Cboe Global Markets (CBOE) 10-K risk factor changes: FY2017 vs FY2016

We hold exclusive licenses to list securities index options on the S&P 500 Index, the [removed: S&P 100 Index, the] Russell 2000 Index, as well as others, granted to us by the owners of such indexes and based on which we have developed our proprietary VIX methodology.

In [removed: 2016,] [added: 2017,] approximately [removed: 88.2%] [added: 69.8%] of our [added: net] transaction fees [added: (defined below)] were generated by [removed: our] futures and index options, the overwhelming majority of which were generated by our exclusively-licensed products and products based on the VIX methodology.

[added: In addition, the E.U. implemented at the beginning of 2018 legislation known as the Benchmark Regulation that may impact the ability of European investors to trade our U.S. benchmark products if they are not recognized, authorized, endorsed or deemed equivalent in the E.U.] While similar legislation [added: to MiFIR] has not been proposed in the U.S., if it were passed, it could cause us to lose exclusivity in our internally developed and licensed index products.

The [removed: adopted and proposed] [added: new] European legislation may impact our expansion activities [added: of our U.S. benchmark products] in Europe, and may reduce the volume on our [added: US options and futures] exchanges from international customers.

The value of our exclusive licenses to list securities index options [added: and futures] also depends on the continued ability of index owners to require licenses for the trading of options [added: and futures] based on their indexes.

Although we and the index owners have prevailed in legal actions challenging our rights to exclusively license indexes, we may be subject to changes in the law or other actions taken in the future that might impede our ability to exclusively offer trading in certain index [removed: options.][added: options and futures.]

The volume of [removed: options and futures] [added: exchange] transactions and the demand for our products and services are directly affected by economic, political and market conditions in the [removed: U.S.] [added: U.S., Europe] and elsewhere in the world that are beyond our control, including:

| [removed: •] | [added: · | |] broad trends in business and finance; |

| [removed: •] | [added: · | |] concerns over [added: inflation and] wavering institutional or retail confidence levels; |

| [removed: •] | [added: · | | government or central bank actions, such as] changes in government fiscal and monetary policy and foreign currency exchange rates; |

| [removed: •] | [added: · | |] the availability of short-term and long-term funding and capital; |

| [removed: •] | [added: · | |] the availability of alternative investment opportunities; |

| [removed: •] | [added: · | |] changes in the level of trading activity in underlying instruments; |

| [removed: •] | [added: · | |] changes and volatility in the prices of securities; |

| [removed: •] | [added: · | |] the level and volatility of interest rates; |

| [removed: •] | [added: · | |] unforeseen market closures or other disruptions in trading; and |

[removed: Significant declines] [added: This,] in [removed: trading volumes or demand for market data] [added: turn,] may have a material adverse effect on our business, financial condition and operating results.

[removed: CBOE] [added: Cboe Options, C2, BZX, BYX, EDGX] and [removed: C2] [added: EDGA] are registered national securities exchanges and [removed: SROs,] [added: self-regulatory organizations (“SROs”),] and, as such, are subject to comprehensive regulation by the SEC.

CFE is a [removed: DCM] [added: designated contract market (“DCM”), and Cboe SEF is a swap execution facility (“SEF”), each] registered with the CFTC and [removed: is] subject to comprehensive regulation by the CFTC.

In addition to the requirements related to operating our [added: U.S.] markets imposed by the SEC and the CFTC, we also have certain responsibilities for regulating the TPHs [added: and members] that trade on our exchanges.

While we have entered into agreements under which FINRA with respect to our options [added: and equities] exchanges, and NFA with respect to our futures exchange, provide certain regulatory services, we retain [added: ultimate] responsibility for the regulation of our [removed: TPHs.][added: TPHs and members.]

See [removed: "Business—Regulatory Responsibilities."][added: “Business – Competition.”]

The SEC and CFTC have broad powers to audit, investigate and enforce compliance and to punish noncompliance [removed: by SROs] [added: by, as applicable, SROs, DCMs] and [removed: DCMs, respectively,] [added: SEFs] pursuant to applicable laws, rules and regulations.

If [removed: the SEC or CFTC] [added: a regulatory authority] were to find one of our programs of enforcement or compliance to be deficient, [removed: CBOE, C2] [added: our SROs, DCM,] or [removed: CFE] [added: SEF] could be the subject of [removed: SEC or CFTC] investigations and enforcement proceedings that may result in substantial sanctions, including revocation of [removed: an exchange's] registration as a national securities [removed: exchange] [added: exchange, DCM,] or [removed: DCM.][added: SEF.]

Any such investigations or proceedings, whether successful or unsuccessful, could result in substantial costs, the diversion of resources, including management time, and potential harm to our reputation, which could have a material adverse effect on our business, [removed: results of operations or] financial [removed: condition.][added: condition and operating results.]

In addition, [removed: CBOE, C2] [added: our SROs, DCM,] or [removed: CFE] [added: SEF] may be required to modify or restructure their regulatory functions in response to any changes in the regulatory environment, or they may be required to rely on third parties to perform regulatory and oversight functions, each of which may require us to incur substantial expenses and may harm our reputation if our regulatory services are deemed inadequate.

The [removed: business of operating options exchanges] [added: securities industry] is characterized by intense price competition, especially with respect to transaction fees.

[removed: The] [added: In our options segment, the] pricing model for trade execution [removed: for options] has changed in response to competitive market [removed: conditions] [added: conditions,] and our competitors have adjusted transaction fees and fee structures accordingly, including by opening new exchanges, which allow them to offer multiple pricing models that can appeal to different segments of market participants.

We also compete on price against certain multiply-listed options products, including SPY, [removed: that] [added: which] offer some of the features of our proprietary products.

Also, our profits could decline if competitive [removed: pressures force us to reduce fees.]

In [removed: 2016, 2015 and 2014,] [added: 2017,] approximately [removed: 70.5%, 71.9% and 70.9%] [added: 70.2%] of our operating [removed: revenues, respectively,] [added: revenues] were generated by our transaction-based business.

| [removed: •] | [added: · | |] heightened capital requirements; |

| [removed: •] | [added: · | |] regulatory or legislative actions; |

| [removed: •] | [added: · | |] reduced access to capital required to fund trading activities; [removed: or] |

| [removed: •] | [added: · | |] significant market disruptions. |

These actions, including Basel III, [removed: Dodd-Frank and] [added: Dodd-Frank,] the Collins Amendment to Dodd-Frank, [added: MiFID II and MiFIR,] may cause market participants to reduce [removed: the number of trades they make] [added: trading activity] on our exchanges.

[removed: See "Management's Discussion and Analysis—Operating Revenues—Average revenue per contract."] If the amount of our trading volume decreases, or the mix traded shifts to our lower revenue per contract products, our revenues from transaction fees will decrease.

Legislative or regulatory changes affecting [removed: the listed options or futures] [added: our] markets could have a material adverse effect on our [removed: business.][added: business, financial condition and operating results.]

Changes in regulation by the SEC, CFTC, [added: FCA,] foreign regulators or other government action, including SEC approval of rule filings by other SROs or entities, including OCC, could materially affect our markets.

In recent years, the securities and futures industries have been subject to [removed: significant] regulatory changes as a result of increasing government and public scrutiny of the securities and futures industries.

The E.U. has adopted legislation commonly referred to as MiFIR that will require the person with proprietary rights to a benchmark to provide non-discriminatory access to that benchmark to trading venues and central counterparty clearing houses for the purposes of trading and clearing.

Licenses to the benchmark must be provided on fair, reasonable and non-discriminatory terms.

| | · | | economic, political and geopolitical market conditions; |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | other legislative and regulatory changes; |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | the perceived attractiveness of the U.S. or European capital markets; |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | changes in the volume of foreign currency transactions; |

| --- | --- | --- | --- |

| | · | | changes in supply and demand for currencies; |

| --- | --- | --- | --- |

| | · | | movements in currency exchange rates; |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | changes in the financial strength of market participants; |

| --- | --- | --- | --- |

| | · | | consolidation among market participants and market data subscribers; |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | disruptions due to terrorism, war, extreme weather events or other catastrophes |

| --- | --- | --- | --- |

Any of these factors, individually or collectively, could have a material adverse effect on our business, financial condition and operating results by causing a substantial decline in the financial services markets and reducing trading volumes and demand for market data.

In addition to its other SRO responsibilities, BZX, as a listing market, also is responsible for evaluating applications submitted by issuers interested in listing their securities on BZX and monitoring each issuer’s compliance with BZX’s continued listing standards.

Failure to comply with these SRO responsibilities could result in potential sanctions or fines and a negative impact on Cboe’s reputation or branding.

Our European business is subject to regulatory oversight in the U.K. by the U.K. Financial Conduct Authority (“FCA”), which through the “passporting” regime provides authorization to carry on business in other Member States of the E.U. and the European Economic Area in accordance with the applicable E.U. legislation and regulation to which our European business is subject.

If a regulatory authority makes a finding of non‑compliance, conditional fines could be imposed, and our licenses could be revoked.

Any such fine or revocation of a license could have a material adverse effect on our business, financial condition and operating results.

For example, if we are unable to fulfill

our obligations under the consent orders with the SEC with respect to Cboe Options and C2 or with respect to BZX, BYX, EDGX and EDGA, it may have a significant adverse impact on our business, financial condition and operating results.

In addition, SROs are required by federal law to perform a variety of regulatory functions.

In light of those responsibilities, courts have held that SROs are immune from damages for some civil claims related to actions that are incident to their regulatory responsibilities.

There is a risk that a court might not adopt the immunity doctrine, and whether a court that recognizes the doctrine would apply it to a claim depends on the nature of the claim.

See "Business—Products—Strategic Relationships" for a discussion of these licenses and their expiration dates.

In addition, the European Parliament has adopted legislation that will require European exchanges to provide non-discriminatory access to benchmarks, like index options, and is considering other legislation that may impact the ability of European banks to trade our products.

| | |

| --- | --- |

| • | concerns about terrorism and war. |

General economic conditions affect options and futures trading in a variety of ways, from the availability of capital to investor confidence.

The economic climate in recent years has been characterized by challenging business, economic and political conditions throughout the world.

Adverse changes in the economy may have a negative impact on our revenues by causing a decline in trading volume.

Although CBOE Holdings itself is not an SRO, CBOE Holdings is subject to regulation by the SEC of activities that involve the options exchanges.

Specifically, the SEC will exercise oversight over the governance of CBOE Holdings and its relationship with CBOE and C2.

If any of these events occur, our operating results and profitability could be adversely affected.

business.

While many of its requirements have been implemented or are in the process of being implemented, some of the provisions in Dodd-Frank that impact our markets require additional action by the SEC or the CFTC.

In 2016, the SEC approved a plan to create, implement and maintain the CAT, which would serve as a comprehensive audit trail of orders that will allow regulators to efficiently and accurately track all activity in Regulation NMS securities in the U.S. market.

In addition to increased regulatory obligations, implementation of the CAT could result in significant additional expenditures, including to implement any new technology to meet any plan's requirements.

The current deadline for the EU to qualify foreign clearinghouses as equivalent is June 15, 2017.

On June 23, 2016, the U.K. held a referendum in which voters approved an exit from the EU, commonly referred to as “Brexit.” As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s future relationship with the EU.

The Brexit vote resulted in regulatory uncertainty throughout the region and could adversely affect business activity, political stability and economic conditions throughout Europe.

For a discussion of the regulatory environment in which we operate and proposed regulatory changes, see "Business—Regulatory Environment and Compliance."

We compete with futures exchanges and swap execution facilities that offer comparable products and with the over-the-counter market with respect to our proprietary products.

With respect to our multiply-listed products, our principal competitors are the thirteen other U.S. options exchanges.

See the risk factor entitled "Our business may be adversely affected by price competition."

Most of the equity options and options on ETPs listed and traded on our exchanges are also listed and traded on other U.S. options exchanges.

Changes we have implemented in response to competitive pressures may not be successful in maintaining or expanding our market share in those products in the future.

Likewise, our future responses to these or other competitive developments may not be successful in maintaining or expanding our market share.

In addition, indexes underlying our products, including VIX and SPX, may be licensed for use in similar OTC options.

Needs or preferences of investors could change leading to a migration to the market of some trades that today could be entered into on our exchanges.

Options on ETFs and ETNs that have such licenses on these indexes are available for trading.

As a result, trading in our products could decrease due to competitive pressures from these alternative products.

The derivatives industry has witnessed both the consolidation of exchange holding companies and the growth in the number of exchanges, with a doubling of the number of options exchanges over the past decade.

The increase to the number of competitors that we face may result in fragmentation of the market and a reduced market share for our exchanges.

A decline in our transaction fees or any loss of customers would lower our revenues, which would adversely affect our profitability.

For a discussion of the competitive environment in which we operate, see "Business—Competition."

make us unable to conduct other aspects of our business.

If we are unable to fulfill our obligations under the Consent Order, it may have a significant adverse impact on our business.

In addition to entering into the Consent Order and agreeing to complete certain undertakings, we may be subject to additional investigations or proceedings by the SEC if the SEC were to find that we did not fulfill our obligations under the Consent Order.

See "Business—Regulatory Environment and Compliance—Compliance—Consent Order." Any investigations or proceedings, whether successful or unsuccessful, could result in substantial costs, the diversion of resources, including management time, and potential harm to our reputation, which could have a material adverse effect on our business results of operations or financial condition.

