases within one year . During the year ended December 31, 2022, $24.4 million of right of use assets and $24.4 million of lease liabilities were added related to new operating leases, including the addition of $1.3 million of right of use assets and lease liabilities related to acquisitions. Additionally, in October 2021, the Company signed a new lease to secure approximately 29,500 square feet of office space in Amsterdam. The initial term of the lease is 120 months from the accounting commencement date, February 1, 2022. The Company has the option to renew the lease term for an additional 60 months . The total legally binding minimum lease payments for this lease are approximately $9.2 million. The following table presents the supplemental balance sheet information related to leases as of December 31, 2022 and 2021 (in millions): December 31, December 31, 2022 2021 Operating lease right of use assets $ 111.7 $ 110.1 Total leased assets $ 111.7 $ 110.1 Accrued liabilities $ 18.3 $ 15.6 Non-current operating lease liabilities 129.3 129.2 Total leased liabilities $ 147.6 $ 144.8 The following table presents operating lease costs and other information as of and for the years ended December 31, 2022 and 2021 (in millions, except as stated): Year Ended December 31, Year Ended December 31, 2022 2021 Operating lease costs (1) $ 30.0 $ 25.6 Lease term and discount rate information: Weighted average remaining lease term (years) 10.2 11.1 Weighted average discount rate 3.1 % 3.3 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 20.9 $ 17.2 Right-of-use assets obtained in exchange for lease liabilities 24.4 14.1 (1) Includes short-term lease and variable lease costs, which are immaterial. The total rent expense related to lease obligations, reflected in technology support services and facilities costs line items on the consolidated statements of income, for the years ended December 31, 2022, 2021, and 2020 were $30.0 million, $25.6 million, and $20.2 million, respectively. The maturities of the lease liabilities are as follows as of December 31, 2022 (in millions): December 31, 2022 2023 $ 22.4 2024 17.1 2025 16.0 2026 16.7 2027 14.3 After 2027 (1) 90.6 Total lease payments $ 177.1 Less: Interest (29.5) Present value of lease liabilities $ 147.6 (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 | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 25. SUBSEQUENT EVENTS On February 8 and 9, 2023, the Company’s Board of Directors and Compensation Committee, as applicable, approved granting 301,668 RSUs and 64,916 PSUs, with an effective date of February 19, 2023 , to certain officers and employees at a fair value, based on the closing price of the Company’s stock on the grant date. The shares have a three year vesting period based on achievement of certain service, performance and/or market conditions and vesting accelerates upon the occurrence of a termination of employment following a change in control of the Company or in the event of earlier death, disability or, if applicable, qualified retirement. On February 9, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.50 per share. The dividend is payable on March 15, 2023 to stockholders of record at the close of business on February 28, 2023. There have been no additional subsequent events that would require disclosure in, or adjustment to, the consolidated financial statements as of and for the year ended December 31, 2022. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of accounting and basis of presentation | (a) Principles of Accounting These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) as established by FASB. (b) Basis of Presentation The accompanying financial statements are presented on a consolidated basis to include the accounts and transactions of Cboe Global Markets, Inc. and its majority owned subsidiaries and all significant intercompany accounts and transactions have been eliminated. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates based upon historical experience, observance of trends, information available from outside sources and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. Beginning in the first quarter of 2022, the Company updated the financial statement captions within its consolidated statements of income to better reflect the Company’s diversified products, expansive geographical reach, and overall business strategy. Below is a summary of the changes to the financial statement captions. The changes do not have a financial impact on the Company’s reported revenue, revenues less cost of revenues, reported net income, or cash flows from operations. Revenues ● Cash and spot markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s North American Equities, Europe and Asia Pacific, Global FX, and Digital segments. ● Data and access solutions – includes access and capacity fees, proprietary market data fees, and associated other revenue across Cboe’s six segments. ● Derivatives markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s Options, Futures, Europe and Asia Pacific, and Digital segments. Cost of Revenues ● Royalty fees and other cost of revenues – includes royalty fees and other cost of revenues across the Company’s six segments. In prior periods, royalty fees and other cost of revenues were presented as distinct cost of revenues categories. |
Segment information | Segment information The Company previously operated five reportable business segments prior to the quarter ended June 30, 2022. As a result of the ErisX acquisition, which was subsequently rebranded to Cboe Digital, as of the quarter ended June 30, 2022, the Company operates six reportable segments: Options, North American Equities, Europe and Asia Pacific, Futures, Global FX, and Digital which is reflective of how the Company's chief operating decision-maker reviews and operates the business. See Note 16 (“Segment Reporting”) for more information. |
Use of Estimates | (c) Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of the amounts of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of goodwill, indefinite-lived intangible assets, and unrecognized tax benefits. |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents The Company’s cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains cash at various regulated financial institutions and brokerage firms which, at times, may be in excess of the federal depository insurance limit. The Company’s management regularly monitors these institutions and believes that the potential for future loss is remote. The Company considers liquid investments with original or acquired maturities of three months or less to be cash equivalents. |
Financial Investments | (e) Financial Investments Financial investments are classified as trading or available-for-sale. Trading financial investments represent financial investments held by Cboe Trading that retain the industry-specific accounting classification required for broker-dealers and marketable securities held in a rabbi trust for the Company’s non-qualified retirement and benefit plans. The investments held by the broker-dealer subsidiary are recorded at fair value with changes in unrealized gains and losses reflected within interest expense, net in the consolidated statements of income. The investments held in a trust are recorded at fair value with changes in unrealized gains or losses recorded within other income (expense) and the equal and offsetting charges in the related liability are recorded in compensation and benefits expense in the consolidated statements of income. Available-for-sale financial investments are comprised of the financial investments not held by Cboe Trading, including highly liquid U.S. Treasury securities. Unrealized gains and losses, net of income taxes, are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. Interest on financial investments, including amortization of premiums and accretion of discounts, is recognized as income when earned. Realized gains and losses on financial investments are calculated using the specific identification method and are included in interest expense, net in the accompanying consolidated statements of income. A decline in the fair value of any available-for-sale investment below carrying value that is deemed to be other-than-temporary results in an impairment to reduce the carrying value to realizable value. To determine whether an impairment is other-than-temporary, the Company considers all available information relevant to the collectability of the investment, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates. |
Accounts Receivable, Net | (f) Accounts Receivable, Net Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried at amortized cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis and recognizes the total owed from a member firm as accounts receivable, net and the total owed to a member firm as accounts payable and accrued liabilities in the consolidated balance sheets. On a periodic basis, management evaluates the Company’s accounts receivable and records an allowance for expected credit losses using an aging schedule. The aging schedule applies loss rates based on historical loss information and, as deemed necessary, is adjusted for differences in the nature of the receivables that exist at the reporting date from the historical period. Due to the short-term nature of the accounts receivable, changes in future economic conditions are not expected to have a significant impact on the expected credit losses. The accounts receivable are presented net of allowance for credit losses on the consolidated balance sheets and the associated losses are presented in other operating expenses on the consolidated statements of income. |
Property and Equipment, Net | (g) Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated lives of the assets, generally ranging from three to seven years . Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation of leasehold improvements is calculated using the straight-line method over the shorter of the related lease term or the estimated useful life of the assets. Long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances indicate that the carrying values of the assets may not be recoverable. The Company bases this evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present that would indicate that the carrying value of any asset may not be recoverable, the Company determines whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. In the event of impairment, the Company recognizes a loss for the difference between the carrying value and the estimated value of the asset as measured using quoted market prices or, in the absence of quoted market prices, a discounted cash flow analysis. The Company expenses software development costs as incurred during the preliminary project stage, while capitalizing costs incurred during the application development stage, which includes design, coding, installation and testing activities. |
Goodwill and Intangible Assets, Net | (h) Goodwill and Intangible Assets, Net Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of a business acquired. Goodwill is allocated to the Company’s reporting units based on the assignment of the fair values of each reporting unit of the acquired company. The Company tests goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying value may be impaired. Interim impairment testing was performed during the quarter ended June 30, 2022 due to the acquisition of Cboe Digital, resulting in an impairment charge to goodwill. During the quarter ended September 30, 2022 the Company concluded that the factors indicative of impairment were still relevant, resulting in the write-down of the remaining carrying value of goodwill to zero. See Note 10 (“Goodwill, Intangible Assets, Net, and Digital Assets Held”) for additional information. The annual impairment test is performed during the fourth quarter using October 1 carrying values, and if the fair value of the reporting unit is found to be less than the carrying value, an impairment loss is recorded. The Company performed its 2022 annual goodwill impairment test and determined that no additional impairment existed. Intangible assets, net, primarily include acquired trademarks and trade names, customer relationships, strategic alliance agreements, licenses and registrations and non-compete agreements. Intangible assets with finite lives are amortized based on the discounted cash flow method applied over the estimated useful lives of the intangible assets and are tested for impairment if certain events occur indicating that the carrying value may be impaired. Intangible assets deemed to have indefinite useful lives are not amortized, but instead are tested for impairment at least annually, usually concurrently with goodwill. Impairment exists if the fair value of the asset is less than the carrying value, and in that case, an impairment loss is recorded. The Company performed its 2022 annual intangible assets impairment test using October 1, 2022 carrying values and determined that no additional impairment existed, apart from the goodwill impairment mentioned above . |
Treasury Stock | (i) Treasury Stock The Company accounts for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in the consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are either available to be redistributed or they are retired. The Company accounts for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in-capital on the consolidated balance sheets. |
Foreign Currency | (j) Foreign Currency The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated into U.S. dollars using the exchange rate in effect as of each balance sheet date. Statements of income and cash flow amounts are translated using the average exchange rate during the period. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at the applicable exchange rates are included in accumulated other comprehensive income (loss), net in the accompanying consolidated balance sheets. Foreign currency gains and losses are recorded as other (expense) income, net in the consolidated statements of income. The Company’s operations in the United Kingdom, Amsterdam, Canada, Singapore, Philippines, Hong Kong, Australia and Japan are recorded in Pounds sterling, Euros, Canadian dollars, Singapore dollars, Philippine pesos, Hong Kong dollars, Australian dollars and Japanese Yen, respectively. |
Income Taxes | (k) Income Taxes Deferred taxes are recorded on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the tax benefit from an unrecognized tax benefit only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense is recognized on the full amount of deferred benefits for unrecognized tax benefits. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in the income tax provision within the consolidated statements of income. The Company elected to account for global intangible low-taxed income (“GILTI”) in the period in which it is incurred, and therefore, has not provided any deferred tax impacts of GILTI in the consolidated financial statements. |
Revenue Recognition | (l) Revenue Recognition For further discussion related to revenue recognition of fees, such as transaction and clearing fees and liquidity payments, access and capacity fees, market data fees, and regulation transaction and Section 31 fees, see Note 4 (“Revenue Recognition”). |
