Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Cboe Global Markets, Inc. and Subsidiaries
Reports of Independent Registered Public Accounting Firm (PCAOB ID 185)	107
Consolidated Financial Statements:
Consolidated Balance Sheets	111
Consolidated Statements of Income	112
Consolidated Statements of Comprehensive Income	113
Consolidated Statements of Changes in Stockholders’ Equity	114
Consolidated Statements of Cash Flows	115
Notes to Consolidated Financial Statements	116

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Cboe Global Markets, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Cboe Global Markets, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 16, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of goodwill impairment analysis for the Europe and Asia Pacific reporting unit

As discussed in Notes 2 and 10 to the consolidated financial statements, the Company tests goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying value may be impaired. This involves estimating the fair value of the reporting unit using a discounted cash flow model.

We identified the evaluation of the Company’s goodwill impairment analysis for the Europe and Asia Pacific reporting unit as a critical audit matter. The determination of the fair value of the Europe and Asia Pacific reporting unit required management to make assumptions about the forecasted revenue growth rates and operating margin assumptions within the discounted cash flow model used in the income approach. Evaluating these assumptions involved a higher degree of auditor judgment and the use of professionals with specialized skills and knowledge. Changes to these assumptions could impact the conclusions reached regarding the recoverability of goodwill for the Europe and Asia Pacific reporting unit.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Europe and Asia Pacific reporting unit goodwill impairment analysis, including controls over the forecasted revenue growth rates and operating margin assumptions. We evaluated the Company’s forecasted revenue growth rates and operating margins by comparing historical revenue growth rate and operating margin forecasts to actual results. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted with evaluating the forecasted revenue growth rates and operating margin assumptions by comparing them to peer companies.

Evaluation of unrecognized tax benefits

As discussed in Notes 2 and 21 to the consolidated financial statements, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the consolidated financial statements from such a position is measured based upon the largest benefit that has greater than 50% likelihood of being realized upon ultimate settlement.

We identified the evaluation of unrecognized tax benefits in certain jurisdictions as a critical audit matter. A higher degree of auditor judgment and the involvement of professionals with specialized skills and knowledge was required to evaluate the Company’s estimate of tax benefits to be realized upon ultimate settlement of its tax positions.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s unrecognized tax benefits process, including controls over the estimate of tax benefits to be realized upon ultimate settlement of tax positions. We evaluated the Company’s ability to estimate its unrecognized tax benefits by comparing historical unrecognized tax benefits to actual results upon the conclusion of examinations by applicable taxing authorities. In addition, we involved tax professionals with specialized skills and knowledge who assisted in:

●	analyzing the Company’s tax positions, including the measurement of unrecognized tax benefits

●	evaluating changes in applicable laws and regulations

●	inspecting settlements with applicable taxing authorities.

/s/ KPMG LLP

We have served as the Company’s auditor since 2020.

Kansas City, Missouri

February 16, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Cboe Global Markets, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Cboe Global Markets, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 16, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. 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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Kansas City, Missouri February 16, 2024

Cboe Global Markets, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2023 and 2022

(In millions, except share and per share data)


	December 31,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	543.2	$	432.7
Financial investments		57.5		91.7
Accounts receivable, net of $4.5 allowance for credit losses at December 31, 2023 and $2.2 at December 31, 2022		337.3		369.8
Margin deposits, clearing funds, and interoperability funds		848.8		543.0
Digital assets - safeguarded assets		51.3		22.9
Income taxes receivable		74.5		48.3
Other current assets		66.7		47.6
Total current assets		1,979.3		1,556.0

Investments		345.3		253.2
Land		—		2.3
Property and equipment, net		109.2		108.2
Property held for sale		8.7		—
Operating lease right of use assets		136.6		111.7
Goodwill		3,140.6		3,122.8
Intangible assets, net		1,561.5		1,662.8
Other assets, net		206.3		181.9
Total assets	$	7,487.5	$	6,998.9
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	$	412.7	$	420.2
Section 31 fees payable		51.9		147.1
Deferred revenue		5.9		11.7
Margin deposits, clearing funds, and interoperability funds		848.8		543.0
Digital assets - safeguarded liabilities		51.3		22.9
Income taxes payable		1.0		3.5
Current portion of long-term debt		—		304.7
Current portion of contingent consideration liabilities		11.8		24.1
Total current liabilities		1,383.4		1,477.2

Long-term debt		1,439.2		1,437.3
Non-current unrecognized tax benefits		243.8		196.1
Deferred income taxes		217.8		222.9
Non-current operating lease liabilities		150.8		129.3
Non-current portion of contingent consideration liabilities		—		15.0
Other non-current liabilities		67.5		55.8
Total liabilities		3,502.5		3,533.6
Commitments and contingencies

Stockholders' equity:
Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and outstanding at December 31, 2023 and December 31, 2022		—		—
Common stock, $0.01 par value: 325,000,000 shares authorized, 105,556,817 and 105,527,815 shares issued and outstanding, respectively at December 31, 2023 and 107,670,248 and 105,951,199 shares issued and outstanding, respectively at December 31, 2022		1.1		1.1
Common stock in treasury, at cost, 29,002 shares at December 31, 2023 and 1,719,049 shares at December 31, 2022		(10.5)		(131.0)
Additional paid-in capital		1,478.6		1,455.1
Retained earnings		2,525.2		2,171.1
Accumulated other comprehensive loss, net		(9.4)		(31.0)
Total stockholders’ equity		3,985.0		3,465.3
Total liabilities and stockholders' equity	$	7,487.5	$	6,998.9

See accompanying notes to consolidated financial statements.

Cboe Global Markets, Inc. and Subsidiaries

Consolidated Statements of Income

Years ended December 31, 2023, 2022, and 2021

(In millions, except per share data)


	2023		2022		2021
Revenues:
Cash and spot markets	$	1,445.1	$	1,777.6	$	1,660.5
Data and access solutions		539.2		497.0		427.7
Derivatives markets		1,789.2		1,683.9		1,406.6
Total revenues		3,773.5		3,958.5		3,494.8
Cost of revenues:
Liquidity payments		1,385.8		1,670.2		1,650.7
Routing and clearing		79.1		83.2		87.8
Section 31 fees		185.7		329.8		179.6
Royalty fees and other cost of revenues		204.9		133.6		100.6
Total cost of revenues		1,855.5		2,216.8		2,018.7
Revenues less cost of revenues		1,918.0		1,741.7		1,476.1
Operating expenses:
Compensation and benefits		425.8		363.0		288.5
Depreciation and amortization		158.0		166.8		167.4
Technology support services		99.7		77.7		66.7
Professional fees and outside services		92.0		89.0		83.7
Travel and promotional expenses		37.6		23.7		9.7
Facilities costs		25.7		25.1		22.2
Acquisition-related costs		7.4		19.9		15.6
Goodwill impairment		—		460.9		—
Other expenses		13.9		26.0		16.4
Total operating expenses		860.1		1,252.1		670.2
Operating income		1,057.9		489.6		805.9
Non-operating (expenses) income:
Interest expense		(62.4)		(60.0)		(48.0)
Interest income		12.0		3.6		0.6
Earnings in investments		39.5		7.2		1.0
Other income (expense), net		0.6		(7.5)		(3.4)
Income before income tax provision		1,047.6		432.9		756.1
Income tax provision		286.2		197.9		227.1
Net income		761.4		235.0		529.0
Net income allocated to participating securities		(3.9)		(0.9)		(1.7)
Net income allocated to common stockholders	$	757.5	$	234.1	$	527.3
Basic earnings per share	$	7.16	$	2.20	$	4.93
Diluted earnings per share	$	7.13	$	2.19	$	4.92

Basic weighted average shares outstanding		105.8		106.3		107.0
Diluted weighted average shares outstanding		106.2		106.7		107.2

See accompanying notes to consolidated financial statements.

Cboe Global Markets, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Years ended December 31, 2023, 2022 and 2021

(In millions)


	2023		2022		2021
Net income	$	761.4	$	235.0	$	529.0
Other comprehensive income (loss), net of income tax:
Foreign currency translation adjustments		24.6		(85.6)		(19.3)
Unrealized holding losses on financial investments		(2.8)		(0.8)		—
Post-retirement benefit obligations		(0.2)		(0.2)		(0.1)
Comprehensive income		783.0		148.4		509.6
Comprehensive income allocated to participating securities		(3.9)		(0.9)		(1.7)
Comprehensive income allocated to common stockholders, net of income tax	$	779.1	$	147.5	$	507.9

See accompanying notes to consolidated financial statements.

Cboe Global Markets, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Years ended December 31, 2023, 2022 and 2021

(In millions)


											Accumulated
							Additional				other		Total
	Preferred		Common		Treasury		paid-in		Retained		comprehensive		stockholders’
	Stock		Stock		Stock		capital		earnings		income (loss), net		equity
Balance at December 31, 2020	$	—	$	1.2	$	(1,250.4)	$	2,713.3	$	1,809.8	$	75.0	$	3,348.9
Cash dividends on common stock of $1.80 per share		—		—		—		—		(193.3)		—		(193.3)
Stock-based compensation		—		0.1		—		26.6		—		—		26.7
Repurchases of common stock from employee stock plans		—		—		(6.2)		—		—		—		(6.2)
Purchase of common stock		—		—		(81.3)		—		—		—		(81.3)
Retirement of treasury stock		—		(0.2)		1,231.1		(1,230.9)		—		—		—
Shares issued under employee stock purchase plan		—		—		—		0.4		—		—		0.4
Net income		—		—		—		—		529.0		—		529.0
Other comprehensive loss		—		—		—		—		—		(19.4)		(19.4)
Balance at December 31, 2021	$	—	$	1.1	$	(106.8)	$	1,509.4	$	2,145.5	$	55.6	$	3,604.8
Cash dividends on common stock of $1.96 per share		—		—		—		—		(209.4)		—		(209.4)
Stock-based compensation		—		—		—		30.7		—		—		30.7
Repurchases of common stock from employee stock plans		—		—		(8.9)		—		—		—		(8.9)
Purchase of common stock		—		—		(100.9)		—		—		—		(100.9)
Retirement of treasury stock		—		—		85.6		(85.6)		—		—		—
Shares issued under employee stock purchase plan		—		—		—		0.6		—		—		0.6
Net income		—		—		—		—		235.0		—		235.0
Other comprehensive loss		—		—		—		—		—		(86.6)		(86.6)
Balance at December 31, 2022	$	—	$	1.1	$	(131.0)	$	1,455.1	$	2,171.1	$	(31.0)	$	3,465.3
Cash dividends on common stock of $2.10 per share		—		—		—		—		(223.5)		—		(223.5)
Stock-based compensation		—		—		—		41.3		—		—		41.3
Repurchases of common stock from employee stock plans		—		—		(13.9)		—		—		—		(13.9)
Purchase of common stock		—		—		(83.9)		—		—		—		(83.9)
Retirement of treasury stock		—		—		218.3		(34.5)		(183.8)		—		—
Shares issued under employee stock purchase plan		—		—		—		16.7		—		—		16.7
Net income		—		—		—		—		761.4		—		761.4
Other comprehensive income		—		—		—		—		—		21.6		21.6
Balance at December 31, 2023	$	—	$	1.1	$	(10.5)	$	1,478.6	$	2,525.2	$	(9.4)	$	3,985.0

See accompanying notes to consolidated financial statements.

Cboe Global Markets, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years ended December 31, 2023, 2022 and 2021

(In millions)


	2023		2022		2021
Cash flows from operating activities:
Net income	$	761.4	$	235.0	$	529.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		158.0		166.8		167.4
Amortization of debt issuance cost and debt discount		2.6		2.4		2.2
Change in contingent consideration		(14.4)		(5.2)		(2.7)
Realized gain on available-for-sale financial investments		(2.7)		—		—
Provision for accounts receivable credit losses		4.0		1.1		0.4
Benefit for deferred income taxes		(15.2)		(155.7)		(18.9)
Stock-based compensation expense		41.3		30.7		26.6
Loss on disposal of property and equipment		0.1		0.3		0.4
Impairment charge of investment		1.8		10.6		5.6
Goodwill impairment		—		460.9		—
Equity (earnings) loss in investments		(36.9)		(4.2)		0.4
Gain on investment		—		(7.5)		—
Changes in assets and liabilities:
Accounts receivable		39.4		(49.8)		12.0
Restricted cash and cash equivalents and customer bank deposits (included in margin deposits, clearing funds, and interoperability funds)		282.6		(217.5)		(66.2)
Restricted cash and cash equivalents (included in other current assets)		—		—		4.4
Income taxes receivable		(26.3)		(5.4)		10.3
Other current assets		(17.4)		(4.0)		(8.8)
Other assets		(26.7)		(20.8)		(47.4)
Accounts payable and accrued liabilities		(19.1)		38.8		45.0
Section 31 fees payable		(95.2)		106.3		(112.1)
Deferred revenue		(5.8)		(4.1)		4.9
Income taxes payable		(2.8)		(3.8)		3.9
Unrecognized tax benefits		47.7		89.1		33.2
Other liabilities		(0.8)		(12.9)		7.2
Net cash provided by operating activities		1,075.6		651.1		596.8
Cash flows from investing activities:
Acquisitions, net of cash acquired		—		(708.3)		(151.5)
Proceeds from acquisition-related escrow		—		—		0.6
Contributions to investments		(57.1)		(14.6)		(209.8)
Purchases of available-for-sale financial investments		(89.8)		(104.7)		(101.2)
Proceeds from maturities of available-for-sale financial investments		135.7		51.2		160.2
Proceeds from sale of intangible assets		0.8		—		—
Proceeds from investments		—		1.1		—
Proceeds from insurance		0.3		—		—
Purchases of property and equipment and leasehold improvements		(45.0)		(59.8)		(51.0)
Net cash used in investing activities		(55.1)		(835.1)		(352.7)
Cash flows from financing activities:
Proceeds from long-term debt		—		663.6		110.0
Principal payments of current portion of long-term debt		(305.0)		(220.0)		(20.0)
Debt issuance costs		—		(4.9)		—
Cash dividends on common stock		(223.5)		(209.4)		(193.3)
Repurchases of common stock from employee stock plans		(13.9)		(8.9)		(6.2)
Shares issued under employee stock purchase plan		(16.7)		(0.6)		(0.4)
Payments of contingent consideration related to acquisitions		(13.1)		(38.7)		(9.1)
Proceeds from Cboe Digital syndication		—		1.5		—
Purchase of common stock		(83.9)		(100.9)		(81.3)
Net cash (used in) provided by financing activities		(656.1)		81.7		(200.3)
Effect of foreign currency exchange rates on cash, cash equivalents, and restricted cash and cash equivalents		52.8		(10.0)		(9.1)
Increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents		417.2		(112.3)		34.7
Cash, cash equivalents, and restricted cash and cash equivalents:
Beginning of period		979.9		1,092.2		1,057.5
End of period	$	1,397.1	$	979.9	$	1,092.2
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents:
Cash and cash equivalents		543.2		432.7		341.9
Restricted cash and cash equivalents (included in margin deposits, clearing funds, and interoperability funds)		834.8		530.3		745.9
Restricted cash and cash equivalents (included in other current assets)		5.1		4.2		4.4
Customer bank deposits (included in margin deposits, clearing funds, and interoperability funds)		14.0		12.7		—
Total	$	1,397.1	$	979.9	$	1,092.2
Supplemental disclosure of cash transactions:
Cash paid for income taxes, net of refunds	$	286.4	$	271.1	$	209.8
Cash paid for interest		56.7		51.0		42.1
Supplemental disclosure of noncash investing activities:
Accounts receivable acquired	$	—	$	4.4	$	3.5
Financial investments acquired		—		1.5		—
Other current assets acquired		—		1.6		1.0
Goodwill acquired		—		593.5		133.6
Intangible assets acquired		—		164.1		73.8
Property and equipment, net acquired		—		1.6		3.1
Data processing software and other assets acquired		—		2.0		—
Operating lease right of use asset acquired		—		1.2		—
Other assets, net acquired		—		—		0.5
Accounts payable and accrued liabilities assumed		—		(6.1)		(1.8)
Income taxes payable acquired		—		—		(0.1)
Deferred revenue acquired		—		(0.6)		—
Operating lease liability - non-current acquired		—		(1.2)		—
Contingent consideration related to acquisitions		—		(10.1)		(49.6)
Deferred income taxes acquired		—		(22.6)		(15.6)
Other non-current liabilities acquired		—		(0.4)		—
Supplemental disclosure of noncash financing activities:
Paycheck Protection Program loan forgiveness	$	—	$	1.3	$	—
Cboe Digital investor member revenue asset		(3.2)		(19.9)		—
Cboe Digital option grant liability		3.2		21.4		—