Claims of infringement are not uncommon in our industry.

products, services or technologies to avoid infringement, which could materially adversely affect our business, results of operations or financial condition.

We operate, monitor and maintain our computer systems and networks, including the systems that comprise CBOE Command, the platform for trading on our exchanges and CBOE Vector, the platform that we are developing that is expected to replace CBOE Command.

[removed: The Company's principal business is operating markets that offer for] [added: Our Options segment includes] trading [removed: options on various] [added: of listed] market indexes (index options), mostly on an exclusive basis, [removed: and futures contracts,] as well as on non-exclusive "multiply-listed" options, such as options on the stocks of individual corporations (equity options) and options on other exchange-traded products (ETP options), such as exchange-traded funds (ETF options) and exchange-traded notes (ETN [removed: options).][added: options) that occur on Cboe Options, C2, BZX and EDGX.]

[removed: CFE, our all-electronic futures exchange, offers] [added: Our Futures segment includes] trading of futures on the VIX Index and [added: bitcoin, and] other [removed: products.][added: products that occur on CFE, our all-electronic futures exchange.]

[removed: | • | On December 15, 2016,] [added: To finance the cash required for the acquisition,] we entered into a $1.0 billion [removed: senior unsecured delayed draw] term loan [removed: facility] [added: agreement] and [removed: on January 12, 2017, we] issued $650 million [added: in] aggregate principal amount of [removed: our] 3.650% [removed: Senior Notes due 2027. |][added: senior notes.]

Components of [removed: Operating] Revenues

Access fees represent fees assessed [removed: to Trading Permit and Privilege Holders] for the opportunity to trade, including fees for trading-related [removed: functionality, on CBOE, C2 and CFE.][added: functionality across all segments.]

To facilitate trading, the Company offers technology services, terminal and other equipment [removed: rentals,] [added: rights,] maintenance services, trading floor space and telecommunications services.

Trading floor and equipment [removed: rentals] [added: rights] are generally on a month-to-month basis.

Facilities, systems services and other fees are generally monthly fee-based, although certain services are influenced by trading volume or other defined metrics, [removed: while] others are based solely on demand.

[removed: Salaries] [added: Compensation] and benefits represent our largest expense category and tend to be driven by both our staffing requirements and the general dynamics of the employment market.

Depreciation and amortization expense results from the depreciation of long-lived assets purchased and the amortization of purchased and internally developed [removed: software.][added: software, and the amortization of intangible assets.]

Technology support services [removed: expense] consists primarily of costs related to the maintenance of computer equipment supporting our system architecture, circuits supporting our wide area network, support for production software, fees paid to information vendors for displaying data and off-site system hosting fees.

Professional fees and outside services consist primarily of consulting services, which [removed: include: the supplementation of] [added: include supplemental] staff [removed: for] activities primarily related to systems development and maintenance, legal, regulatory and audit, [added: and] tax advisory [removed: services and acquisition-related costs, consisting mainly of legal and professional fees.][added: services.]

Royalty fees primarily consist of license fees paid [added: by us] for the use of underlying indexes in our proprietary products usually based on contracts traded.

The Company has licenses with the owners of the S&P 500 Index, S&P 100 Index and certain other S&P indexes, [added: FTSE Russell indexes,] the DJIA, MSCI, [removed: FTSE Russell indexes] and certain other index products.

Travel and promotional expenses primarily consist of advertising, costs for special events, sponsorship of industry conferences, options education seminars and [removed: travel related] [added: travel-related] expenses.

Other expenses represent costs necessary to support our operations [removed: but] [added: that] are not [added: already] included in the above categories.

Other [removed: Income/(Expense)][added: Income (Expense)]

Critical Accounting Policies [removed: and Estimates]

The preparation of [removed: the Company's] consolidated financial statements [added: in conformity with U.S. GAAP] requires [removed: the Company] [added: our management] to make estimates and [removed: judgments] [added: assumptions] that affect the reported amounts of [removed: assets, liabilities, revenue and expenses,] [added: assets] and [removed: related] [added: liabilities,] disclosure of [added: the amounts of] contingent assets and [removed: liabilities.][added: liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.]

The impact of, and any associated risks related to, these policies on our business operations is discussed throughout "Management's Discussion and Analysis of Financial Condition and Results of Operations." For a detailed discussion on the application of these and other accounting policies, see Note [removed: [1](#sB3B1AC625EEC3A1926C21A191F7B6B5F)] [added: [2](#sB3B1AC625EEC3A1926C21A191F7B6B5F)] to our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

[removed: | • |] Exchange [removed: services] [added: Services] and [removed: other fees revenue is recognized during the period the service is provided. |][added: Other Fees]

[removed: Year] [added: The following summarizes changes in revenues for the year] ended December 31, [removed: 2016] [added: 2016,] compared to the year ended December 31, [removed: 2015][added: 2015:]

The following summarizes [added: changes in] financial performance for the year ended December 31, [removed: 2016] [added: 2017,] compared to [removed: 2015.][added: the year ended December 31, 2016:]

| | [removed: 2016] | [added: 2016] | | | 2015 | | | [removed: | Inc./(Dec.)] [added: Change] | | [added: 2016] | | [removed: Percent Change] [added: 2015] | |

| | [added: |] (in millions, except [added: percentages, earnings] per [removed: share amounts) | | |] [added: share, and as noted below)] | | | | | | | | | | |

| Operating income | [removed: 298.2] | | [removed: | | 319.9] [added: 298.2] | | | [added: 319.9] | [removed: (21.7] | | [removed: )] [added: (21.7)] | | [removed: (6.8] [added: (6.8)] | [removed: )%] [added: %] |

| Income before income [removed: taxes | 306.6 |] [added: tax provision] | | | [removed: 324.0] [added: 306.6] | | | [added: 324.0] | [removed: (17.4] | | [removed: )] [added: (17.4)] | | [removed: (5.4] [added: (5.4)] | [removed: )%] [added: %] |

| Income tax provision | [removed: 120.9] | | [added: 120.9] | | [removed: 119.0] | [added: 119.0] | | | 1.9 | | [removed: | |] 1.6 | % |

| Net income | [added: |] $ | 185.7 | | [removed: |] $ | 205.0 | | [removed: |] $ | [removed: (19.3 | )] [added: (19.3)] | | [removed: (9.4] [added: (9.4)] | [removed: )%] [added: %] |

| Net income allocated to common stockholders | [added: |] $ | 184.9 | | [removed: |] $ | 204.1 | | [removed: | $ | (19.2 | ) | | (9.4 | )% |]

| [removed: Diluted—net] [added: Net] income [removed: per share] allocated to common stockholders | [removed: $] | [removed: 2.27 | | |] $ | [removed: 2.46 | | | | |] [added: 396.7] | | [added: $] | [added: 184.9] |

[removed: | • | The increase in total operating] [added: Total] revenues [removed: was] [added: increased] primarily driven by higher transaction fees, exchange services and other fees, market data fees and regulatory fees, partially offset by lower access fees and other revenue. [removed: |]

[removed: Operating] Revenues

[removed: Total operating revenues] [added: Market data fees increased] for the year ended December 31, 2016 [removed: increased $22.4 million, or 3.5%,] [added: compared] to [removed: $656.9 million from $634.5 million in] the prior year.

The following summarizes changes in [removed: total operating] revenues for the year ended December 31, [removed: 2016] [added: 2017] compared to [removed: 2015.][added: the year ended December 31, 2016:]

| | [added: |] (in millions) | | | | | [removed: | | | | | | | | |]

| Exchange services and other fees | [removed: 46.3] | | [added: 46.3] | | [removed: 42.2] | [added: 42.2] | | | 4.1 | | [removed: | | 9.6] [added: 9.7] | % |

| Market data fees | [removed: 33.2] | | [added: 33.2] | | [removed: 30.0] | [added: 30.0] | | | 3.2 | | [removed: | | 10.4] [added: 10.7] | % |

| Regulatory fees | [removed: 48.3] | | [added: 48.3] | | [removed: 33.5] | [added: 33.5] | | | 14.8 | | [removed: | | 44.3] [added: 44.2] | % |

[removed: Transaction fees] [added: Expenses] increased [removed: 1.6%] to [removed: $463.3 million] [added: 54.7% of total operating revenues in the year ended 2016 compared with 49.6% in the same period in 2015.The following summarizes changes in operating expenses] for the year ended December 31, 2016, [removed: representing 70.5% of total operating revenues,] compared [removed: with $456.0 million for] [added: to] the prior [removed: year period, or 71.9% of total operating revenues.][added: year:]

Cboe Global Markets, Inc. is one of the world’s largest exchange holding companies, offering cutting-edge trading and investment solutions to investors around the world.

The Company is committed to relentless innovation, connecting global markets with world-class technology, and providing seamless solutions that enhance the customer experience.

Cboe offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, U.S. and European equities, exchange-traded products, global foreign exchange and multi-asset volatility products based on the VIX, the world’s barometer for equity market volatility.

Cboe’s trading venues include the largest options exchange in the U.S. by volume and the largest stock exchange by value traded in Europe.

In addition, the Company is the second-largest stock exchange operator in the U.S. by volume and a leading market globally for ETP trading.

The Company is headquartered in Chicago with offices in Kansas City, New York, London, San Francisco, Singapore, Hong Kong, and Ecuador.

On February 28, 2017, pursuant to the Agreement and Plan of Merger, dated as of September 25, 2016, Cboe acquired Bats Global Markets, Inc. The year ended December 31, 2017 includes financial results for Bats for the period from March 1, 2017 through December 31, 2017.

In October 2017, the Company changed its legal name from CBOE Holdings, Inc. to Cboe Global Markets, Inc. The amendment to effect the name change was filed and became effective with the State of Delaware on October 16, 2017.

Business Segments

We previously operated as a single reportable business segment as of December 31, 2016.

As a result of the Merger, beginning in 2017, we are reporting five segments: Options, U.S. Equities, Futures, European Equities, and Global FX.

Segment performance is primarily based on operating income (loss).

We have aggregated all of our corporate costs and eliminations, as well as other business ventures, within Corporate Items and Eliminations; however, operating expenses that relate to activities of a specific segment have been allocated to that segment.

Our management allocates resources, assesses performance and manages our business according to these segments:

Options.

It also includes the listed equity and ETP options routed transaction services that occur on Cboe Trading.

U.S. Equities.

Our U.S. Equities segment includes trading of listed cash equities and ETP transaction services that occur on BZX, BYX, EDGX and EDGA.

It also includes the listings business where ETPs and the Company are listed on BZX.

Futures.

European Equities.

Our European Equities segment includes trading of pan‑European listed equities transaction services, ETPs, exchange‑traded commodities, and international depository receipts that occur on the RIE, operated by Cboe Europe Equities.

It also includes the listed cash equities and ETPs routed transaction services that occur through Cboe Chi-X Europe, as well as the listings business where ETPs can be listed on Cboe Europe Equities.

Global FX.

Our Global FX segment includes institutional FX services on the Cboe FX platform, as well as non-deliverable forward FX transactions executed on Cboe SEF.

Factors Affecting Results of Operations

In broad terms, our business performance is impacted by a number of drivers, including macroeconomic events affecting the risk and return of financial assets, investor sentiment, the regulatory environment for capital markets, geopolitical events, central bank policies and changing technology, particularly in the financial services industry.

Our future revenues and net income will continue to be influenced by a number of domestic and international economic trends, including:

| | · | | trading volumes on our proprietary products such as VIX options and futures and SPX options; |

| --- | --- | --- | --- |

| | · | | trading volumes in listed cash equity securities and ETPs in both the U.S. and Europe, volumes in listed equity options, and volumes in institutional FX trading, all of which are driven primarily by overall macroeconomic conditions; |

| --- | --- | --- | --- |

| | · | | the demand for the U.S. tape plan market data distributed by the Securities Information Processors (SIPs), which determines the pool size of the industry market data revenue we receive based on our market share; |

| --- | --- | --- | --- |

| | · | | the demand for information about, or access to, our markets, which is dependent on the products we trade, our importance as a liquidity center and the quality and pricing of our data and access services; |

| --- | --- | --- | --- |

| | · | | consolidation of our customers and competitors in the industry, |

| --- | --- | --- | --- |

| | · | | continuing pressure in transaction fee pricing due to intense competition in the United States and Europe; and |

| --- | --- | --- | --- |

General

CBOE Holdings, Inc. is the holding company for Chicago Board Options Exchange, Incorporated, CBOE Futures Exchange, LLC, C2 Options Exchange, Incorporated and other subsidiaries, including our majority ownership in CBOE Vest Financial Group, Inc.

The Company operates CBOE, CFE and C2 as stand-alone exchanges, but reports the results of its operations in a single reporting segment.

CBOE is our primary options market and offers trading in listed options through a single system that integrates electronic trading and traditional open outcry trading on our trading floor in Chicago.

This integration of electronic trading and traditional open outcry trading into a single exchange is known as our Hybrid trading model.

C2 is our all-electronic exchange that also offers trading of listed options, and may operate with a different market model and fee structure than CBOE.

All of our exchanges operate on our proprietary technology platform known as CBOE Command.