Concentrations of Revenue and Liquidity Payments | Concentrations of Revenue and Liquidity Payments For the years ended December 31, 2022, 2021, and 2020, no customer accounted for more than 13% of the Company’s total revenue. No customer is contractually or otherwise obligated to continue to use the Company’s services. The loss of, or a significant reduction of, participation by these customers may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows. The two largest clearing members clear the majority of the market-maker sides of transactions at all of the Company’s U.S. options exchanges. If either of these clearing members were to withdraw from the business of market-maker clearing and market-makers were unable to transfer to another clearing member, this could create significant disruption to the U.S. options markets, including Cboe’s. |
Earnings Per Share | (m) Earnings Per Share The computation of basic earnings per share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders. The computation of diluted earnings per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method. |
Stock Based Compensation | (n) Stock-Based Compensation The Company grants stock-based compensation to its employees through restricted stock units and grants restricted stock awards to its board members. The Company records stock-based compensation expense for all stock-based compensation granted based on the grant-date fair value. The Company recognizes stock-based compensation expense related to stock-based compensation awards with graded vesting that have a service condition on a straight-line basis over the requisite service period of the entire award. The amount of stock-based compensation expense related to awards of restricted stock and restricted stock units is based on the fair value of Cboe Global Markets, Inc. common stock at the date of grant. The fair value is based on a current market-based transaction of the Company’s common stock. If a market-based transaction of the Company’s common stock is not available, then the fair value is based on an independent third-party valuation using equal weighting of two valuation analysis techniques, discounted cash flows and valuation multiples observed from publicly traded companies in a similar industry. On November 18, 2022, Cboe Digital Holdings Inc. (“Cboe Digital Holdings”) entered into minority interest purchase agreements with certain digital asset industry participants, pursuant to which Cboe Digital Holdings agreed to issue Restricted Common Units in Cboe Digital. Cboe Digital Holdings also entered into a Warrant Agreement to issue Common Units of Cboe Digital in the future. Certain Cboe Digital investor members paid for the Restricted Common Units through the issuance of promissory notes, which are nonrecourse in nature. The issuances of Restricted Common Units are accounted for as in-substance stock options. A certain Cboe Digital investor member paid for the Restricted Common Units in exchange for cash. Expense associated with the Restricted Common Units is recognized as contra-revenue ratably over a five-year period. The Company uses a Black Scholes pricing model to estimate the fair value of the in-substance stock option created by the Restricted Common Units and promissory notes as well as the fair value of the Warrant. Contra-revenue will be recognized while the performance conditions of the Warrant remain probable in conformance with the requirements in ASC 606 – Revenue from Contracts with Customers. Further adjustments will be recognized in each reporting period until performance is complete relating to changes in the fair value of the option and Warrant liabilities in accordance with ASC 718 – Compensation – Stock Compensation. See Note 19 (“Stock-based Compensation”) for additional information. |
Business Combinations | (o) Business Combinations The Company records identifiable assets, liabilities and goodwill acquired in a business combination at fair value at the acquisition date. Additionally, transaction-related costs are expensed in the period incurred. |
Debt Issuance Costs | (p) Debt Issuance Costs All costs incurred to issue debt are capitalized as a contra-liability and amortized over the life of the debt using the interest method. |
Investments | (q) Investments The Company generally accounts for investments using the measurement alternative when it owns less than 20% of the outstanding voting stock of a company, there is an absence of readily determinable fair value for the respective investment, and the Company has an inability to exercise significant influence over the investment based upon the respective ownership interests held. The Company recognizes dividend income when declared. In general, the equity method of accounting is used when the Company owns 20% to 50% of the outstanding voting stock of a company and when it is able to exercise significant influence over the operating and financial policies of a company. For equity method investments, the Company records the pro-rata share of earnings or losses each period and records any dividends received as a reduction in the investment balance. The equity method investment is inclusive of other-than-temporary declines in value, recognized by the investee, who considers a variety of factors such as the earnings capacity of the investment and the fair value of the investment compared to its carrying value. If the estimated fair value of the investment is less than the carrying value and the decline in value is considered to be other than temporary, the excess of the carrying value over the estimated fair value is recognized in the financial statements as an impairment. |
Leases | (r) Leases The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, operating leases are included in operating lease right of use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities on the balance sheet as of December 31, 2022. The Company does not have any finance leases as of December 31, 2022. ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. The Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the lease liabilities, as the rate implicit in the Company’s leases are generally not reasonably determinable. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s leases. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. For short-term operating leases, lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet and the Company recognizes lease expense in facilities costs within the consolidated statements of income for these leases on a straight-line basis over the lease term. Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more, and some of which include the Company’s option to terminate the leases within one year . When the implicit rate in the Company’s lease is not reasonably determinable, the Company applies an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. |
Margin Deposits and Clearing Funds | (s) Margin Deposits and Clearing Funds Margin deposits and clearing funds in the form of cash contributions by Cboe Clear Europe’s clearing participants where title has transferred to Cboe Clear Europe are included as current assets with equal and offsetting current liabilities in the consolidated balance sheet. These margin deposits and clearing funds are deposited with De Nederlandsche Bank (“DNB”), can only be used for specified Cboe Clear Europe operations, and fluctuate over time due to changes in deposit requirements. Certain non-cash margin deposits and clearing fund deposits, as well as interoperability fund deposits, are not reflected in the accompanying consolidated balance sheet, as Cboe Clear Europe does not take economic ownership of these balances. Cash held as margin deposits and clearing fund deposits may be invested at an approved bank in accordance with Cboe Clear Europe’s investment policy, and any interest or gain received, or loss incurred on invested funds is recorded in other revenue in the consolidated statements of income. Cboe Clear Digital clears cryptocurrencies from 51 U.S. jurisdictions authorized by license or not subject to licensing. Cboe Clear Digital performs a guarantee function whereby Cboe Clear Digital helps to ensure that the obligations of the transactions it clears are fulfilled. Cboe Clear Digital attempts to mitigate this risk by performing internal compliance and due diligence procedures as well as implementing internal risk controls. Cboe Clear Digital 's due diligence procedures include review of the personal and corporate information, financial position of the member participant, and monitoring of Cboe Clear Digital's risk exposure thresholds. |
Digital Assets Held | (t) Digital Assets Held The Company determined that digital assets held should be accounted for under ASC 350 – Intangibles – Goodwill and Other, and included on the consolidated balance sheets within intangibles, net. As there is no inherent limit imposed on the useful life of the digital assets, they are classified as indefinite lived intangible assets and are not subject to amortization. Instead, they must be tested for impairment annually or more frequently if events or circumstances change that indicate that it’s more likely than not that the asset is impaired (i.e., if an impairment indicator exists). Therefore, the value of digital assets is determined at the date of acquisition and will only be remeasured in the event the Company concludes impairment exists. The Company will not record any increases in value during the period the digital assets are held; the only gains that will be recorded will be upon disposition (if the proceeds exceed the carrying value at the time of the disposition). |
Digital Assets - Safeguarded Assets and Liabilities | (u) Digital Assets – Safeguarded Assets and Liabilities In accordance with the SEC issued Staff Accounting Bulletin 121 (“SAB 121”), the Company recorded a safeguard liability with respect to its obligation to safeguard customers’ digital assets along with a corresponding safeguard asset. The safeguard asset and liability are remeasured at fair value on a recurring basis with no impact to the consolidated statement of income. In the event that the Company or its vendors fail to safeguard the customers’ digital assets, any resulting loss will reduce the safeguard asset with a corresponding loss recorded in other expenses in the consolidated statement of income . |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – Adopted On March 31, 2022, SAB 121 was issued, which sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard digital assets that an entity holds for its platform users. The guidance requires an entity to recognize a liability for the obligation to safeguard the users’ assets and recognize an associated asset for the digital assets held for users. Both the liability and asset will be measured initially and subsequently at the fair value of the digital assets being safeguarded. The guidance also requires additional disclosures related to the nature and amount of digital assets held on behalf of its platform users, with separate disclosure for each significant digital asset, and the vulnerabilities the entity has due to any concentration in such activities. The guidance, effective for interim or annual periods ending after June 15, 2022, was adopted by the Company as of June 30, 2022. As a result of adopting SAB 121 , the Company recorded digital assets - safeguarded assets, with corresponding digital assets - safeguarded liabilities of $22.4 million, respectively, as of June 30, 2022, with no impact to the consolidated statements of income and cash flows. Recent Accounting Pronouncements – Issued, not yet Adopted There were no applicable material accounting pronouncements that have been issued, but were not yet adopted as of December 31, 2022. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE RECOGNITION | |
Schedule of disaggregated revenue contract types | The following table depicts the disaggregated revenue contract types listed above within each respective financial statement caption in the consolidated statements of income (in millions): Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Year Ended December 31, 2022 Transaction and clearing fees $ 1,375.5 $ — $ 1,563.3 $ 2,938.8 Access and capacity fees — 324.2 — 324.2 Market data fees 80.3 168.7 33.2 282.2 Regulatory fees 280.2 — 84.5 364.7 Other revenue 41.6 4.1 2.9 48.6 $ 1,777.6 $ 497.0 $ 1,683.9 $ 3,958.5 Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Year Ended December 31, 2021 Transaction and clearing fees $ 1,366.5 $ — $ 1,326.6 $ 2,693.1 Access and capacity fees — 280.7 — 280.7 Market data fees 91.6 130.0 30.5 252.1 Regulatory fees 161.6 — 46.7 208.3 Other revenue 40.8 17.0 2.8 60.6 $ 1,660.5 $ 427.7 $ 1,406.6 $ 3,494.8 Cash Data and and Spot Access Derivatives Markets Solutions Markets Total Year Ended December 31, 2020 Transaction and clearing fees $ 1,287.2 $ — $ 1,130.8 $ 2,418.0 Access and capacity fees — 236.7 — 236.7 Market data fees 98.6 105.0 28.4 232.0 Regulatory fees 416.9 — 83.3 500.2 Other revenue 17.4 18.8 4.0 40.2 $ 1,820.1 $ 360.5 $ 1,246.5 $ 3,427.1 |
Schedule of disaggregation of revenue according to segment | The following table depicts the disaggregation of revenue according to segment (in millions): North Corporate American Europe and Items and Options Equities Asia Pacific Futures Global FX Digital Eliminations Total Year Ended December 31, 2022 Transaction and clearing fees $ 1,471.7 $ 1,155.3 $ 161.9 $ 91.6 $ 58.0 $ 0.3 $ — $ 2,938.8 Access and capacity fees 151.7 109.3 34.0 19.9 9.3 — — 324.2 Market data fees 108.7 131.2 33.1 8.0 1.2 — — 282.2 Regulatory fees 84.2 280.2 — 0.3 — — — 364.7 Other revenue 6.9 5.7 35.6 — 0.4 — — 48.6 $ 1,823.2 $ 1,681.7 $ 264.6 $ 119.8 $ 68.9 $ 0.3 $ — $ 3,958.5 Timing of revenue recognition Services transferred at a point in time $ 1,562.8 $ 1,441.2 $ 197.5 $ 91.9 $ 58.4 $ 0.3 $ — $ 3,352.1 Services transferred over time 260.4 240.5 67.1 27.9 10.5 — — 606.4 $ 1,823.2 $ 1,681.7 $ 264.6 $ 119.8 $ 68.9 $ 0.3 $ — $ 3,958.5 Year Ended December 31, 2021 Transaction and clearing fees $ 1,231.2 $ 1,173.1 $ 145.3 $ 95.2 $ 48.3 $ — $ — $ 2,693.1 Access and capacity fees 124.0 98.0 31.2 18.7 8.8 — — 280.7 Market data fees 84.3 134.6 25.6 6.6 1.0 — — 252.1 Regulatory fees 46.6 161.6 — 0.1 — — — 208.3 Other revenue 18.9 3.2 38.2 — — — 0.3 60.6 $ 1,505.0 $ 1,570.5 $ 240.3 $ 120.6 $ 58.1 $ — $ 0.3 $ 3,494.8 Timing of revenue recognition Services transferred at a point in time $ 1,296.7 $ 1,337.9 $ 183.5 $ 95.3 $ 48.3 $ — $ 0.3 $ 2,962.0 Services transferred over time 208.3 232.6 56.8 25.3 9.8 — — 532.8 $ 1,505.0 $ 1,570.5 $ 240.3 $ 120.6 $ 58.1 $ — $ 0.3 $ 3,494.8 Year Ended December 31, 2020 Transaction and clearing fees $ 1,046.3 $ 1,147.2 $ 90.9 $ 84.5 $ 49.1 $ — $ — $ 2,418.0 Access and capacity fees 107.0 84.2 20.6 17.0 7.9 — — 236.7 Market data fees 74.2 137.0 13.4 6.6 0.8 — — 232.0 Regulatory fees 83.4 416.8 — — — — — 500.2 Other revenue 19.2 4.3 15.6 1.1 — — — 40.2 $ 1,330.1 $ 1,789.5 $ 140.5 $ 109.2 $ 57.8 $ — $ — $ 3,427.1 Timing of revenue recognition Services transferred at a point in time $ 1,148.9 $ 1,568.3 $ 106.5 $ 85.6 $ 49.1 $ — $ — $ 2,958.4 Services transferred over time 181.2 221.2 34.0 23.6 8.7 — — 468.7 $ 1,330.1 $ 1,789.5 $ 140.5 $ 109.2 $ 57.8 $ — $ — $ 3,427.1 |
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 Cash Revenue Balance at December 31, 2021 Additions Recognized December 31, 2022 Liquidity provider sliding scale (1) $ — $ 7.2 $ (7.2) $ — Other, net 15.3 16.5 (20.1) 11.7 Total deferred revenue $ 15.3 $ 23.7 $ (27.3) $ 11.7 (1) Liquidity providers are eligible to participate in the sliding scale program, which involves prepayment of transaction fees, and to receive reduced fees based on the achievement of certain volume thresholds within a calendar month. These transaction fees are amortized and recorded ratably as the transactions occur over the period . |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Acquisitions | |