See accompanying notes to consolidated financial statements.

Cboe Global Markets, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of December 31, 2023 and 2022 and for the****Years ended December 31, 2023, 2022 and 2021

1. NATURE OF OPERATIONS

Cboe Global Markets, Inc., the world's leading derivatives and securities exchange network, delivers cutting-edge trading, clearing and investment solutions to people around the world. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives, FX, and digital assets, across North America, Europe, and Asia Pacific. Above all, the Company is committed to building a trusted, inclusive global marketplace that enables people to pursue a sustainable financial future.

Cboe’s subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In addition, the Company operates Cboe Europe, one of the largest stock exchanges by value traded in Europe, and owns Cboe Clear Europe, a leading pan-European equities and derivatives clearinghouse, BIDS Holdings, which owns a leading block-trading ATS by volume in the U.S., and provides block-trading services with Cboe market operators in Europe, Canada, Australia, and Japan, Cboe Australia, an operator of trading venues in Australia, Cboe Japan, an operator of trading venues in Japan, Cboe Digital, an operator of a U.S. based digital asset spot market and a regulated futures exchange, Cboe Clear Digital, an operator of a regulated clearinghouse, and Cboe Canada Inc., a recognized Canadian securities exchange. Cboe subsidiaries also serve collectively as a leading market globally for exchange-traded products (“ETPs”) listings and trading.

The Company is headquartered in Chicago with offices in Amsterdam, Belfast, Hong Kong, Kansas City, London, Manila, New York, San Francisco, Sarasota Springs, Singapore, Sydney, Tokyo, and Toronto.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)	Principles of Accounting

These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) as established by FASB.

(b)	Basis of Presentation

The accompanying financial statements are presented on a consolidated basis to include the accounts and transactions of Cboe Global Markets, Inc. and its majority owned subsidiaries and all significant intercompany accounts and transactions have been eliminated.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses. On an ongoing basis, management evaluates its estimates based upon historical experience, observance of trends, information available from outside sources and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different conditions or assumptions.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included.

Segment information

(c)	Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of the amounts of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of goodwill, indefinite-lived intangible assets, and unrecognized tax benefits.

(d)	Cash and Cash Equivalents

The Company’s cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains cash at various regulated financial institutions and brokerage firms which, at times, may be in excess of the federal depository insurance limit. The Company’s management regularly monitors these institutions and believes that the potential for future loss is remote. The Company considers liquid investments, including short-term repurchase agreements, with original or acquired maturities of three months or less to be cash equivalents.

(e)	Financial Investments

Financial investments are classified as trading or available-for-sale.

Trading financial investments represent financial investments held by Cboe Trading that retain the industry-specific accounting classification required for broker-dealers and marketable securities held in a rabbi trust for the Company’s non-qualified retirement and benefit plans. The investments held by the broker-dealer subsidiary are recorded at fair value with changes in unrealized gains and losses reflected within interest expense, net in the consolidated statements of income. The investments held in a trust are recorded at fair value with changes in unrealized gains or losses recorded within other income (expense) and the equal and offsetting charges in the related liability are recorded in compensation and benefits expense in the consolidated statements of income as it relates to employee compensation plans and recorded in professional fees and outside services expense in the consolidated statements of income as it relates to non-employee director compensation plans.

Available-for-sale financial investments are comprised of the financial investments not held by Cboe Trading, including highly liquid U.S. Treasury securities. Unrealized gains and losses, net of income taxes, are included as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets.

Interest on financial investments, including amortization of premiums and accretion of discounts, is recognized as income when earned. Realized gains and losses on financial investments are calculated using the specific identification method and are included in interest expense, net in the accompanying consolidated statements of income.

(f)	Accounts Receivable, Net

Accounts receivable are concentrated with the Company’s member firms and market data distributors and are carried at amortized cost. The Company nets transaction fees and liquidity payments for each member firm on a monthly basis and recognizes the total owed from a member firm as accounts receivable, net and the total owed to a member firm as accounts payable and accrued liabilities in the consolidated balance sheets. On a periodic basis, management evaluates the Company’s accounts receivable and records an allowance for expected credit losses using an aging schedule. The aging schedule applies loss rates based on historical loss information and, as deemed necessary, is adjusted for differences in the nature of the receivables that exist at the reporting date from the historical period. Due to the short-term nature of the accounts receivable, changes in future economic conditions are not expected to have a significant impact on the expected credit losses.

The accounts receivable are presented net of allowance for credit losses on the consolidated balance sheets and the associated losses are presented in other operating expenses on the consolidated statements of income.

(g)	Property and Equipment, Net

Property and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated lives of the assets, generally ranging from three to seven years. Expenditures for

repairs and maintenance are charged to expense as incurred. Depreciation of leasehold improvements is calculated using the straight-line method over the shorter of the related lease term or the estimated useful life of the assets.

Long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances indicate that the carrying values of the assets may not be recoverable. The Company bases this evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present that would indicate that the carrying value of any asset may not be recoverable, the Company determines whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. In the event of impairment, the Company recognizes a loss for the difference between the carrying value and the estimated value of the asset as measured using quoted market prices or, in the absence of quoted market prices, a discounted cash flow analysis.

The Company expenses software development costs as incurred during the preliminary project stage, while capitalizing costs incurred during the application development stage, which includes design, coding, installation and testing activities.

(h)	Goodwill and Intangible Assets, Net

Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of a business acquired. Goodwill is allocated to the Company’s reporting units based on the assignment of the fair values of each reporting unit of the acquired company. The Company tests goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying value may be impaired. Interim impairment testing was performed during the quarter ended June 30, 2022 due to the acquisition of Cboe Digital, resulting in an impairment charge to goodwill. During the quarter ended September 30, 2022 the Company concluded that the factors indicative of impairment were still relevant, resulting in the write-down of the remaining carrying value of goodwill to zero. See Note 10 (“Goodwill, Intangible Assets, Net, and Digital Assets Held”) for additional information. The annual impairment test is performed during the fourth quarter using October 1 carrying values, and if the fair value of the reporting unit is found to be less than the carrying value, an impairment loss is recorded. The Company performed its 2023 annual goodwill impairment test and determined that no additional impairment existed.

Intangible assets, net, primarily include acquired trademarks and trade names, customer relationships, strategic alliance agreements, licenses and registrations and non-compete agreements. Intangible assets with finite lives are amortized based on the discounted cash flow method applied over the estimated useful lives of the intangible assets and are tested for impairment if certain events occur indicating that the carrying value may be impaired.

Intangible assets deemed to have indefinite useful lives are not amortized, but instead are tested for impairment at least annually, usually concurrently with goodwill. Impairment exists if the fair value of the asset is less than the carrying value, and in that case, an impairment loss is recorded. The Company performed its 2023 annual intangible assets impairment test using October 1, 2023 carrying values and determined that no additional impairment existed.

(i)	Treasury Stock

The Company accounts for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in the consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are either available to be redistributed or they are retired. The Company accounts for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in-capital or retained earnings on the consolidated balance sheets.

(j)	Foreign Currency

The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated into U.S. dollars using the exchange rate in effect as of each balance sheet date. Statements of income and cash flow amounts are translated using the average exchange rate during the period. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at the applicable exchange rates are included in accumulated other comprehensive income (loss), net in the accompanying consolidated balance sheets. Foreign currency gains and losses are recorded as other (expense) income, net in the consolidated statements of income. The Company’s operations in the United Kingdom, Amsterdam, Canada, Australia, Japan, Singapore, Philippines, and Hong Kong are

recorded in Pounds sterling, Euros, Canadian dollars, Australian dollars, Japanese Yen, Singapore dollars, Philippine pesos, and Hong Kong dollars, respectively.

(k)	Income Taxes

Deferred taxes are recorded on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by valuation allowances when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company recognizes the tax benefit from an unrecognized tax benefit only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense is recognized on the full amount of deferred benefits for unrecognized tax benefits. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in the income tax provision within the consolidated statements of income.

The Company elected to account for global intangible low-taxed income (“GILTI”) in the period in which it is incurred, and therefore, has not provided any deferred tax impacts of GILTI in the consolidated financial statements.

(l)	Revenue Recognition

For further discussion related to revenue recognition of fees, such as transaction and clearing fees and liquidity payments, access and capacity fees, market data fees, and regulation transaction and Section 31 fees, see Note 4 (“Revenue Recognition”).

Concentrations of Revenue

For each of the years ended December 31, 2023, 2022, and 2021, one customer accounted for approximately 11% of the Company’s total revenue. The revenues associated with this customer are included in the Options, North American Equities, Europe and Asia Pacific, Global FX and Futures segments and totaled $389.4 million, $415.3 million, and $376.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

No customer is contractually or otherwise obligated to continue to use the Company’s services. The loss of, or a significant reduction of, participation by these customers may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows. The two largest clearing members clear the majority of the market-maker sides of transactions at all of the Company’s U.S. options exchanges. If either of these clearing members were to withdraw from the business of market-maker clearing and market-makers were unable to transfer to another clearing member, this could create significant disruption to the U.S. options markets, including Cboe’s.

(m)	Earnings Per Share

The computation of basic earnings per share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders.

The computation of diluted earnings per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method.

(n)	Stock-Based Compensation

The Company grants stock-based compensation to its employees through restricted stock units and grants restricted stock units, starting in 2023, to its directors. The Company records stock-based compensation expense for all stock-based compensation granted based on the grant-date fair value. The Company recognizes stock-based compensation expense related to stock-based compensation awards with graded vesting that have a service condition on a straight-line basis over the requisite service period of the entire award.

The amount of stock-based compensation expense related to awards of restricted stock and restricted stock units is based on the fair value of Cboe Global Markets, Inc. common stock at the date of grant. The fair value is based on a current market-based transaction of the Company’s common stock. If a market-based transaction of the Company’s common stock is not available, then the fair value is based on an independent third-party valuation using equal weighting of two valuation analysis techniques, discounted cash flows and valuation multiples observed from publicly traded companies in a similar industry.

On November 18, 2022, Cboe Digital Holdings Inc. (“Cboe Digital Holdings”) entered into minority interest purchase agreements with certain digital asset industry participants, pursuant to which Cboe Digital Holdings agreed to issue Restricted Common Units in Cboe Digital. Cboe Digital Holdings also entered into a Warrant Agreement to issue Common Units of Cboe Digital in the future. Certain Cboe Digital investor members paid for the Restricted Common Units through the issuance of promissory notes, which are nonrecourse in nature. The issuances of Restricted Common Units are accounted for as in-substance stock options. A certain Cboe Digital investor member paid for the Restricted Common Units in exchange for cash. Expense associated with the Restricted Common Units is recognized as contra-revenue ratably over a five-year period. The Company uses a Black Scholes pricing model to estimate the fair value of the in-substance stock option created by the Restricted Common Units and promissory notes as well as the fair value of the Warrant Units. Contra-revenue will be recognized while the performance conditions of the Warrant Units remain probable in conformance with the requirements in ASC 606 – Revenue from Contracts with Customers. Further adjustments will be recognized in each reporting period until performance is complete relating to changes in the fair value of the option and Warrant liabilities in accordance with ASC 718 – Compensation – Stock Compensation. See Note 19 (“Stock-Based Compensation”) for additional information.

Certain Cboe Digital investor members can earn additional Restricted Common Units if they meet certain performance-based metrics outlined in an equity incentive program (“Incentive Program Units”). The Incentive Program Units are subject to the same terms and conditions as the other Restricted Common Units and are similarly liability-classified awards. Cboe Digital authorized a maximum of 20 Common Units to be distributed over the two-year life of the incentive program. The cost associated with the Incentive Program Units will be recognized as contra-revenue ratably over the remaining service period associated with the Incentive Program Units. Further adjustments will be recognized in each reporting period until performance is complete relating to changes in the fair value of the incentive program liabilities in accordance with ASC 718 – Compensation – Stock Compensation. Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is immaterial as of December 31, 2023. See Note 19 (“Stock-Based Compensation”) for more information.

(o)	Business Combinations

The Company records identifiable assets, liabilities and goodwill acquired in a business combination at fair value at the acquisition date. Additionally, transaction-related costs are expensed in the period incurred.

(p)	Debt Issuance Costs

All costs incurred to issue debt are capitalized as a contra-liability and amortized over the life of the debt using the interest method.