Business Highlights

| | |

| --- | --- |

| • | On September 25, 2016, CBOE Holdings and Bats entered into the Merger Agreement. The completion of the Merger is subject to certain conditions, including, among others, receipt of certain regulatory approvals. The Merger is expected to close on February 28, 2017. For more information, see "Business—Pending Merger" above. |

| • | In connection with entering into the Merger Agreement, we entered into a commitment letter relating to a $1.65 billion senior unsecured 364-day bridge loan facility. In lieu of entering into the bridge loan facility, CBOE Holdings entered into a term loan agreement and completed a notes offering, securing $1.65 billion to finance the cash portion of its pending acquisition of Bats as well as the repayment of Bats' existing indebtedness. |

| • | On December 15, 2016, we entered into a $150 million revolving credit facility to be used for working capital and other general corporate purposes. |

| • | Transaction fees accounted for 70.5%, 71.9% and 70.9% of total operating revenues for the years ended December 31, 2016, 2015 and 2014, respectively. |

| • | Index options and futures contracts accounted for 88.2%, 82.9% and 81.8% of our transaction fees for the years ended December 31, 2016, 2015 and 2014, respectively. |

| • | Our share of total U.S. exchange-traded options contracts for the year ended December 31, 2016 was 27.7%, up from 27.1% in 2015 and down from 29.9% in 2014. |

| • | Operating expenses were 54.7%, 49.6% and 49.2%, of total operating revenues for the years ended December 31, 2016, 2015 and 2014, respectively. |

| • | Compensation and benefits, representing our largest expense category, were 17.2%, 16.7% and 19.7%, of total operating revenues for the years ended December 31, 2016, 2015 and 2014, respectively. |

| • | Professional fees and outside services for the year ended December 31, 2016 includes $13.7 million of acquisition-related costs, consisting mainly of legal and professional fees. |

Business Strategy

We believe that the derivatives industry, especially the listed options and futures industry, has significant growth potential, including through new participants and products.

We expect to further expand our business and increase our revenues and profitability by pursuing the following growth strategies:

| • | We intend to continue our efforts to expand the use of our products domestically and internationally through extended trading hours in our exclusive index options and futures products and investor education. |

| • | We intend to continue developing innovative proprietary products that meet the needs of the derivatives industry and complement our core products, both through strategic relationships and internal development. |

| • | We have designed our fee schedule to provide economic benefits to market participants that concentrate their overall trading activity at our exchanges. |

| • | We intend to continue to enhance our trading platform by continuing to invest in enhancing and augmenting the functionality and capacity of our trading systems and by developing the next generation of trading technology, CBOE Vector. However, the launch of CBOE Vector on CFE is suspended due to the pending Merger. |

| • | We evaluate strategic opportunities that leverage and complement our core business and that we believe will enhance stockholder value. |

In addition, we believe the recently announced Merger squarely fits into our growth strategy outlined above to develop unique products, expand our customer base and leverage alliances that complement our core business.

Specifically, we believe that the Merger has the potential to significantly expand and diversify our product line across new asset classes, such as U.S. and European equities, ETF trading and global FX products, broaden our reach with Bats’ market-leading European presence and increase our non-transactional revenue stream, while enabling us to streamline the combined company’s technology and enhance our strong growth and margin profile.

The primary and largest source of operating revenues is transaction fees.

Transaction fees are a function of many variables with the main three being: (1) exchange fee rates; (2) trading volume mix (products traded); and (3) transaction mix between origin type.

Because transaction fees are assessed on a per contract basis, transaction fee revenue is correlated to the volume of contracts traded on the Company's exchanges.

While exchange fee rates are established by the Company, trading volume and transaction mix are influenced by a number of factors, including price competition, price volatility in the underlying securities and national and international economic and political conditions.

Revenue is recorded as transactions occur on a trade-date basis.

The main products that trade on our exchanges are equity, index and ETP options and futures contracts.

| • | Equity options reflect trading in options contracts on the stocks of individual companies. |

| • | Index options reflect trading in index options contracts on market indexes. |

| • | ETP options include ETF options that are options on baskets of stocks designed to generally track an index, but which trade like individual stocks, and ETN options that are options on senior, unsecured, unsubordinated debt securities issued by an underwriting bank. |

| • | Futures contracts are standardized, transferable, exchange-traded contracts that require delivery of a commodity, bond, currency, stock index or other benchmark interests at a specified price and on a specified future date, which are settled in cash. |

The CBOE program contains a tier-based market-maker appointment system with different trading permits based on trading function and, in the case of market-makers, the assessment of a surcharge for certain CBOE proprietary products and sliding scales for all Market-Maker and Floor Broker Trading Permits held by affiliated Trading Permit Holders and TPH Organizations that are used in any options classes other than certain proprietary indexes.

We have exposure to market risk for changes in interest rates relating to our cash and cash [removed: equivalents.][added: equivalents, short-term investments, short-term and long-term restricted cash and investments, and indebtedness.]

As a result of our operating activities, we are exposed to market risks such as foreign currency exchange rate risk, equity risk, credit risk, and interest rate risk.

We have implemented policies and procedures to measure, manage and monitor and report risk exposures, which are reviewed regularly by management and our board of directors.

Foreign Currency Exchange Rate Risk

As a result of the acquisition of Bats, we expanded our operations in Europe and Asia, and are subject to currency translation risk as revenues and expenses are denominated in foreign currencies, primarily the British pound, Singapore dollar, Hong Kong dollar, and the Euro.

We also have de minimis exposure to other foreign currencies, including the Swiss Franc, Norwegian Kroner, Swedish Krona, and Danish Kroner.

For the year ended December 31, 2017, our exposure to foreign-denominated revenues and expenses is presented by primary foreign currency in the following table:

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | Year Ended | | | | |

| | | December 31, 2017 | | | | |

| | | | | | British | |

| | | Euro (1) | | | Pound (1) | |

| | | (in millions, except | | | | |

| | | percentages) | | | | |

| Foreign denominated % of: | | | | | | |

| Revenues | | 1.1 | % | | 1.0 | % |

| Cost of revenues | | 0.9 | % | | 0.2 | % |

| Operating expenses | | 0.1 | % | | — | % |

| Impact of 10% adverse currency fluctuation on: | | | | | | |

| Revenues | | 2.8 | | | 2.6 | |

| Cost of revenues | | 0.6 | | | 0.2 | |

| Operating expenses | | — | | | — | |

| | (1) | | An average foreign exchange rate to the U.S. dollar for the period was used. |

| --- | --- | --- | --- |

Equity Risk

Our investment in European operations is exposed to volatility in currency exchange rates through translation of our net assets or equity to U.S. dollars.

The assets and liabilities of our European business are denominated in British pounds.

Fluctuations in currency exchange rates may create volatility in our reported results as we are required to translate foreign currency reported statements of financial condition and operational results into U.S. dollars for consolidated reporting.

The translation of these non-U.S. dollar statements of financial condition into U.S. dollars for consolidated reporting results in a cumulative translation adjustment, which is recorded in accumulated other comprehensive loss (income) within stockholders' equity on our consolidated balance sheet.

Our primary exposure to this equity risk as of December 31, 2017 is presented by foreign currency in the following table:

| | | | |

| --- | --- | --- | --- |

| | | British | |

| | | Pound (1) | |

| | | (in millions) | |

| Net equity investment in Cboe Europe | | $ | 688.1 |

| Impact on consolidated equity of a 10% adverse currency fluctuation | | $ | 68.8 |

| | (1) | | Converted to U.S. dollars using the foreign exchange rate of British pounds into U.S. dollars as of December 31, 2017. |

| --- | --- | --- | --- |

Credit Risk

We are exposed to market risk in the ordinary course of business.

This market risk consists primarily of interest rate risk associated with our cash and cash equivalents.

The Company does not trade options for its own account.

As of December 31, 2016 and 2015, our cash and cash equivalents were $97.3 million and $102.3 million, respectively.

We invest available cash in highly liquid, short-term investments, such as money market funds and U.S. Treasury securities.

Our investment policy is to preserve capital and liquidity.

A hypothetical three basis point decrease in short-term interest rates would decrease annual earnings by less than $75,000, assuming no change in the amount or composition of our cash and cash equivalents.

As of December 31, 2016, we had no long-term indebtedness.

However, as discussed above, we intend to incur significant indebtedness in connection with the Merger, a portion of which is expected to be incurred at variable rates of interest.

Accordingly, following the Merger, we expect to be exposed to the risk of increased interest rates unless we enter into offsetting hedging transactions.

Impact of Inflation

We have not been adversely affected by inflation as technological advances and competition have generally caused prices for hardware and software that we use for our electronic platforms to remain constant or decline.

Since transactions on our exchanges are not governed by long-term contracts, we believe that any increases in inflation are unlikely to have a material adverse effect on us.

[removed: CFE,] [added: | | · | | Futures. The Futures segment includes the business of] our [removed: all-electronic] futures exchange, [removed: offers trading of] [added: CFE, which lists] futures on the VIX Index and [added: bitcoin and] other [added: futures] products. [added: |]

[removed: Our operating revenues are primarily driven by transaction] [added: Transaction] fee [removed: revenues, which] [added: revenues] are generated on the contracts [added: or shares] traded on our exchanges.

In [removed: 2016,] [added: 2017,] approximately [removed: 70.5%] [added: 70.2%] of our operating revenues were generated by transaction fee revenues.

[removed: CBOE] [added: Cboe Options] was founded in 1973 as a non-stock corporation owned by its members.

[removed: CBOE] [added: Cboe Options] was the first organized marketplace for the trading of standardized, exchange-traded options on equity securities.

[removed: CBOE Holdings] [added: Cboe Global Markets] was incorporated in the State of Delaware on August 15, 2006.

In June 2010, [removed: CBOE] [added: Cboe Options] demutualized, [removed: CBOE,] [added: Cboe Options,] CFE and C2 became wholly-owned subsidiaries of [removed: CBOE Holdings] [added: Cboe Global Markets] and [removed: CBOE Holdings] [added: Cboe Global Markets] completed its initial public offering.

In October 2010, [removed: C2, the Company's all-electronic options exchange,] [added: C2] initiated operations.

The number of U.S. options exchanges that we compete with has [removed: more than doubled over the past eleven years, from five exchanges] [added: significantly increased] to [removed: fifteen,] [added: 11 exchanges, as of December 31, 2017,] in large part due to existing exchange holding companies opening new exchanges that offer different markets and pricing models on existing technology.

[removed: The] [added: In addition, the] options exchanges that we compete with set fees and rebates to attract multiply-listed options business to their exchanges, which has reduced the net revenue per contract that we generate from multiply-listed [removed: options.][added: options, and the options exchanges that we compete with structure their options businesses in partnership with established market participants, such as consolidators, and other order flow providers, to increase their volume traded.]

We are subject to regulation by the [removed: SEC] [added: SEC, CTFC, FINRA] and [removed: the CFTC] [added: FCA] and market participants may be subject to regulation by the SEC, [removed: the] CFTC, [removed: the] [added: FINRA, FCA,] Board of Governors of the Federal Reserve, [removed: the] U.S. Department of the Treasury and/or [added: our] foreign regulators.

Laws and regulations regarding our business [removed: and the business of market participants] are frequently modified or [removed: changed.][added: changed to address perceived problems, new products, competition or at the request of market participants.]

We have established ourselves as a global leader and innovator in [removed: the options] [added: our] industry.

| [removed: •] | [added: · | |] Innovative Products and Services. We [added: are structured and committed to deliver a differentiated experience to our customers, through our offering of innovative proprietary products, order types, risk management tools and other products and services. We] have [added: also] worked closely and collaboratively with market participants to introduce new products and services to meet the evolving needs of the [removed: derivatives] industry, and [added: we] plan to continue these efforts. Products we have developed include index options, [added: equity options,] options and futures on the VIX Index and other volatility indexes, short duration options, including Weeklys, FLexible EXchange Options [removed: ("FLEX options")] [added: (“FLEX options”)] and options strategy benchmark indexes. [added: We have also developed products that enable our customers to monitor their order handling on our markets in real‑time, such as our user dashboard and latency reports. We were the first U.S. options exchange to trade options during non-U.S. trading hours, offering extended trading hours in our exclusive proprietary products. We also connect with a growing customer base through trading and educational resources, including resources available through our website, the world-renowned Cboe Options Institute, participating at industry trade shows and industry forums.] |

| [removed: •] | [added: · | |] Strategic Relationships and Partnerships. We have entered into licensing agreements with index providers under which we have rights to create volatility indexes and offer options and futures products on their indexes. We have also formed partnerships with key providers to develop new products and services. See [removed: "Strategic Relationships" and "Strategic Partnerships."] [added: “Proprietary Products-Strategic Relationships.”] |

| [removed: •] | [added: · | |] Leading [removed: Brand,] [added: Market Position,] Reputation and [removed: Market Position. CBOE,] [added: Brand. We are a leading global operator of securities exchanges and other electronic markets and have a strong market share in] the [added: markets we serve. Cboe Options, the] largest U.S. options exchange, based on both contract volume and notional value, and one of the largest options exchanges in the world, is an options market leader. As the creator of listed options and other significant products in the listed options industry, including the VIX Index and VIX futures and options, [removed: CBOE] [added: Cboe] is a leading brand name in the options and volatility space. [added: In U.S. listed cash equities, we are the second largest exchange operator, with a market share of 19.0% of the overall U.S. equity market for the year ended December 31, 2017. In European-listed equities, we execute the largest notional value of pan-European equities traded by a single market operator, with a market share of 21.0% of European trading in the securities available for trading on Cboe Europe Equities for the year ended December 31, 2017. In addition, we have a substantial presence in the spot FX markets, with an 13.4% market share of the publicly reported] |