Schedule of finite-lived and indefinite-lived intangible assets acquired | The following table presents the details of intangible assets as of the acquisition date, inclusive of purchase price adjustments outlined above (in millions, except as stated). All acquired intangible assets with finite lives are amortized using the straight-line method. Cboe Asia Pacific Useful Life (Years) Cboe Digital Useful Life (Years) NEO Useful Life (Years) Trading registrations and licenses $ 6.2 Indefinite $ 25.0 Indefinite $ 15.1 Indefinite Customer relationships 60.1 30 — 37.4 15 Technology 7.5 2 70.0 10 16.2 7 Trademarks and tradenames — — 0.4 5 Total identifiable intangible assets $ 73.8 $ 95.0 $ 69.1 |
NEO | |
Acquisitions | |
Schedule of Purchase Price Allocation | The following table presents the details of the adjustments made to the initial purchase price allocation for the NEO acquisition during the year ended December 31, 2022 (in millions) Initial purchase Total Adjusted purchase price allocation adjustments price allocation Goodwill $ 132.4 $ 0.2 $ 132.6 Intangible assets 130.1 (61.0) 69.1 Net working capital (6.9) 16.6 9.7 Contingent consideration (54.3) 44.2 (10.1) |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS | |
Schedule of investments | As of December 31, 2022 and 2021, the Company's investments were comprised of the following (in millions) : As of December 31, 2022 2021 Equity method investments: Investment in 7Ridge Investments 3 LP $ 215.4 $ 209.5 Total equity method investments 215.4 209.5 Other equity investments: Investment in Eris Innovations Holdings, LLC 20.0 20.0 Investment in CSD Br 5.9 — Investment in Coin Metrics Inc. 5.0 — Investment in Cboe Vest Financial Group, Inc. 2.9 2.9 Investment in Effective Investing Limited 1.8 — Investment in OCC 0.3 0.3 Investment in American Financial Exchange, LLC — 10.6 Investment in Eris Digital Holdings, LLC — 1.1 Other equity investments 1.9 1.4 Total other equity investments 37.8 36.3 Total investments $ 253.2 $ 245.8 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | Property and equipment, net consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, December 31, 2022 2021 Construction in progress $ 7.7 $ 17.3 Building 68.8 68.8 Furniture and equipment 291.3 256.5 Total property and equipment 367.8 342.6 Less accumulated depreciation (259.6) (237.4) Property and equipment, net $ 108.2 $ 105.2 |
CREDIT LOSSES (Tables)
CREDIT LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
CREDIT LOSSES | |
Schedule of changes in allowance for credit losses | The following represents the changes in allowance for credit losses during the years ended December 31, 2022 and 2021 (in millions): Balance at December 31, 2021 Current period provision for expected credit losses Write-offs charged against the allowance Recoveries collected Balance at December 31, 2022 Allowance for notes receivable credit losses $ 30.1 $ — $ — $ — $ 30.1 Allowance for accounts receivable credit losses 1.0 1.6 (0.1) (0.3) 2.2 Total allowance for credit losses $ 31.1 $ 1.6 $ (0.1) $ (0.3) $ 32.3 Balance at December 31, 2020 Current period provision for expected credit losses Write-offs charged against the allowance Recoveries collected Balance at December 31, 2021 Allowance for notes receivable credit losses $ 30.1 $ — $ — $ — $ 30.1 Allowance for accounts receivable credit losses 0.6 0.7 (0.3) — 1.0 Total allowance for credit losses $ 30.7 $ 0.7 $ (0.3) $ — $ 31.1 |
OTHER ASSETS, NET (Tables)
OTHER ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OTHER ASSETS, NET | |
Schedule of other assets, net | Other assets, net consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, December 31, 2022 2021 Software development work in progress $ 8.9 $ 5.6 Data processing software 124.2 103.8 Less accumulated depreciation and amortization (78.8) (70.9) Data processing software, net 54.3 38.5 Other assets (1) 127.6 87.3 Other assets, net $ 181.9 $ 125.8 (1) At December 31, 2022 and December 31, 2021, the majority of the balance included long-term prepaid assets and notes receivable. See Note 8 (“Credit Losses”) for more information on the notes receivable included within other assets, net on the consolidated balance sheets. As of December 31, 2022 and December 31, 2021, the notes receivable, net balance was $102.9 million and $79.3 million, respectively. At December 31, 2022, a contra-revenue asset totaling $19.9 million, which arose from the issuance of Cboe Digital Restricted Common Units and Warrants, is included in other assets, net. The issuance of Cboe Digital Restricted Common Units and Warrants is described in Note 19 (“Stock-based Compensation”). |
GOODWILL, INTANGIBLE ASSETS, _2
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD | |
Schedule of goodwill details by segment | The following table presents the details of goodwill by segment (in millions) : North American Europe and Options Equities Asia Pacific Global FX Digital Total Balance as of December 31, 2020 $ 305.8 $ 1,877.3 $ 444.8 $ 267.2 $ — $ 2,895.1 Adjustment — (0.5) (0.4) — — (0.9) Additions — — 134.0 — — 134.0 Changes in foreign currency exchange rates — 0.1 (2.9) — — (2.8) Balance as of December 31, 2021 $ 305.8 $ 1,876.9 $ 575.5 $ 267.2 $ — $ 3,025.4 Adjustment — 0.2 3.4 — 0.8 4.4 Additions — 132.4 — — 460.1 592.5 Impairment — — — — (460.9) (460.9) Changes in foreign currency exchange rates — (8.7) (29.9) — — (38.6) Balance as of December 31, 2022 $ 305.8 $ 2,000.8 $ 549.0 $ 267.2 $ — $ 3,122.8 |
Schedule of details of intangible assets | The following table presents the details of the intangible assets by segment (in millions): North American Europe and Options Equities Asia Pacific Global FX Digital Total Balance as of December 31, 2020 $ 173.4 $ 1,055.5 $ 386.8 $ 113.3 $ — $ 1,729.0 Additions — — 73.8 — — 73.8 Amortization (14.3) (64.4) (26.3) (21.6) — (126.6) Changes in foreign currency exchange rates — 0.3 (7.9) — — (7.6) Balance as of December 31, 2021 $ 159.1 $ 991.4 $ 426.4 $ 91.7 $ — $ 1,668.6 Adjustments — (61.0) — — — (61.0) Additions — 130.1 — — 95.9 226.0 Amortization (13.0) (62.1) (25.6) (18.9) (4.7) (124.3) Changes in foreign currency exchange rates — (5.6) (40.9) — — (46.5) Balance as of December 31, 2022 $ 146.1 $ 992.8 $ 359.9 $ 72.8 $ 91.2 $ 1,662.8 |
Schedule of categories of intangible assets | The following tables present the categories of intangible assets by segment as of December 31, 2022 and 2021 (in millions, except as stated): Weighted December 31, 2022 Average North American Europe and Amortization Options Equities Asia Pacific Global FX Digital Period (in years) Trading registrations and licenses $ 95.5 $ 605.3 $ 199.5 $ — $ 25.0 Indefinite Customer relationships 46.6 412.8 208.9 140.0 — 16 Market data customer relationships 53.6 322.0 58.4 64.4 — 9 Technology 28.1 56.4 32.8 22.5 70.0 8 Trademarks and tradenames 12.9 8.2 2.3 1.2 — 7 Digital assets held — — — — 0.9 Indefinite Accumulated amortization (90.6) (411.9) (142.0) (155.3) (4.7) $ 146.1 $ 992.8 $ 359.9 $ 72.8 $ 91.2 Weighted December 31, 2021 Average North American Europe and Amortization Options Equities Asia Pacific Global FX Digital Period (in years) Trading registrations and licenses $ 95.5 $ 592.0 $ 221.1 $ — $ — Indefinite Customer relationships 46.6 378.3 232.3 140.0 — 17 Market data customer relationships 53.6 322.0 65.2 64.4 — 10 Technology 28.1 41.1 35.6 22.5 — 5 Trademarks and tradenames 12.9 7.8 2.5 1.2 — 8 Accumulated amortization (77.6) (349.8) (130.3) (136.4) — $ 159.1 $ 991.4 $ 426.4 $ 91.7 $ — |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, 2022 December 31, 2021 Compensation and benefit-related liabilities $ 90.2 $ 68.6 Royalties 33.3 23.0 Accrued liabilities 87.7 73.3 Rebates payable 75.2 95.3 Marketing fee payable 15.9 15.7 Tax reserves 90.4 — Accounts payable 27.5 19.5 Total accounts payable and accrued liabilities $ 420.2 $ 295.4 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
Schedule of debt | The Company’s debt consisted of the following as of December 31, 2022 and 2021 (in millions): December 31, 2022 December 31, 2021 Term Loan Agreement due December 2023, floating rate $ 304.7 $ 159.5 $650 million fixed rate Senior Notes due January 2027, stated rate of 3.650% 647.3 646.5 $500 million fixed rate Senior Notes due December 2030, stated rate of 1.625% 494.0 493.3 $300 million fixed rate Senior Notes due March 2032, stated rate of 3.000% 296.0 — Revolving Credit Agreement — — Cboe Clear Europe Credit Facility — — Total debt $ 1,742.0 $ 1,299.3 |
Schedule of maturities of long-term debt | The future expected loan repayments related to the Term Loan Agreement and the Senior Notes as of December 31, 2022 are as follows (in millions): 2023 $ 305.0 2024 — 2025 — 2026 — Thereafter 1,450.0 Principal amounts repayable 1,755.0 Debt issuance costs (7.0) Unamortized discounts on notes (6.0) Total debt outstanding $ 1,742.0 |
Schedule of interest expense | Year Ended Year Ended Year Ended December 31, December 31, December 31, 2022 2021 2020 Components of interest expense: Contractual interest $ 57.6 $ 45.7 $ 35.3 Amortization of debt discount and issuance costs 2.4 2.3 3.4 Interest expense $ 60.0 $ 48.0 $ 38.7 Interest income (3.6) (0.6) (1.1) Interest expense, net $ 56.4 $ 47.4 $ 37.6 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET | |
Schedule of Accumulated Other Comprehensive Income (Loss), Net | The following represents the changes in accumulated other comprehensive income (loss), net by component (in millions): Foreign Currency Unrealized Total Accumulated Other Translation Investment Post-Retirement Comprehensive Adjustment Gain/Loss Benefits Income (Loss), Net Balance at December 31, 2020 $ 74.7 $ (0.1) $ 0.4 $ 75.0 Other comprehensive loss (19.3) — (0.1) (19.4) Balance at December 31, 2021 $ 55.4 $ (0.1) $ 0.3 $ 55.6 Other comprehensive loss (85.6) (0.8) (0.2) (86.6) Balance at December 31, 2022 $ (30.2) $ (0.9) $ 0.1 $ (31.0) |
CLEARING OPERATIONS (Tables)
CLEARING OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
CLEARING OPERATIONS | |
Schedule of total clearing participant deposits | The following tables present the Company’s total clearing participant deposits as of December 31, 2022 and December 31, 2021 (in millions) : December 31, 2022 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 426.9 $ 338.2 $ 765.1 Clearing funds 103.4 38.6 142.0 Interoperability funds (1) 376.0 89.3 465.3 Total $ 906.3 $ 466.1 $ 1,372.4 December 31, 2021 Cash Contributions Non-Cash Contributions (1) Total Contributions Margin deposits $ 600.0 $ 287.0 $ 887.0 Clearing funds 145.9 41.9 187.8 Interoperability funds (1) 423.3 92.6 515.9 Total $ 1,169.2 $ 421.5 $ 1,590.7 (1) These amounts are not reflected in the consolidated balance sheets, as Cboe Clear Europe does not take economic ownership of these balances. |
Schedule of cash deposits and safeguarded digital assets | The table below presents the Company’s cash deposits and safeguarded digital assets held on behalf of its customers for the purposes of supporting clearing transactions as of December 31, 2022 (in millions): December 31, 2022 Customer bank deposits $ 12.7 Digital assets - safeguarded assets 22.9 Total $ 35.6 |
Schedule of valuation of digital assets - safeguarded assets and safeguarded liabilities | The following table depicts the Company’s valuation of digital assets – safeguarded assets and safeguarded liabilities as of December 31, 2022: Digital Asset Number of Units Valuation per Unit Fair value (in millions) Bitcoin ("BTC") 717 $ 16,540 $ 11.8 Ethereum ("ETH") 6,362 1,199 7.6 Litecoin ("LTC") 17,873 70 1.3 Bitcoin Cash ("BCH") 6,883 97 0.7 USD Coin ("USDC") 1,516,479 1 1.5 $ 22.9 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE MEASUREMENT | |
Schedule of fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021 (in millions): December 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 64.2 $ 64.2 $ — $ — Marketable securities (1): Mutual funds 15.3 15.3 — — Money market funds 12.2 12.2 — — Digital assets - safeguarded assets 22.9 22.9 — — Total Assets $ 114.6 $ 114.6 $ — $ — Liabilities: Contingent consideration liabilities $ 39.1 $ — $ — $ 39.1 Digital assets - safeguarded liabilities 22.9 22.9 — — Cboe Digital restricted common units liability (2) 15.5 — — 15.5 Cboe Digital warrant liability (2) 5.9 — — 5.9 Total Liabilities $ 83.4 $ 22.9 $ — $ 60.5 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 9.1 $ 9.1 $ — $ — Marketable securities (1): Mutual funds 18.4 18.4 — — Money market funds 9.6 9.6 — — Total Assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Total Liabilities $ 70.5 $ — $ — $ 70.5 ____________________________________ (1) These amounts are reflected within financial investments in the consolidated balance sheets. (2) These amounts are reflected within other non-current liabilities in the consolidated balance sheets. |
Schedule of fair value hierarchy for assets and liabilities measured on a nonrecurring basis | The following tables present the Company’s fair value hierarchy for certain assets and liabilities held by the Company as of December 31, 2022 and 2021 (in millions): December 31, 2022 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 64.2 $ 64.2 $ — $ — Deferred compensation plan assets (1) 27.5 27.5 — — Digital assets - safeguarded assets 22.9 22.9 — — Digital assets held (2) 0.9 0.9 — — Total assets $ 115.5 $ 115.5 $ — $ — Liabilities: Contingent consideration liabilities $ 39.1 $ — $ — $ 39.1 Deferred compensation plan liabilities (3) 27.5 27.5 — — Digital assets - safeguarded liabilities 22.9 22.9 — — Cboe Digital restricted common units liability (3) 15.5 — — 15.5 Cboe Digital warrant liability (3) 5.9 — — 5.9 Debt 1,573.9 — 1,573.9 — Total liabilities $ 1,684.8 $ 50.4 $ 1,573.9 $ 60.5 December 31, 2021 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury securities (1) $ 9.1 $ 9.1 $ — $ — Deferred compensation plan assets (1) 28.0 28.0 — — Total assets $ 37.1 $ 37.1 $ — $ — Liabilities: Contingent consideration liabilities $ 70.5 $ — $ — $ 70.5 Deferred compensation plan liabilities (3) 28.0 28.0 — — Debt 1,333.6 — 1,333.6 — Total liabilities $ 1,432.1 $ 28.0 $ 1,333.6 $ 70.5 ________________________________________ (1) These amounts are reflected within financial investments in the consolidated balance sheets. (2) These amounts are reflected within intangible assets, net in the consolidated balance sheets. (3) These amounts are reflected within other non-current liabilities in the consolidated balance sheets. |
Schedule of fair value of debt obligation | At December 31, 2022 and 2021, the fair values of the Company’s debt obligations were as follows (in millions): Fair Value December 31, 2022 December 31, 2021 Term Loan Agreement $ 306.3 $ 160.1 3.650% Senior Notes 623.6 702.6 1.625% Senior Notes 390.7 470.9 3.000% Senior Notes 253.3 — |
Summary of changes in the fair value of Level 3 financial liabilities | Level 3 Financial Liabilities for the Year Ended December 31, 2022 Balance at Realized (gains) Foreign Beginning of losses during Currency Balance at Period period Adjustments Additions Settlements Translation End of Period Liabilities: Contingent consideration liabilities $ 70.5 $ (5.2) $ (44.3) $ 57.7 $ (38.7) $ (0.9) $ 39.1 Cboe Digital restricted common units liability — — — 15.5 — — 15.5 Cboe Digital warrant liability — — — 5.9 — — 5.9 Total Liabilities $ 70.5 $ (5.2) $ (44.3) $ 79.1 $ (38.7) $ (0.9) $ 60.5 Level 3 Financial Liabilities for the Year Ended December 31, 2021 Balance at Realized (gains) Foreign Beginning of losses during Currency Balances at Period period Adjustments Additions Settlements Translation End of Period Liabilities Contingent consideration liabilities $ 32.7 $ (2.7) $ — $ 49.6 $ (9.1) $ — $ 70.5 Total Liabilities $ 32.7 $ (2.7) $ — $ 49.6 $ (9.1) $ — $ 70.5 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT REPORTING | |