(q)	Investments

The Company generally accounts for investments using the measurement alternative when it owns less than 20% of the outstanding voting stock of a company, there is an absence of readily determinable fair value for the respective investment, and the Company has an inability to exercise significant influence over the investment based upon the respective ownership interests held. The Company recognizes dividend income when declared.

In general, the equity method of accounting is used when the Company owns 20% to 50% of the outstanding voting stock of a company and when it is able to exercise significant influence over the operating and financial policies of a company. For equity method investments, the Company records the pro-rata share of earnings or losses each period and records any dividends received as a reduction in the investment balance. The equity method investment is inclusive of other-than-temporary declines in value, recognized by the investee, who considers a variety of factors such as the earnings capacity of the investment and the fair value of the investment compared to its carrying value. If the estimated fair value of the investment is less than the carrying value and the decline in value is considered to be other than temporary, the excess of the carrying value over the estimated fair value is recognized in the financial statements as an impairment.

(r)	Leases

The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, operating leases are included in operating lease right of use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities on the balance sheet as of December 31, 2023. The Company does not have any finance leases as of December 31, 2023.

ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. The Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the lease liabilities, as the rate implicit in the Company’s leases are generally not reasonably determinable. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s leases. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. For short-term operating leases, lease expense is recognized on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet and the Company recognizes lease expense in facilities costs within the consolidated statements of income for these leases on a straight-line basis over the lease term. Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more, and some of which include the Company’s option to terminate the leases within one year. When the implicit rate in the Company’s lease is not reasonably determinable, the Company applies an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

(s)	Margin Deposits, Clearing Funds, and Interoperability Funds

Margin deposits, clearing funds, and interoperability funds in the form of cash contributions by Cboe Clear Europe’s clearing participants where title has transferred to Cboe Clear Europe are included as current assets with equal and offsetting current liabilities in the consolidated balance sheet. As a result of an update in its rules, effective August 14, 2023, Cboe Clear Europe may invest interoperability fund deposits provided by clearing participants subsequent to the effective date of the rules change. In accordance with the updated policy, Cboe Clear Europe has the option to maintain cash deposits provided by clearing participants at Clearstream Banking S.A., in the same manner done previously, or invest the cash in certain investments within the parameters of its investment policy. As such, the interoperability fund deposits are reflected in the consolidated balance sheet as of the effective date of the rules change. Changes in margin deposits, clearing funds, and interoperability funds, are presented net in the “restricted cash and cash equivalents and customer bank deposits (included in margin deposits, clearing funds, and interoperability funds)” line in the operating section of the consolidated statement of cash flows. Similarly, cash flows associated with related investment agreements as well as interest income earned on such investments will be classified as cash flows from operating activities in the consolidated statement of cash flows. Both activities are part of Cboe Clear Europe’s principal operating activities and are presented within the operating section of the consolidated statement of cash flows.

When investments are made in accordance with its investment policy, Cboe Clear Europe receives the amount of investment earnings and pays clearing participants those earnings minus a set basis point cost of collateral. Related

interest income and interest expense are presented gross in the consolidated statement of income in other revenue and other cost of revenue, respectively, as it relates to a core operating activity of Cboe Clear Europe.

See Note 14 ("Clearing Operations") for more information.

Cboe Clear Digital is authorized, by license or not subject to licensing, to conduct money services business (“MSB”) services in 50 U.S. jurisdictions. Cboe Clear Digital performs a guarantee function whereby Cboe Clear Digital helps to ensure that the obligations of the transactions it clears are fulfilled. Cboe Clear Digital attempts to mitigate this risk by performing internal compliance and due diligence procedures as well as implementing internal risk controls. Cboe Clear Digital 's due diligence procedures include review of the personal and corporate information, financial position of the member participant, and monitoring of Cboe Clear Digital's risk exposure thresholds.

(t) Digital Assets Held

The Company determined that digital assets held should be accounted for under ASC 350 – Intangibles – Goodwill and Other, and included on the consolidated balance sheets within intangibles, net. As there is no inherent limit imposed on the useful life of the digital assets, they are classified as indefinite lived intangible assets and are not subject to amortization. Instead, they must be tested for impairment annually or more frequently if events or circumstances change that indicate that it’s more likely than not that the asset is impaired (i.e., if an impairment indicator exists). Therefore, the value of digital assets is determined at the date of acquisition and will only be remeasured in the event the Company concludes impairment exists. The Company will not record any increases in value during the period the digital assets are held; the only gains that will be recorded will be upon disposition (if the proceeds exceed the carrying value at the time of the disposition).

(u) Digital Assets – Safeguarded Assets and Liabilities

In accordance with the SEC issued Staff Accounting Bulletin 121 (“SAB 121”), the Company recorded a liability with respect to its obligation to safeguard customers' digital assets (Digital assets - safeguarded liabilities) along with a corresponding asset (Digital assets - safeguarded assets). The safeguarded assets and liabilities are measured at the fair value of the digital assets that the Company is safeguarding on behalf of its customers. In the event that the Company or its vendors fail to safeguard the customers’ digital assets, any resulting loss will reduce the safeguard asset with a corresponding loss recorded in other expenses in the consolidated statement of income.

3. RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements – Adopted

On March 31, 2022, SAB 121 was issued, which sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard digital assets that an entity holds for its platform users. The guidance requires an entity to recognize a liability for the obligation to safeguard the users’ assets and recognize an associated asset for the digital assets held for users. Both the liability and asset will be measured initially and subsequently at the fair value of the digital assets being safeguarded. The guidance also requires additional disclosures related to the nature and amount of digital assets held on behalf of its platform users, with separate disclosure for each significant digital asset, and the vulnerabilities the entity has due to any concentration in such activities. The guidance, effective for interim or annual periods ending after June 15, 2022, was adopted by the Company as of June 30, 2022. As a result of adopting SAB 121, the Company recorded digital assets - safeguarded assets, with corresponding digital assets - safeguarded liabilities of $22.4 million, respectively, as of June 30, 2022, with no impact to the consolidated statements of income and cash flows.

Recent Accounting Pronouncements – Issued, not yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. For public entities, the update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company expects to

adopt the update for the financial statements issued for the year ending December 31, 2024 and does not anticipate a material impact to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. This ASU addresses the accounting and disclosure requirements for certain crypto assets and requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in earnings in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. For public entities, the update is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2024. The Company expects to adopt the update for the financial statements issued in the first quarter of 2025 and does not anticipate a material impact to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU addresses investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. For public entities, the update is effective for fiscal years beginning after December 15, 2024. The Company expects to adopt the update for the financial statements issued for the year ending December 31, 2025 and does not anticipate a material impact to the consolidated financial statements.

4. REVENUE RECOGNITION

The Company presents three financial statement revenue captions within its consolidated statements of income that reflect the Company’s diversified products, expansive geographical reach, and overall business strategy. Below is a summary of the Company’s financial statement revenue captions:

Revenues

	●	Cash and spot markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s North American Equities, Europe and Asia Pacific, Global FX, and Digital segments.

	●	Data and access solutions – includes access and capacity fees, proprietary market data fees, and associated other revenue across Cboe’s six segments.

	●	Derivatives markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s Options, Futures, Europe and Asia Pacific, and Digital segments.

The Company’s main types of revenue contracts consist of the following, which are disaggregated from the consolidated statements of income.

	●	Transaction and clearing fees – Transaction fees represent fees charged by the Company for meeting the point-in-time performance obligation of executing a trade on its markets. These fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Transaction fees are recognized across all segments. Clearing fees, which include settlement fees, represent fees charged by the Company for meeting the point-in-time performance obligation for transactions cleared and settled by Cboe Clear Europe and Cboe Clear Digital, the derivatives clearing organization for Cboe Digital. Clearing fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Clearing fees are recognized in the Europe and Asia Pacific and Digital segments. Transaction and clearing fees, as well as any tiered volume discounts, are calculated and billed monthly in accordance with the Company’s published fee schedules.

	●	Access and capacity fees – Access and capacity fees represent fees assessed for the opportunity to trade, including fees for trading-related functionality across all segments, terminal and other equipment rights, maintenance services, trading floor space and telecommunications services. Facilities, systems services and other fees are generally monthly fee-based. These fees are billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the performance obligations are met. All

		access and capacity fees associated with the trading floor are recognized over time in the Options segment, as the performance obligations are met.

	●	Market data fees – Market data fees represent the fees received by the Company from the U.S. tape plans and fees charged to customers for proprietary market data. Fees from the U.S. tape plans are collected monthly based on published fee schedules and distributed quarterly to the Exchanges based on a known formula. A contract for proprietary market data is entered into and charged on a monthly basis in accordance with the Company’s published fee schedules as the service is provided. Proprietary market data also includes revenue from various licensing agreements. Both types of market data are satisfied over time, and revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the Company provides the data to meet its performance obligation. U.S. tape plan market data is recognized in the North American Equities and Options segments. Proprietary market data fees are recognized across all segments.

	●	Regulatory fees – There are two types of regulatory fees that the Company recognizes. The first type represents fees collected by the Company to cover the Section 31 fees charged to the Exchanges by the SEC for meeting the point-in-time performance obligation of executing a trade on its markets. The fees charged to customers are based on the fee set by the SEC per notional value of U.S. Equities exchange transactions and per round turn of Options transactions executed on the Company’s U.S. securities markets. These fees are calculated and billed monthly and are recognized in the North American Equities and Options segments. As the Exchanges are responsible for the ultimate payment to the SEC, the Exchanges are considered the principal in these transactions. Regulatory fees also include the options regulatory fee (“ORF”) which supports the Company’s regulatory oversight function in the Options segment, along with other miscellaneous regulatory fees, and neither can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the performance obligation is fulfilled.

	●	Other revenue – Other revenue primarily includes interest income on investments (including from investments of interoperability fund deposits) from clearing operations, all fees related to the trade reporting facility operated in the Europe and Asia Pacific segment, listing fees, and revenue associated with advertisements through the Company’s websites.

All revenue recognized in the consolidated statements of income is considered to be revenue from contracts with customers, with the exception of interest income from clearing operations. The following table depicts the disaggregated revenue contract types listed above within each respective financial statement caption in the consolidated statements of income (in millions):


	Cash		Data and
	and Spot		Access		Derivatives
	Markets		Solutions		Markets		Total
Year Ended December 31, 2023
Transaction and clearing fees	$	1,149.7	$	—	$	1,681.6	$	2,831.3
Access and capacity fees		—		347.5		—		347.5
Market data fees		71.3		188.7		33.7		293.7
Regulatory fees		153.8		—		69.9		223.7
Other revenue		70.3		3.0		4.0		77.3
	$	1,445.1	$	539.2	$	1,789.2	$	3,773.5

	Cash		Data and
	and Spot		Access		Derivatives
	Markets		Solutions		Markets		Total
Year Ended December 31, 2022
Transaction and clearing fees	$	1,375.5	$	—	$	1,563.3	$	2,938.8
Access and capacity fees		—		324.2		—		324.2
Market data fees		80.3		168.7		33.2		282.2
Regulatory fees		280.2		—		84.5		364.7
Other revenue		41.6		4.1		2.9		48.6
	$	1,777.6	$	497.0	$	1,683.9	$	3,958.5

	Cash		Data and
	and Spot		Access		Derivatives
	Markets		Solutions		Markets		Total
Year Ended December 31, 2021
Transaction and clearing fees	$	1,366.5	$	—	$	1,326.6	$	2,693.1
Access and capacity fees		—		280.7		—		280.7
Market data fees		91.6		130.0		30.5		252.1
Regulatory fees		161.6		—		46.7		208.3
Other revenue		40.8		17.0		2.8		60.6
	$	1,660.5	$	427.7	$	1,406.6	$	3,494.8

The following table depicts the disaggregation of revenue according to segment (in millions):


			North										Corporate
			American		Europe and								Items and
	Options		Equities		Asia Pacific		Futures		Global FX		Digital		Eliminations		Total
Year Ended December 31, 2023
Transaction and clearing fees	$	1,583.7	$	946.3	$	145.6	$	98.0	$	62.2	$	(4.5)	$	—	$	2,831.3
Access and capacity fees		161.0		117.1		36.3		22.0		10.7		0.4		—		347.5
Market data fees		118.8		128.3		36.7		8.5		1.4		—		—		293.7
Regulatory fees		69.6		153.8		—		0.3		—		—		—		223.7
Other revenue		6.4		7.5		62.6		0.2		0.6		—		—		77.3
	$	1,939.5	$	1,353.0	$	281.2	$	129.0	$	74.9	$	(4.1)	$	—	$	3,773.5
Timing of revenue recognition
Services transferred at a point in time	$	1,659.7	$	1,107.6	$	208.2	$	98.5	$	62.8	$	(4.5)	$	—	$	3,132.3
Services transferred over time		279.8		245.4		73.0		30.5		12.1		0.4		—		641.2
	$	1,939.5	$	1,353.0	$	281.2	$	129.0	$	74.9	$	(4.1)	$	—	$	3,773.5

Year Ended December 31, 2022
Transaction and clearing fees	$	1,471.7	$	1,155.3	$	161.9	$	91.6	$	58.0	$	0.3	$	—	$	2,938.8
Access and capacity fees		151.7		109.3		34.0		19.9		9.3		—		—		324.2
Market data fees		108.7		131.2		33.1		8.0		1.2		—		—		282.2
Regulatory fees		84.2		280.2		—		0.3		—		—		—		364.7
Other revenue		6.9		5.7		35.6		—		0.4		—		—		48.6
	$	1,823.2	$	1,681.7	$	264.6	$	119.8	$	68.9	$	0.3	$	—	$	3,958.5
Timing of revenue recognition
Services transferred at a point in time	$	1,562.8	$	1,441.2	$	197.5	$	91.9	$	58.4	$	0.3	$	—	$	3,352.1
Services transferred over time		260.4		240.5		67.1		27.9		10.5		—		—		606.4
	$	1,823.2	$	1,681.7	$	264.6	$	119.8	$	68.9	$	0.3	$	—	$	3,958.5

Year Ended December 31, 2021
Transaction and clearing fees	$	1,231.2	$	1,173.1	$	145.3	$	95.2	$	48.3	$	—	$	—	$	2,693.1
Access and capacity fees		124.0		98.0		31.2		18.7		8.8		—		—		280.7
Market data fees		84.3		134.6		25.6		6.6		1.0		—		—		252.1
Regulatory fees		46.6		161.6		—		0.1		—		—		—		208.3
Other revenue		18.9		3.2		38.2		—		—		—		0.3		60.6
	$	1,505.0	$	1,570.5	$	240.3	$	120.6	$	58.1	$	—	$	0.3	$	3,494.8
Timing of revenue recognition
Services transferred at a point in time	$	1,296.7	$	1,337.9	$	183.5	$	95.3	$	48.3	$	—	$	0.3	$	2,962.0
Services transferred over time		208.3		232.6		56.8		25.3		9.8		—		—		532.8
	$	1,505.0	$	1,570.5	$	240.3	$	120.6	$	58.1	$	—	$	0.3	$	3,494.8

Contract liabilities as of December 31, 2023 primarily represent prepayments of transaction fees and certain access and capacity and market data fees to the Exchanges. The revenue recognized from contract liabilities and the remaining balance is shown below (in millions):


	Balance at		Cash		Revenue		Balance at
	December 31, 2022		Additions		Recognized		December 31, 2023
Liquidity provider sliding scale (1)	$	—	$	7.2	$	(7.2)	$	—
Other, net		11.7		18.7		(24.3)		6.1
Total deferred revenue	$	11.7	$	25.9	$	(31.5)	$	6.1

(1)	Liquidity providers are eligible to participate in the sliding scale program, which involves prepayment of transaction fees, and to receive reduced fees based on the achievement of certain volume thresholds within a calendar month. These transaction fees are amortized and recorded ratably as the transactions occur over the period.