We expect to further [removed: expand] [added: grow] our business and increase our revenues and profitability by [added: following our mission and] pursuing the following growth strategies:

| [removed: •] | [added: · | |] Expand [added: Our] Customer Base. [added: The acquisition of Bats expanded our customer base through geographic expansion and broader product offerings and leveraged alliances that complement our core business.] We intend to continue our efforts to [removed: expand] [added: grow] the use of our products domestically and internationally, by intensifying our business development efforts to target new retail investors and institutional [removed: investors, including pensions and endowments,] [added: investors] and to inform them about how to trade our products, especially our proprietary products. [added: With our expanded sales team through the Bats acquisition, we are able to increase our cross selling efforts and reach a larger group of potential customers domestically and internationally.] We also intend to continue to offer investor education and [added: a] wide [added: breadth of] educational resources for both retail and institutional customers through the [removed: CBOE] [added: Cboe] Options Institute and through our comprehensive website, [added: as well and through our presence at industry trade shows and participation in industry forums. We have expanded, and intend to continue growing, our educational offerings,] including through the [removed: annual CBOE] [added: Cboe] Risk Management Conferences, now held [added: annually] in the [removed: U.S.,] [added: United States,] Europe and Asia. [removed: Further, offering extended trading hours in our exclusive products is at] [added: We were also recognized by] the [removed: core of our international expansion effort. In addition to extended trading hours for VIX futures and SPX] [added: Japanese Financial Services Authority as a designated listing exchange in 2017] and [removed: VIX options,] [added: by Hong Kong’s Mandatory Provident Fund Schemes Authority as an approved stock exchange] in [removed: 2016 we began overnight dissemination of values for the VIX Index.] [added: early 2018.] We opened an office in [removed: London and engaged a full-time consultant in] Hong Kong in [removed: 2016] [added: 2017] to further support our [removed: expanding] [added: increasing] international business development efforts. |

| [removed: •] | [added: · | |] Develop Innovative Products [removed: that Leverage] and [removed: Complement Core Products.] [added: Services.] We [added: are continuing to explore the development of index and other high margin derivative products to trade on our exchanges. We] intend to license and create proprietary intellectual property to develop proprietary products that meet the needs of the derivatives industry, [removed: through] both [added: through] strategic relationships and internally developed products, while continuing to diversify our product line across asset classes. In [removed: 2016,] [added: addition, as market share and volumes on our exchanges and trading platforms continue to rise,] we [added: believe that additional proprietary market data, analytics and connectivity revenues can be generated while continuing to offer competitive pricing across all of our segments. In 2017, we] continued to leverage [removed: partnerships with index providers] [added: relationships] to extend our product offering [removed: with products such as SPX Weeklys with Monday and Wednesday expirations and Flex Options with Asian and Cliquet style settlements. In addition, we launched] [added: by launching] new products on [removed: certain Frank Russell Company and FTSE International Limited (together, "FTSE Russell")] [added: S&P Select Sector] indexes that are solely listed for trading on [removed: CBOE] [added: Cboe] in the U.S. [added: and appeal to European investors and launched futures on bitcoin.] |

| [removed: •] | [added: · | |] Offer Compelling Economic [removed: Model.] [added: Models.] We have designed our [removed: fee schedule] [added: fees and pricing models] to provide benefits to market participants that concentrate their overall trading [removed: activity on CBOE,] [added: activity,] which we believe encourages market participants to increase their business with us. In our proprietary products, we offer discounts and incentives to certain participants based on relative volume and the use of selected strategies. In multiply-listed [removed: products,] [added: products and cash equities trading,] we offer incentive programs to attract [removed: customer] order flow to help our market participants manage both the fixed and transaction-based costs of [removed: trading on CBOE.] [added: trading.] We regularly review the [removed: fee schedules] [added: fees and pricing models] for all of our exchanges to provide an industry-leading economic offering. |

| [removed: •] | [added: · | |] Continue to Enhance Our [removed: Trading Systems.] [added: Leading Edge Technology.] We recognize that the opportunity to participate in the growth of the [added: equities and] derivatives market will be driven in great part by the trading functionality and [removed: systems] [added: technology] capabilities that an exchange offers to market participants. We intend to use our strong in-house development capabilities and continued investment to further enhance and develop the functionality and capacity of our trading systems. [removed: In 2015, we began in-house custom development of our next generation of trading technology, CBOE Vector, a new platform designed with the end-user in mind, using the latest hardware and software technology in order to provide enhanced agility, speed, connectivity and risk controls. However, the launch of CBOE Vector on CFE is suspended due to the pending Merger.] [added: See “Technology.”] |

| [removed: •] | [added: · | |] Evaluate Strategic [removed: Opportunities that Leverage and Complement Core Business.] [added: Opportunities.] We evaluate strategic opportunities that we believe will enhance stockholder value. We specifically look for strategic opportunities beyond our current businesses that will capitalize on our core competencies and diversify our sources of revenue. We continue to form new alliances with various partners that leverage our strengths and enable us to diversify our [added: product and business lines across new regions and asset classes. In addition to our transformative acquisition of Bats, in 2017, we acquired the assets of Silexx Financial Systems, LLC (“Silexx”), a company that develops, markets and supports an innovative order and execution management system (“OEMS”) for both buy- and sell-side customers.] |

These include volatility [removed: indexes] [added: index products] based on various broad-based market indexes (such as the S&P 500, the S&P [removed: 100, the Russell 2000] [added: 100] and the [removed: DJIA),] [added: Russell 2000),] volatility indexes based on ETFs and individual [removed: stocks,] [added: stocks (such as] the [removed: CBOE] [added: Cboe] S&P 500 Implied Correlation [removed: Index,] [added: Index and] the [removed: CBOE] [added: Cboe] S&P 500 Smile [removed: Index] [added: Index)] and [removed: a series of] options strategy [removed: benchmarks, including] [added: benchmarks (such as] BuyWrite, PutWrite and Collar indexes based on the S&P [removed: 500,] [added: 500 and] Russell 2000 and BuyWrite indexes based on other broad-based market [removed: indexes.][added: indexes).]

In addition to any transaction fee revenue generated on products created based on these indexes, we have licensed others to use some of these indexes to create products and have entered into agreements whereby we have granted [added: to] others the rights to sub-license certain indexes.

[removed: The Company generates] [added: We generate] revenue from both the calculation and dissemination of index values and from the licensing of our proprietary indexes.

We license their [removed: indexes] [added: indexes, including on an exclusive basis,] as the [removed: basis] [added: foundation] for indexes, index options and other products.

| [removed: •] | [added: · | |] S&P [removed: 500 and] [added: 500,] S&P [removed: 100] [added: 100, S&P Select Sector] Indexes. We have the exclusive right to offer options contracts on the S&P 500 [removed: Index and] [added: Index,] the S&P 100 Index [added: and the S&P Select Sector Indexes] as a result of a licensing arrangement with S&P [removed: OPCO] [added: Dow Jones Indices,] LLC [removed: ("S&P").] [added: (“S&P”).] Our license with S&P is through December 31, 2033, with an exclusive license to trade options on the S&P 500 Index through December 31, 2032. We are also authorized to use the S&P 500 Index and S&P 100 [removed: Index] for the creation of [removed: CBOE] [added: Cboe] volatility indexes, such as the VIX Index, and tradable products on those volatility indexes. |

| [removed: •] | [added: · | |] MSCI. We have the exclusive right in the [removed: U.S.] [added: United States] to offer options on six of [removed: MSCI's] [added: MSCI’s] indexes, including the MSCI EAFE and the MSCI Emerging Markets Indexes, as a result of a licensing arrangement with MSCI Inc. We offer options on the MSCI EAFE and the MSCI Emerging Markets [removed: Indexes and in 2016 we broadened distribution of data on these indexes through CBOE’s Market Data Express, LLC ("MDX") service.] [added: Indexes.] |

| [removed: •] | [added: · | |] Dow Jones Industrial Average ("DJIA"). We have the exclusive right during standard U.S. trading hours to offer options contracts on the DJIA and certain other Dow Jones indexes through December 31, [removed: 2017] [added: 2033] as a result of a licensing arrangement with [removed: S&P Dow Jones Indices,] [added: DJI Opco,] LLC. We are also authorized to use these indexes to create [removed: CBOE] [added: Cboe] volatility indexes and trade options, futures and other products on these indexes. |

It is one of the most commonly followed indexes, and is considered a bellwether for the [removed: U. S.] [added: U.S.] economy.

We [added: also offer SPX Weeklys options, which we] believe that traders are using [removed: this product] to fine tune the timing of hedging strategies and maximize the risk premium in strategies that involve the sale of options, such as covered call writing.

[removed: CBOE] [added: Cboe] pioneered the volatility trading [removed: space,] [added: space] with its introduction of [added: futures on] the [removed: CBOE Volatility] [added: VIX] Index [removed: (the "VIX Index")] in [removed: 1993.][added: 2004 and options on the VIX Index in 2006.]

[removed: Since we started offering these products, we have seen trading from a number of different customer segments utilizing a number of different trading strategies, including hedging] extreme stock market declines, also known as “tail risk” hedging, and risk-managed strategies that seek to capture the relative price changes of expected volatility at different times in the future.

We also offer VIX Weeklys options and futures to provide investors with opportunities and tools to trade volatility over a [removed: shorter-term.][added: shorter term.]

[removed: While the trading] [added: Trading] volumes in options and futures on the VIX Index [removed: have increased over the past five years, trading volumes in these products are] [added: may be] especially sensitive to market volatility, with increases in volume generally occurring along with spikes in volatility.

| [removed: •] | [removed: CBOE] [added: · | | Cboe] Vest. [removed: In 2016, we made] [added: We have] a majority [added: equity] investment in [removed: CBOE Vest,] [added: Cboe Vest Financial Group, Inc. (“Cboe Vest”),] an investment manager focused on Target Outcome Investment strategies. [removed: CBOE] [added: Cboe] Vest [removed: launched in 2016 three new] [added: offers] mutual funds, [removed: CBOE] [added: including Cboe] Vest S&P 500 Buffer Protect Strategy [removed: Fund, CBOE Vest Defined Distribution Strategy] Fund and [removed: CBOE] [added: Cboe] Vest [removed: S&P 500 Enhanced Growth] [added: Defined Distribution] Strategy Fund. |

[removed: | • | CBOE utilizes various matching algorithms] in different listed options classes, with different combinations of customer priority, participation rights and pro-rata, modified pro-rata or price-time [added: priority] depending on the product. [removed: |]

CFE utilizes a [removed: pricing] [added: price-time priority] model [removed: in which] [added: for VIX futures and clients are charged] transaction fees [added: that] vary depending on the type of market participant on whose behalf a trade is made and on whether the trade is executed through CFE’s central limit order book, or is a block trade.

CFE also offers [removed: Day Trade and New Foreign Trader Incentive Programs] [added: incentive programs for certain products] that provide rebates on trades that qualify for the respective programs.

In our proprietary products, we compete against [added: other] futures exchanges and swap execution facilities that offer similar products, as well as against financial market participants that offer similar over-the-counter derivatives.

The following description of the business should be read in conjunction with the information included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2017.

This description contains forward-looking statements that involve risks and uncertainties.

Actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Cboe Global Markets, Inc. is one of the world’s largest exchange holding companies, offering cutting-edge trading and investment solutions to investors around the world.

The Company is committed to relentless innovation, connecting global markets with world-class technology, and providing seamless solutions that enhance the customer experience.

Cboe offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, U.S. and European equities, exchange-traded products (“ETPs”), global foreign exchange (“FX”) and multi-asset volatility products based on the VIX Index, the world’s barometer for equity market volatility.

Cboe’s trading venues include the largest options exchange in the U.S. and the largest stock exchange by value traded in Europe.

In addition, the Company is the second-largest stock exchange operator by volume in the U.S. and a leading market globally for ETP trading.

The Company reports the results of its operations in five business segments: Options, U.S. Equities, Futures, European Equities and Global FX.

Our operating revenues consist primarily of transaction fees, regulatory fees, market data fees and connectivity fees.

We also generate revenue from both the calculation and dissemination of index values and from the licensing of our proprietary products.

Our Business

As described in further detail below, on February 28, 2017, the Company completed the acquisition of Bats.

Following the acquisition, on October 16, 2017, we changed our legal name from CBOE Holdings, Inc. to Cboe Global Markets, Inc.

On February 28, 2017, pursuant to the Agreement and Plan of Merger, dated as of September 25, 2016 (the “Merger Agreement”), by and among Cboe Global Markets, Bats, CBOE Corporation, a Delaware corporation and a wholly-owned subsidiary of Cboe (“Merger Sub”), and Cboe Bats, LLC (formerly CBOE V, LLC), a Delaware limited liability company and a wholly-owned subsidiary of Cboe (“Merger LLC”), Cboe completed the Merger of Merger Sub with and into Bats and the subsequent merger (the “Subsequent Merger”) of Bats with and into Merger LLC.

As a result of the Merger, Bats became a wholly-owned subsidiary of Cboe.

In connection with the Merger, the Company issued approximately 30 million shares of Cboe Global Markets common stock and paid approximately $956 million in cash.