Summarized financial data of reportable segments | Summarized financial data of reportable segments was as follows (in millions): North Corporate American Europe and Items and Options Equities Asia Pacific Futures Global FX Digital Eliminations Total Year ended December 31, 2022 Revenues $ 1,823.2 $ 1,681.7 $ 264.6 $ 119.8 $ 68.9 $ 0.3 $ — $ 3,958.5 Operating income (loss) 740.5 146.6 38.1 55.2 8.8 (491.4) (8.2) 489.6 Year ended December 31, 2021 Revenues $ 1,505.0 $ 1,570.5 $ 240.3 $ 120.6 $ 58.1 $ — $ 0.3 $ 3,494.8 Operating income (loss) 538.0 156.1 56.0 66.0 2.7 — (12.9) 805.9 Year ended December 31, 2020 Revenues $ 1,330.1 $ 1,789.5 $ 140.5 $ 109.2 $ 57.8 $ — $ — $ 3,427.1 Operating income (loss) 430.4 159.5 33.5 53.8 6.0 — (21.0) 662.2 |
Schedule of revenue by geographic location | The following represents our revenues less cost of revenues based on jurisdiction (in millions): United States Non-U.S. Total Revenues less cost of revenues: Year ended December 31, 2022 $ 1,531.3 $ 210.4 $ 1,741.7 Year ended December 31, 2021 $ 1,286.9 $ 189.2 $ 1,476.1 Year ended December 31, 2020 $ 1,139.9 $ 114.4 $ 1,254.3 |
REGULATORY CAPITAL (Tables)
REGULATORY CAPITAL (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REGULATORY CAPITAL | |
Schedule of actual and minimum regulatory capital requirements of the subsidiary | The following table presents the Company’s subsidiaries with regulatory capital requirements discussed above, as well as the actual and minimum regulatory capital requirements of the subsidiary as of December 31, 2022 (in millions): Minimum Subsidiary Regulatory Authority Actual Requirement Cboe Trading FINRA/SEC $ 17.3 $ 1.2 BIDS Trading FINRA/SEC 8.0 0.5 Cboe Fixed Income Markets FINRA/SEC 3.9 0.5 Cboe Europe FCA 50.8 27.7 Cboe Chi-X Europe FCA 0.3 0.1 Cboe NL Dutch Authority for Financial Markets 13.1 6.4 Cboe Clear Europe DNB 63.7 39.3 MATCHNow IIROC 4.7 0.2 CFE CFTC 58.7 44.1 Cboe SEF CFTC 2.4 1.3 Cboe Digital Exchange CFTC 10.6 4.1 Cboe Clear Digital CFTC 21.2 5.4 Cboe Australia ASIC 8.3 4.2 Cboe Japan JFSA 12.9 3.2 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock-based Compensation | |
Summary of stock option/warrant activity | Weighted Number of average exercise Shares price Outstanding, January 1, 2020 $ 10,834 $ 18.59 Exercised 10,834 18.59 Outstanding, December 31, 2020 $ — $ — Exercised — — Outstanding, December 31, 2021 $ — $ — Exercised — — Outstanding and exercisable December 31, 2022 $ — $ — |
Summary of restricted stock activity | Weighted Number of average grant shares date fair value Nonvested stock at January 1, 2020 436,013 $ 91.58 Granted 193,912 115.89 Vested (272,258) 88.32 Forfeited (15,585) 106.70 Nonvested stock at December 31, 2020 342,082 $ 108.40 Granted 298,084 92.32 Vested (166,598) 106.13 Forfeited (30,249) 97.01 Nonvested stock at December 31, 2021 443,319 $ 99.22 Granted 369,037 119.97 Vested (201,457) 99.87 Forfeited (54,837) 106.07 Nonvested stock at December 31, 2022 556,062 $ 112.07 |
Summary of performance-based restricted stock units | Weighted Number of average grant Shares date fair value Nonvested stock at January 1, 2020 132,248 $ 107.21 Granted 72,975 125.62 Vested (48,053) 108.91 Forfeited (34,504) 109.85 Nonvested stock at December 31, 2020 122,666 $ 115.18 Granted 71,302 98.32 Vested (29,468) 111.45 Forfeited (12,090) 110.20 Nonvested stock at December 31, 2021 152,410 $ 108.41 Granted 64,668 141.41 Vested (16,834) 96.00 Forfeited (33,542) 95.40 Nonvested stock at December 31, 2022 166,702 $ 125.08 |
Cboe Digital Restricted Common Units | |
Stock-based Compensation | |
Summary of stock option/warrant activity | The following table summarizes the option activity during the year ended December 31, 2022 (in millions, except number of shares and contractual term): Weighted Weighted average Number of average Aggregate remaining shares exercise price intrinsic value contractual term Outstanding, January 1, 2022 — $ — $ — — Granted 185 0.3 — 6 years Vested — — — — Outstanding and exercisable December 31, 2022 185 $ 0.3 $ — 6 years |
Cboe Digital Warrants | |
Stock-based Compensation | |
Summary of stock option/warrant activity | Weighted Number of average shares exercise price Outstanding, January 1, 2022 — $ — Granted 80 0.2 Vested — — Outstanding and exercisable December 31, 2022 80 $ 0.2 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
EQUITY | |
Summary of repurchased shares of the company's common stock under the share repurchase program | Average Repurchase Amount of Repurchases Shares Repurchased Price Per Share (in millions) 2022 Fourth quarter 132,111 $ 116.07 $ 15.3 Third quarter — — — Second quarter 147,139 106.12 15.6 First quarter 596,988 117.25 70.0 Total open market common stock repurchases 876,238 100.9 2021 Fourth quarter — $ — $ — Third quarter — — — Second quarter 331,373 101.57 33.7 First quarter 490,632 96.97 47.6 Total open market common stock repurchases 822,005 81.3 2020 Fourth quarter 1,013,709 $ 86.79 $ 88.0 Third quarter 465,366 89.92 41.8 Second quarter 992,159 100.54 99.8 First quarter 1,062,881 112.46 119.5 Total open market common stock repurchases 3,534,115 349.1 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of net deferred tax liabilities | Net deferred tax assets and liabilities consist of the following as of December 31, 2022 and 2021 (in millions): As of December 31, 2022 2021 Deferred tax assets: Accrued compensation and benefits $ 16.1 $ 14.7 Property, equipment and technology, net 16.0 2.8 Investments 95.1 — Operating leases 37.1 33.5 Other 75.7 54.4 Subtotal 240.0 105.4 Valuation allowance (17.5) (12.2) Total deferred tax assets 222.5 93.2 Deferred tax liabilities: Intangibles (390.1) (372.4) Property, equipment and technology, net (20.4) (19.8) Investments — (44.3) Prepaid expenses or assets (4.4) (4.7) Operating leases (28.2) (24.7) Total deferred tax liabilities (443.1) (465.9) Net deferred tax liabilities $ (220.6) $ (372.7) |
Schedule of provision for income taxes | The provision for income taxes for the years ended December 31, 2022, 2021 and 2020 consists of the following (in millions): Year Ended December 31, 2022 2021 2020 Current tax expense: Federal $ 210.4 $ 148.4 $ 143.7 State 130.2 83.4 70.5 Foreign 13.0 14.2 8.9 Total current tax expense 353.6 246.0 223.1 Deferred income tax (benefit) expense: Federal (126.2) (24.3) (25.2) State (22.7) (7.3) (9.1) Foreign (6.8) 12.7 3.4 Total deferred income tax benefit (155.7) (18.9) (30.9) Total $ 197.9 $ 227.1 $ 192.2 |
Schedule of income from continuing operations before taxes | For the years ended December 31, 2022, 2021, and 2020, income before taxes consists of the following (in millions): Year Ended December 31, 2022 2021 2020 U.S. operations $ 401.3 $ 714.0 $ 601.9 Foreign operations 31.6 42.1 58.5 Total $ 432.9 $ 756.1 $ 660.4 |
Schedule of reconciliation of the statutory federal income tax rate to the effective income tax rate | A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2022, 2021, and 2020 is as follows: Year Ended December 31, 2022 2021 2020 Statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % Impact of federal, state and local tax law & rate changes, net (0.5) % 1.9 % (0.2) % State taxes, net of federal benefit 4.5 % 4.3 % 4.2 % Uncertain tax positions 20.6 % 3.2 % 2.9 % Deduction for foreign-derived intangible income (1.0) % (0.6) % (1.1) % Valuation allowance 0.6 % — % 0.8 % Other, net 0.5 % 0.2 % 1.5 % Effective income tax rate 45.7 % 30.0 % 29.1 % |
Schedule of reconciliation of beginning and ending unrecognized tax benefits | A reconciliation of the beginning and ending unrecognized tax benefits, excluding interest and penalties, is as follows (in millions): 2022 2021 2020 Balance as of January 1 $ 162.1 $ 138.6 $ 116.7 Gross increases on unrecognized tax benefits in prior period 21.8 3.4 3.3 Gross decreases on unrecognized tax benefits in prior period — (0.2) — Gross increases on unrecognized tax benefits in current period 32.9 26.5 24.3 Settlements (3.7) — — Lapse of statute of limitations (1.0) (6.2) (5.7) Balance as of December 31 $ 212.1 $ 162.1 $ 138.6 |
Schedule of tax years currently under audit or remain open and subject to examination by the tax authorities | U.S. Federal 2008-2016, 2019-2022 California 2015-2022 Illinois 2019-2022 New York 2015-2022 New York City 2015-2022 United Kingdom 2019-2022 Netherlands 2016-2022 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
EARNINGS PER SHARE | |
Reconciliation of basic and diluted net income per common share | The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2022, 2021, and 2020 (in millions, except per share data): Year Ended December 31, 2022 2021 2020 Basic earnings per share numerator: Net income $ 235.0 $ 529.0 $ 468.2 Net income allocated to participating securities (0.9) (1.7) (1.2) Net income allocated to common stockholders $ 234.1 $ 527.3 $ 467.0 Basic earnings per share denominator: Weighted average shares outstanding 106.3 107.0 109.1 Basic earnings per share $ 2.20 $ 4.93 $ 4.28 Diluted earnings per share numerator: Net income $ 235.0 $ 529.0 $ 468.2 Net income allocated to participating securities (0.9) (1.7) (1.2) Net income allocated to common stockholders $ 234.1 $ 527.3 $ 467.0 Diluted earnings per share denominator: Weighted average shares outstanding 106.3 107.0 109.1 Dilutive common shares issued under stock program 0.4 0.2 0.2 Total dilutive weighted average shares 106.7 107.2 109.3 Diluted earnings per share $ 2.19 $ 4.92 $ 4.27 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES. | |
Schedule of supplemental balance sheet information related to leases | The following table presents the supplemental balance sheet information related to leases as of December 31, 2022 and 2021 (in millions): December 31, December 31, 2022 2021 Operating lease right of use assets $ 111.7 $ 110.1 Total leased assets $ 111.7 $ 110.1 Accrued liabilities $ 18.3 $ 15.6 Non-current operating lease liabilities 129.3 129.2 Total leased liabilities $ 147.6 $ 144.8 |
Schedule of lease cost and other information | The following table presents operating lease costs and other information as of and for the years ended December 31, 2022 and 2021 (in millions, except as stated): Year Ended December 31, Year Ended December 31, 2022 2021 Operating lease costs (1) $ 30.0 $ 25.6 Lease term and discount rate information: Weighted average remaining lease term (years) 10.2 11.1 Weighted average discount rate 3.1 % 3.3 % Supplemental cash flow information and non-cash activity: Cash paid for amounts included in the measurement of lease liabilities $ 20.9 $ 17.2 Right-of-use assets obtained in exchange for lease liabilities 24.4 14.1 (1) Includes short-term lease and variable lease costs, which are immaterial. |
Schedule of maturities of lease liabilities | The maturities of the lease liabilities are as follows as of December 31, 2022 (in millions): December 31, 2022 2023 $ 22.4 2024 17.1 2025 16.0 2026 16.7 2027 14.3 After 2027 (1) 90.6 Total lease payments $ 177.1 Less: Interest (29.5) Present value of lease liabilities $ 147.6 (1) Total lease payments include $20.4 million related to options to extend lease terms that are reasonably certain of being exercised. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 segment | Mar. 31, 2022 segment | Dec. 31, 2022 USD ($) item segment customer | Dec. 31, 2021 customer | Dec. 31, 2020 customer | |
Summary of Significant Accounting Policies | |||||
Number of reportable segments | segment | 6 | 5 | 6 | ||
Goodwill impairment from annual impairment test | $ 0 | ||||
Intangible assets impairment loss | $ 0 | ||||
Options to renew | true | ||||
Option to terminate period | 1 year | ||||
Minimum | |||||
Summary of Significant Accounting Policies | |||||
Useful life (in years) | 3 years | ||||
Renewal term | 1 year | ||||
Maximum | |||||
Summary of Significant Accounting Policies | |||||
Useful life (in years) | 7 years | ||||
Renewal term | 5 years | ||||
Option to terminate period | 1 year | ||||
Transaction fees | Customer Risk | |||||
Summary of Significant Accounting Policies | |||||
Number of members | item | 2 | ||||
Revenue | Customer Risk | Major Customer | |||||
Summary of Significant Accounting Policies | |||||
Number of members | customer | 0 | 0 | 0 | ||
Concentration risk (as a percent) | 13% | 13% | 13% |
RECENT ACCOUNTING PRONOUNCEME_3
RECENT ACCOUNTING PRONOUNCEMENTS - Adopted (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jun. 30, 2022 |
RECENT ACCOUNTING PRONOUNCEMENTS | ||
Digital assets - safeguarded assets | $ 22.9 | $ 22.4 |
Digital assets - safeguarded liabilities | $ 22.9 | $ 22.4 |
REVENUE RECOGNITION - Revenue b
REVENUE RECOGNITION - Revenue by product line and Segment (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Reporting Information | |||
Number of types of regulatory fees the Company recognizes | item | 2 | ||
Revenues | $ 3,958.5 | $ 3,494.8 | $ 3,427.1 |
Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 3,352.1 | 2,962 | 2,958.4 |
Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 606.4 | 532.8 | 468.7 |
Corporate Items and Eliminations | |||
Segment Reporting Information | |||
Revenues | 0.3 | ||
Corporate Items and Eliminations | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 0.3 | ||
Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 1,823.2 | 1,505 | 1,330.1 |
Options | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 1,562.8 | 1,296.7 | 1,148.9 |
Options | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 260.4 | 208.3 | 181.2 |
North American Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 1,681.7 | 1,570.5 | 1,789.5 |
North American Equities | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 1,441.2 | 1,337.9 | 1,568.3 |
North American Equities | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 240.5 | 232.6 | 221.2 |
Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 119.8 | 120.6 | 109.2 |
Futures | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 91.9 | 95.3 | 85.6 |
Futures | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 27.9 | 25.3 | 23.6 |
Europe and Asia Pacific | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 264.6 | 240.3 | 140.5 |
Europe and Asia Pacific | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 197.5 | 183.5 | 106.5 |
Europe and Asia Pacific | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 67.1 | 56.8 | 34 |
Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 68.9 | 58.1 | 57.8 |
Global FX | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 58.4 | 48.3 | 49.1 |
Global FX | Operating Segments | Services transferred over time | |||
Segment Reporting Information | |||
Revenues | 10.5 | 9.8 | 8.7 |
Digital | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 0.3 | ||
Digital | Operating Segments | Services transferred at a point in time | |||
Segment Reporting Information | |||
Revenues | 0.3 | ||
Transaction and clearing fees | |||
Segment Reporting Information | |||
Revenues | 2,938.8 | 2,693.1 | 2,418 |
Transaction and clearing fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 1,471.7 | 1,231.2 | 1,046.3 |
Transaction and clearing fees | North American Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 1,155.3 | 1,173.1 | 1,147.2 |
Transaction and clearing fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 91.6 | 95.2 | 84.5 |
Transaction and clearing fees | Europe and Asia Pacific | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 161.9 | 145.3 | 90.9 |
Transaction and clearing fees | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 58 | 48.3 | 49.1 |
Transaction and clearing fees | Digital | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 0.3 | ||
Access and capacity fees | |||
Segment Reporting Information | |||
Revenues | 324.2 | 280.7 | 236.7 |
Access and capacity fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 151.7 | 124 | 107 |