5. ACQUISITIONS

On May 2, 2022, the Company purchased ErisX, which was subsequently rebranded to Cboe Digital. Cboe Digital operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. Ownership of Cboe Digital allows the Company to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency. Eris Innovations Holdings, LLC (formerly Eris Exchange Holdings, LLC) was not a part of this transaction and the Company

retains its minority equity ownership interest in Eris Innovations Holdings, LLC. Of the acquisition’s purchase price, $460.9 million was allocated to goodwill, $95.0 million was allocated to intangible assets, and $8.4 million was allocated to working capital. Prior to signing the acquisition agreement, the Company held a minority investment in ErisX. As a result of the acquisition of the remaining portion of ErisX, the Company recognized a $7.5 million gain, reflecting the change in fair value of the minority investment in ErisX as a result of the acquisition, which is included in other income (expense), net in the consolidated statement of income for the year ended December 31, 2022. See below for further discussion of intangible assets acquired. Additionally, the Company performed impairment testing during the year ended December 31, 2022, as there were market events that indicated it was more likely than not that these assets were impaired, resulting in the recognition of impairment charges to goodwill. See Note 10 (“Goodwill, Intangible Assets, Net, and Digital Assets Held”) for more information on the impairments.

On June 1, 2022, the Company purchased Aequitas Innovations Inc. and Neo Exchange Inc. which at the time were recognized Canadian securities exchanges and were subsequently rebranded to Cboe Canada. Cboe Canada is a fintech organization that is comprised of a fully registered Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equities trading and a non-listed securities distribution platform. With ownership of Cboe Canada, the Company expects to further grow Canada as a hub for global equities trading. As of December 31, 2022, the allocation of purchase price includes adjustments within the measurement period resulting in a decrease to intangible assets, an increase in net working capital and a reduction in contingent consideration. See the table below for more information about the adjustments made to the Cboe Canada purchase price allocation. See below for further discussion of intangible assets acquired and Note 15 (“Fair Value Measurement”) for the impact of the allocation adjustments on the Company’s financial liabilities.

The following table presents the details of the adjustments made to the initial purchase price allocation for the Cboe Canada acquisition during the year ended December 31, 2023 (in millions):


	Initial purchase		Total		Adjusted purchase
	price allocation		adjustments		price allocation
Goodwill	$	132.4	$	0.2	$	132.6
Intangible assets		130.1		(61.0)		69.1
Net working capital		(6.9)		16.6		9.7
Contingent consideration		(54.3)		44.2		(10.1)

The following table presents the details of intangible assets as of the acquisition date, inclusive of purchase price adjustments outlined above (in millions, except as stated). All acquired intangible assets with finite lives are amortized using the straight-line method.


	Cboe Digital		Useful Life (Years)	Cboe Canada		Useful Life (Years)
Trading registrations and licenses	$	25.0	Indefinite	$	15.1	Indefinite
Customer relationships		—			37.4	15
Technology		70.0	10		16.2	7
Trademarks and tradenames		—			0.4	5
Total identifiable intangible assets	$	95.0		$	69.1

Acquisition-related costs relate to acquisitions and other strategic opportunities. The Company expensed $7.4 million of acquisition-related costs during the year ended December 31, 2023, all of which related to professional fees and other expenses. These acquisition-related expenses are included in acquisition-related costs in the consolidated statements of income.

The Company expensed $19.9 million of acquisition-related costs during the year ended December 31, 2022, all of which related to professional fees and other expenses. These acquisition-related expenses are included in acquisition-related costs in the consolidated statements of income.

The Company expensed $15.6 million of acquisition-related costs during the year ended December 31, 2021 which primarily included $15.0 million of professional fees, and $0.6 million of impairment charges related to facilities. These acquisition-related expenses are included in acquisition-related costs in the consolidated statements of income.

6. INVESTMENTS

As of December 31, 2023 and 2022, the Company's investments were comprised of the following (in millions):


	December 31,		December 31,
	2023		2022
Equity method investments:
Investment in 7Ridge Investments 3 LP	$	292.0	$	215.4
Total equity method investments		292.0		215.4

Other equity investments:
Investment in Eris Innovations Holdings, LLC		20.0		20.0
Investment in Globacap Technology Limited		16.0		—
Investment in CSD Br		5.9		5.9
Investment in Coin Metrics Inc.		5.0		5.0
Investment in Cboe Vest Financial Group, Inc.		2.9		2.9
Investment in Effective Investing Limited		—		1.8
Investment in OCC		0.3		0.3
Other equity investments		3.2		1.9
Total other equity investments		53.3		37.8

Total investments	$	345.3	$	253.2

Equity Method Investments

The Company’s investment in the 7Ridge Fund represents a nonconsolidated variable interest entity (“VIE”). The Company has determined that consolidation of the VIE is not required as the Company is not the primary beneficiary of the 7Ridge Fund, as it does not have controlling financial interest and lacks the ability to unilaterally remove the general partner, 7Ridge Investments 3 GP Limited, direct material strategic decisions, or dissolve the entity (i.e. the Company does not have unilateral substantive “kick-out” or “liquidation” rights).

The Company’s interest in the 7Ridge Fund is equal to the carrying value of the investment as of December 31, 2023, or $292.0 million, which includes periodic capital contributions to the 7Ridge Fund, as well as the Company’s share of 7Ridge Fund’s profit or loss, including gains or losses arising from the fair value measurement of the investment held by the 7Ridge Fund, booked against the investment account. The carrying value of the investment is included in investments within the consolidated balance sheets. The Company’s maximum loss exposure, in the unlikely event that all of the VIE’s assets become worthless, is limited to the carrying value of Company’s investment.

Other Equity Investments

In the second quarter of 2022, the Company invested $5.0 million in a funding raise by Coin Metrics, Inc., a digital asset intelligence and crypto data startup, $5.9 million in a funding raise by CSD Br, a Brazilian bank and financial intermediary, and completed the purchase of ErisX, which was subsequently rebranded to Cboe Digital. Eris Innovations Holdings, LLC was not a part of this transaction and the Company retains its minority equity ownership interest in Eris Innovations Holdings, LLC. See Note 5 (“Acquisitions”) for more information. In the third quarter of 2022, the Company invested $1.8 million in a funding raise by Effective Investing Limited, an emerging global sustainability data provider measuring the social and environmental impact of companies and investment portfolios. In the fourth quarter of 2022 the Company invested an additional $0.1 million in a funding raise by StratiFi Technologies, Inc, a risk management platform that provides a one-stop-shop solution for portfolio risk analysis. The Company previously held a minority stake in StratiFi and the funding raise allowed the Company to maintain its current investment percentage.

In the second quarter of 2023, the Company invested $16.0 million in Globacap Technology Limited, a white label service provider to capital market participants, which focuses on three core areas: private placement, securities administration, and secondary liquidity. In the fourth quarter of 2023, the Company invested $1.3 million in Osaka Digital Exchange, an equity proprietary trading system in the Japanese equity markets focused on launching the first secondary trading market for security tokens in Japan.

Additionally, in the fourth quarter of 2023, Effective Investing Limited, a minority investment of the Company included within other equity investments, announced plans to wind down the company. The Company wrote off the investment as of December 31, 2023. The loss related to the write-off was included within other income (expense), net in the consolidated statements of income.

The carrying value of other equity investments is included in investments in the consolidated balance sheets. The Company accounts for these investments using the measurement alternative given the absence of readily determinable fair values for the respective investments and due to the Company’s inability to exercise significant influence over the investments based upon the respective ownership interests held.

7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following as of December 31, 2023 and 2022 (in millions):


	December 31,		December 31,
	2023		2022
Construction in progress	$	1.5	$	7.7
Building		—		68.8
Furniture and equipment		322.9		291.3
Total property and equipment		324.4		367.8
Less accumulated depreciation		(215.2)		(259.6)
Property and equipment, net	$	109.2	$	108.2

Depreciation expense using the straight-line method was $33.0 million, $35.3 million and $33.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company’s former headquarters location was originally classified as held for sale on May 1, 2019, but was returned to held and used on May 1, 2021 due to the time elapsed since active marketing for the sale of the building commenced. The Company continued discussions with potential buyers. Effective July 27, 2023, the Company entered into an agreement to sell its former headquarters building, subject to customary closing conditions. The Company classified the associated land, building, and certain furniture and equipment of the former headquarters location as held for sale, performed an impairment assessment, and ceased depreciation effective August 1, 2023. Negotiations are ongoing and the Company expects to complete the sale in the first half of 2024. In connection with the sale, the Company anticipates providing seller financing to the purchaser in the form of a promissory note for a portion of the purchase price of the former headquarters. As of December 31, 2023, the total value of the property held for sale on the consolidated balance sheet was $8.7 million.

8. CREDIT LOSSES

Current expected credit losses are estimated for accounts receivable and certain notes receivable.

Accounts receivable represent amounts due from the Company’s member firms. The allowance for accounts receivable credit losses is calculated using an aging schedule.

The allowance for notes receivable credit losses is associated with notes receivable included within other assets, net on the consolidated balance sheets and relates to promissory notes to fund the implementation and operation of the consolidated audit trail (“CAT”), which notes are to be repaid by Consolidated Audit Trail, LLC (“CATLLC”). CAT involves the creation of an audit trail that is required by SEA Rule 613, and it strives to enhance regulators’ ability to monitor trading activity in the U.S. markets through a phased implementation. CATLLC is a national market system plan that was created by self-regulatory organizations that include the Company’s six Exchanges, the other U.S. national securities exchanges and FINRA (who collectively are referred to as the “Plan Participants”) to implement and operate the CAT. The funding of the CAT’s implementation and operations is ultimately expected to be provided by Plan Participants and by broker-dealers (who are referred to as “Industry Members”). However, the funding to date has solely been provided to CATLLC by the Plan Participants in exchange for promissory notes.

On September 6, 2023, the SEC issued an order approving an amendment to the CAT national market system plan to implement a revised funding model (“CAT Funding Model”) for Consolidated Audit Trail, LLC (“CATLLC”) to fund the CAT. The approved CAT Funding Model contemplates two categories of CAT fees calculated based on the “executed equivalent shares” of transactions in eligible securities: (i) CAT fees assessed by CATLLC to Industry Members who are CAT Executing Brokers (the brokers responsible for executing each side of the transaction) to recover a portion of

historical CAT costs previously paid to CATLLC by the Plan Participants; and (ii) CAT fees assessed by CATLLC to CAT Executing Brokers and Plan Participants to fund prospective CAT costs. To date, the funding of the CAT has solely been provided by the SROs/Plan Participants has been done in exchange for promissory notes. The funds generated from the assessment of CAT fees to recover a portion of historical CAT costs will be used by CATLLC to repay a portion of these promissory notes to the Plan Participants.

The Plan Participants submitted fee filings during the first week of January 2024 with the SEC to implement the applicable transaction-based fee rates that are to be assessed by CATLLC to CAT Executing Brokers to recover a portion of historical CAT costs incurred prior to 2022. Additional CAT fees related to other historical CAT costs and to prospective CAT costs are planned to be introduced at a later time through separate fee filings submitted by the Plan Participants. Once the CAT fee related to ongoing prospective CAT costs becomes effective through fee filings submitted by the Plan Participants, it is anticipated there will no longer be any need for Plan Participants to fund CATLLC in exchange for promissory notes. On January 17, 2024, the SEC issued orders suspending each Plan Participant’s fee filing and instituting proceedings to determine whether to approve or disapprove the fees, which orders were published in the Federal Register on February 13, 2024. Comments are due March 5, 2024, and rebuttal comments are due March 19, 2024.

Until the fees for historical CAT costs that are associated with the promissory notes are collected from CAT Executing Brokers and remitted by CATLLC to the Plan Participants, and until CAT fees assessed by CATLLC to CAT Executing Brokers and Plan Participants to fund prospective CAT costs are implemented, the Plan Participants may continue to incur additional significant costs, including additional promissory notes to fund CAT. Additionally, portions of promissory notes related to the funding of the implementation and operation of the CAT may not be collectible, including if the SEC finds that the SROs/Plan Participants did not satisfy any of the financial accountability milestones. The allowance for notes receivable credit losses associated with the CAT is calculated using a methodology that is primarily based on the structure of the notes and various potential outcomes under the CAT Funding Model. See Note 23 (“Commitments, Contingencies, and Guarantees”) for more information.