The Company entered into a term loan agreement and completed a notes offering, as described below, securing $1.65 billion to finance the cash portion of its acquisition of Bats as well as the repayment of Bats’ existing indebtedness.

The Merger significantly expanded the Company’s product lines across multiple asset classes, broadened its geographic reach with pan-European equities, added global FX markets and diversified its business mix with significant non-transactional revenue streams.

The acquired business provides added trade execution, listing of ETPs, market data, trade reporting, connectivity and risk management solutions to brokers, market makers, asset managers, ETP issuers and other market participants, ultimately benefiting retail and institutional investors across multiple asset classes, including listed cash equity securities in the United States and Europe, listed equity options in the United States and institutional spot FX globally, as well as ETPs, including exchange-traded funds (“ETFs”), in the United States and Europe.

In addition, the Company plans to utilize Bats’ leading proprietary trading technology by migrating trading in Cboe Options, C2 and CFE onto a single technology platform.

As a result of the Merger, beginning in 2017, the Company is reporting five business segments: Options, U.S. Equities, Futures, European Equities, and Global FX.

Prior to this, the Company operated as a single reportable business segment as of December 31, 2016.

| | · | | Options. The Options segment includes our options exchange business, which lists for trading options on (i) market indexes (“index options”), including the VIX Index, mostly on an exclusive basis, (ii) non-exclusive "multiply-listed" options, such as options on the stocks of listed individual corporations (“equity options”) and (iii) other ETPs, such as ETFs and exchange-traded notes (“ETN”). These options trade on Cboe Options, C2, BZX and EDGX. Cboe Options is our primary options market and offers trading in listed options through a single system that integrates electronic trading and traditional open outcry trading on our trading floor in Chicago. This integration of electronic trading and traditional open outcry trading into a single exchange is known as our Hybrid trading model. C2, BZX and EDGX are our all-electronic exchanges that also offer trading in listed options, and may operate with different market models and fee structures than Cboe Options. |

| --- | --- | --- | --- |

| | · | | U.S. Equities. The U.S. Equities segment includes listed cash equities and ETP transaction services that occur on BZX, BYX, EDGX and EDGA. It also includes ETP listing, market data revenue generated from the U.S. tape plans, and from the sale of proprietary market data, listed cash equities and ETPs routing transaction services, connectivity fees and advertising activity from ETF.com. |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | European Equities. The European Equities segment includes the pan‑European listed cash equities transaction services, ETPs, exchange‑traded commodities, and international depository receipts that occur on the RIE, operated by Cboe Europe Equities. It also includes the listed cash equities and ETPs routed transaction services that occur through Cboe Chi-X Europe, as well as the listings business where ETPs can be listed on Cboe Europe Equities. Cboe Europe Equities operates two lit books, a periodic auctions book, a Large In Scale trading negotiation facility and two dark books on its MTF, and operates one lit book and one dark book on its RM. On its MTF books, Cboe Europe Equities offers trading in listed cash equity securities from 15 major European markets. |

| --- | --- | --- | --- |

| | · | | Global FX. The Global FX segment includes institutional FX services on the Cboe FX platform, which offers an independent, transparent electronic marketplace structure where institutional buyers and sellers worldwide can trade spot FX directly, either anonymously or on a disclosed basis with each other. The Global FX segment also includes non-deliverable forward FX transactions executed on Cboe SEF. |

| --- | --- | --- | --- |

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 17 - Segment Reporting to the notes to our Consolidated Financial Statements for discussion of total revenues, revenues before reimbursements, segment operating profit and total assets by business segment.

Certain areas within our segments operate globally.

For information regarding risks related to our international operations see “Risk Factors.”

The following chart illustrates volume for options (Cboe Options, C2 Options, BZX Options and EDGX Options); Futures (CFE); U.S. Equities (BZX Equities, BYX Equities, EDGA Equities, EDGX Equities); European Equities; and Global FX (Cboe FX) for the periods indicated (which includes information prior to the acquisition of Bats):

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Annual Volumes | | | | | | | |

| | | 2017 | | | 2016 | | | 2015 | |

CBOE Holdings, Inc. is the holding company for Chicago Board Options Exchange, Incorporated, CBOE Futures Exchange, LLC, C2 Options Exchange, Incorporated and other subsidiaries, including our majority ownership in CBOE Vest Financial Group Inc. ("CBOE Vest").

The Company's principal business is operating markets that offer for trading options on various market indexes (index options), mostly on an exclusive basis, and futures contracts, as well as on non-exclusive "multiply-listed" options, such as options on the stocks of individual corporations (equity options) and options on other exchange-traded products (ETP options), such as exchange-traded funds (ETF options) and exchange-traded notes (ETN options).

The Company operates CBOE, CFE and C2 as stand-alone exchanges, but reports the results of its operations in a single reporting segment.

CBOE is our primary options market and offers trading in listed options through a single system that integrates electronic trading and traditional open outcry trading on our trading floor in Chicago.

This integration of electronic trading and traditional open outcry trading into a single exchange is known as our Hybrid trading model.

C2 is our all-electronic exchange that also offers trading of listed options, and may operate with a different market model and fee structure than CBOE.

All of our exchanges operate on our proprietary technology platform known as CBOE Command.

The following chart illustrates annual contract volume across the different categories of products traded at the Company for the periods indicated:

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | Annual Contract Volume | | | | | | | | | | | | | |

| | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |

| Equities | 364,373,339 | | | 392,982,051 | | | 488,580,906 | | | 433,777,204 | | | 494,289,301 | |

| Indexes | 433,256,044 | | | 408,281,695 | | | 406,454,861 | | | 372,647,443 | | | 304,339,908 | |

| Exchange-traded products | 326,740,299 | | | 320,997,251 | | | 379,742,163 | | | 341,023,209 | | | 311,792,122 | |

| Total Options Volume | 1,124,369,682 | | | 1,122,260,997 | | | 1,274,777,930 | | | 1,147,447,856 | | | 1,110,421,331 | |

| Futures | 60,176,526 | | | 51,671,188 | | | 50,615,435 | | | 40,193,447 | | | 23,892,931 | |

| Total Contract Volume | 1,184,546,208 | | | 1,173,932,185 | | | 1,325,393,365 | | | 1,187,641,303 | | | 1,134,314,262 | |

History

Pending Merger

CBOE Holdings and Bats Global Markets, Inc. (“Bats”) entered into an Agreement and Plan of Merger, dated as of September 25, 2016 (the “Merger Agreement”), providing, among other things, that, upon the terms and subject to the conditions set forth in the Merger Agreement, a wholly-owned subsidiary of CBOE Holdings will merge with and into Bats, with Bats surviving as a wholly-owned subsidiary of CBOE Holdings (the “Merger”).

The Merger Agreement also provides that, immediately following the effective time of the Merger, Bats, as the surviving corporation from the Merger, will merge

with and into CBOE V, LLC (“Merger LLC”), a wholly-owned subsidiary of CBOE Holdings, Inc. (the “Subsequent Merger”), with Merger LLC surviving the Subsequent Merger as a wholly-owned subsidiary of CBOE Holdings.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of voting common stock of Bats, par value $0.01 per share (“Bats Voting Common Stock”), and each share of non-voting common stock of Bats, par value $0.01 per share (“Bats Non-Voting Common Stock” and, together with the Bats Voting Common Stock, “Bats Common Stock”), issued and outstanding immediately prior to the Effective Time (other than shares held by CBOE Holdings, Bats or any of their respective subsidiaries, shares held by any holder of Bats Common Stock who is entitled to demand and properly demands appraisal of such shares under Delaware law and unvested restricted shares of Bats Common Stock granted under any Bats equity incentive plan) will convert into, at the election of the holder of such share, subject to proration and adjustment, either (i) 0.3201 of a share of common stock of CBOE Holdings, par value $0.01 per share (“CBOE Holdings Common Stock”), and $10.00 in cash (the “Mixed Consideration”), (ii) an amount of cash, without interest (the “Cash Consideration”), equal to the sum (rounded to two decimal places) of (a) $10.00 and (b) the product obtained by multiplying 0.3201 by the volume-weighted average price (rounded to four decimal places) of shares of CBOE Holdings Common Stock on the NASDAQ Stock Market LLC for the ten consecutive trading days ending on the second full trading day prior to the Effective Time (the “Closing VWAP”), or (iii) a number of shares of CBOE Holdings Common Stock (the “Stock Consideration”) equal to the sum of (a) 0.3201 and (b) the quotient (rounded to four decimal places) obtained by dividing $10.00 by the Closing VWAP.

Holders of Bats Common Stock who do not make an election will receive the Mixed Consideration.

The consideration to be paid to holders of Bats Common Stock electing to receive the Cash Consideration or the Stock Consideration in connection with the Merger is subject to automatic adjustment, as applicable, to ensure that the total amount of cash paid and the total number of shares of CBOE Holdings Common Stock issued in the Merger is the same as what would be paid and issued if all holders of Bats Common Stock were to receive the Mixed Consideration at the Effective Time.

The completion of the Merger is subject to certain conditions, including, among others, (i) adoption by Bats stockholders of the Merger Agreement, (ii) approval by CBOE Holdings stockholders of the issuance of CBOE Holdings common stock in connection with the Merger, (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act ("HSR") and the receipt of all other regulatory approvals the failure to obtain which would make any of the transactions contemplated by the Merger Agreement illegal, including, without limitation, approval from the SEC, the Financial Industry Regulatory Authority ("FINRA") and the U.K. Financial Conduct Authority and (iv) other customary closing conditions.

Early termination of the waiting period under the HSR was granted on November 18, 2016.

CBOE Holdings and Bats received regulatory approvals by the SEC on December 19, 2016 and December 16, 2016, respectively, and FINRA granted approval on January 6, 2017.

On January 17, 2017, Bats stockholders adopted the Merger Agreement and CBOE Holdings stockholders approved the issuance of CBOE Holdings common stock pursuant to the Merger Agreement.

CBOE Holdings received regulatory approvals from the Dutch Central Bank and the United Kingdom's ("U.K.") Financial Conduct Authority (“FCA”) on February 2, 2017 and February 9, 2017, respectively.

The Merger is expected to close on February 28, 2017.

Industry

Our primary business of offering exchange-traded options and futures contracts on financial instruments is part of the large global derivatives industry.

Derivatives are financial contracts whose value is derived from an underlying asset or reference value.

While derivatives exist on a wide range of underlying assets and references, we currently focus on offering derivatives products on individual stocks, indexes, exchange-traded funds, exchange-traded notes and various benchmarks related to trading and investment strategies.

The global derivatives industry includes both exchanges and a large over-the-counter market.

The most common types of derivatives are options, futures and swap contracts.

These products allow for various types of risk to be isolated and transferred.

Options and Futures

Cboe incorporates herein by reference the discussion set forth in Note 21 (“Income Taxes”) and Note 23 (“Commitments, Contingencies, and Guarantees– Legal Proceedings”) of the consolidated financial statements included herein.

As of December 31, 2016, the end of the period covered by this report, the Company was subject to the various legal proceedings and claims discussed below, as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.

The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions.

The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading.

The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.

The Company's assessment of whether a loss is reasonably possible or probable is based on its assessment of the ultimate outcome of the matter following all appeals.

As of December 31, 2016, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these 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 litigation is inherently uncertain and an adverse outcome from certain matters could have a material effect on our earnings in any given reporting period.

However, in the opinion of management, the ultimate liability is not expected to have a material effect on our financial position, liquidity or capital resources.

Lanier Litigation

On May 23, 2014, Harold R.

Lanier sued 14 securities exchanges, including CBOE, in the United States District Court for the Southern District of New York (the "Court") on behalf of himself and a putative class consisting of all persons in the

United States who entered into contracts to receive market data through certain data plans at any time since May 19, 2008 to the present.

The complaint alleged that the market data provided under the CQ Plan and CTA Plans was inferior to the data that the exchanges provided to those that directly receive other data from the exchanges, which the plaintiffs alleged is a breach of their “subscriber contracts” and a violation of the exchanges’ obligations under the CQ and CTA Plans.

The plaintiffs sought monetary and injunctive relief.

On May 30, 2014, Mr. Lanier filed two additional suits in the same Court, alleging substantially the same claims and requesting the same types of relief against the exchanges who participate in the UTP and the OPRA data plans.

CBOE was a defendant in each of these suits, while C2 was only a defendant in the suit regarding the OPRA Plan.

On April 28, 2015, the Court dismissed Lanier’s complaint with prejudice because it was preempted by the federal regulatory scheme and because the claims were precluded by the terms of the applicable subscriber agreements.

Mr. Lanier appealed the orders dismissing each of his three cases and, on September 2, 2015, he filed his opening appellate briefs in those cases.

The defendants’ response briefs were filed November 24, 2015 and briefing on the appeals has concluded.

The oral arguments on the appeals were heard on March 3, 2016.

On September 23, 2016, the Court of Appeals ruled in favor of the defendants and affirmed the Court’s dismissal of Lanier’s complaints with prejudice.

On October 7, 2016, Lanier filed a petition for rehearing only in the action related to the OPRA Plan and the Court of Appeals ruling with respect to the other two complaints is now final.

On November 4, 2016, the Court of Appeals denied the petition for rehearing in the case related to the OPRA Plan.