Access and capacity fees | North American Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 109.3 | 98 | 84.2 |
Access and capacity fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 19.9 | 18.7 | 17 |
Access and capacity fees | Europe and Asia Pacific | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 34 | 31.2 | 20.6 |
Access and capacity fees | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 9.3 | 8.8 | 7.9 |
Market data fees | |||
Segment Reporting Information | |||
Revenues | 282.2 | 252.1 | 232 |
Market data fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 108.7 | 84.3 | 74.2 |
Market data fees | North American Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 131.2 | 134.6 | 137 |
Market data fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 8 | 6.6 | 6.6 |
Market data fees | Europe and Asia Pacific | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 33.1 | 25.6 | 13.4 |
Market data fees | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 1.2 | 1 | 0.8 |
Regulatory fees | |||
Segment Reporting Information | |||
Revenues | 364.7 | 208.3 | 500.2 |
Regulatory fees | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 84.2 | 46.6 | 83.4 |
Regulatory fees | North American Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 280.2 | 161.6 | 416.8 |
Regulatory fees | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 0.3 | 0.1 | |
Other revenue | |||
Segment Reporting Information | |||
Revenues | 48.6 | 60.6 | 40.2 |
Other revenue | Corporate Items and Eliminations | |||
Segment Reporting Information | |||
Revenues | 0.3 | ||
Other revenue | Options | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 6.9 | 18.9 | 19.2 |
Other revenue | North American Equities | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 5.7 | 3.2 | 4.3 |
Other revenue | Futures | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 1.1 | ||
Other revenue | Europe and Asia Pacific | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 35.6 | 38.2 | 15.6 |
Other revenue | Global FX | Operating Segments | |||
Segment Reporting Information | |||
Revenues | 0.4 | ||
Licensing revenue | |||
Segment Reporting Information | |||
Revenues | 12.4 | 13.1 | |
Cash and spot markets | |||
Segment Reporting Information | |||
Revenues | 1,777.6 | 1,660.5 | 1,820.1 |
Cash and spot markets | Transaction and clearing fees | |||
Segment Reporting Information | |||
Revenues | 1,375.5 | 1,366.5 | 1,287.2 |
Cash and spot markets | Market data fees | |||
Segment Reporting Information | |||
Revenues | 80.3 | 91.6 | 98.6 |
Cash and spot markets | Regulatory fees | |||
Segment Reporting Information | |||
Revenues | 280.2 | 161.6 | 416.9 |
Cash and spot markets | Other revenue | |||
Segment Reporting Information | |||
Revenues | 41.6 | 40.8 | 17.4 |
Data and access solutions | |||
Segment Reporting Information | |||
Revenues | 497 | 427.7 | 360.5 |
Data and access solutions | Access and capacity fees | |||
Segment Reporting Information | |||
Revenues | 324.2 | 280.7 | 236.7 |
Data and access solutions | Market data fees | |||
Segment Reporting Information | |||
Revenues | 168.7 | 130 | 105 |
Data and access solutions | Other revenue | |||
Segment Reporting Information | |||
Revenues | 4.1 | 17 | 18.8 |
Derivatives markets | |||
Segment Reporting Information | |||
Revenues | 1,683.9 | 1,406.6 | 1,246.5 |
Derivatives markets | Transaction and clearing fees | |||
Segment Reporting Information | |||
Revenues | 1,563.3 | 1,326.6 | 1,130.8 |
Derivatives markets | Market data fees | |||
Segment Reporting Information | |||
Revenues | 33.2 | 30.5 | 28.4 |
Derivatives markets | Regulatory fees | |||
Segment Reporting Information | |||
Revenues | 84.5 | 46.7 | 83.3 |
Derivatives markets | Other revenue | |||
Segment Reporting Information | |||
Revenues | $ 2.9 | $ 2.8 | $ 4 |
REVENUE RECOGNITION - Rollforwa
REVENUE RECOGNITION - Rollforward of contract liabilities (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | $ 15.3 |
Cash Additions | 23.7 |
Revenue Recognized | (27.3) |
Ending Balance | 11.7 |
Liquidity provider sliding scale | |
Revenue recognized from contract liabilities and remaining balance | |
Cash Additions | 7.2 |
Revenue Recognized | (7.2) |
Other, net | |
Revenue recognized from contract liabilities and remaining balance | |
Beginning Balance | 15.3 |
Cash Additions | 16.5 |
Revenue Recognized | (20.1) |
Ending Balance | $ 11.7 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Millions | 12 Months Ended | ||||
May 02, 2022 USD ($) | Jul. 01, 2021 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Acquisitions | |||||
Goodwill | $ 592.5 | $ 134 | |||
Contingent consideration liabilities | 39.1 | 70.5 | |||
Acquisition-related costs | 19.9 | 15.6 | $ 45.2 | ||
Professional fees | 89 | 83.7 | 60.6 | ||
Acquisitions | |||||
Acquisitions | |||||
Acquisition-related costs | $ 19.9 | 15.6 | 45.3 | ||
Professional fees | 15 | 22.1 | |||
Impairment of investment | 15.1 | ||||
Impairment facilities charges | $ 0.6 | $ 8.1 | |||
Cboe Asia Pacific | |||||
Acquisitions | |||||
Number of key capital markets | item | 2 | ||||
Goodwill | $ 137 | ||||
Intangible assets | 73.8 | ||||
Working capital | 25.7 | ||||
Contingent consideration liabilities | $ 53 | ||||
Cboe Digital | |||||
Acquisitions | |||||
Goodwill | $ 460.9 | ||||
Intangible assets | 95 | ||||
Working capital | 8.4 | ||||
Gain on change in fair value | $ 7.5 |
ACQUISITIONS - NEO acquisition
ACQUISITIONS - NEO acquisition (Details) - USD ($) $ in Millions | 7 Months Ended | 12 Months Ended | |||
Dec. 31, 2022 | Jun. 01, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||||
Goodwill | $ 592.5 | $ 134 | |||
Contingent consideration | $ (39.1) | $ (39.1) | (39.1) | (70.5) | |
Goodwill, Total adjustments | 4.4 | $ (0.9) | |||
NEO | |||||
Business Acquisition [Line Items] | |||||
Goodwill | 132.6 | $ 132.4 | |||
Intangible assets | 69.1 | 130.1 | 69.1 | 69.1 | |
Net working capital | 9.7 | (6.9) | 9.7 | 9.7 | |
Contingent consideration | $ (10.1) | $ (54.3) | (10.1) | $ (10.1) | |
Goodwill, Total adjustments | 0.2 | ||||
Intangible assets, Total Adjustments | (61) | ||||
Net working capital, Total adjustments | 16.6 | ||||
Contingent consideration, Total adjustments | $ 44.2 |
ACQUISITIONS - Intangible asset
ACQUISITIONS - Intangible assets acquired (Details) - USD ($) $ in Millions | Jun. 01, 2022 | May 02, 2022 | Jul. 01, 2021 |
Cboe Asia Pacific | |||
Acquisitions | |||
Total identifiable intangible assets | $ 73.8 | ||
Cboe Digital | |||
Acquisitions | |||
Total identifiable intangible assets | $ 95 | ||
NEO | |||
Acquisitions | |||
Total identifiable intangible assets | $ 69.1 | ||
Customer relationships | Cboe Asia Pacific | |||
Acquisitions | |||
Finite-lived intangible assets acquired | $ 60.1 | ||
Useful Life (Years) | 30 years | ||
Customer relationships | NEO | |||
Acquisitions | |||
Finite-lived intangible assets acquired | $ 37.4 | ||
Useful Life (Years) | 15 years | ||
Technology | Cboe Asia Pacific | |||
Acquisitions | |||
Finite-lived intangible assets acquired | $ 7.5 | ||
Useful Life (Years) | 2 years | ||
Technology | Cboe Digital | |||
Acquisitions | |||
Finite-lived intangible assets acquired | $ 70 | ||
Useful Life (Years) | 10 years | ||
Technology | NEO | |||
Acquisitions | |||
Finite-lived intangible assets acquired | $ 16.2 | ||
Useful Life (Years) | 7 years | ||
Trademarks and tradenames | NEO | |||
Acquisitions | |||
Finite-lived intangible assets acquired | $ 0.4 | ||
Useful Life (Years) | 5 years | ||
Licensing Agreements | Cboe Asia Pacific | |||
Acquisitions | |||
Indefinite-lived intangible assets acquired | $ 6.2 | ||
Licensing Agreements | Cboe Digital | |||
Acquisitions | |||
Indefinite-lived intangible assets acquired | $ 25 | ||
Licensing Agreements | NEO | |||
Acquisitions | |||
Indefinite-lived intangible assets acquired | $ 15.1 |
INVESTMENTS - Schedule of inves
INVESTMENTS - Schedule of investments and Other Equity Investments (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
May 31, 2020 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Schedule of Cost and Equity Method Investments | |||||
Total equity method investments | $ 215.4 | $ 209.5 | |||
Total other equity investments | 37.8 | 36.3 | |||
Total investments | 253.2 | 245.8 | |||
Investment in 7Ridge Investments 3 LP | |||||
Schedule of Cost and Equity Method Investments | |||||
Total equity method investments | 215.4 | 209.5 | |||
Investment in Eris Exchange Holdings, LLC | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | 20 | 20 | |||
Investment in CSD Br | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | 5.9 | $ 5.9 | |||
Investment in Coin Metrics Inc. | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | 5 | $ 5 | |||
Investment in Cboe Vest Financial Group, Inc. | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | 2.9 | 2.9 | |||
Investment in Effective Investing Limited | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | 1.8 | $ 1.8 | |||
Investment in OCC | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | $ 0.3 | 0.3 | |||
Investment percentage | 20% | ||||
Investment in American Financial Exchange, LLC | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | 10.6 | ||||
Investment in Eris Digital Holdings, LLC | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | 1.1 | ||||
Recognized gain or loss on restructuring | $ 0 | ||||
Other equity investments | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | $ 1.9 | $ 1.4 | |||
StratiFi Technologies | |||||
Schedule of Cost and Equity Method Investments | |||||
Total other equity investments | $ 0.1 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment, Net | |||
Total property and equipment | $ 367.8 | $ 342.6 | |
Less accumulated depreciation | (259.6) | (237.4) | |
Total property and equipment, net | 108.2 | 105.2 | |
Depreciation expense | 35.3 | 33.5 | $ 26.8 |
Construction in progress | |||
Property and Equipment, Net | |||
Total property and equipment | 7.7 | 17.3 | |
Building | |||
Property and Equipment, Net | |||
Total property and equipment | 68.8 | 68.8 | |
Furniture and equipment | |||
Property and Equipment, Net | |||
Total property and equipment | $ 291.3 | $ 256.5 |
PROPERTY AND EQUIPMENT, NET - F
PROPERTY AND EQUIPMENT, NET - Former headquarters location (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Property and Equipment, Net | ||
Property held and used | $ 108.2 | $ 105.2 |
Land | 2.3 | 2.3 |
Property and equipment | 108.2 | $ 105.2 |
Former Chicago Headquarters Location | ||
Property and Equipment, Net | ||
Property held and used | 9.8 | |
Land | 2.3 | |
Property and equipment | $ 7.5 |
CREDIT LOSSES (Details)
CREDIT LOSSES (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Credit losses | ||
Allowance balance at beginning of period | $ 31.1 | $ 30.7 |
Current period provision for expected credit losses | 1.6 | 0.7 |
Write-offs charged against the allowance | (0.1) | (0.3) |
Recoveries collected | (0.3) | |
Allowance balance at end of period | 32.3 | 31.1 |
Notes receivable | ||
Credit losses | ||
Allowance balance at beginning of period | 30.1 | 30.1 |
Allowance balance at end of period | 30.1 | 30.1 |
Accounts receivable | ||
Credit losses | ||
Allowance balance at beginning of period | 1 | 0.6 |
Current period provision for expected credit losses | 1.6 | 0.7 |
Write-offs charged against the allowance | (0.1) | (0.3) |
Recoveries collected | (0.3) | |
Allowance balance at end of period | $ 2.2 | $ 1 |
OTHER ASSETS, NET (Details)
OTHER ASSETS, NET (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets | |||
Less accumulated depreciation and amortization | $ (78.8) | $ (70.9) | |
Data processing software, net | 54.3 | 38.5 | |
Other assets | 127.6 | 87.3 | |
Total other assets, net | 181.9 | 125.8 | |
Notes receivable, net | 102.9 | 79.3 | |
Amortization expense | 124.3 | 126.6 | $ 124.8 |
Contra-revenue assets | 19.9 | ||
Software development work in progress | |||
Intangible Assets | |||
Software | 8.9 | 5.6 | |
Data processing software | |||
Intangible Assets | |||
Software | 124.2 | 103.8 | |
Amortization expense | $ 7.2 | $ 7.3 | $ 6.9 |
GOODWILL, INTANGIBLE ASSETS, _3
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD - Goodwill by segment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
May 02, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill | ||||||
Balance at beginning of the period | $ 3,025.4 | $ 2,895.1 | ||||
Adjustment | 4.4 | (0.9) | ||||
Additions | 592.5 | 134 | ||||
Impairment | (460.9) | |||||
Changes in foreign currency exchange rates | (38.6) | (2.8) | ||||
Balance at end of the period | 3,122.8 | 3,025.4 | $ 2,895.1 | |||
Deferred tax benefit | 155.7 | 18.9 | 30.9 | |||
Carrying value | 253.2 | 245.8 | ||||
Cboe Digital | ||||||
Goodwill | ||||||
Additions | $ 460.9 | |||||
Impairment | $ (0.8) | |||||
Options | ||||||
Goodwill | ||||||
Balance at beginning of the period | 305.8 | 305.8 | ||||
Adjustment | 0 | 0 | ||||
Additions | 0 | 0 | ||||
Impairment | 0 | |||||
Changes in foreign currency exchange rates | 0 | 0 | ||||
Balance at end of the period | 305.8 | 305.8 | 305.8 | |||
North American Equities | ||||||
Goodwill | ||||||
Balance at beginning of the period | 1,876.9 | 1,877.3 | ||||
Adjustment | 0.2 | (0.5) | ||||
Additions | 132.4 | 0 | ||||
Impairment | 0 | |||||
Changes in foreign currency exchange rates | (8.7) | 0.1 | ||||
Balance at end of the period | 2,000.8 | 1,876.9 | 1,877.3 | |||
Europe and Asia Pacific | ||||||
Goodwill | ||||||
Balance at beginning of the period | 575.5 | 444.8 | ||||
Adjustment | 3.4 | (0.4) | ||||
Additions | 0 | 134 | ||||
Impairment | 0 | |||||
Changes in foreign currency exchange rates | (29.9) | (2.9) | ||||
Balance at end of the period | 549 | 575.5 | 444.8 | |||
Global FX | ||||||
Goodwill | ||||||
Balance at beginning of the period | 267.2 | 267.2 | ||||
Adjustment | 0 | 0 | ||||
Additions | 0 | 0 | ||||
Impairment | 0 | |||||
Changes in foreign currency exchange rates | 0 | 0 | ||||
Balance at end of the period | 267.2 | 267.2 | 267.2 | |||
Digital | ||||||
Goodwill | ||||||
Balance at beginning of the period | 0 | 0 | ||||
Adjustment | 0.8 | 0 | ||||
Additions | 460.1 | 0 | ||||
Impairment | $ 460.1 | (460.9) | ||||
Changes in foreign currency exchange rates | 0 | 0 | ||||
Balance at end of the period | 0 | $ 0 | $ 0 | |||
Deferred tax benefit | 116.2 | |||||
Decrease in carrying value | 343.9 | |||||
Carrying value | 220 | |||||
Intangible asset impairment | $ 0 | |||||
Other long lived assets | $ 0 | |||||
Futures | ||||||
Goodwill | ||||||
Balance at end of the period | $ 0 |
GOODWILL, INTANGIBLE ASSETS, _4
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD - Intangible assets by segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets | |||
Balance at beginning of the period | $ 1,668.6 | $ 1,729 | |
Adjustments | (61) | ||
Additions | 226 | 73.8 | |
Amortization | (124.3) | (126.6) | $ (124.8) |
Changes in foreign currency exchange rates | (46.5) | (7.6) | |
Balance at end of the period | 1,662.8 | 1,668.6 | 1,729 |
Options | |||
Intangible Assets | |||
Balance at beginning of the period | 159.1 | 173.4 | |
Amortization | (13) | (14.3) | |
Balance at end of the period | 146.1 | 159.1 | 173.4 |
North American Equities | |||
Intangible Assets | |||
Balance at beginning of the period | 991.4 | 1,055.5 | |
Adjustments | (61) | ||
Additions | 130.1 | ||
Amortization | (62.1) | (64.4) | |
Changes in foreign currency exchange rates | (5.6) | 0.3 | |
Balance at end of the period | 992.8 | 991.4 | 1,055.5 |
Europe and Asia Pacific | |||
Intangible Assets | |||
Balance at beginning of the period | 426.4 | 386.8 | |
Additions | 73.8 | ||
Amortization | (25.6) | (26.3) | |
Changes in foreign currency exchange rates | (40.9) | (7.9) | |
Balance at end of the period | 359.9 | 426.4 | 386.8 |
Global FX | |||
Intangible Assets | |||