The following represents the changes in allowance for credit losses during the years ended December 31, 2023 and 2022 (in millions):


	Allowance fornotes receivablecredit losses		Allowance foraccounts receivablecredit losses		Totalallowance forcredit losses
Balance at December 31, 2021	$	30.1	$	1.0	$	31.1
Current period provision for expected credit losses		—		1.6		1.6
Write-offs charged against the allowance		—		(0.1)		(0.1)
Recoveries collected		—		(0.3)		(0.3)
Balance at December 31, 2022	$	30.1	$	2.2	$	32.3
Current period provision for expected credit losses		—		4.0		4.0
Write-offs charged against the allowance		—		(1.6)		(1.6)
Recoveries collected		—		(0.1)		(0.1)
Balance at December 31, 2023	$	30.1	$	4.5	$	34.6

9. OTHER ASSETS, NET

Other assets, net consisted of the following as of December 31, 2023 and 2022 (in millions):


	December 31,		December 31,
	2023		2022
Software development work in progress	$	3.5	$	8.9
Data processing software		128.1		124.2
Less accumulated depreciation and amortization		(88.3)		(78.8)
Data processing software, net		43.3		54.3
Other assets (1)		163.0		127.6
Other assets, net	$	206.3	$	181.9

(1) At December 31, 2023 and 2022, the majority of the balance included notes receivable, net of allowance, a contra-revenue asset, and long-term prepaid assets. As of December 31, 2023 and 2022, the notes receivable, net balance was $136.9 million and $102.9 million, respectively. See Note 8 (“Credit Losses”) for more information on the notes receivable included within other assets, net on the consolidated balance sheets. See Note 19 (“Stock-Based Compensation”) for more information on the contra-revenue asset related to the issuance of Cboe Digital Restricted Common Units and Warrant Units included within other assets, net on the consolidated balance sheets. As of December 31, 2023 and 2022, the contra-revenue asset balance was $18.1 million and $19.9 million, respectively.

Amortization expense related to data processing software was $8.4 million, $7.2 million, and $7.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.

10. GOODWILL, INTANGIBLE ASSETS, NET, AND DIGITAL ASSETS HELD

The following table presents the details of goodwill by segment (in millions):


			North American		Europe and
	Options		Equities		Asia Pacific		Global FX		Digital		Total
Balance as of December 31, 2021	$	305.8	$	1,876.9	$	575.5	$	267.2	$	—	$	3,025.4
Adjustments		—		0.2		3.4		—		0.8		4.4
Additions		—		132.4		—		—		460.1		592.5
Impairment		—		—		—		—		(460.9)		(460.9)
Changes in foreign currency exchange rates		—		(8.7)		(29.9)		—		—		(38.6)
Balance as of December 31, 2022	$	305.8	$	2,000.8	$	549.0	$	267.2	$	—	$	3,122.8
Changes in foreign currency exchange rates		—		3.6		14.2		—		—		17.8
Balance as of December 31, 2023	$	305.8	$	2,004.4	$	563.2	$	267.2	$	—	$	3,140.6

Goodwill has been allocated to specific reporting units for purposes of impairment testing - Options, North American Equities, Europe and Asia Pacific, and Global FX. No goodwill has been allocated to Futures. See below for further details on Cboe Digital’s goodwill. Goodwill impairment testing is performed annually in the fiscal fourth quarter or more frequently if conditions exist that indicate that the asset may be impaired.

Following the acquisition of Cboe Digital, which closed on May 2, 2022, in the quarter ended June 30, 2022, negative events and trends in the broader digital asset environment emerged, such as deleveraging and bankruptcies, and certain negative trends in the broader digital asset environment that started in late 2021 intensified, such as the decline in digital asset prices, overall market activity, and market capitalization. Additionally, following the acquisition of Cboe Digital, the efforts to syndicate minority ownership interests in Cboe Digital to potential investors during the quarter ended June 30, 2022 became more challenging, and the outlook for the Digital segment’s future market growth was negatively impacted. The Company considered these developments, in particular the syndication efforts during the quarter ended June 30, 2022, to be potential indications of impairment and performed an interim impairment test for the goodwill recognized in the Digital reporting unit during the quarter ended June 30, 2022. The Company concluded that the carrying value of the reporting unit exceeded its estimated fair value, which considered both market and income approaches, and recorded a goodwill impairment charge of $460.1 million in the consolidated statements of income during the quarter ended June 30, 2022, and also recognized a deferred tax asset of $116.2 million. This deferred tax asset, resulting from the excess of tax-deductible goodwill over book goodwill, relates to future tax deductions the Company expects to realize to reduce potential tax payments on future income. As a result, the carrying value of Cboe Digital decreased by $343.9 million, to $220.0 million

as of June 30, 2022. The Company also performed an impairment assessment over the intangible assets recognized as a result of the Cboe Digital acquisition during the quarter ended June 30, 2022, and based on the results of the assessments, determined there was no impairment required as the fair value approximated the carrying value. No other long lived assets were recognized as a result of the acquisition.

As a result of the finalization of the net working capital calculation associated with the acquisition of Cboe Digital during the quarter ended September 30, 2022, the Company recorded additional goodwill of $0.8 million. Subsequently, the Company concluded that the indicators of impairment outlined in the previous paragraph continued to be relevant and recorded an additional goodwill impairment charge of $0.8 million in the consolidated statements of income for the three months ended September 30, 2022. The Company determined there were no further impairment indicators for the year ended December 31, 2023.

The following table presents the details of the intangible assets by segment (in millions):


			North American		Europe and
	Options		Equities		Asia Pacific		Global FX		Digital		Total
Balance as of December 31, 2021	$	159.1	$	991.4	$	426.4	$	91.7	$	—	$	1,668.6
Adjustments		—		(61.0)		—		—		—		(61.0)
Additions		—		130.1		—		—		95.9		226.0
Amortization		(13.0)		(62.1)		(25.6)		(18.9)		(4.7)		(124.3)
Changes in foreign currency exchange rates		—		(5.6)		(40.9)		—		—		(46.5)
Balance as of December 31, 2022	$	146.1	$	992.8	$	359.9	$	72.8	$	91.2	$	1,662.8
Dispositions		—		—		—		—		(0.8)		(0.8)
Amortization		(12.0)		(59.5)		(21.5)		(16.6)		(7.0)		(116.6)
Changes in foreign currency exchange rates		—		2.0		14.1		—		—		16.1
Balance as of December 31, 2023	$	134.1	$	935.3	$	352.5	$	56.2	$	83.4	$	1,561.5

For the years ended December 31, 2023, 2022 and 2021, amortization expense was $116.6 million, $124.3 million and $126.6 million, respectively. The estimated future amortization expense is $93.9 million for 2024, $77.3 million for 2025, $70.0 million for 2026, $63.2 million for 2027, and $57.6 million for 2028.

The following tables present the categories of intangible assets by segment as of December 31, 2023 and 2022 (in millions, except as stated):


											Weighted
	December 31, 2023										Average
			North American		Europe and						Amortization
	Options		Equities		Asia Pacific		Global FX		Digital		Period (in years)
Trading registrations and licenses	$	95.5	$	606.0	$	209.6	$	—	$	25.0	Indefinite
Customer relationships		46.6		413.9		216.1		140.0		—	15
Market data customer relationships		53.6		322.0		61.6		64.4		—	8
Technology		28.1		56.9		34.2		22.5		70.0	7
Trademarks and tradenames		12.9		8.2		2.4		1.2		—	6
Digital assets held		—		—		—		—		0.1	Indefinite
Accumulated amortization		(102.6)		(471.7)		(171.4)		(171.9)		(11.7)
	$	134.1	$	935.3	$	352.5	$	56.2	$	83.4


											Weighted
	December 31, 2022										Average
			North American		Europe and						Amortization
	Options		Equities		Asia Pacific		Global FX		Digital		Period (in years)
Trading registrations and licenses	$	95.5	$	605.3	$	199.5	$	—	$	25.0	Indefinite
Customer relationships		46.6		412.8		208.9		140.0		—	16
Market data customer relationships		53.6		322.0		58.4		64.4		—	9
Technology		28.1		56.4		32.8		22.5		70.0	8
Trademarks and tradenames		12.9		8.2		2.3		1.2		—	7
Digital assets held		—		—		—		—		0.9	Indefinite
Accumulated amortization		(90.6)		(411.9)		(142.0)		(155.3)		(4.7)
	$	146.1	$	992.8	$	359.9	$	72.8	$	91.2

Cboe Digital holds customer digital assets in customer accounts, referred to as wallets, either through a licensed trust company, third-party custodian or in separate and distinct wallets managed by Cboe Digital. Cboe Digital, together with its third-party custodian, secures customers’ digital assets and protects them from loss or theft. Customer digital assets are held in omnibus wallets for the benefit of customers of Cboe Digital and Cboe Digital maintains the records of the amount and type of digital asset owned by each of its customers in omnibus wallets. The amount of customer digital assets held by Cboe Digital is reflected within digital assets – safeguarded assets and digital assets – safeguarded liabilities in the consolidated balance sheets. In addition, Cboe Digital maintains an immaterial amount of its own digital assets to facilitate customer trading.

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following as of December 31, 2023 and 2022 (in millions):


	December 31, 2023		December 31, 2022
Compensation and benefit-related liabilities	$	77.1	$	90.2
Royalties		44.9		33.3
Accrued liabilities		70.3		87.7
Current operating lease liabilities		20.8		—
Rebates payable		75.1		75.2
Marketing fee payable		17.5		15.9
Current unrecognized tax benefits		82.3		90.4
Accounts payable		24.7		27.5
Total accounts payable and accrued liabilities	$	412.7	$	420.2

12. DEBT

The Company’s debt consisted of the following as of December 31, 2023 and 2022 (in millions):


	December 31, 2023		December 31, 2022
Term Loan Agreement due December 2023, floating rate	$	—	$	304.7
$650 million fixed rate Senior Notes due January 2027, stated rate of 3.650%		647.9		647.3
$500 million fixed rate Senior Notes due December 2030, stated rate of 1.625%		494.8		494.0
$300 million fixed rate Senior Notes due March 2032, stated rate of 3.000%		296.5		296.0
Revolving Credit Agreement		—		—
Cboe Clear Europe Credit Facility		—		—
Total debt	$	1,439.2	$	1,742.0

As described below in further detail the Company repaid in full all outstanding indebtedness under the Term Loan Agreement totaling $305.0 million during the year ended December 31, 2023.

Term Loan Agreement

On March 22, 2018, the Company entered into a Term Loan Credit Agreement (the “Term Loan Agreement”). The Term Loan Agreement matured on December 15, 2023 and initially provided for a senior unsecured term loan facility in an aggregate principal amount of $300 million, which amount was later increased to allow for an additional draw of $110 million on June 25, 2021 in order to fund a portion of the acquisition of Cboe Asia Pacific (formerly Chi-X Asia Pacific Holdings Limited) and was increased on March 29, 2022 to allow for additional delayed draws of $190 million on April 29, 2022 to fund a portion of the Cboe Digital (formerly ErisX) acquisition, and $175 million on May 31, 2022 to fund a portion of the Cboe Canada (formerly NEO) acquisition. On each of August 25, 2022 and September 22, 2022, the Company repaid $50 million, respectively, of outstanding indebtedness under the Term Loan Agreement, and on each of November 1, 2022, December 1, 2022, and December 27, 2022, the Company repaid $40 million, $50 million, and $30 million, respectively, of outstanding indebtedness under the Term Loan Agreement totaling $220 million repaid during the year ended December 31, 2022. On May 12, 2023, June 21, 2023, September 28, 2023, October 20, 2023, and October 27, 2023, the Company repaid $65 million, $75 million, $90 million, $60 million and $15 million respectively, of outstanding indebtedness under the Term Loan Agreement, totaling $305 million repaid during the year ended December 31, 2023. As of December 31, 2023 the Term Loan Agreement matured and was repaid in full.

Loans under the Term Loan Agreement bore interest, at the Company’s option, at either (i) the Secured Overnight Financing Rate (“SOFR”) as administered by the Federal Reserve Bank of New York (or a successor administrator) plus a margin of 0.65 percent per annum or (ii) a daily floating rate based on the agent’s prime rate (subject to certain minimums based upon the federal funds effective rate or SOFR) plus a margin of 0.50 percent per annum.

The Term Loan Agreement contained customary representations, warranties, and affirmative and negative covenants for facilities of its type, including financial covenants, events of default, including cross-defaults from the Company’s other indebtedness, and indemnification provisions in favor of the lenders thereunder. The negative covenants included restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants required the Company to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00; provided that the consolidated leverage ratio may, subject to certain triggering events set forth in the Term Loan Agreement, be increased to 4.25 to 1.00 or 4.00 to 1.00 (from 3.50 to 1.00) for four consecutive fiscal quarters following certain acquisitions, provided this increase may be made only once and at the time it exercises such financial covenant step-up, the Company shall be exercising a like step-up under its revolving credit facility.

Senior Notes

On January 12, 2017, the Company entered into an indenture (the “Indenture”), by and between the Company and Computershare Trust Company, N.A. (as successor to Wells Fargo Bank, National Association), as trustee, in connection with the issuance of $650 million aggregate principal amount of the Company’s 3.650% Senior Notes due 2027 (“3.650% Senior Notes”). The form and terms of the 3.650% Senior Notes were established pursuant to an Officer’s Certificate, dated as of January 12, 2017, supplementing the Indenture. The Company used a portion of the net proceeds from the

3.650% Senior Notes to fund, in part, the Merger, including the payment of related fees and expenses and the repayment of Bats’ existing indebtedness, and the remainder for general corporate purposes. The 3.650% Senior Notes mature on January 12, 2027 and bear interest at the rate of 3.650% per annum, payable semi-annually in arrears on January 12 and July 12 of each year, commencing July 12, 2017.

On December 15, 2020, the Company issued $500 million aggregate principal amount of 1.625% Senior Notes due 2030 ("1.625% Senior Notes"). The form and terms of the 1.625% Senior Notes were established pursuant to an Officer’s Certificate, dated as of December 15, 2020, supplementing the Indenture. The Company used the net proceeds from the 1.625% Senior Notes to finance the acquisition of BIDS Trading, repay a portion of amounts outstanding under the term loan facility and all outstanding indebtedness under the revolving credit facility and the remainder for general corporate purposes, which may include the financing of future acquisitions or the repayment of other outstanding indebtedness. The 1.625% Senior Notes mature on December 15, 2030 and bear interest at the rate of 1.625% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2021.

On March 16, 2022, the Company issued $300 million aggregate principal amount of 3.000% Senior Notes due 2032 (“3.000% Senior Notes” and, together with the 1.625% Senior Notes and the 3.650% Senior Notes, the “Senior Notes”). The form and terms of the 3.000% Senior Notes were established pursuant to an Officer’s Certificate, dated as of March 16, 2022, supplementing the Indenture. The Company used the net proceeds from the 3.000% Senior Notes, together with cash on hand, and the proceeds of additional borrowings, to partially fund its acquisition of Cboe Digital. The 3.000% Senior Notes mature on March 16, 2032 and bear interest at the rate of 3.000% per annum, payable semi-annually in arrears on March 16 and September 16 of each year, commencing September 16, 2022.