Other

As a self-regulatory organization under the jurisdiction of the SEC, with respect to CBOE and C2, and as a designated contract market under the jurisdiction of the CFTC, with respect to CFE, we are subject to routine reviews and inspections by the SEC and the CFTC.

We are also currently a party to various other legal proceedings in addition to those already mentioned.

Management does not believe that the outcome of any of these other reviews, inspections or other legal proceedings will have a material impact on our consolidated financial position, results of operations or cash flows.

| [removed: ý |] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

[removed: |] For the fiscal year ended December 31, [removed: 2016 | | |][added: 2017]

| [removed: o |] [added: ☐] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

[removed: |] For the transition period from to [removed: | | |]

[removed: CBOE HOLDINGS, INC.][added: Cboe Global Markets, Inc.]

| [removed: Delaware] (State or other jurisdiction of [removed: incorporation or organization)] | [removed: | 20-5446972] (I.R.S. Employer [removed: Identification Number)] |

| [removed: 400 South LaSalle Street Chicago, Illinois] (Address of principal executive offices) | [removed: | 60605] (Zip Code) |

| Common Stock, par value $0.01 per share [added: Common Stock, par value $0.01 per share] | | NASDAQ Global Select Market [added: Cboe BZX] |

Yes [removed: ý No o][added: ☒No ☐]

Yes [removed: o] [added: ☐] No [removed: ý][added: ☒]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months [removed: (of] [added: (or] for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company or an emerging growth] company.

See the definitions of "large accelerated filer," "accelerated [removed: filer" and] [added: filer,"] "smaller reporting [removed: company"] [added: company," and “emerging growth company”] in Rule 12b-2 of the Exchange Act.

| Large accelerated filer [removed: ý |] [added: ☒] | Accelerated filer [removed: o |] [added: ☐] | Non-accelerated filer [removed: ¨] [added: ☐] (Do not check if a smaller reporting company) | [removed: |] Smaller reporting company [removed: o] [added: ☐] | [added: Emerging growth company ☐ |]

As of June 30, [removed: 2016,] [added: 2017,] the aggregate market value of the Registrant's outstanding voting common equity held by non-affiliates was approximately [removed: $5.4] [added: $11.4] billion based on the closing price of [removed: $66.62] [added: $91.40] per share of common stock.

The number of outstanding shares of the registrant's common stock as of February [removed: 16, 2017] [added: 15, 2018] was [removed: 81,285,307] [added: 112,704,945] shares of common stock.

| [Item [removed: 1.](#s99FFBCC14F310DAAD9801A1923AA086B)] [added: 1.](#Item_1__Business)] | | [removed: [Business](#s99FFBCC14F310DAAD9801A1923AA086B)] [added: [Business](#Item_1__Business)] | [removed: [4](#s99FFBCC14F310DAAD9801A1923AA086B)] [added: 6] |

| [Item [removed: 1A.](#sC34E70133A8825D3A8721A1958BF0C89)] [added: 1A.](#Item1ARiskFactors)] | | [Risk [removed: Factors](#sC34E70133A8825D3A8721A1958BF0C89)] [added: Factors](#Item1ARiskFactors)] | [removed: [20](#sC34E70133A8825D3A8721A1958BF0C89)] [added: 27] |

| [Item [removed: 1B.](#sEB4BC10338A4B3A16C801A1958F40E05)] [added: 1B.](#Item1BUnresolvedStaffComments_497585)] | | [Unresolved Staff [removed: Comments](#sEB4BC10338A4B3A16C801A1958F40E05)] [added: Comments](#Item1BUnresolvedStaffComments_497585)] | [removed: [36](#sEB4BC10338A4B3A16C801A1958F40E05)] [added: 50] |

| [Item [removed: 2.](#s59D6B1ECC4732069A7881A195912D89E)] [added: 2.](#Item2Properties_26633)] | | [removed: [Properties](#s59D6B1ECC4732069A7881A195912D89E)] [added: [Properties](#Item2Properties_26633)] | [removed: [36](#s59D6B1ECC4732069A7881A195912D89E)] [added: 51] |

| [Item [removed: 3.](#s6686FA8B16010E58AD301A192355F767)] [added: 3.](#Item3LegalProceedings_399160)] | | [Legal [removed: Proceedings](#s6686FA8B16010E58AD301A192355F767)] [added: Proceedings](#Item3LegalProceedings_399160)] | [removed: [36](#s6686FA8B16010E58AD301A192355F767)] [added: 51] |

| [Item [removed: 4.](#s8AE46519E0B247C2DF1F1A195967B9D0)] [added: 4.](#Item4MineSafetyDisclosures_10202)] | | [Mine Safety [removed: Disclosures](#s8AE46519E0B247C2DF1F1A195967B9D0)] [added: Disclosures](#Item4MineSafetyDisclosures_10202)] | [removed: [37](#s8AE46519E0B247C2DF1F1A195967B9D0)] [added: 51] |

| [Item [removed: 5.](#sFF24F39B60A16DE3249C1A1923ED8168)] [added: 5.](#Item5MarketforRegistrantsCommonEquity_14)] | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sFF24F39B60A16DE3249C1A1923ED8168)] [added: Securities](#Item5MarketforRegistrantsCommonEquity_14)] | [removed: [38](#sFF24F39B60A16DE3249C1A1923ED8168)] [added: 51] |

| [Item [removed: 6.](#s33FFF1BFFA843008F3A31A192302CE7A)] [added: 6.](#Item6SelectedFinancialData_274620)] | | [Selected Financial [removed: Data](#s33FFF1BFFA843008F3A31A192302CE7A)] [added: Data](#Item6SelectedFinancialData_274620)] | [removed: [41](#s33FFF1BFFA843008F3A31A192302CE7A)] [added: 55] |

| [Item [removed: 7.](#s3D0B3D92838ED5FE6FB71A195A19DF5A)] [added: 7.](#Item7MangamentsDiscussionandAnalysis_301)] | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s3D0B3D92838ED5FE6FB71A195A19DF5A)] [added: Operations](#Item7MangamentsDiscussionandAnalysis_301)] | [removed: [42](#s3D0B3D92838ED5FE6FB71A195A19DF5A)] [added: 57] |

| [Item [removed: 7A.](#s338444FC0F11BC9BB0611A195BB805A5)] [added: 7A.](#Item7AQuantitativeandQualitativeDisclosu)] | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s338444FC0F11BC9BB0611A195BB805A5)] [added: Risk](#Item7AQuantitativeandQualitativeDisclosu)] | [removed: [63](#s338444FC0F11BC9BB0611A195BB805A5)] [added: 94] |

| [Item [removed: 8.](#s21C1AE24AD965236A83C1A195BC05DB5)] [added: 8.](#Item8FinancialStatementsandSupplementary)] | | [Financial Statements and Supplementary [removed: Data](#s21C1AE24AD965236A83C1A195BC05DB5)] [added: Data](#Item8FinancialStatementsandSupplementary)] | [removed: [64](#s21C1AE24AD965236A83C1A195BC05DB5)] [added: 98] |

| [Item [removed: 9.](#sBFA80C421093456C9EEB1A1960909ECE)] [added: 9.](#Item9ChangesinDisagreementswithAccountan)] | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sBFA80C421093456C9EEB1A1960909ECE)] [added: Disclosure](#Item9ChangesinDisagreementswithAccountan)] | [removed: [93](#sBFA80C421093456C9EEB1A1960909ECE)] [added: 146] |

| [Item [removed: 9A.](#sE45ECEF2A9142B0FA8D91A1960C1E7F6)] [added: 9A.](#Item9AControlsandProcedures_932099)] | | [Controls and [removed: Procedures](#sE45ECEF2A9142B0FA8D91A1960C1E7F6)] [added: Procedures](#Item9AControlsandProcedures_932099)] | [removed: [93](#sE45ECEF2A9142B0FA8D91A1960C1E7F6)] [added: 146] |

| [Item [removed: 9B.](#s4F10A6F263C9ACC35E591A1960E3D159)] [added: 9B.](#Item9BOtherInformation_923882)] | | [Other [removed: Information](#s4F10A6F263C9ACC35E591A1960E3D159)] [added: Information](#Item9BOtherInformation_923882)] | [removed: [93](#s4F10A6F263C9ACC35E591A1960E3D159)] [added: 147] |

| | | [PART [removed: III](#sE2B69997F75FC06917BF1A1961153328)] [added: III](#PARTIII_637833)] | |

| [Item [removed: 10.](#sD80E2A41816398F31C981A193725EF46)] [added: 10.](#Item10DirectorsExecutiveOfficers_470329)] | | [Directors, Executive Officers and Corporate [removed: Governance](#sD80E2A41816398F31C981A193725EF46)] [added: Governance](#Item10DirectorsExecutiveOfficers_470329)] | [removed: [94](#sD80E2A41816398F31C981A193725EF46)] [added: 147] |

| [Item [removed: 11.](#s234772CB9FD1A9D413021A196168BDD1)] [added: 11.](#Item11ExecutiveCompensation_846147)] | | [Executive [removed: Compensation](#s234772CB9FD1A9D413021A196168BDD1)] [added: Compensation](#Item11ExecutiveCompensation_846147)] | [removed: [94](#s234772CB9FD1A9D413021A196168BDD1)] [added: 147] |

| [Item [removed: 12.](#sC101B652E959E8038BC51A196189E734)] [added: 12.](#Item12SecurityOwnershipofCertainBenefici)] | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sC101B652E959E8038BC51A196189E734)] [added: Matters](#Item12SecurityOwnershipofCertainBenefici)] | [removed: [94](#sC101B652E959E8038BC51A196189E734)] [added: 148] |

| [Item [removed: 13.](#s8BC17D91CA5513D5790B1A1961BBDF00)] [added: 13.](#Item13CertainRelationshipsandRelatedTran)] | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s8BC17D91CA5513D5790B1A1961BBDF00)] [added: Independence](#Item13CertainRelationshipsandRelatedTran)] | [removed: [94](#s8BC17D91CA5513D5790B1A1961BBDF00)] [added: 148] |

| [Item [removed: 14.](#s9A7B8B9EF321E22554F11A1961DDC734)] [added: 14.](#Item14PrincipalAccountantFeesandServices)] | | [Principal Accountant Fees and [removed: Services](#s9A7B8B9EF321E22554F11A1961DDC734)] [added: Services](#Item14PrincipalAccountantFeesandServices)] | [removed: [94](#s9A7B8B9EF321E22554F11A1961DDC734)] [added: 148] |

| [Item [removed: 15.](#sD83A6B2C25C8EA6044621A1962309ED1)] [added: 15.](#Item15ExhibitsFinancialStatementSchedule)] | | [Exhibits, Financial Statement [removed: Schedules](#sD83A6B2C25C8EA6044621A1962309ED1)] [added: Schedules](#Item15ExhibitsFinancialStatementSchedule)] | [removed: [95](#sD83A6B2C25C8EA6044621A1962309ED1)] [added: 149] |

| [removed: •] | [removed: "CBOE Holdings,"] [added: · | | "Cboe,"] "we," "us," "our" or "the Company" refers to [removed: CBOE Holdings,] [added: Cboe Global Markets,] Inc. and its subsidiaries. |

| [removed: •] | [removed: "CBOE"] [added: · | | "Cboe Options"] refers to [removed: Chicago Board Options] [added: Cboe] Exchange, [removed: Incorporated,] [added: Inc.,] a wholly-owned subsidiary of [removed: CBOE Holdings,] [added: Cboe Global Markets,] Inc. |

| [removed: •] | [added: · | |] "C2" refers to [added: Cboe] C2 [removed: Options] Exchange, [removed: Incorporated,] [added: Inc.] a wholly-owned subsidiary of [removed: CBOE Holdings,] [added: Cboe Global Markets,] Inc. |

10-K 1 cboe-20171231x10k.htm 10-K

or

| Delaware | 20-5446972 |

| incorporation or organization) | Identification Number) |

| 400 South LaSalle Street | |

| Chicago, Illinois | 60605 |

Yes ☒ No ☐

Yes ☒ No ☐

| --- | --- | --- | --- | --- |

Yes ☐ No ☒

Portions of Cboe Global Market’s Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31, 2017, are incorporated by reference in Part III.

CBOE GLOBAL MARKETS, INC.