Balance at beginning of the period | 91.7 | 113.3 | |
Amortization | (18.9) | (21.6) | |
Balance at end of the period | 72.8 | $ 91.7 | $ 113.3 |
Digital | |||
Intangible Assets | |||
Additions | 95.9 | ||
Amortization | (4.7) | ||
Balance at end of the period | $ 91.2 |
GOODWILL, INTANGIBLE ASSETS, _5
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD - Estimated Future Amortization (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD | |||
Amortization expense | $ 124.3 | $ 126.6 | $ 124.8 |
Amortization expense | |||
2023 | 115.7 | ||
2024 | 92.5 | ||
2025 | 76.1 | ||
2026 | 68.9 | ||
2027 | $ 62.2 |
GOODWILL, INTANGIBLE ASSETS, _6
GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD - Intangible assets by category (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets | |||
Intangible assets, net | $ 1,662.8 | $ 1,668.6 | $ 1,729 |
Customer relationships | Weighted Average | |||
Intangible Assets | |||
Amortization period (in years) | 16 years | 17 years | |
Market data customer relationships | Weighted Average | |||
Intangible Assets | |||
Amortization period (in years) | 9 years | 10 years | |
Technology | Weighted Average | |||
Intangible Assets | |||
Amortization period (in years) | 8 years | 5 years | |
Trademarks and tradenames | Weighted Average | |||
Intangible Assets | |||
Amortization period (in years) | 7 years | 8 years | |
Options | |||
Intangible Assets | |||
Accumulated amortization | $ (90.6) | $ (77.6) | |
Intangible assets, net | 146.1 | 159.1 | 173.4 |
Options | Customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 46.6 | 46.6 | |
Options | Market data customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 53.6 | 53.6 | |
Options | Technology | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 28.1 | 28.1 | |
Options | Trademarks and tradenames | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 12.9 | 12.9 | |
Options | Licensing Agreements | |||
Intangible Assets | |||
Indefinite-lived intangible assets, gross | 95.5 | 95.5 | |
North American Equities | |||
Intangible Assets | |||
Accumulated amortization | (411.9) | (349.8) | |
Intangible assets, net | 992.8 | 991.4 | 1,055.5 |
North American Equities | Customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 412.8 | 378.3 | |
North American Equities | Market data customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 322 | 322 | |
North American Equities | Technology | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 56.4 | 41.1 | |
North American Equities | Trademarks and tradenames | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 8.2 | 7.8 | |
North American Equities | Licensing Agreements | |||
Intangible Assets | |||
Indefinite-lived intangible assets, gross | 605.3 | 592 | |
Europe and Asia Pacific | |||
Intangible Assets | |||
Accumulated amortization | (142) | (130.3) | |
Intangible assets, net | 359.9 | 426.4 | 386.8 |
Europe and Asia Pacific | Customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 208.9 | 232.3 | |
Europe and Asia Pacific | Market data customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 58.4 | 65.2 | |
Europe and Asia Pacific | Technology | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 32.8 | 35.6 | |
Europe and Asia Pacific | Trademarks and tradenames | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 2.3 | 2.5 | |
Europe and Asia Pacific | Licensing Agreements | |||
Intangible Assets | |||
Indefinite-lived intangible assets, gross | 199.5 | 221.1 | |
Global FX | |||
Intangible Assets | |||
Accumulated amortization | (155.3) | (136.4) | |
Intangible assets, net | 72.8 | 91.7 | $ 113.3 |
Global FX | Customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 140 | 140 | |
Global FX | Market data customer relationships | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 64.4 | 64.4 | |
Global FX | Technology | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 22.5 | 22.5 | |
Global FX | Trademarks and tradenames | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 1.2 | $ 1.2 | |
Digital | |||
Intangible Assets | |||
Accumulated amortization | (4.7) | ||
Intangible assets, net | 91.2 | ||
Digital | Technology | |||
Intangible Assets | |||
Finite-lived intangible assets, gross | 70 | ||
Digital | Licensing Agreements | |||
Intangible Assets | |||
Indefinite-lived intangible assets, gross | 25 | ||
Digital | Digital assets held | |||
Intangible Assets | |||
Indefinite-lived intangible assets, gross | $ 0.9 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||
Compensation and benefit-related liabilities | $ 90.2 | $ 68.6 |
Royalties | 33.3 | 23 |
Accrued liabilities | 87.7 | 73.3 |
Rebates payable | 75.2 | 95.3 |
Marketing fee payable | 15.9 | 15.7 |
Tax reserves | 90.4 | |
Accounts payable | 27.5 | 19.5 |
Total accounts payable and accrued liabilities | $ 420.2 | $ 295.4 |
DEBT - Schedule of long-term de
DEBT - Schedule of long-term debt (Details) € in Millions, $ in Millions | Dec. 31, 2022 USD ($) | Dec. 31, 2022 EUR (€) | Mar. 16, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 15, 2020 USD ($) | Jul. 01, 2020 EUR (€) | Mar. 22, 2018 USD ($) | Jan. 12, 2017 USD ($) |
Debt Instrument | ||||||||
Total debt | $ 1,742 | $ 1,299.3 | ||||||
Debt issuance costs | (7) | |||||||
Term Loan Agreement | ||||||||
Debt Instrument | ||||||||
Total debt | 304.7 | 159.5 | ||||||
Debt instrument face amount | $ 300 | |||||||
3.650% Senior Notes due January 2027 | ||||||||
Debt Instrument | ||||||||
Total debt | 647.3 | 646.5 | ||||||
Debt instrument face amount | $ 650 | $ 650 | $ 650 | |||||
Interest rate (as a percent) | 3.65% | 3.65% | 3.65% | 3.65% | 3.65% | |||
1.625% Senior Notes due December 2030 | ||||||||
Debt Instrument | ||||||||
Total debt | $ 494 | $ 493.3 | ||||||
Debt instrument face amount | $ 500 | $ 500 | $ 500 | |||||
Interest rate (as a percent) | 1.625% | 1.625% | 1.625% | 1.625% | 1.625% | |||
3.000% Senior Notes due March 2032 | ||||||||
Debt Instrument | ||||||||
Total debt | $ 296 | |||||||
Debt instrument face amount | $ 300 | $ 300 | ||||||
Interest rate (as a percent) | 3% | 3% | 3% | |||||
Revolving Credit Agreement | ||||||||
Debt Instrument | ||||||||
Total debt | $ 0 | |||||||
Cboe Clear Europe Credit Facility | ||||||||
Debt Instrument | ||||||||
Total debt | € | € 0 | |||||||
Debt instrument face amount | € | € 1,500 |
DEBT (Details)
DEBT (Details) € in Millions, $ in Millions | 12 Months Ended | ||||||||||||||||||||
Dec. 27, 2022 USD ($) | Dec. 01, 2022 USD ($) | Nov. 01, 2022 USD ($) | Sep. 22, 2022 USD ($) | Aug. 25, 2022 USD ($) | Jun. 30, 2022 EUR (€) | May 31, 2022 USD ($) | Apr. 29, 2022 USD ($) | Feb. 25, 2022 USD ($) subsidiary | Jun. 25, 2021 USD ($) | Jul. 01, 2020 USD ($) | Dec. 31, 2022 USD ($) subsidiary | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 EUR (€) subsidiary | Mar. 16, 2022 USD ($) | Jul. 01, 2021 EUR (€) | Dec. 15, 2020 USD ($) | Jul. 01, 2020 EUR (€) | Mar. 22, 2018 USD ($) | Jan. 12, 2017 USD ($) | |
Debt Instrument | |||||||||||||||||||||
Proceeds from long-term debt | $ 663.6 | $ 110 | $ 493.7 | ||||||||||||||||||
Repayments of outstanding indebtedness | 220 | 20 | $ 155 | ||||||||||||||||||
Borrowings outstanding | $ 1,742 | 1,299.3 | |||||||||||||||||||
Amended term loan agreement | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Proceeds from long-term debt | $ 175 | $ 190 | $ 110 | ||||||||||||||||||
Amended term loan agreement | Prime Rate | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0.50% | ||||||||||||||||||||
Amended term loan agreement | Secured Overnight Financing Rate ("SOFR") | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0.65% | ||||||||||||||||||||
Term Loan Agreement | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Debt instrument face amount | $ 300 | ||||||||||||||||||||
Repayments of outstanding indebtedness | $ 220 | ||||||||||||||||||||
Minimum consolidated interest ratio | 4 | ||||||||||||||||||||
Maximum consolidated leverage ratio | 3.50 | 3.50 | |||||||||||||||||||
Maximum consolidated leverage ratio, scenario one | 4.25 | 4.25 | |||||||||||||||||||
Maximum consolidated leverage ratio, scenario two | 4 | 4 | |||||||||||||||||||
Borrowings outstanding | $ 304.7 | 159.5 | |||||||||||||||||||
3.650% Senior Notes due January 2027 | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Debt instrument face amount | $ 650 | $ 650 | $ 650 | ||||||||||||||||||
Interest rate (as a percent) | 3.65% | 3.65% | 3.65% | 3.65% | 3.65% | ||||||||||||||||
Borrowings outstanding | $ 647.3 | $ 646.5 | |||||||||||||||||||
1.625% Senior Notes due December 2030 | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Debt instrument face amount | $ 500 | $ 500 | $ 500 | ||||||||||||||||||
Interest rate (as a percent) | 1.625% | 1.625% | 1.625% | 1.625% | 1.625% | ||||||||||||||||
Borrowings outstanding | $ 494 | $ 493.3 | |||||||||||||||||||
3.000% Senior Notes due March 2032 | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Debt instrument face amount | $ 300 | $ 300 | |||||||||||||||||||
Interest rate (as a percent) | 3% | 3% | 3% | ||||||||||||||||||
Borrowings outstanding | $ 296 | ||||||||||||||||||||
Senior Notes | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Redemption price | 101% | ||||||||||||||||||||
Revolving Credit Agreement | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Minimum consolidated interest ratio | 4 | ||||||||||||||||||||
Maximum consolidated leverage ratio | 3.50 | 3.50 | |||||||||||||||||||
Minimum consolidated interest ratio, scenario one | 4.25 | ||||||||||||||||||||
Minimum consolidated interest ratio, scenario two | 4 | ||||||||||||||||||||
Credit agreement, maximum borrowing capacity | $ 400 | ||||||||||||||||||||
Term of agreement | 3 years | ||||||||||||||||||||
Maximum borrowing capacity, increase limit | $ 200 | ||||||||||||||||||||
Maximum borrowing capacity, total with increase | $ 600 | ||||||||||||||||||||
Number of subsidiaries designated as additional borrowers | subsidiary | 0 | 0 | |||||||||||||||||||
Borrowings outstanding | $ 0 | ||||||||||||||||||||
Borrowing capacity available | $ 400 | ||||||||||||||||||||
Revolving Credit Agreement | Minimum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0.75% | ||||||||||||||||||||
Number of subsidiaries that may be designated as additional borrowers | subsidiary | 1 | ||||||||||||||||||||
Revolving Credit Agreement | Maximum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 1.25% | ||||||||||||||||||||
Revolving Credit Agreement | Prime Rate | Minimum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0% | ||||||||||||||||||||
Revolving Credit Agreement | Prime Rate | Maximum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0.25% | ||||||||||||||||||||
Revolving Credit Agreement | Dollars SFOR | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0.10% | ||||||||||||||||||||
Revolving Credit Agreement | Sterling SONIA | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0.0326% | ||||||||||||||||||||
Revolving Credit Agreement | Euros EURIBOR | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0% | ||||||||||||||||||||
Revolving Credit Agreement | Swing Line Sub-Facility | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Credit agreement, maximum borrowing capacity | $ 25 | ||||||||||||||||||||
Cboe Clear Europe Credit Facility | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Debt instrument face amount | € | € 1,500 | ||||||||||||||||||||
Maximum borrowing capacity, increase limit | € | 500 | ||||||||||||||||||||
Maximum borrowing capacity, total with increase | € | 2,000 | ||||||||||||||||||||
Borrowings outstanding | € | € 0 | ||||||||||||||||||||
Borrowing capacity available | € | € 1,250 | ||||||||||||||||||||
Debt instrument, threshold amount transferred to provider of settlement or custody services | € | 500 | ||||||||||||||||||||
Percentage of commitment fee | 0.30% | ||||||||||||||||||||
Facility payable | 364 days | ||||||||||||||||||||
Debt instrument, threshold net worth on each drawdown | $ 1,750 | ||||||||||||||||||||
Debt instrument, amount to meet minimum liquidity regulations | € | € 20 | € 24 | |||||||||||||||||||
Cboe Clear Europe Credit Facility | Minimum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Credit agreement, maximum borrowing capacity | € | € 1,250 | ||||||||||||||||||||
Maximum borrowing capacity, total with increase | € | 1,750 | ||||||||||||||||||||
Debt instrument, amount to meet minimum liquidity regulations | € | 20 | ||||||||||||||||||||
Cboe Clear Europe Credit Facility | Maximum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Credit agreement, maximum borrowing capacity | € | 1,500 | ||||||||||||||||||||
Maximum borrowing capacity, total with increase | € | 2,000 | ||||||||||||||||||||
Debt instrument, amount to meet minimum liquidity regulations | € | € 30 | ||||||||||||||||||||
Cboe Clear Europe Credit Facility | Base Rate | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 1.75% | ||||||||||||||||||||
Cboe Clear Europe Credit Facility | Base Rate | Minimum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 1.60% | ||||||||||||||||||||
Cboe Clear Europe Credit Facility | Base Rate | Maximum | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 1.75% | ||||||||||||||||||||
Cboe Clear Europe Credit Facility | Federal Funds Effective Rate | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Interest rate margin (as a percent) | 0.50% | ||||||||||||||||||||
Cboe Digital | Amended term loan agreement | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Proceeds from long-term debt | $ 190 | ||||||||||||||||||||
Repayments of outstanding indebtedness | $ 30 | $ 50 | $ 40 | $ 50 | $ 50 | $ 220 | |||||||||||||||
NEO | Amended term loan agreement | |||||||||||||||||||||
Debt Instrument | |||||||||||||||||||||
Proceeds from long-term debt | $ 175 |
DEBT - Debt repayments (Details
DEBT - Debt repayments (Details) - USD ($) $ in Millions | May 01, 2020 | Dec. 31, 2022 | Dec. 31, 2021 |
Long-term Debt | |||
2023 | $ 305 | ||
Thereafter | 1,450 | ||
Principal amounts repayable | 1,755 | ||
Debt issuance costs | (7) | ||
Unamortized discounts on notes | (6) | ||
Total debt outstanding | $ 1,742 | $ 1,299.3 | |
Cboe Digital | Paycheck Protection Program ("PPP") | |||
Debt | |||
Proceeds from loan subsequently forgiven | $ 1.3 |
DEBT - Interest Expense (Detail
DEBT - Interest Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt - components of interest expense | |||
Contractual interest | $ 57.6 | $ 45.7 | $ 35.3 |
Amortization of debt discount and issuance costs | 2.4 | 2.3 | 3.4 |
Interest expense | 60 | 48 | 38.7 |
Interest income | (3.6) | (0.6) | (1.1) |
Interest expense, net | $ 56.4 | $ 47.4 | $ 37.6 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
AOCI Rollforward | |||
Beginning balance | $ 3,604.8 | $ 3,348.9 | $ 3,355.6 |
Other comprehensive loss | (86.6) | (19.4) | 37.4 |
Ending balance | 3,465.3 | 3,604.8 | 3,348.9 |
Accumulated other comprehensive income (loss), net. | |||
AOCI Rollforward | |||
Beginning balance | 55.6 | 75 | 37.6 |
Other comprehensive loss | (86.6) | (19.4) | 37.4 |
Ending balance | (31) | 55.6 | 75 |
Foreign Currency Translation Adjustment | |||
AOCI Rollforward | |||
Beginning balance | 55.4 | 74.7 | |
Other comprehensive loss | (85.6) | (19.3) | |
Ending balance | (30.2) | 55.4 | 74.7 |
Unrealized Investment Gain/Loss | |||
AOCI Rollforward | |||
Beginning balance | (0.1) | (0.1) | |
Other comprehensive loss | (0.8) | ||
Ending balance | (0.9) | (0.1) | (0.1) |
Post-Retirement Benefits | |||
AOCI Rollforward | |||
Beginning balance | 0.3 | 0.4 | |
Other comprehensive loss | (0.2) | (0.1) | |
Ending balance | $ 0.1 | $ 0.3 | $ 0.4 |
CLEARING OPERATIONS - Narrative
CLEARING OPERATIONS - Narrative (Details) - Cboe Clear Europe Credit Facility | 1 Months Ended | 12 Months Ended |