The Senior Notes are unsecured obligations of the Company and rank equally with all of the Company’s other existing and future unsecured, senior indebtedness, but are effectively junior to the Company’s secured indebtedness, to the extent of the value of the assets securing such indebtedness, and will be structurally subordinated to the secured and unsecured indebtedness of the Company’s subsidiaries.

The Company has the option to redeem some or all of the Senior Notes, at any time in whole or from time to time in part, at the redemption prices set forth in the applicable Officer’s Certificate. The Company may also be required to offer to repurchase the Senior Notes upon the occurrence of a Change of Control Triggering Event (as such term is defined in the applicable Officer’s Certificate) at a repurchase price equal to 101 percent of the aggregate principal amount of Senior Notes to be repurchased.

Indenture

Under the Indenture, the Company may issue debt securities, which includes the Senior Notes, at any time and from time to time, in one or more series without limitation on the aggregate principal amount. The Indenture governing the Senior Notes contains customary restrictions, including a limitation that restricts the Company’s ability and the ability of certain of the Company’s subsidiaries to create or incur secured debt. Such Indenture also limits certain sale and leaseback transactions and contains customary events of default. At December 31, 2023, the Company was in compliance with these covenants.

Revolving Credit Agreement

On February 25, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the “Revolving Credit Agreement”), which amended and restated the prior revolving credit agreement.

The Revolving Credit Agreement provides for a senior unsecured $400 million three-year revolving credit facility (the “Revolving Credit Facility”) that includes a $25 million swing line sub-facility. The Company may also, subject to the agreement of the applicable lenders, increase the commitments under the Revolving Credit Facility by up to $200 million, for a total of $600 million. Subject to specified conditions, the Company may designate one or more of its subsidiaries as additional borrowers under the Revolving Credit Agreement provided that the Company guarantees all borrowings and other obligations of any such subsidiaries under the Revolving Credit Agreement. As of December 31, 2023, no subsidiaries were designated as additional borrowers.

Funds borrowed under the Revolving Credit Agreement may be used to fund working capital and for other general corporate purposes, including the making of any acquisitions the Company may pursue in the ordinary course of its business. As of December 31, 2023, no borrowings were outstanding under the Revolving Credit Agreement. Accordingly,

at December 31, 2023, $400 million of borrowing capacity was available for the purposes permitted by the Revolving Credit Agreement.

Loans under the Revolving Credit Agreement will bear interest, at the Company’s option, at either (i) the Relevant Rate (defined herein) plus a margin (based on the Company’s public debt ratings) ranging from 0.75 percent per annum to 1.25 percent per annum or (ii) a daily fluctuating rate based on the administrative agent’s prime rate (subject to certain minimums based upon the federal funds effective rate or Term SOFR), which is subject to a 1 percent floor, plus a margin (based on the Company’s public debt ratings) ranging from zero percent per annum to 0.25 percent per annum. “Relevant Rate” means with respect to any committed borrowing or swingline borrowing denominated in (a) Dollars, Term SOFR plus a spread adjustment of 0.10 percent per annum, (b) Sterling, SONIA plus a spread adjustment of 0.0326 percent per annum and (c) Euros, EURIBOR, as applicable, provided that each Relevant Rate is subject to a 0 percent floor.

Subject to certain conditions stated in the Revolving Credit Agreement, the Company and any subsidiaries designated as additional borrowers may borrow, prepay and reborrow amounts under the Revolving Credit Facility at any time during the term of the Revolving Credit Agreement. The Revolving Credit Agreement will terminate and all amounts owing thereunder will be due and payable on February 25, 2027, unless the commitments are terminated earlier, either at the request of the Company or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events). The Revolving Credit Agreement contains customary representations, warranties, and affirmative and negative covenants for facilities of its type, including financial covenants, events of default and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and fundamental changes, subject to certain exceptions in each case. The financial covenants require the Company to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio of not less than 4.00 to 1.00 and a maximum consolidated leverage ratio of not greater than 3.50 to 1.00; provided that the consolidated leverage ratio may, subject to certain triggering events set forth in the Revolving Credit Agreement, be increased to 4.25 to 1.00 on one occasion and 4.00 to 1.00 on another occasion, in each case, for four consecutive fiscal quarters; provided that, prior to the exercise of the second such financial covenant step-up, the maximum consolidated leverage ratio shall have returned to a level of 3.50 to 1.00 for at least two consecutive fiscal quarters. At December 31, 2023, the Company was in compliance with these covenants and did not exercise financial covenant step-up.

Cboe Clear Europe Credit Facility

On July 1, 2020, EuroCCP (subsequently rebranded to Cboe Clear Europe), as borrower, the Company, as guarantor, entered into a Facility Agreement (as subsequently amended and restated, the “Facility” or “Cboe Clear Europe Credit Facility”) with Bank of America Merrill Lynch International Designated Activity Company, as co-ordinator, facility agent, lender, sole lead arranger and sole bookrunner, Citibank N.A., as security agent, and certain other lenders named therein. The Facility was amended and restated, on July 1, 2021, June 30, 2022, and June 29, 2023, as described below.

The Facility provides for a €1.25 billion committed syndicated multicurrency revolving and swingline credit facility (i) that is available to be drawn by Cboe Clear Europe towards (a) financing unsettled amounts in connection with the settlement of transactions in securities and other items processed through Cboe Clear Europe’s clearing system and (b) financing any other liability or liquidity requirement that Cboe Clear Europe incurred in the operation of its clearing system and (ii) under which the scheduled interest and fees on borrowings (but not the principal amount of any borrowings) are guaranteed by the Company. Subject to certain conditions, Cboe Clear Europe is able to increase the commitments under the Facility by up to €500 million, to a total of €1.75 billion.

Borrowings under the Facility are secured by cash, eligible government bonds and eligible equity assets deposited by Cboe Clear Europe into secured accounts. In addition, Cboe Clear Europe must ensure that at all times the aggregate of (a) each clearing participant’s contribution to the relevant clearing fund, (b) each clearing participant’s margin amount and (c) any cash equities purchased using the proceeds of the assets described in (a) and (b), less the amount of any such clearing participant contribution, margin amount or cash equities which have been transferred to (or secured in favor of) any provider of settlement or custody services to Cboe Clear Europe, is not less than €500 million.

Borrowings under the Facility’s revolving loans and non-U.S. dollar swingline loans bear interest at the relevant floating base rate plus a margin of 1.60 percent per annum and (subject to certain conditions) borrowings under the Facility’s U.S. dollar swingline loans bear interest as the higher of the relevant agent’s prime commercial lending rate for U.S. dollars and 0.5 percent per annum over the federal funds effective rate. A commitment fee of 0.275 percent per annum is payable on the unused and uncalled amount of the Facility during the availability period.

Subject to certain conditions stated in the Facility, Cboe Clear Europe may borrow, prepay and reborrow amounts under the Facility at any time during the term of the Facility. The Facility will terminate and all amounts owing thereunder will be due and payable on June 28, 2024, unless the commitments are terminated earlier, either at the request of Cboe Clear Europe or, if an event of default occurs, by the Lenders (or automatically in the case of certain bankruptcy-related events).

The Facility contains customary representations, warranties and covenants for facilities of its type, including events of default of the Company and Cboe Clear Europe and indemnification provisions in favor of the Lenders. In particular, the covenants include restrictions regarding the incurrence of liens by Cboe Clear Europe and its subsidiaries, and an event of default will be triggered if Cboe Clear Europe ceases its business, subject to certain exceptions in each case. There is also a requirement for the net worth of (a) the Company to be no less than $1.75 billion on the date of each drawdown and delivery of compliance certificates and (b) Cboe Clear Europe to be the higher of €30 million and any such amount required for Cboe Clear Europe to meet minimum liquidity regulations under applicable regulation at all times.

As of December 31, 2023, no borrowings were outstanding under the Facility. Accordingly, at December 31, 2023, €1.25 billion of borrowing capacity was available for the purposes permitted by the Facility. At December 31, 2023, the Company and Cboe Clear Europe were in compliance with applicable covenants.

Small Business Administration’s Paycheck Protection Program

On May 1, 2020, prior to Cboe’s acquisition of Cboe Digital, Cboe Digital (formerly ErisX) received $1.3 million of proceeds from a loan issued under either the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") under section 7(a)(36) of the Small Business Act or the SBA Paycheck Protection Program Second Draw Loans under Section 7(a)(37) of the SBA. On May 26, 2022, the PPP loan was forgiven and no further balance is due.

Notes Payments and Contractual Interest

The future expected repayments related to the Senior Notes as of December 31, 2023 are as follows (in millions):


2024	$	—
2025		—
2026		—
2027		650.0
Thereafter		800.0
Principal amounts repayable		1,450.0
Debt issuance costs		(5.9)
Unamortized discounts on notes		(4.9)
Total debt outstanding	$	1,439.2

Interest expense recognized on the Term Loan Agreement, the Senior Notes, and the Revolving Credit Agreement is included in interest expense in the consolidated statements of income. The Company is also obligated to pay commitment fees under the terms of the Revolving Credit Agreement, Term Loan Agreement and Facility, which are also included in interest expense.

Components of interest expense, net recognized in the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 are as follows (in millions):


	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2023		2022		2021
Components of interest expense:
Contractual interest	$	59.8	$	57.6	$	45.7
Amortization of debt discount and issuance costs		2.6		2.4		2.3
Interest expense	$	62.4	$	60.0	$	48.0
Interest income		(12.0)		(3.6)		(0.6)
Interest expense, net	$	50.4	$	56.4	$	47.4

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET

The following represents the changes in accumulated other comprehensive income (loss), net by component (in millions):


	Foreign Currency		Unrealized				Total Accumulated Other
	Translation		Investment		Post-Retirement		Comprehensive
	Adjustment		Gain/Loss		Benefits		Income (Loss), Net
Balance at December 31, 2021	$	55.4	$	(0.1)	$	0.3	$	55.6
Other comprehensive loss		(85.6)		(0.8)		(0.2)		(86.6)
Balance at December 31, 2022	$	(30.2)	$	(0.9)	$	0.1	$	(31.0)
Other comprehensive income (loss)		24.6		(2.8)		(0.2)		21.6
Balance at December 31, 2023	$	(5.6)	$	(3.7)	$	(0.1)	$	(9.4)

14. CLEARING OPERATIONS

Cboe operates two clearing houses, Cboe Clear Europe and Cboe Clear Digital, each of which acts as a central counterparty that provides clearing and settlement services.

Cboe Clear Europe

Cboe Clear Europe is a European equities central counterparty that provides post-trade services to stock exchanges, MTFs, over-the-counter (“OTC”) equities trades and an equity derivatives exchange. Cboe Clear Europe clears equities from eighteen European markets and the United States, as well as Depositary Receipts, ETFs, and equity-like instruments. In September 2021 Cboe Clear Europe began clearing equity derivatives for ten European markets, initially index futures and options and as of November 2023, single stock options. Through a novation process, Cboe Clear Europe becomes the buyer for every seller and the seller for every buyer, thereby protecting clearing participants from counterparty risk and allowing the settlement of trades in the event of a clearing participant default.

Cboe Clear Europe only assumes the guarantor role if it has an equal and offsetting claim against a clearing participant. For the period ended December 31, 2023, there have been no events of default for which a liability is required to be recognized in accordance with GAAP.

Cboe Clear Europe Clearing Participant Deposits

Cboe Clear Europe generally requires all clearing participants to deposit collateral to help mitigate Cboe Clear Europe’s exposure to credit risk in the event that a clearing participant fails to meet a financial or contractual obligation.

Margin Deposits

Margin deposits, which are predominately in the form of cash and cash equivalents, are deposits made by each clearing participant to Cboe Clear Europe to cover some or all of the credit risk of its failure to fulfill its obligations in the trade. Cboe Clear Europe maintains and manages all cash deposits related to margin deposits. Substantially all risks and rewards of margin deposit ownership, including net interest income, belong to Cboe Clear Europe and are recorded in cash and spot markets on the consolidated statements of income. In the event of a default, Cboe Clear Europe can access the defaulting participant’s margin deposits to cover the defaulting participant’s losses. For more information, see “Default and Liquidity Waterfalls” below.

Clearing Funds

The clearing fund mutualizes the risk of default among all clearing participants. Depending on their membership, clearing participants contribute to the cash-equity and/or derivatives segment of the clearing fund. Although the entire clearing fund is available to cover potential losses in the event that the margin deposits and the clearing fund deposits of a defaulting clearing participant are inadequate to fulfill that clearing participant’s outstanding financial obligations, the clearing fund first uses the product class segment of the Clearing Fund in which the defaulting participants was active (see “Default and Liquidity Waterfalls” below). In the event of a default, Cboe Clear Europe is generally required to liquidate the defaulting clearing participant’s open positions. To the extent that the positions remain open, Cboe Clear Europe is required to assume the defaulting clearing participant’s obligations related to the open positions. Clearing

participants are required to make contributions to the clearing fund that are proportional to their risk exposure in the form of cash or non-cash contributions, which generally consist of highly liquid securities.

Interoperability Fund

For the cash equity business line, Cboe Clear Europe has entered into interoperable arrangements with two other central counterparties (“CCPs”). Under these arrangements, margin is pledged to and from interoperable CCPs. The interoperability fund consists of collateral provided by clearing participants that is pledged by Cboe Clear Europe to the other interoperable CCPs, to cover margin calls Cboe Clear Europe receives from such interoperable CCPs.

Effective August 14, 2023, Cboe Clear Europe enacted changes to its rules, and is able to invest the cash collateral received in the form of interoperability fund deposits from clearing participants in certain investments, typically securities issued by pre-approved sovereign issuers and reverse repurchase agreements with overnight maturities. When investments are made in accordance with Cboe Clear Europe’s investment policy, Cboe Clear Europe receives the amount of investment earnings and pays clearing participants those earnings minus a set basis point cost of collateral. As Cboe Clear Europe is able to direct the investment of the cash interoperability fund deposits received from the clearing participants within the program parameters and receives an economic benefit from those investments, these amounts are included in the Margin Deposits, Clearing Funds, and Interoperability fund captions in the consolidated balance sheets and the related interest income and expense is recorded in other revenue and other costs of revenue respectively on the consolidated statements of income.