2017 FORM 10-K

| | | [PART I](#PARTI_822414) | |

| | | [PART II](#PARTII_507992) | |

| | | [PART IV](#PARTIV_133246) | |

| [Item 16.](#Item16Form10KSummary_266369) | | [Form 10-K Summary](#Item16Form10KSummary_266369) | 155 |

| --- | --- | --- | --- |

| | · | | "Bats Global Markets" and "Bats" refer to our wholly-owned subsidiary Bats Global Markets, Inc., now known as Cboe Bats, LLC, and its subsidiaries. |

| --- | --- | --- | --- |

| | · | | "BYX" refers to Cboe BYX Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc. |

| --- | --- | --- | --- |

| | · | | "BZX" refers to Cboe BZX Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc. |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | "Cboe Chi-X Europe" refers to our broker-dealer entity, Cboe Chi-X Europe Limited, a wholly-owned subsidiary of Cboe Global Markets, Inc., operated in the United Kingdom. |

| --- | --- | --- | --- |

| | · | | "Cboe Europe Equities" refers to Cboe Europe Limited, a wholly-owned subsidiary of Cboe Global Markets, Inc., the U.K. operator of our Multilateral Trading Facility ("MTF"), and our Regulated Market ("RM"), under its Recognized Investment Exchange ("RIE") status. |

| --- | --- | --- | --- |

| | · | | "Cboe FX" refers to Cboe FX Holdings, LLC, a wholly-owned subsidiary of Cboe Global Markets, Inc. |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | "Cboe SEF" refers to Cboe SEF, LLC, our swap execution facility that is a wholly-owned subsidiary of Cboe Global Markets, Inc. |

| --- | --- | --- | --- |

| | · | | "Cboe Trading" refers to our broker-dealer entity, Cboe Trading, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc., operated in the United States. |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| | · | | "EDGA" refers to Cboe EDGA Exchange, Inc., a wholly-owned subsidiary of Cboe Global Markets, Inc. |

| --- | --- | --- | --- |

10-K 1 cboe-1231201610k.htm 10-K

| | | |

| --- | --- | --- |

| or | | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Documents | | Form 10-K Reference |

| Portions of the Company's Proxy Statement for the 2017 Annual Meeting of Stockholders | | Part III |

2016 FORM 10-K

| | | | |

| | | | Page |

| | | [PART I](#s3B5A5742B3CB380FB25A1A19577296AA) | |

| | | [PART II](#s3999D277864FB52316EC1A195998CE47) | |

| | | [PART IV](#sAC0F391E3559445EBA331A19620F0CFA) | |

| | |

| --- | --- |

| • | "Consent Order" refers to the consent order that CBOE and C2 entered into with the SEC on June 11, 2013. |

| • | "Our exchanges" refers to CBOE, C2 and CFE. |

CBOE®, Chicago Board Options Exchange®, CBOE Volatility Index®, CFE®, Livevol®, FLEX®, FLexible EXchange®, Hybrid®, LEAPS® and VIX® are registered trademarks and BuyWriteSM, CBOE Futures ExchangeSM, CBOE VestSM, CBOE Options InstituteSM, CBOE Russell 2000 Volatility IndexSM, CBOE/CBOT 10-year U.S. Treasury Note Volatility IndexSM and WeeklysSM are service marks of CBOE.

C2SM and C2 Options ExchangeSM are service marks of C2.

Dow Jones®, Dow Jones Industrial Average®, DJIA® and Dow Jones Indexes are registered trademarks or service marks of Dow Jones Trademark Holdings, LLC, used under license.

CBOT is a trademark of CME Group, Inc. ("CME").

CBOE has, with the permission of CME, used the CBOT trademark in CBOE/CBOT 10-year U.S. Treasury Note Volatility Index.

CME makes no representation regarding the advisability of investing in any investment product that is based on such indexes.

| • | our dependence on third party service providers; |

| • | our ability to maintain access fee revenues; |

| • | the satisfaction of the conditions precedent to the consummation of our proposed acquisition of Bats Global Markets, Inc. (“Bats”), including, without limitation, the receipt of regulatory approvals on the terms desired or anticipated; |

| • | risks relating to the value of our shares to be issued in the proposed transaction; |

| • | disruptions of our and Bats’ current plans, operations and relationships with market participants caused by the announcement and pendency of the proposed transaction; and |

of this Report.

Through our wholly-owned subsidiary, [removed: Chicago Options Exchange] [added: Cboe] Building Corporation, we own the building in which our principal offices are located and occupy approximately 300,000 square feet of this building.

In addition to our principal offices, we have space located at 8050 Marshall Drive, Lenexa, Kansas, where we lease approximately 39,000 square feet of space.

The lease on this space expires in February 2025 and contains two five-year renewal options, as well as a one-time option to terminate in November 2019 if certain contingencies under the lease are met.

We have an office located at 17 State Street, New York, New York, where we lease approximately 21,000 square feet of space, which expires in April 2024.

The disaster recovery sites in the United States are located in Kansas City, Missouri and Secaucus, New Jersey.

In addition, we have agreements with a primary data center in Secaucus, New Jersey and a secondary data center in Chicago, Illinois.

Our principal offices in the United Kingdom are at 11 Monument Street, London, where we lease approximately 10,300 square feet of office space, which expires in March 2027.

Our work area recovery space is available on invocation with a specialist provider.

In Europe, our primary data center is in Slough, England.

The secondary data center for Bats Europe is in Park Royal, London.

We operate a back-up location for our London operations in the United Kingdom.

We also maintain leased locations in California, Singapore, and Hong Kong.

We believe that our properties are in good operating condition and adequately serve our current business operations.

Generally, our properties are not earmarked for use by a particular segment.

Instead, most of our properties are used by two or more segments.

We also anticipate that suitable additional or alternative space will be available at commercially reasonable terms for future expansion to the extent necessary.

In addition to our principal offices, we lease approximately 13,000 square feet, which includes office space, our data center and remote network operations.

We believe the space we occupy is sufficient to meet our current and expected future needs.

The Company's common stock is listed on [added: Cboe BZX and] the NASDAQ Global Select Market under the trading symbol CBOE.

As of January 31, [removed: 2017,] [added: 2018,] there were approximately [removed: 145] [added: 186] holders of record of our common stock.

The following table sets forth the high and low sales prices by quarter for shares of our common stock as reported on [added: BZX and] NASDAQ and cash dividends declared per quarter:

| | [added: |] Price Range | | | | | | [removed: | | Cash Dividends Declared] per Share | | [removed: |]

| Calendar Period | [removed: High] | [added: High] | | | Low | | | | | [removed: | |]

| 2016 | | | | | | | | | | [removed: | |]

| First Quarter | [removed: 67.41] | [added: $] | [added: 67.41] | | [removed: 58.43] [added: $] | [added: 58.43] | | [added: $] | 0.23 | [removed: | |]

| Second Quarter | [removed: 66.95] | | [added: 66.95] | | [removed: 61.22] | [added: 61.22] | | | 0.23 | [removed: | |]

| Third Quarter | [removed: 71.05] | | [added: 71.05] | | [removed: 64.62] | [added: 64.62] | | | 0.25 | [removed: | |]

| Fourth Quarter | [removed: 77.29] | | [added: 77.29] | | [removed: 61.58] | [added: 61.58] | | | 0.25 | [removed: | |]

| 2017 | | | | | | | | | | [removed: | |]

[removed: 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.

As of December 31, [removed: 2016,] [added: 2017,] the Company had $97 million of availability remaining under its existing share repurchase [removed: authorizations.][added: authorization.]

The following graph compares the cumulative total return provided to stockholders on our common stock since our initial public offering against the return of the S&P [removed: Midcap 400] [added: 500] Index and a customized peer group that includes CME Group Inc., Intercontinental Exchange Inc., [removed: NASDAQ, Inc.] and [removed: CBOE Holdings.][added: Nasdaq, Inc.]

An investment of $100, with reinvestment of all dividends, is assumed to have been made in our common stock, the index and the peer groups on December 31, [removed: 2011,] [added: 2012,] and its performance is tracked on [removed: a] [added: an] annual basis through December 31, [removed: 2016.][added: 2017.]

Among [removed: CBOE Holdings,] [added: Cboe Global Markets,] Inc., the S&P [removed: Midcap 400] [added: 500] Index

[removed: ][added: ]

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | Cash | |

| | | | | | | | | Dividends Declared | |

| First Quarter | | | 81.37 | | | 72.54 | | | 0.25 |

| Second Quarter | | | 91.80 | | | 80.00 | | | 0.25 |

| Third Quarter | | | 108.26 | | | 91.12 | | | 0.27 |

| Fourth Quarter | | | 128.32 | | | 107.48 | | | 0.27 |

Share Repurchase Program

The program permits the Company to

The program was not utilized during the year ended December 31, 2017.

Purchase of common stock from employees

During the fiscal quarter ended December 31, 2017, we purchased shares from employees in connection with the settlement of employee tax withholding obligations arising from the vesting of restricted stock units.

The table below represents repurchases made by or on behalf of us or any “affiliated purchaser” of our common stock during the fiscal quarter ended December 31, 2017:

| | | | |

| --- | --- | --- | --- |

| Period | Total number of shares purchased | | Average price paid per share |

| October 1 to October 31, 2017 | — | $ | — |

| November 1 to November 30, 2017 | 145 | | 119.63 |

| December 1 to December 31, 2017 | 52,794 | | 124.97 |

| Total | 52,939 | | 124.66 |

| | | | | | | | | | | | | |

| | | 12/12 | | 12/13 | | 12/14 | | 12/15 | | 12/16 | | 12/17 |

| Cboe Global Markets, Inc. | | 100.00 | | 180.77 | | 223.84 | | 232.26 | | 268.31 | | 457.37 |

| S&P 500 | | 100.00 | | 211.60 | | 253.82 | | 276.42 | | 287.20 | | 341.87 |

| Peer Group | | 100.00 | | 170.08 | | 189.10 | | 213.86 | | 260.69 | | 341.01 |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2015 | | | | | | | | | | | |

| First Quarter | $ | 68.00 | | | $ | 56.57 | | | $ | 0.21 | |

| Second Quarter | 59.64 | | | | 55.04 | | | | 0.21 | | |

| Third Quarter | 67.22 | | | | 57.41 | | | | 0.23 | | |

| Fourth Quarter | 72.53 | | | | 63.65 | | | | 0.23 | | |

| Through February 16, 2017 (1) | 80.47 | | | | 72.54 | | | | 0.25 | | |

(1) On February 16, 2017, the Company's board of directors declared a quarterly cash dividend of $0.25 per share.

The dividend is payable on March 24, 2017 to stockholders of record at the close of business on March 3, 2017.

Under the program, for the year ended December 31, 2016, the Company purchased 947,786 shares of common stock at an average cost per share of $63.83 totaling $60.5 million.

Since inception of the program through December 31, 2016, the Company has purchased 10,947,401 shares of common stock at an average cost per share of $45.95 totaling $503.0 million.

As a result of our pending transaction with Bats, we were not active in our share repurchase program during the third and fourth quarters of 2016.

__________________________________________

* $100 invested on 12/31/11 in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

Copyright© 2017 Standard & Poor's, a division of S&P Global.

All rights reserved.

| | 12/2011 | | 12/2012 | | 12/2013 | | 12/2014 | | 12/2015 | | 12/2016 | |

| CBOE Holdings, Inc. | 100 | | 119.10 | | 215.30 | | 266.60 | | 276.63 | | 319.56 | |

| S&P Midcap 400 | 100 | | 117.88 | | 157.37 | | 172.74 | | 168.98 | | 204.03 | |

| Peer Group | 100 | | 108.45 | | 184.46 | | 205.09 | | 231.94 | | 282.72 | |

The following [removed: table shows] selected financial [added: and operating] data [removed: of the Company that] should be read [removed: together] [added: in conjunction] with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and [removed: the Consolidated Financial Statements] [added: our consolidated financial statements] and [removed: corresponding] [added: the accompanying] notes included in Items 7 and 8, [removed: respectively,] [added: respectively] of this Form [removed: 10-K:][added: 10-K.]

| | [added: |] Year Ended December 31, | | | | | | | | | | | | | | [removed: | | | | |]

| | [removed: 2016] | [removed: | | | 2015 |] [added: 2017] | | | [removed: 2014] [added: 2016] | | | [added: 2015] | [removed: 2013] | | [added: 2014] | | [removed: 2012] | [added: 2013] | |

| | [removed: (In thousands,] [added: | (in millions,] except per share [removed: amounts) | | | | |] [added: data)] | | | | | | | | | | | | | |

| Net income [removed: per share] allocated to common stockholders | | [removed: | | | |] [added: $] | [added: 396.7] | | [added: $] | [added: 184.9] | | [added: $] | [added: 204.1] | | [added: $] | [added: 188.4] | | [added: $] | [added: 173.9] |

| Basic [added: earnings per share] | [removed: $] | [removed: 2.27] [added: $] | [added: 3.70] | | $ | [removed: 2.46 |] [added: 2.27] | | $ | [removed: 2.21 |] [added: 2.46] | | $ | [removed: 1.99 |] [added: 2.21] | | $ | [removed: 1.78 |] [added: 1.99] |

| Diluted [removed: | 2.27 | | |] [added: earnings per share] | [removed: 2.46] | [added: $] | [added: 3.69] | | [removed: 2.21] [added: $] | [added: 2.27] | | [added: $] | [removed: 1.99] [added: 2.46] | | [added: $] | [added: 2.21] | [removed: 1.78] | [added: $] | [added: 1.99] |

| [removed: Cash dividends declared] [added: Distributions] per share [removed: (1) (2)] | [removed: 0.96] | [removed: | | | 0.88 |] [added: $] | [added: 1.04] | | [removed: 0.78] [added: $] | [added: 0.96] | | [added: $] | [removed: 1.16] [added: 0.88] | | [added: $] | [added: 0.78] | [removed: 1.29] | [added: $] | [added: 1.16] |

| Balance Sheet Data: | | | | | | | | | | | | | | | | [removed: | | | |]

The information set forth below is not necessarily indicative of our future results for any period.

We completed the acquisition of Bats during 2017 and included the financial results of Bats in our consolidated financial results from March 1, 2017.