Sep. 30, 2021 item | Dec. 31, 2022 item Counterparty | |
Clearing Operations | ||
Number of European markets | item | 10 | 18 |
Number of central counterparties | Counterparty | 2 | |
Default and liquid waterfalls regulatory capital | 25% |
CLEARING OPERATIONS - Clearing
CLEARING OPERATIONS - Clearing participant (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Clearing Operations | ||
Cash Contributions | $ 906.3 | $ 1,169.2 |
Non-Cash Contributions | 466.1 | 421.5 |
Total Contributions | 1,372.4 | 1,590.7 |
Margin deposits | ||
Clearing Operations | ||
Cash Contributions | 426.9 | 600 |
Non-Cash Contributions | 338.2 | 287 |
Total Contributions | 765.1 | 887 |
Clearing funds | ||
Clearing Operations | ||
Cash Contributions | 103.4 | 145.9 |
Non-Cash Contributions | 38.6 | 41.9 |
Total Contributions | 142 | 187.8 |
Interoperability funds | ||
Clearing Operations | ||
Cash Contributions | 376 | 423.3 |
Non-Cash Contributions | 89.3 | 92.6 |
Total Contributions | $ 465.3 | $ 515.9 |
CLEARING OPERATIONS - Cboe Clea
CLEARING OPERATIONS - Cboe Clear Digital (Details) $ in Millions | Dec. 31, 2022 USD ($) jurisdiction | Jun. 30, 2022 USD ($) |
Clearing Operations | ||
Cash deposits | $ 12.7 | |
Digital assets - safeguarded assets | 22.9 | $ 22.4 |
Total | $ 35.6 | |
Cboe Clear Digital | ||
Clearing Operations | ||
Number Of U.S. Jurisdictions authorized | jurisdiction | 51 |
CLEARING OPERATIONS - Valuation
CLEARING OPERATIONS - Valuation (Details) $ / shares in Units, $ in Millions | Dec. 31, 2022 USD ($) item $ / shares | Jun. 30, 2022 USD ($) |
Fair Value - Digital Assets - Safeguarded Assets and Safeguarded Liabilities | ||
Fair Value | $ 22.9 | $ 22.4 |
Bitcoin | ||
Fair Value - Digital Assets - Safeguarded Assets and Safeguarded Liabilities | ||
Number of Units | item | 717 | |
Valuation per Unit | $ / shares | $ 16,540 | |
Fair Value | $ 11.8 | |
Ethereum | ||
Fair Value - Digital Assets - Safeguarded Assets and Safeguarded Liabilities | ||
Number of Units | item | 6,362 | |
Valuation per Unit | $ / shares | $ 1,199 | |
Fair Value | $ 7.6 | |
Litecoin | ||
Fair Value - Digital Assets - Safeguarded Assets and Safeguarded Liabilities | ||
Number of Units | item | 17,873 | |
Valuation per Unit | $ / shares | $ 70 | |
Fair Value | $ 1.3 | |
Bitcoin Cash | ||
Fair Value - Digital Assets - Safeguarded Assets and Safeguarded Liabilities | ||
Number of Units | item | 6,883 | |
Valuation per Unit | $ / shares | $ 97 | |
Fair Value | $ 0.7 | |
USD Coin | ||
Fair Value - Digital Assets - Safeguarded Assets and Safeguarded Liabilities | ||
Number of Units | item | 1,516,479 | |
Valuation per Unit | $ / shares | $ 1 | |
Fair Value | $ 1.5 |
FAIR VALUE MEASUREMENT - Fair v
FAIR VALUE MEASUREMENT - Fair value hierarchy for assets and liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Assets: | |||
Total assets | $ 115.5 | $ 37.1 | |
Digital assets - safeguarded assets | 22.9 | $ 22.4 | |
Liabilities: | |||
Contingent consideration liabilities | 39.1 | 70.5 | |
Digital assets - safeguarded liabilities | 22.9 | $ 22.4 | |
Cboe Digital restricted common units liability | 15.5 | ||
Cboe Digital warrant liability | 5.9 | ||
Total liabilities | 1,684.8 | 1,432.1 | |
Level 1 | |||
Assets: | |||
Total assets | 115.5 | 37.1 | |
Digital assets - safeguarded assets | 22.9 | ||
Liabilities: | |||
Digital assets - safeguarded liabilities | 22.9 | ||
Total liabilities | 50.4 | 28 | |
Level 2 | |||
Liabilities: | |||
Total liabilities | 1,573.9 | 1,333.6 | |
Level 3 | |||
Liabilities: | |||
Contingent consideration liabilities | 39.1 | 70.5 | |
Cboe Digital restricted common units liability | 15.5 | ||
Cboe Digital warrant liability | 5.9 | ||
Total liabilities | 60.5 | 70.5 | |
Recurring | |||
Assets: | |||
Total assets | 114.6 | ||
Digital assets - safeguarded assets | 22.9 | ||
Liabilities: | |||
Contingent consideration liabilities | 39.1 | 70.5 | |
Digital assets - safeguarded liabilities | 22.9 | ||
Cboe Digital restricted common units liability | 15.5 | ||
Cboe Digital warrant liability | 5.9 | ||
Total liabilities | 83.4 | 70.5 | |
Recurring | U.S. Treasury securities | |||
Assets: | |||
Total assets | 64.2 | 9.1 | |
Recurring | Marketable securities | |||
Assets: | |||
Total assets | 37.1 | ||
Recurring | Marketable securities | Mutual funds | |||
Assets: | |||
Total assets | 15.3 | 18.4 | |
Recurring | Marketable securities | Money market funds | |||
Assets: | |||
Total assets | 12.2 | 9.6 | |
Recurring | Level 1 | |||
Assets: | |||
Total assets | 114.6 | ||
Digital assets - safeguarded assets | 22.9 | ||
Liabilities: | |||
Digital assets - safeguarded liabilities | 22.9 | ||
Total liabilities | 22.9 | ||
Recurring | Level 1 | U.S. Treasury securities | |||
Assets: | |||
Total assets | 64.2 | 9.1 | |
Recurring | Level 1 | Marketable securities | |||
Assets: | |||
Total assets | 37.1 | ||
Recurring | Level 1 | Marketable securities | Mutual funds | |||
Assets: | |||
Total assets | 15.3 | 18.4 | |
Recurring | Level 1 | Marketable securities | Money market funds | |||
Assets: | |||
Total assets | 12.2 | 9.6 | |
Recurring | Level 3 | |||
Liabilities: | |||
Contingent consideration liabilities | 39.1 | 70.5 | |
Cboe Digital restricted common units liability | 15.5 | ||
Cboe Digital warrant liability | 5.9 | ||
Total liabilities | $ 60.5 | $ 70.5 |
FAIR VALUE MEASUREMENT - Fair_2
FAIR VALUE MEASUREMENT - Fair value hierarchy of financial instruments held (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Assets: | |||
Investments fair value | $ 64.2 | $ 9.1 | |
Deferred compensation plan assets | 27.5 | 28 | |
Digital assets - safeguarded assets | 22.9 | $ 22.4 | |
Digital assets held | 0.9 | ||
Total assets | 115.5 | 37.1 | |
Liabilities: | |||
Contingent consideration liabilities | 39.1 | 70.5 | |
Deferred compensation plan liabilities | 27.5 | 28 | |
Digital assets - safeguarded liabilities | 22.9 | $ 22.4 | |
Cboe Digital restricted common units liability | 15.5 | ||
Cboe Digital warrant liability | 5.9 | ||
Debt | 1,573.9 | 1,333.6 | |
Total liabilities | 1,684.8 | 1,432.1 | |
Level 1 | |||
Assets: | |||
Investments fair value | 64.2 | 9.1 | |
Deferred compensation plan assets | 27.5 | 28 | |
Digital assets - safeguarded assets | 22.9 | ||
Digital assets held | 0.9 | ||
Total assets | 115.5 | 37.1 | |
Liabilities: | |||
Deferred compensation plan liabilities | 27.5 | 28 | |
Digital assets - safeguarded liabilities | 22.9 | ||
Total liabilities | 50.4 | 28 | |
Level 2 | |||
Liabilities: | |||
Debt | 1,573.9 | 1,333.6 | |
Total liabilities | 1,573.9 | 1,333.6 | |
Level 3 | |||
Liabilities: | |||
Contingent consideration liabilities | 39.1 | 70.5 | |
Cboe Digital restricted common units liability | 15.5 | ||
Cboe Digital warrant liability | 5.9 | ||
Total liabilities | $ 60.5 | $ 70.5 |
FAIR VALUE MEASUREMENT - Narrat
FAIR VALUE MEASUREMENT - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Reporting Information | |||
Contingent consideration liabilities | $ 39.1 | $ 70.5 | |
Payment of contingent consideration liabilities | 38.7 | 9.1 | $ 2.2 |
Change in contingent consideration | $ 5.2 | ||
Number of other stock exchanges | item | 3 | ||
Hanweck, FT Options, Trade Alert And Cboe Asia Pacific | |||
Segment Reporting Information | |||
Payment of contingent consideration liabilities | $ 38.7 | ||
Recurring | |||
Segment Reporting Information | |||
Contingent consideration liabilities | $ 39.1 | $ 70.5 |
FAIR VALUE MEASUREMENT - Fair_3
FAIR VALUE MEASUREMENT - Fair values of debt obligations (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Mar. 16, 2022 | Dec. 31, 2021 | Dec. 15, 2020 | Jan. 12, 2017 |
Debt | |||||
Debt obligations | $ 1,573.9 | $ 1,333.6 | |||
Level 2 | |||||
Debt | |||||
Debt obligations | 1,573.9 | 1,333.6 | |||
Term Loan Agreement | Level 2 | |||||
Debt | |||||
Debt obligations | $ 306.3 | $ 160.1 | |||
3.650% Senior Notes due January 2027 | |||||
Debt | |||||
Interest rate (as a percent) | 3.65% | 3.65% | 3.65% | 3.65% | |
3.650% Senior Notes due January 2027 | Level 2 | |||||
Debt | |||||
Debt obligations | $ 623.6 | $ 702.6 | |||
1.625% Senior Notes due December 2030 | |||||
Debt | |||||
Interest rate (as a percent) | 1.625% | 1.625% | 1.625% | 1.625% | |
1.625% Senior Notes due December 2030 | Level 2 | |||||
Debt | |||||
Debt obligations | $ 390.7 | $ 470.9 | |||
3.000% Senior Notes due March 2032 | |||||
Debt | |||||
Interest rate (as a percent) | 3% | 3% | |||
3.000% Senior Notes due March 2032 | Level 2 | |||||
Debt | |||||
Debt obligations | $ 253.3 |
FAIR VALUE MEASUREMENT - Change
FAIR VALUE MEASUREMENT - Changes in fair value of Level 3 financial liabilities (Details) - Level 3 - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in fair value of level 3 financial liabilities | ||
Balance at Beginning of Period | $ 70.5 | $ 32.7 |
Realized (Gains) Losses during period | $ (5.2) | $ (2.7) |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Business Combination, Contingent Consideration, Liability, Noncurrent | Business Combination, Contingent Consideration, Liability, Noncurrent |
Adjustments | $ (44.3) | |
Additions | 79.1 | $ 49.6 |
Settlements | (38.7) | (9.1) |
Foreign Currency Translation | (0.9) | |
Balance at End of Period | 60.5 | 70.5 |
Contingent consideration liability | ||
Changes in fair value of level 3 financial liabilities | ||
Balance at Beginning of Period | 70.5 | 32.7 |
Realized (Gains) Losses during period | (5.2) | (2.7) |
Adjustments | (44.3) | |
Additions | 57.7 | 49.6 |
Settlements | (38.7) | (9.1) |
Foreign Currency Translation | (0.9) | |
Balance at End of Period | 39.1 | $ 70.5 |
Cboe Digital restricted common units liability | ||
Changes in fair value of level 3 financial liabilities | ||
Additions | 15.5 | |
Balance at End of Period | 15.5 | |
Cboe Digital warrant liability | ||
Changes in fair value of level 3 financial liabilities | ||
Additions | 5.9 | |
Balance at End of Period | $ 5.9 |
SEGMENT REPORTING - Summarized
SEGMENT REPORTING - Summarized financial information by reportable segment (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 segment | Mar. 31, 2022 segment | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Reporting Information | |||||
Number of reportable segments | segment | 6 | 5 | 6 | ||
Revenues | $ 3,958.5 | $ 3,494.8 | $ 3,427.1 | ||
Operating income (loss) | 489.6 | 805.9 | 662.2 | ||
Operating Segments | Options | |||||
Segment Reporting Information | |||||
Revenues | 1,823.2 | 1,505 | 1,330.1 | ||
Operating income (loss) | 740.5 | 538 | 430.4 | ||
Operating Segments | North American Equities | |||||
Segment Reporting Information | |||||
Revenues | 1,681.7 | 1,570.5 | 1,789.5 | ||
Operating income (loss) | 146.6 | 156.1 | 159.5 | ||
Operating Segments | Europe and Asia Pacific | |||||
Segment Reporting Information | |||||
Revenues | 264.6 | 240.3 | 140.5 | ||
Operating income (loss) | 38.1 | 56 | 33.5 | ||
Operating Segments | Futures | |||||
Segment Reporting Information | |||||
Revenues | 119.8 | 120.6 | 109.2 | ||
Operating income (loss) | 55.2 | 66 | 53.8 | ||
Operating Segments | Global FX | |||||
Segment Reporting Information | |||||
Revenues | 68.9 | 58.1 | 57.8 | ||
Operating income (loss) | 8.8 | 2.7 | 6 | ||
Operating Segments | Digital | |||||
Segment Reporting Information | |||||
Revenues | 0.3 | ||||
Operating income (loss) | (491.4) | ||||
Corporate Items and Eliminations | |||||
Segment Reporting Information | |||||
Revenues | 0.3 | ||||
Operating income (loss) | $ (8.2) | $ (12.9) | $ (21) |
SEGMENT REPORTING - Geographica
SEGMENT REPORTING - Geographical Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information | |||
Revenues less cost of revenues | $ 1,741.7 | $ 1,476.1 | $ 1,254.3 |
Non-U.S. | |||
Segment Reporting Information | |||
Revenues less cost of revenues | 210.4 | 189.2 | 114.4 |
United States | |||
Segment Reporting Information | |||
Revenues less cost of revenues | $ 1,531.3 | $ 1,286.9 | $ 1,139.9 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Outside US | |||
Defined Contribution Plan | |||
Company contribution amount | $ 3 | $ 2.3 | $ 1.6 |
SMART Plan | |||
Defined Contribution Plan | |||
Total assets in the trust | 27.5 | ||
Company contribution amount | $ 14.4 | $ 11.8 | $ 10.5 |
REGULATORY CAPITAL (Details)
REGULATORY CAPITAL (Details) | Dec. 31, 2022 USD ($) Test |
Cboe Trading | |
Regulatory Requirement | |
Capital | $ 17,300,000 |
Minimum Requirement | 1,200,000 |
BIDS Trading | |
Regulatory Requirement | |
Capital | 8,000,000 |
Minimum Requirement | $ 500,000 |
Cboe Fixed Income Markets | |
Regulatory Requirement | |
Minimum net capital required to be maintained, option 1 - percentage of aggregate indebtedness items | 12.50% |
Minimum net capital required to be maintained, option 2 - amount | $ 5,000 |
Capital | 3,900,000 |
Minimum Requirement | 500,000 |
Cboe Europe | |
Regulatory Requirement | |
Capital | 50,800,000 |
Minimum Requirement | 27,700,000 |
Cboe Chi-X Europe | |
Regulatory Requirement | |
Capital | 300,000 |
Minimum Requirement | 100,000 |
Capital resources requirement | 100,000 |
Cboe NL | |
Regulatory Requirement | |
Capital | 13,100,000 |
Minimum Requirement | 6,400,000 |
Cboe Clear Europe | |
Regulatory Requirement | |
Capital | 63,700,000 |
Minimum Requirement | 39,300,000 |
MATCHNow | |
Regulatory Requirement | |
Capital | 4,700,000 |
Minimum Requirement | 200,000 |
CFE | |
Regulatory Requirement | |
Capital | 58,700,000 |
Minimum Requirement | $ 44,100,000 |
Number of capital adequacy tests required to be met | Test | 2 |
Cboe SEF | |
Regulatory Requirement | |
Capital | $ 2,400,000 |
Minimum Requirement | $ 1,300,000 |
Number of capital adequacy tests required to be met | Test | 2 |
Cboe Digital Exchange | |
Regulatory Requirement | |
Capital | $ 10,600,000 |
Minimum Requirement | $ 4,100,000 |
Number of capital adequacy tests required to be met | Test | 2 |
Cboe Clear Digital | |
Regulatory Requirement | |
Capital | $ 21,200,000 |
Minimum Requirement | $ 5,400,000 |
Number of capital adequacy tests required to be met | Test | 2 |
Cboe Australia | |
Regulatory Requirement | |
Capital | $ 8,300,000 |
Minimum Requirement | 4,200,000 |
Cboe Japan | |
Regulatory Requirement | |
Capital | 12,900,000 |
Minimum Requirement | $ 3,200,000 |
Minimum required regulatory capital ratio (as a percent) | 120% |
Cboe Trading and BIDS Trading | |
Regulatory Requirement | |
Minimum net capital required to be maintained, option 1 - percentage of aggregate indebtedness items | 6.67% |
Minimum net capital required to be maintained, option 2 - amount | $ 100,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
May 31, 2022 | Feb. 28, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-based Compensation | |||||
Stock-based compensation expense | $ 30.7 | $ 26.6 | $ 21.7 | ||
Payments for the purchase of shares to satisfy the employee income tax withholdings | $ 8.9 | $ 6.2 | 14.2 | ||
Restricted Stock Units | |||||
Stock-based Compensation | |||||
Number of shares of common stock of which unit is convertible (in shares) | 1 | ||||
Vesting period | 3 years | ||||
Qualified retirement eligibility age for grants awarded in and after 2017 | 55 years | ||||
Qualified retirement eligibility number of years of service for grants awarded in and after 2017 | 10 years | ||||
Stock options | |||||
Stock-based Compensation | |||||
Total intrinsic value of stock options exercised | $ 0.9 | ||||
RSAs and RSUs | |||||
Stock-based Compensation | |||||
Shares purchased to satisfy the employee income tax withholdings (in shares) | 68,872 | ||||
Payments for the purchase of shares to satisfy the employee income tax withholdings | $ 8.2 | ||||
Vested (in shares) | 201,457 | 166,598 | 272,258 | ||
PSUs | |||||
Stock-based Compensation | |||||
Number of shares of common stock of which unit is convertible (in shares) | 1 | ||||