Cboe Clear Europe Default and Liquidity Waterfalls

The default waterfall is the priority order in which the capital resources are expected to be utilized in the event of a default where the defaulting clearing participant’s collateral would not be sufficient to cover the cost to liquidate its portfolio. If a default occurs and the defaulting clearing participant’s collateral, including margin deposits and clearing fund deposits, are depleted, then additional capital is utilized in the following order:

	●	Cboe Clear Europe dedicated own resources: The Cboe Clear Europe default waterfall first utilizes its dedicated own resources in two forms and totaling 35% of Cboe Clear Europe capital requirements; the ‘first skin in the game’, equal to 25% of Cboe Clear Europe capital requirements before the use of clearing fund contributions described below and the ‘second skin in the game’, an amount between 10-25% of capital requirements as discussed in Note 18 (“Regulatory Capital”).

	●	Clearing fund: Second, the Cboe Clear Europe default waterfall utilizes traditional CCP risk mutualization, in the event that default losses fully exhaust Cboe Clear Europe’s dedicated own resources amount, whereby contributions applicable to a particular product class are applied first to any loss attributable to that product class.

	●	Pro rata contributions: Third, if the default losses caused cannot be covered by the first two layers, the non-defaulting clearing participants shall on demand make additional payments to Cboe Clear Europe on a pro rata basis in proportion to the amount of their clearing fund contributions to cover any such remaining losses, which is limited to an amount equal to twice their clearing fund contribution as established under Cboe Clear Europe’s rules and regulations. In this scenario, contributions applicable to a particular product class are first applied to any losses attributable to that product class.

In addition to the default waterfall, the liquidity waterfall is the priority order in which the liquidity resources are expected to be utilized for Cboe Clear Europe’s ordinary course business operations and in situations when additional liquidity resources and liquidity measures may be activated in case of a potential liquidity shortfall. Liquidity, intraday or overnight, is mainly required for securities settlement. In ordinary course business circumstances, liquidity resources include the collateral directly deposited with Cboe Clear Europe, FX swap arrangements, and reverse repurchase agreements, as well as the use of the Facility.

Cboe Clear Digital

Cboe Clear Digital is a digital asset and digital asset derivatives clearinghouse and central counterparty that provides clearing and settlement of digital asset trades. Cboe Clear Digital is registered as a Derivatives Clearing Organization (“DCO”) regulated by the U.S. Commodity Futures Trading Commission (“CFTC”) and is registered with the U.S. Treasury Financial Crimes Enforcement Network (“FinCEN”) as a money services business (“MSB”). Cboe Clear Digital is authorized by license or not subject to licensing, to conduct MSB services in 50 U.S. jurisdictions. Cboe Clear Digital performs a guarantee function whereby Cboe Clear Digital helps to ensure that the obligations of the transactions it clears are fulfilled. Cboe Clear Digital attempts to mitigate this risk by performing internal compliance and due diligence

procedures as well as implementing internal risk controls. Cboe Clear Digital 's due diligence procedures include review of the personal and corporate information, financial position of the member participant, and monitoring of Cboe Clear Digital's risk exposure thresholds. As of December 31, 2023, Cboe Clear Digital does not expect a material loss concerning credit risk on any member participant.

Cboe Clear Digital Clearing Participant Deposits

Customer bank deposits

Cboe Clear Digital holds cash on behalf of its customers for the purposes of supporting clearing transactions. Customer cash may be invested in approved investments and any interest or gain received, or loss incurred on invested funds is recorded in the Consolidated Statement of Income. There was no interest, gains or losses on invested funds for the year ended December 31, 2023. The Company includes customer cash related to the clearing activity on the consolidated balance sheets in margin deposits, clearing funds, and interoperability funds, with a corresponding liability.

Digital assets - safeguarded assets

The Company holds digital assets on behalf of its customers. In accordance with the SEC issued Staff Accounting Bulletin 121 (“SAB 121”), the Company includes customer digital assets on the consolidated balance sheets in digital assets - safeguarded assets, with a corresponding offset in digital assets - safeguarded liabilities.

The details of our margin deposits, clearing funds, and interoperability funds as of December 31, 2023 and December 31, 2022, are as follows (in millions):


	December 31, 2023
	Margin Deposits		Clearing Funds		Interoperability Funds		Total
Cboe Clear Europe central bank account	$	361.3	$	140.1	$	271.0	$	772.4
Cboe Clear Europe reverse repurchase and other		2.7		4.1		55.6		62.4
Cboe Clear Digital customer bank deposits		14.0		—		—		14.0
Total cash margin deposits, clearing funds, and interoperability funds	$	378.0	$	144.2	$	326.6	$	848.8

	December 31, 2023
	Margin Deposits		Clearing Funds		Interoperability Funds		Total
Cboe Clear Europe non-cash contributions (1)	$	637.0	$	65.6	$	228.0	$	930.6

	December 31, 2022
	Margin Deposits		Clearing Funds		Interoperability Funds (2)		Total
Cboe Clear Europe central bank account	$	426.9	$	103.4	$	376.0	$	906.3
Cboe Clear Europe reverse repurchase and other		—		—		—		—
Cboe Clear Digital customer bank deposits		12.7		—		—		12.7
Total cash margin deposits, clearing funds, and interoperability funds	$	439.6	$	103.4	$	376.0	$	919.0

	December 31, 2022
	Margin Deposits		Clearing Funds		Interoperability Funds (2)		Total
Cboe Clear Europe non-cash contributions (1)	$	338.2	$	38.6	$	89.3	$	466.1

(1)	These amounts are not reflected in the consolidated balance sheets, as Cboe Clear Europe does not have the ability to sell or repledge the amounts absent a clearing participant default.

(2)

As of December 31, 2022, the interoperability funds were not reflected in the consolidated balance sheets, as Cboe Clear Europe did not have the ability to sell or repledge the amounts absent a clearing participant default in respect of non-cash contributions nor to invest the balances in respect of cash contributions at that point in time. See the updated rule change in respect of cash contributions discussed above.

The table below presents the Company’s safeguarded digital assets held on behalf of its customers for the purposes of supporting clearing transactions as of December 31, 2023 and December 31, 2022 (in millions):


		December 31, 2023			December 31, 2022
Digital assets - safeguarded assets		$	51.3		$	22.9

The following depicts the Company’s valuation of digital assets – safeguarded assets and safeguarded liabilities as of December 31, 2023 and December 31, 2022:


	December 31, 2023
Digital Asset	Number of Units	Valuation per Unit		Fair value (in millions)
Bitcoin ("BTC")	821	$	42,492	$	34.9
Ethereum ("ETH")	6,270		2,282		14.3
Litecoin ("LTC")	16,329		74		1.2
Bitcoin Cash ("BCH")	1,374		261		0.4
USD Coin ("USDC")	506,652		1		0.5
				$	51.3

	December 31, 2022
Digital Asset	Number of Units	Valuation per Unit		Fair value (in millions)
Bitcoin ("BTC")	717	$	16,540	$	11.8
Ethereum ("ETH")	6,362		1,199		7.6
Litecoin ("LTC")	17,873		70		1.3
Bitcoin Cash ("BCH")	6,883		97		0.7
USD Coin ("USDC")	1,516,479		1		1.5
				$	22.9

15. FAIR VALUE MEASUREMENT

Fair value is the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk.

The Company applied ASC 820 – Fair Value Measurement, which provides guidance for using fair value to measure assets and liabilities by defining fair value and establishing the framework for measuring fair value. ASC 820 applies to financial and nonfinancial instruments that are measured and reported on a fair value basis. The three-level hierarchy of fair value measurements is based on whether the inputs to those measurements are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.

The fair value hierarchy requires the use of observable market data when available and consists of the following levels:

	●	Level 1—Unadjusted inputs based on quoted markets for identical assets or liabilities.

	●	Level 2—Observable inputs, either direct or indirect, not including Level 1 measurements, corroborated by market data or based upon quoted prices in non-active markets.

	●	Level 3—Unobservable inputs that reflect management’s best assumptions of what market participants would use in valuing the asset or liability.

The Company has included a tabular disclosure for financial assets and liabilities that are measured at fair value on a recurring basis in the consolidated balance sheets as of December 31, 2023 and 2022, respectively.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022 (in millions):


	December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities (1)	$	20.8	$	20.8	$	—	$	—
Marketable securities (1):
Mutual funds		17.1		17.1		—		—
Money market funds		19.6		19.6		—		—
Digital assets - safeguarded assets		51.3		—		51.3		—
Total assets	$	108.8	$	57.5	$	51.3	$	—
Liabilities:
Contingent consideration liabilities	$	11.8	$	—	$	—	$	11.8
Digital assets - safeguarded liabilities		51.3		—		51.3		—
Cboe Digital restricted common units liability (2)		18.7		—		—		18.7
Cboe Digital warrant liability (2)		5.9		—		—		5.9
Total liabilities	$	87.7	$	—	$	51.3	$	36.4


	December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities (1)	$	64.2	$	64.2	$	—	$	—
Marketable securities (1):
Mutual funds		15.3		15.3		—		—
Money market funds		12.2		12.2		—		—
Digital assets - safeguarded assets		22.9		22.9		—		—
Total assets	$	114.6	$	114.6	$	—	$	—
Liabilities:
Contingent consideration liabilities	$	39.1	$	—	$	—	$	39.1
Digital assets - safeguarded liabilities		22.9		22.9		—		—
Cboe Digital restricted common units liability (2)		15.5		—		—		15.5
Cboe Digital warrant liability (2)		5.9		—		—		5.9
Total liabilities	$	83.4	$	22.9	$	—	$	60.5

(1)	These amounts are reflected within financial investments in the consolidated balance sheets.

(2)	These amounts are reflected within other non-current liabilities in the consolidated balance sheets.

The following is a description of the Company’s valuation methodologies used for instruments measured at fair value on a recurring basis:

Financial Investments

Financial investments consist of highly liquid U.S. Treasury securities, and marketable securities held in a trust for the Company’s non-qualified retirement and benefit plans, also referred to as deferred compensation plan assets. The deferred compensation plan assets have an equal and offsetting deferred compensation plan liability based on the value of the deferred compensation plan assets. These securities are valued by obtaining feeds from a number of live data sources, including active market makers and inter dealer brokers and therefore categorized as Level 1. No material adjustments were made to the carrying value of financial investments for the period ended December 31, 2023. See Note 17 (“Employee Benefit Plans”) for more information.

Digital Assets – Safeguarded Assets and Liabilities

Digital assets – safeguarded assets and liabilities represents the Company’s holdings of Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and USD Coin on behalf of the Company’s customers. The Company has determined the principal marketplace for digital assets to be the spot market of Cboe Digital Exchange, LLC (“Cboe Digital Exchange”). The

Company valued digital assets – safeguarded assets, and digital assets – safeguarded liabilities by using the closing prices at 4:00pm Central Time on Cboe Digital Exchange’s spot market (“Cboe Digital spot market”) as of December 31, 2023 for the underlying digital assets held on behalf of the Company’s customers. During the year ended December 31, 2023, these assets and liabilities were transferred from Level 1 to Level 2 in the fair value hierarchy as they are not traded in active markets and are valued using prices that are quoted from an active exchange that has been identified as the principal market for the underlying digital assets held on behalf of the Company’s customers. See Note 14 (“Clearing Operations”) for additional details regarding digital assets held.

Contingent Consideration Liabilities

In connection with the acquisitions of Hanweck Associates, LLC (“Hanweck”), Cboe Asia Pacific, and Cboe Canada, the Company entered into contingent consideration arrangements with the sellers. The total fair value of the liabilities at December 31, 2023 was $11.8 million That value is based on the Company’s estimate of the likelihood that certain performance targets in the respective acquisition agreements are expected to be accomplished. In connection with the contingent consideration arrangements, the Company paid a total of $13.1 million in contingent consideration to the sellers of Hanweck, Cboe Asia Pacific and Cboe Canada during the year ended December 31, 2023. Additionally, in December 2023, as a result of updated projections which exhibited a decrease in the likelihood of Cboe Japan and Cboe Canada achieving their contingency payment milestones as part of their purchase agreements, unmet milestones were written off and resulted in a reduction of the contingent consideration liability of $14.4 million for the Company, which is reflected within other expenses in the consolidated statements of income. In December 2022, MATCHNow contingent consideration expired and the remaining balance was not achieved, and thus written off and resulted in an operating gain of $5.2 million for the Company, which is reflected within other expenses in the consolidated statements of income. Because the fair value measurements relating to the contingent consideration liabilities are subject to management judgment, measurement uncertainty is inherent in the valuation of the contingent consideration liabilities as of the reporting date. Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is immaterial as of December 31, 2023.

Cboe Digital Syndication Liabilities

On November 18, 2022, Cboe Digital Holdings Inc. (“Cboe Digital Holdings”) entered into minority interest purchase agreements with certain digital asset industry participants, pursuant to which Cboe Digital Holdings agreed to issue Restricted Common Units in Cboe Digital. Cboe Digital Holdings also entered into a Warrant Agreement to issue Common Units of Cboe Digital in the future. Certain Cboe Digital investor members paid for the Restricted Common Units through the issuance of promissory notes, which are nonrecourse in nature and are accounted for as in-substance stock options. The cost associated with the Restricted Common Units is recognized as contra-revenue ratably over a five-year period. The Company uses a Black Scholes option pricing model to estimate the fair value of the in-substance stock option created by the Restricted Common Units and promissory notes as well as the fair value of the Warrant Units. Contra-revenue will be recognized while the performance conditions of the Warrant Units remain probable in conformance with the requirements in ASC 606 – Revenue from Contracts with Customers. Further adjustments will be recognized in each reporting period until performance is complete relating to changes in the fair value of the option and Warrant liabilities in accordance with ASC 718 – Compensation – Stock Compensation. Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is immaterial as of December 31, 2023. See Note 19 (“Stock-Based Compensation”) for more information.

Certain Cboe Digital investor members can earn additional Restricted Common Units if they meet certain performance-based metrics outlined in an equity incentive program. The Incentive Program Units are subject to the same terms and conditions as the other Restricted Common Units and are similarly liability-classified awards. Cboe Digital authorized a maximum of 20 Common Units to be distributed over the two-year life of the incentive program. The cost associated with the Incentive Program Units will be recognized as contra-revenue ratably over the remaining service period associated with the Incentive Program Units. Further adjustments will be recognized in each reporting period until performance is complete relating to changes in the fair value of the incentive program liabilities in accordance with ASC 718 – Compensation – Stock Compensation. Based on the recorded balance of the liabilities, any measurement uncertainty related to this Level 3 measurement is immaterial as of December 31, 2023. See Note 19 (“Stock-Based Compensation”) for more information.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets, such as goodwill and intangible assets, are measured at fair value on a non-recurring basis. For goodwill, the process involves using a market approach and income approach (using discounted estimated cash flows) to

determine the fair value of each reporting unit on a stand-alone basis. That fair value is compared to the carrying value of the reporting unit, including its recorded goodwill. In connection with the annual impairment evaluation of goodwill and indefinite lived intangibles, impairment is considered to have occurred if the fair value of the reporting unit is lower than the carrying value of the reporting unit. See “Digital Assets Held” below and Note 2 (“Summary of Significant Accounting Policies”) for discussion of valuation considerations specific to digital assets held. For the other intangible assets, the process also involves using a discounted cash flow method to determine the fair value of each intangible asset. Impairment is considered to have occurred if the fair value of the intangible asset is lower than its carrying value. These measurements are considered Level 3 and these assets are recognized at fair value if they are deemed to be impaired. In addition, property held for sale as of December 31, 2023 was also measured at fair value at September 30, 2023. See Note 7 (“Property and Equipment, Net”) for more information on property held for sale.