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Consolidated Statements of Operations Data: | | | | | | | | | | | | | | | |

| Revenues: | | | | | | | | | | | | | | | |

| Transaction fees | | $ | 1,564.9 | | $ | 509.3 | | $ | 485.3 | | $ | 466.9 | | $ | 426.3 |

| Access fees | | | 106.8 | | | 52.4 | | | 53.3 | | | 59.3 | | | 61.0 |

| Exchange services and other fees | | | 74.8 | | | 46.3 | | | 42.2 | | | 38.0 | | | 37.3 |

| Market data fees | | | 164.5 | | | 33.2 | | | 30.0 | | | 30.5 | | | 24.9 |

| Regulatory fees | | | 291.5 | | | 48.3 | | | 33.5 | | | 37.1 | | | 36.6 |

| Other revenue | | | 26.6 | | | 13.6 | | | 19.5 | | | 14.6 | | | 15.0 |

| Total revenues | | | 2,229.1 | | | 703.1 | | | 663.8 | | | 646.4 | | | 601.1 |

| Cost of revenues: | | | | | | | | | | | | | | | |

| Liquidity payments | | | 849.7 | | | 35.8 | | | 29.2 | | | 29.1 | | | 29.2 |

| Routing and clearing | | | 37.6 | | | 11.1 | | | 2.3 | | | 4.1 | | | 4.3 |

| Section 31 fees (1) | | | 260.0 | | | 11.8 | | | — | | | — | | | — |

| Royalty fees | | | 86.2 | | | 78.0 | | | 70.6 | | | 66.1 | | | 56.6 |

| Total cost of revenues | | | 1,233.5 | | | 136.7 | | | 102.1 | | | 99.3 | | | 90.1 |

| Revenues less cost of revenues | | | 995.6 | | | 566.4 | | | 561.7 | | | 547.1 | | | 511.0 |

| Operating expenses: | | | | | | | | | | | | | | | |

| Compensation and benefits | | | 201.4 | | | 113.2 | | | 105.9 | | | 121.7 | | | 118.1 |

| Depreciation and amortization | | | 192.2 | | | 44.4 | | | 46.3 | | | 40.0 | | | 34.5 |

| Technology support services | | | 42.1 | | | 22.5 | | | 20.7 | | | 19.2 | | | 17.9 |

| Professional fees and outside services | | | 66.0 | | | 53.1 | | | 50.1 | | | 32.0 | | | 34.4 |

| Travel and promotional expenses | | | 17.2 | | | 11.0 | | | 9.0 | | | 9.0 | | | 9.8 |

| Facilities costs | | | 10.3 | | | 5.7 | | | 5.0 | | | 5.7 | | | 5.0 |

| Acquisition-related costs | | | 84.4 | | | 13.6 | | | — | | | — | | | — |

| Other expenses | | | 10.1 | | | 4.7 | | | 4.8 | | | 5.7 | | | 5.5 |

| Total operating expenses | | | 623.7 | | | 268.2 | | | 241.8 | | | 233.3 | | | 225.2 |

| Operating income | | | 371.9 | | | 298.2 | | | 319.9 | | | 313.8 | | | 285.8 |

| Interest (expense) income, net | | | (41.3) | | | (5.7) | | | — | | | — | | | — |

| Other income (expense) | | | 3.8 | | | 14.1 | | | 4.1 | | | (4.1) | | | (2.1) |

| Income before income tax provision | | | 334.4 | | | 306.6 | | | 324.0 | | | 309.7 | | | 283.7 |

| Income tax provision | | | (66.2) | | | 120.9 | | | 119.0 | | | 120.0 | | | 107.7 |

| Net income | | $ | 400.6 | | $ | 185.7 | | $ | 205.0 | | $ | 189.7 | | $ | 176.0 |

| Net loss attributable to noncontrolling interests | | | 1.1 | | | 1.1 | | | — | | | — | | | — |

| Net income excluding noncontrolling interests | | | 401.7 | | | 186.8 | | | 205.0 | | | 189.7 | | | 176.0 |

| Change in redemption value of noncontrolling interests | | | (1.1) | | | (1.1) | | | — | | | — | | | — |

| Net income allocated to participating securities | | | (3.9) | | | (0.8) | | | (0.9) | | | (1.3) | | | (2.1) |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Income Statement Data: | | | | | | | | | | | | | | | | | | | |

| Total operating revenues | $ | 656,946 | | | $ | 634,545 | | | $ | 617,225 | | | $ | 572,050 | | | $ | 512,338 | |

| Total operating expenses | 358,746 | | | | 314,617 | | | | 303,424 | | | | 286,236 | | | | 268,241 | | |

| Operating income | 298,200 | | | | 319,928 | | | | 313,801 | | | | 285,814 | | | | 244,097 | | |

| Total other income/(expense) | 8,404 | | | | 4,096 | | | | (4,104 | | ) | | (2,158 | | ) | | (1,546 | | ) |

| Income before income taxes | 306,604 | | | | 324,024 | | | | 309,697 | | | | 283,656 | | | | 242,551 | | |

| Income tax provision | 120,884 | | | | 119,001 | | | | 119,983 | | | | 107,657 | | | | 85,156 | | |

| Net income | $ | 185,720 | | | $ | 205,023 | | | $ | 189,714 | | | $ | 175,999 | | | $ | 157,395 | |

| Net income allocated to common stockholders | $ | 184,945 | | | $ | 204,125 | | | $ | 188,392 | | | $ | 173,863 | | | $ | 155,254 | |

| Total assets | $ | 476,615 | | | $ | 384,788 | | | $ | 383,901 | | | $ | 441,589 | | | $ | 338,858 | |

| Total liabilities | 146,069 | | | | 125,143 | | | | 133,834 | | | | 157,072 | | | | 99,736 | | |

| Redeemable noncontroling interests | 12,600 | | | | — | | | | — | | | | — | | | | — | | |

| Total stockholders' equity | 317,946 | | | | 259,645 | | | | 250,067 | | | | 284,517 | | | | 239,122 | | |

| Average daily volume by product (3) | | | | | | | | | | | | | | | | | | | |

| Equities | 1,446 | | | | 1,559 | | | | 1,939 | | | | 1,721 | | | | 1,977 | | |

| Indexes | 1,719 | | | | 1,620 | | | | 1,613 | | | | 1,479 | | | | 1,217 | | |

| Exchange-traded products | 1,297 | | | | 1,274 | | | | 1,507 | | | | 1,353 | | | | 1,247 | | |

| Total options average daily volume | 4,462 | | | | 4,453 | | | | 5,059 | | | | 4,553 | | | | 4,441 | | |

| Futures | 239 | | | | 205 | | | | 201 | | | | 159 | | | | 96 | | |

| Total average daily volume | 4,701 | | | | 4,658 | | | | 5,260 | | | | 4,712 | | | | 4,537 | | |

__________________________________________

| | |

| --- | --- |

| (1) | On December 11, 2012, the Company's board of directors declared a special cash dividend of $0.75 per share. This was in addition to the quarterly cash dividends which aggregated $0.54 per share for the year ended December 31, 2012. |

| (2) | On December 10, 2013, the Company's board of directors declared a special cash dividend of $0.50 per share. This was in addition to the quarterly cash dividends which aggregated $0.66 per share for the year ended December 31, 2013. |

| (3) | Average daily volume equals the total contracts traded during the period divided by the number of trading days in the period. |

| [removed: CBOE Holdings,] [added: Cboe Global Markets,] Inc. and [removed: Subsidiaries:] [added: Subsidiaries] | |

| [Reports of Independent Registered Public Accounting [removed: Firm](#sD15673230393D75D86A41A195BC71CB1)] [added: Firm](#REPORTOFINDEPENDENTREGISTERED_227565)] | [removed: [65](#sD15673230393D75D86A41A195BC71CB1)] [added: 99] |

[removed: | [Consolidated Balance Sheets as of] December 31, [added: 2017,] 2016 and [removed: 2015](#sDF761CDEEFB7FA1150B91A191ED4608B) | [67](#sDF761CDEEFB7FA1150B91A191ED4608B) |][added: 2015]

[removed: | [Consolidated Statements of Income] [added: The provision] for [added: income taxes for] the [removed: Years Ended] [added: years ended] December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#s3AA3757FE8853CE538CC1A191EFCFCF0) | [68](#s3AA3757FE8853CE538CC1A191EFCFCF0) |][added: 2015 consists of the following (in millions):]

[removed: | [Consolidated Statements] [added: A reconciliation] of [removed: Comprehensive Income] [added: the statutory federal income tax rate to the effective income tax rate] for the [removed: Years Ended] [added: years ended] December 31, [added: 2017,] 2016, [removed: 2015] and [removed: 2014](#sBEEEF05CBFE9AECE12151A191F165EC7) | [69](#sBEEEF05CBFE9AECE12151A191F165EC7) |][added: 2015 is as follows:]

[removed: | [Consolidated Statements of Cash Flows for the] Years [removed: Ended] [added: ended] December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#sEA14D2075251E2CA62C21A191F1C1894) | [70](#sEA14D2075251E2CA62C21A191F1C1894) |][added: 2015]

[removed: | [Consolidated Statements of Stockholders' Equity for the] Years [removed: Ended] [added: ended] December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#s18F4C31A9C6AFEF4D4601A191F43C1D1) | [71](#s18F4C31A9C6AFEF4D4601A191F43C1D1) |][added: 2015]

| [removed: [Notes to] Consolidated Financial [removed: Statements](#s23C8E2BB0A29AB4FAFF01A195CFAE8E0)] [added: Statements:] | [removed: [72](#s23C8E2BB0A29AB4FAFF01A195CFAE8E0)] |

To the [added: Stockholders and the] Board of Directors [removed: and Stockholders] of [added: Cboe Global Markets, Inc.]

[removed: CBOE Holdings,] [added: Cboe Global Markets,] Inc. and Subsidiaries

[added: We have audited the accompanying consolidated balance sheets of Cboe Global Markets, Inc. and subsidiaries (the "Company") as of] December 31, [removed: 2016 and 2015,] [added: 2017] and [added: 2016,] the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash [removed: flows] [added: flows,] for each of the three years in the period ended December 31, [removed: 2016.][added: 2017, and the related notes (collectively referred to as the "financial statements").]

Our responsibility is to express an opinion on [removed: these] [added: the Company's] financial statements based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, [removed: such consolidated] [added: the] financial statements present fairly, in all material respects, the financial position of [removed: CBOE Holdings, Inc.] [added: the Company] as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended December 31, [removed: 2016,] [added: 2017,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (PCAOB),] the [removed: Company’s] [added: Company's] internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on [removed: the] criteria established in Internal [removed: Control-Integrated] [added: Control—Integrated] Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 21, 2017] [added: 22, 2018,] expressed an unqualified opinion on the [removed: Company’s] [added: Company's] internal control over financial reporting.

[removed: /s/] [added: s/] DELOITTE & TOUCHE LLP

[removed: We have audited the] [added: A company’s] internal control over financial reporting [removed: of CBOE Holdings, Inc. (the “Company”) as of][added: includes those policies]

[added: We have audited the internal control over financial reporting Cboe Global Markets, Inc. (the “Company”) as of] December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal [removed: Control-Integrated] [added: Control — Integrated] Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission.][added: Commission (COSO).]

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

A company’s internal control over financial reporting is a process designed [removed: by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel] to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

[removed: A company’s internal control over financial reporting includes those policies] and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Also, projections of any evaluation of [removed: the] effectiveness [removed: of the internal control over financial reporting] to future periods are subject to the risk that [removed: the] controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of [added: December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.]

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (PCAOB),] the consolidated financial statements as of and for the year ended December 31, [removed: 2016] [added: 2017,] of the Company and our report dated [added: February 22, 2018, expressed an unqualified opinion on those financial statements.]

December 31, [removed: 2016] [added: 2017] and [removed: December 31, 2015][added: 2016]

| (in thousands, except [added: per] share amounts) | [removed: December 31, 2016] | [added: 2017] | | | [removed: December 31, 2015] [added: 2016] | | | [added: 2015 | |]

| Cash and [removed: cash equivalents] [added: Cash Equivalents:] | [removed: $] | [removed: 97,298] | | | [removed: $] | [removed: 102,253] | | [added: | | |]

| Income taxes receivable | [removed: 53,708] | | [added: 17.2] | | [removed: 27,901] | [added: 53.7] | |

| Other current assets | [removed: 134] | | [added: 9.4] | | [removed: 625] | [added: 7.4] | |

[removed: | Property] [added: (g)Property] and [removed: Equipment: | | | | | | | |][added: Equipment, Net]

| Less accumulated depreciation and amortization | [removed: (160,101] | | [removed: ) |] [added: (189.6)] | [removed: (155,653] | | [removed: )] [added: (172.0)] |

[removed: | Total] [added: (9)] Property and [removed: Equipment—Net | 55,935 | | | | 60,360 | | |][added: Equipment, Net]

| Other [removed: Assets: | | | |] [added: assets] | | | [added: 32.8] |

| Software development work in progress | [removed: 12,305] | [removed: |] [added: $] | [added: 10.2] | [removed: 13,836] | [added: $] | [added: 12.3] |

[removed: | Total] [added: (10)] Other [removed: Assets—Net | 81,330 | | | | 59,311 | | |][added: Assets, Net]

| Accounts payable and accrued expenses [added: assumed] | [removed: $] | [removed: 79,400] | [added: (59.9)] | | [removed: $] | [removed: 60,104] [added: —] | | [added: | — | |]

| Marketing fee payable | [removed: 7,218] | | [added: 8.4] | | [removed: 6,141] | [added: 7.2] | |