Vesting period | 3 years | ||||
Shares purchased to satisfy the employee income tax withholdings (in shares) | 5,245 | ||||
Payments for the purchase of shares to satisfy the employee income tax withholdings | $ 0.6 | ||||
Vested (in shares) | 16,834 | 29,468 | 48,053 | ||
Risk-free interest rate | 2.88% | 1.75% | |||
Volatility time period | 3 years | 3 years | |||
Expected volatility | 32.80% | 32.20% | |||
Correlation to S&P 500 Index time period | 3 years | 3 years | |||
Correlation with S&P index | 0.52 | 0.51 | |||
Unrecognized compensation expense | $ 36.9 | ||||
Unrecognized compensation expense, period for recognition | 1 year 10 months 24 days | ||||
PSUs | Minimum | |||||
Stock-based Compensation | |||||
Units ultimately expected to be awarded | 0% | ||||
PSUs | Maximum | |||||
Stock-based Compensation | |||||
Units ultimately expected to be awarded | 200% | ||||
Restricted Stock | |||||
Stock-based Compensation | |||||
Vested (in shares) | 183,573 | ||||
Restricted Stock | Director | |||||
Stock-based Compensation | |||||
Vesting period | 1 year |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock option activity (Details) | 12 Months Ended |
Dec. 31, 2020 $ / shares shares | |
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 | 12 Months Ended | ||||
Sep. 15, 2022 | Sep. 14, 2022 | May 31, 2018 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Stock Purchase Plan | ||||||
Compensation expense | $ 30,700,000 | $ 26,600,000 | $ 21,700,000 | |||
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% | |||||
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 | |||||
Exercise price per share of common stock as a percent of fair market value | 85% | |||||
Compensation expense | $ 600,000 | $ 400,000 | $ 300,000 | |||
Shares were reserved for future issuance | 617,805 | |||||
ESPP | US. | ||||||
Employee Stock Purchase Plan | ||||||
Exercise price per share of common stock as a percent of fair market value | 90% | |||||
ESPP | Outside of US | ||||||
Employee Stock Purchase Plan | ||||||
Exercise price per share of common stock as a percent of fair market value | 85% | |||||
RSAs and RSUs | ||||||
Number of shares | ||||||
Beginning balance (in shares) | 443,319 | 342,082 | 436,013 | |||
Granted (in shares) | 369,037 | 298,084 | 193,912 | |||
Vested (in shares) | (201,457) | (166,598) | (272,258) | |||
Forfeited (in shares) | (54,837) | (30,249) | (15,585) | |||
Ending balance of Outstanding and exercisable (in shares) | 556,062 | 443,319 | 342,082 | |||
Weighted average grant date fair value | ||||||
Beginning balance (in USD per share) | $ 99.22 | $ 108.40 | $ 91.58 | |||
Granted (in dollars per share) | 119.97 | 92.32 | 115.89 | |||
Vested (in USD per share) | 99.87 | 106.13 | 88.32 | |||
Forfeited (in USD per share) | 106.07 | 97.01 | 106.70 | |||
Ending balance of Outstanding and exercisable (in USD per share) | $ 112.07 | $ 99.22 | $ 108.40 | |||
PSUs | ||||||
Number of shares | ||||||
Beginning balance (in shares) | 152,410 | 122,666 | 132,248 | |||
Granted (in shares) | 64,668 | 71,302 | 72,975 | |||
Vested (in shares) | (16,834) | (29,468) | (48,053) | |||
Forfeited (in shares) | (33,542) | (12,090) | (34,504) | |||
Ending balance of Outstanding and exercisable (in shares) | 166,702 | 152,410 | 122,666 | |||
Weighted average grant date fair value | ||||||
Beginning balance (in USD per share) | $ 108.41 | $ 115.18 | $ 107.21 | |||
Granted (in dollars per share) | 141.41 | 98.32 | 125.62 | |||
Vested (in USD per share) | 96 | 111.45 | 108.91 | |||
Forfeited (in USD per share) | 95.40 | 110.20 | 109.85 | |||
Ending balance of Outstanding and exercisable (in USD per share) | $ 125.08 | $ 108.41 | $ 115.18 |
STOCK-BASED COMPENSATION - Cboe
STOCK-BASED COMPENSATION - Cboe Digital Restricted Common Units And Cboe Digital Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |
Nov. 18, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | |
Cboe Digital Restricted Common Units | |||
Stock-based Compensation | |||
Interest rate (as a percent) | 5% | ||
Contra-revenue | zero | ||
Contra-revenue is expected to be recognized | $ 14 | $ 14 | |
Change in fair value of option | $ 0 | ||
Vesting period | 5 years | ||
Risk-free interest rate, minimum | 3.88% | ||
Risk-free interest rate, Maximum | 3.95% | ||
Expected dividend rate | 0% | ||
Expected volatility | 60% | ||
Number of shares | |||
Granted (in shares) | 185 | 185 | |
Ending balance of Outstanding and exercisable (in shares) | 185 | 185 | |
Weighted average grant date fair value | |||
Granted (in dollars per share) | $ 0.3 | ||
Ending balance of Outstanding and exercisable (in USD per share) | $ 0.3 | $ 0.3 | |
Weighted average remaining contractual term, Granted (in years) | 6 years | ||
Weighted average remaining contractual term of Outstanding and exercisable (in years) | 6 years | ||
Cboe Digital Restricted Common Units | Minimum | |||
Stock-based Compensation | |||
Expected term (in years) | 5 years | ||
Cboe Digital Restricted Common Units | Maximum | |||
Stock-based Compensation | |||
Expected term (in years) | 7 years | ||
Cboe Digital Warrants | |||
Stock-based Compensation | |||
Contra-revenue | zero | ||
Contra-revenue is expected to be recognized | $ 5.9 | $ 5.9 | |
Number of units called by warrants | 80 | ||
Warrants vested (in shares) | 0 | ||
Change in fair value of warrants | $ 0 | ||
Vesting period | 2 years | ||
Risk-free interest rate | 3.95% | ||
Expected dividend rate | 0% | ||
Expected volatility | 60% | ||
Expected term (in years) | 5 years | ||
Number of shares | |||
Granted (in shares) | 80 | ||
Ending balance of Outstanding and exercisable (in shares) | 80 | 80 | |
Weighted average grant date fair value | |||
Granted (in dollars per share) | $ 0.2 | ||
Ending balance of Outstanding and exercisable (in USD per share) | $ 0.2 | $ 0.2 |
EQUITY (Details)
EQUITY (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) $ / shares | |
Common Stock | |||
Common stock, shares authorized (in shares) | 325,000,000 | 325,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 107,670,248 | 108,159,319 | |
Common stock, shares outstanding (in shares) | 105,951,199 | 106,646,498 | |
Common stock, votes per share | Vote | 1 | ||
Common Stock in Treasury, at Cost | |||
Common stock held in treasury (in shares) | 1,719,049 | 1,512,821 | |
Purchase of Common Stock from Employees | |||
Stock repurchased from employee stock plans (in shares) | 74,117 | 63,911 | |
Average price paid per share (in dollars per share) | $ / shares | $ 119.45 | $ 97.19 | |
Preferred stock | |||
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Dividends | |||
Cash dividends declared (in dollars per share) | $ / shares | $ 1.96 | $ 1.80 | $ 1.56 |
Cash dividends paid (in dollars per share) | $ / shares | $ 1.96 | $ 1.80 | |
Aggregate payout | $ | $ 209.4 | $ 193.3 | $ 170.6 |
EQUITY - Share Repurchase Progr
EQUITY - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | 144 Months Ended | ||||||||||||
Dec. 21, 2022 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2011 | |
Share Repurchase Program | |||||||||||||||
Authorized amount | $ 1,600,000 | $ 1,600,000 | $ 1,600,000 | $ 100,000 | |||||||||||
Number of shares of common stock repurchased | 744,127 | 132,111 | 147,139 | 596,988 | 331,373 | 490,632 | 1,013,709 | 465,366 | 992,159 | 1,062,881 | 876,238 | 822,005 | 3,534,115 | 18,948,367 | |
Average price paid per share | $ 116.07 | $ 106.12 | $ 117.25 | $ 101.57 | $ 96.97 | $ 86.79 | $ 89.92 | $ 100.54 | $ 112.46 | $ 115.20 | $ 70.30 | ||||
Total purchase price | $ 15,300 | $ 15,600 | $ 70,000 | $ 33,700 | $ 47,600 | $ 88,000 | $ 41,800 | $ 99,800 | $ 119,500 | $ 100,900 | $ 81,300 | $ 349,100 | $ 1,300,000 | ||
Availability remaining under existing share repurchase authorizations | $ 217,900 | $ 217,900 | $ 217,900 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets and liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Accrued compensation and benefits | $ 16.1 | $ 14.7 |
Property, equipment and technology, net | 16 | 2.8 |
Investments | 95.1 | |
Operating leases | 37.1 | 33.5 |
Other | 75.7 | 54.4 |
Subtotal | 240 | 105.4 |
Valuation allowance | (17.5) | (12.2) |
Total deferred tax assets | 222.5 | 93.2 |
Deferred tax liabilities: | ||
Intangibles | (390.1) | (372.4) |
Property, equipment and technology, net | (20.4) | (19.8) |
Investments | (44.3) | |
Prepaid expenses or assets | (4.4) | (4.7) |
Operating leases | (28.2) | (24.7) |
Total deferred tax liabilities | (443.1) | (465.9) |
Net deferred tax liabilities | $ (220.6) | $ (372.7) |
INCOME TAXES - Components of in
INCOME TAXES - Components of income tax expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current tax expense: | |||
Federal | $ 210.4 | $ 148.4 | $ 143.7 |
State | 130.2 | 83.4 | 70.5 |
Foreign | 13 | 14.2 | 8.9 |
Total current tax expense | 353.6 | 246 | 223.1 |
Deferred income tax (benefit)/expense/: | |||
Federal | (126.2) | (24.3) | (25.2) |
State | (22.7) | (7.3) | (9.1) |
Foreign | (6.8) | 12.7 | 3.4 |
Total deferred income tax benefit | (155.7) | (18.9) | (30.9) |
Total | $ 197.9 | $ 227.1 | $ 192.2 |
INCOME TAXES - Deferred income
INCOME TAXES - Deferred income tax liability, net (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | |||
U.S. operations | $ 401.3 | $ 714 | $ 601.9 |
Foreign operations | 31.6 | 42.1 | 58.5 |
Income before income tax provision | $ 432.9 | $ 756.1 | $ 660.4 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of statutory federal income tax rate to effective income tax rate (Details) - case | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Aug. 12, 2022 | Nov. 29, 2018 | |
INCOME TAXES | |||||
Statutory U.S. federal income tax rate | 21% | 21% | 21% | ||
Impact of federal, state and local tax law & rate changes, net | (0.50%) | 1.90% | (0.20%) | ||
State taxes, net of federal benefit | 4.50% | 4.30% | 4.20% | ||
Uncertain tax positions | 20.60% | 3.20% | 2.90% | ||
Deduction for Foreign-Derived Intangible Income | (1.00%) | (0.60%) | (1.10%) | ||
Valuation allowance | 0.60% | 0.80% | |||
Other, net | 0.50% | 0.20% | 1.50% | ||
Effective income tax rate | 45.70% | 30% | 29.10% | ||
Number of cases before the U.S. Tax Court | 2 | 3 |
INCOME TAXES - Reconciliation_2
INCOME TAXES - Reconciliation of unrecognized tax benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | |||
Unrecognized tax benefits, beginning balance | $ 162.1 | $ 138.6 | $ 116.7 |
Gross increases on unrecognized tax benefits in prior period | 21.8 | 3.4 | 3.3 |
Gross decreases on unrecognized tax benefits in prior period | (0.2) | ||
Gross increases on unrecognized tax benefits in current period | 32.9 | 26.5 | 24.3 |
Settlements | (3.7) | ||
Lapse of statute of limitations | (1) | (6.2) | (5.7) |
Unrecognized tax benefits, ending balance | $ 212.1 | $ 162.1 | $ 138.6 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income taxes | ||||
Undistributed earnings in subsidiaries | $ 84.4 | |||
Unrecognized tax positions that would affect the annual effective tax rate | 177.1 | $ 162.1 | $ 137.4 | |
Lapse of statute of limitations | 1 | 6.2 | 5.7 | |
Estimated interest costs and penalties | 39.1 | 9.7 | 6.9 | |
Accrued interest and penalties | 74.4 | $ 35.8 | $ 26.1 | |
Capital Loss Carryforwards | ||||
Income taxes | ||||
Capital loss forwards which, if unused, will expire in 2024 | $ 9.4 | |||
Forecast | ||||
Income taxes | ||||
Lapse of statute of limitations | $ 52.4 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Basic and Diluted earnings per share numerator: | |||
Net income | $ 235 | $ 529 | $ 468.2 |
Net income allocated to participating securities | (0.9) | (1.7) | (1.2) |
Net income allocated to common stockholders | $ 234.1 | $ 527.3 | $ 467 |
Basic earnings per share denominator: | |||
Weighted average shares outstanding (in shares) | 106.3 | 107 | 109.1 |
Basic earnings per share (in dollars per share) | $ 2.20 | $ 4.93 | $ 4.28 |
Diluted earnings per share denominator: | |||
Weighted average shares outstanding (in shares) | 106.3 | 107 | 109.1 |
Dilutive common shares issued under stock program (in shares) | 0.4 | 0.2 | 0.2 |
Total dilutive weighted average shares (in shares) | 106.7 | 107.2 | 109.3 |
Diluted earnings per share (in dollars per share) | $ 2.19 | $ 4.92 | $ 4.27 |
COMMITMENTS, CONTINGENCIES, A_2
COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Software Development Activities | NEO | |
Loss Contingencies | |
Contractual obligations | $ 1.8 |
Contractual obligation term | 3 years |
Minimum | Licensing Agreements | |
Loss Contingencies | |
Year 1 | $ 15 |
Year 2 | 15 |
Year 3 | 15 |
Year 4 | 15 |
Year 5 | 15 |
Maximum | Licensing Agreements | |
Loss Contingencies | |
Year 1 | 16 |
Year 2 | 16 |
Year 3 | 16 |
Year 4 | 16 |
Year 5 | $ 16 |
LEASES (Details)
LEASES (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2021 USD ($) ft² | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Leases | ||||
Options to renew | true | |||
Total lease liabilities | $ 147.6 | $ 144.8 | ||
Option to terminate period | 1 year | |||
Additional right of use assets | $ 24.4 | |||
Additional operating lease liabilities | $ 24.4 | |||
Minimum | ||||
Leases | ||||
Initial term | 1 year | |||
Renewal term | 1 year | |||
Maximum | ||||
Leases | ||||
Initial term | 5 years | |||
Renewal term | 5 years | |||
Option to terminate period | 1 year | |||
Acquisitions | ||||
Leases | ||||
Additional right of use assets | $ 1.3 | |||
Additional operating lease liabilities | 1.3 | |||
Technology support services | ||||
Leases | ||||
Rent expense | $ 30 | $ 25.6 | $ 20.2 | |
Office space in Amsterdam | ||||
Leases | ||||
Area of office space leased | ft² | 29,500 | |||
Total lease liabilities | $ 9.2 | |||
Initial term of lease | 120 months | |||
Renewal Term | 60 months |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES. | ||
Operating lease right of use assets | $ 111.7 | $ 110.1 |
Accrued liabilities | $ 18.3 | $ 15.6 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accounts Payable and Accrued Liabilities, Current | Accounts Payable and Accrued Liabilities, Current |
Non-current operating lease liabilities | $ 129.3 | $ 129.2 |
Total lease liabilities | $ 147.6 | $ 144.8 |
LEASES - Lease Costs and Other
LEASES - Lease Costs and Other Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES. | ||
Operating lease costs | $ 30 | $ 25.6 |
Weighted average remaining lease term (years) | 10 years 2 months 12 days | 11 years 1 month 6 days |
Weighted average discount rate | 3.10% | 3.30% |
Cash paid for amounts included in the measurement of lease liabilities | $ 20.9 | $ 17.2 |
Right of use assets obtained in exchange for lease liabilities | $ 24.4 | $ 14.1 |
LEASES - Maturities (Details)
LEASES - Maturities (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Maturities of Lease Liabilities | ||
2023 | $ 22.4 | |
2024 | 17.1 | |
2025 | 16 | |
2026 | 16.7 | |
2027 | 14.3 | |
After 2027 (1) | 90.6 | |
Total lease payments | 177.1 | |
Less: Interest | (29.5) | |
Present value of lease liabilities | 147.6 | $ 144.8 |
Minimum lease payments related to option to extend term | $ 20.4 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - $ / shares | 12 Months Ended | |||
Feb. 09, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
RSUs | ||||
Subsequent Events | ||||
Vesting period | 3 years | |||
PSUs | ||||
Subsequent Events | ||||
Granted (in shares) | 64,668 | 71,302 | 72,975 | |
Vesting period | 3 years | |||
Subsequent Event | ||||
Subsequent Events | ||||
Cash dividend (in dollars per share) | $ 0.50 | |||
Subsequent Event | RSUs | ||||
Subsequent Events | ||||
Granted (in shares) | 301,668 | |||
Vesting period | 3 years | |||
Subsequent Event | PSUs | ||||
Subsequent Events | ||||
Granted (in shares) | 64,916 | |||
Vesting period | 3 years |