The Company performed impairment testing during the quarter ended June 30, 2022, as there were market events that indicated it was more likely than not that Cboe Digital’s assets were impaired, resulting in the recognition of an impairment charge to goodwill related to Cboe Digital. Subsequently, the Company concluded that the indicators of impairment observed during the quarter ended June 30, 2022, continued to be relevant and recorded additional goodwill impairment in the consolidated statements of income for the three months ended September 30, 2022. The Company determined there were no further impairment indicators for the period ended December 31, 2022. See Note 10 (“Goodwill, Intangible Assets, Net, and Digital Assets Held”) for more information on the impairment.

Equity investments without readily determinable fair values that are valued using the measurement alternative are measured at fair value on a non-recurring basis. No observable transactions or impairments impacted the measurements of the investments accounted for as other equity investments. See Note 6 (“Investments”) for more information.

Fair Value of Assets and Liabilities

The following tables present the Company’s fair value hierarchy for certain assets and liabilities held by the Company as of December 31, 2023 and 2022 (in millions):


	December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities (1)	$	20.8	$	20.8	$	—	$	—
Deferred compensation plan assets (1)		36.7		36.7		—		—
Digital assets - safeguarded assets		51.3		—		51.3		—
Digital assets held (2)		0.1		0.1		—		—
Total assets	$	108.9	$	57.6	$	51.3	$	—
Liabilities:
Contingent consideration liabilities	$	11.8	$	—	$	—	$	11.8
Deferred compensation plan liabilities (3)		36.7		36.7		—		—
Digital assets - safeguarded liabilities		51.3		—		51.3		—
Cboe Digital restricted common units liability (3)		18.7		—		—		18.7
Cboe Digital warrant liability (3)		5.9		—		—		5.9
Debt		1,305.7		—		1,305.7		—
Total liabilities	$	1,430.1	$	36.7	$	1,357.0	$	36.4


	December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets:
U.S. Treasury securities (1)	$	64.2	$	64.2	$	—	$	—
Deferred compensation plan assets (1)		27.5		27.5		—		—
Digital assets - safeguarded assets		22.9		22.9		—		—
Digital assets held (2)		0.9		0.9		—		—
Total assets	$	115.5	$	115.5	$	—	$	—
Liabilities:
Contingent consideration liabilities	$	39.1	$	—	$	—	$	39.1
Deferred compensation plan liabilities (3)		27.5		27.5		—		—
Digital assets - safeguarded liabilities		22.9		22.9		—		—
Cboe Digital restricted common units liability (3)		15.5		—		—		15.5
Cboe Digital warrant liability (3)		5.9		—		—		5.9
Debt		1,573.9		—		1,573.9		—
Total liabilities	$	1,684.8	$	50.4	$	1,573.9	$	60.5

(1)	These amounts are reflected within financial investments in the consolidated balance sheets.

(2)	These amounts are reflected within intangible assets, net in the consolidated balance sheets.

(3)	These amounts are reflected within other non-current liabilities in the consolidated balance sheets.

Certain financial assets and liabilities, including cash and cash equivalents, accounts receivable, income tax receivable, accounts payable and Section 31 fees payable, and notes receivable are not measured at fair value on a recurring basis, but the carrying values approximate fair value due to their liquid or short-term nature.

Debt

The debt balance consists of fixed rate Senior Notes and a floating rate Term Loan Agreement. The fair values of the Senior Notes are classified as Level 2 under the fair value hierarchy and are estimated using prevailing market quotes. The fair value of the Term Loan Agreement was determined by utilizing a discounted cash flow analysis and is considered a Level 2 measurement.

At December 31, 2023 and 2022, the fair values of the Company’s debt obligations were as follows (in millions):


	Fair Value
	December 31, 2023		December 31, 2022
Term Loan Agreement	$	—	$	306.3
3.650% Senior Notes		628.5		623.6
1.625% Senior Notes		412.7		390.7
3.000% Senior Notes		264.5		253.3

Digital Assets Held

Digital assets held, which are included within intangible assets, net in the consolidated balance sheets, are valued following a review of exchange prices for each specific digital asset throughout the holding period ended December 31, 2023. The Company will impair to the lowest observable value during the period for each digital asset type in accordance with Cboe Digital’s policy, which states that the Company values digital assets held by using the closing prices at 4:00pm Central Time on Cboe Digital Exchange’s spot market, which the Company determined is the principal market for digital assets. As part of Cboe Digital’s pricing policy, the closing price on Cboe Digital’s spot market is compared to three other exchanges (Coinbase, Bitstamp, and Kraken) and the CoinDesk Price Index to assess for reasonableness. These inputs are categorized in the fair value hierarchy as Level 1 as the marketplace is considered active.

Information on Level 3 Financial Liabilities

The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities during the year ended December 31, 2023 and 2022 (in millions):


	Level 3 Financial Liabilities for the Year Ended December 31, 2023
	Balance at		Realized (Gains)								Foreign
	Beginning of		Losses during								Currency		Balance at
	Period		Period		Adjustments		Additions		Settlements		Translation		End of Period
Liabilities:
Contingent consideration liabilities	$	39.1	$	(14.4)	$	—	$	—	$	(13.1)	$	0.2	$	11.8
Cboe Digital restricted common units liability		15.5				0.1		3.1		—		—		18.7
Cboe Digital warrant liability		5.9		—		—		—		—		—		5.9
Total liabilities	$	60.5	$	(14.4)	$	0.1	$	3.1	$	(13.1)	$	0.2	$	36.4


	Level 3 Financial Liabilities for the Year Ended December 31, 2022
	Balance at		Realized (Gains)								Foreign
	Beginning of		Losses during								Currency		Balances at
	Period		Period		Adjustments		Additions		Settlements		Translation		End of Period
Liabilities:
Contingent consideration liabilities	$	70.5	$	(5.2)	$	(44.3)	$	57.7	$	(38.7)	$	(0.9)	$	39.1
Cboe Digital restricted common units liability		—		—		—		15.5		—		—		15.5
Cboe Digital warrant liability		—		—		—		5.9		—		—		5.9
Total liabilities	$	70.5	$	(5.2)	$	(44.3)	$	79.1	$	(38.7)	$	(0.9)	$	60.5

16. SEGMENT REPORTING

The Company operates six reportable business segments: Options, North American Equities, Europe and Asia Pacific, Futures, Global FX, and Digital which is reflective of how the Company's chief operating decision-maker reviews and operates the business, as discussed in Note 1 (“Nature of Operations”). Segment performance is primarily evaluated based on operating income (loss). The Company’s chief operating decision-maker does not use segment-level assets or income and expenses below operating income (loss) as key performance metrics; therefore, such information is not presented below. The Company has aggregated all of its corporate costs, as well as other business ventures, within the Corporate Items and Eliminations totals based on the decision that those activities should not be used to evaluate the

operating performance of the segments; however, operating expenses that relate to activities of a specific segment have been allocated to that segment.

Options. The Options segment includes options on market indices (“index options”), as well as on the stocks of individual corporations (“equity options”) and on ETPs such as exchange-traded funds (“ETFs”) and exchange-traded notes (“ETNs”), which are “multi-listed” options and listed on a non-exclusive basis. These options are eligible to trade, as applicable, on Cboe Options, C2, BZX, EDGX, and/or other U.S. national security exchanges. Cboe Options is the Company’s primary options market and offers trading in listed options through a single system that integrates electronic trading and traditional open outcry trading on the Cboe Options trading floor in Chicago. C2 Options, BZX Options, and EDGX Options are all-electronic options exchanges, and typically operate with different market models and fee structures than Cboe Options. The Options segment also includes applicable market data fees revenues generated from the consolidated tape plans, the licensing of proprietary options market data, index licensing, routing services, and access and capacity services.

North American Equities. The North American Equities segment includes U.S. equities and ETP transaction services that occur on fully electronic exchanges owned and operated by BZX, BYX, EDGX, and EDGA, equities transactions that occur on the BIDS Trading platform in the U.S. and Canada, and Canadian equities and other transaction services that occur on or through Cboe Canada Inc.’s order books. The North American Equities segment also includes listing services on Cboe Canada Inc., corporate and ETP listings on BZX, applicable market data fees revenues generated from the consolidated tape plans, the licensing of proprietary equities market data, routing services, and access and capacity services.

Europe and Asia Pacific. The Europe and Asia Pacific segment includes the pan-European listed equities and derivatives transaction services, ETPs, exchange-traded commodities, and international depository receipts that are hosted on MTFs operated by Cboe Europe Equities (Cboe Europe and Cboe NL equities exchanges) and Cboe Europe Derivatives (“CEDX”). It also includes the ETP listings business on RMs and clearing activities of Cboe Clear Europe, as well as the equities transaction services of Cboe Australia and Cboe Japan, operators of trading venues in Australia and Japan, respectively, along with equities transactions that occur on the BIDS Trading platform in Australia and Japan. Cboe Europe operates lit and dark books, a periodic auctions book, and Cboe BIDS Europe, a Large-in-Scale (“LIS”) trading negotiation facility for UK symbols. Cboe NL, launched in October 2019 and based in Amsterdam, operates similar business functionality to that offered by Cboe Europe, and provides for trading only in European Economic Area (“EEA”) symbols. Cboe Europe Derivatives, a pan-European derivatives platform launched in September 2021, offers futures and options based on Cboe Europe equity indices, and single stock options. This segment also includes Cboe Europe, Cboe NL, CEDX, Cboe Australia and Cboe Japan revenue generated from the licensing of proprietary market data and from access and capacity services.

Futures. The Futures segment includes transaction services provided by CFE, a fully electronic futures exchange, which includes offerings for trading of VIX futures and other futures products, the licensing of proprietary market data, as well as access and capacity services.

Global FX. The Global FX segment includes institutional FX trading services that occur on the Cboe FX fully electronic trading platform, non-deliverable forward FX transactions (“NDFs”) offered for execution on Cboe SEF, as well as revenue generated from the licensing of proprietary market data and from access and capacity services. The segment includes transaction services for U.S. government securities executed on the Cboe Fixed Income fully electronic trading platform.

Digital. The Digital segment includes a U.S. based digital asset spot market, a regulated futures exchange, and a regulated clearinghouse, as well as revenue generated from the licensing of proprietary market data and from access and capacity services.

Summarized financial data of reportable segments was as follows (in millions):


			North										Corporate
			American		Europe and								Items and
	Options		Equities		Asia Pacific		Futures		Global FX		Digital		Eliminations		Total
Year ended December 31, 2023
Revenues	$	1,939.5	$	1,353.0	$	281.2	$	129.0	$	74.9	$	(4.1)	$	—	$	3,773.5
Operating income (loss)		851.3		118.0		32.7		86.1		24.7		(46.7)		(8.2)		1,057.9
Year ended December 31, 2022
Revenues	$	1,823.2	$	1,681.7	$	264.6	$	119.8	$	68.9	$	0.3	$	—	$	3,958.5
Operating income (loss)		740.5		146.6		38.1		55.2		8.8		(491.4)		(8.2)		489.6
Year ended December 31, 2021
Revenues	$	1,505.0	$	1,570.5	$	240.3	$	120.6	$	58.1	$	—	$	0.3	$	3,494.8
Operating income (loss)		538.0		156.1		56.0		66.0		2.7		—		(12.9)		805.9

Geographical Information

The following summarizes revenues less cost of revenues based on primary jurisdiction (in millions):


	United States		Non-U.S.		Total
Revenues less cost of revenues:
Year ended December 31, 2023	$	1,681.8	$	236.2	$	1,918.0
Year ended December 31, 2022	$	1,531.3	$	210.4	$	1,741.7
Year ended December 31, 2021	$	1,286.9	$	189.2	$	1,476.1

17. EMPLOYEE BENEFIT PLANS

Eligible U.S. employees are eligible to participate in the Cboe Options SMART Plan (“SMART Plan”). The SMART Plan is a defined contribution plan, which is qualified under Internal Revenue Code Section 401(k). In addition, eligible employees may participate in the Supplemental Employee Retirement Plan and the Deferred Compensation Plan. Each plan is a defined contribution plan that is non-qualified under the Internal Revenue Code. The Deferred Compensation Plan assets, held in a trust, are subject to the claims of general creditors of the Company and totaled $36.7 million at December 31, 2023. Although the value of the plan is recorded in financial investments on the consolidated balance sheets, there is an equal and offsetting liability in other non-current liabilities. The investment results of the Deferred Compensation Plan has no impact on net income as the investment results are recorded in equal amounts to both other income (expense), net and compensation and benefits expense in the consolidated statements of income. The Company contributed $15.0 million, $14.4 million, and $11.8 million to the defined contribution plans for the years ended December 31, 2023, 2022, and 2021, respectively.

Eligible employees outside of the U.S., which includes employees of Cboe Europe, Cboe NL, Cboe Clear Europe, BIDS, Cboe Asia Pacific, and Cboe Canada Inc. are eligible to participate in various employee-selected stakeholder contribution plans or plans covered by local jurisdictions or by applicable laws. The Company’s contribution amounted to $4.3 million, $3.0 million, and $2.3 million for the years ended December 31, 2023, 2022, and 2021, respectively. This expense is included in compensation and benefits in the consolidated statements of income.

Effective January 1, 2023, Directors may contribute a percentage of their cash and equity compensation to cash and equity deferred compensation plans that are maintained by the Company and defer income taxes thereon.

18. REGULATORY CAPITAL

As broker-dealers registered with the SEC, Cboe Trading, BIDS Trading, and Cboe Fixed Income are subject to the SEC’s Uniform Net Capital Rule (“Rule 15c3-1”), which requires the maintenance of minimum net capital, as defined therein. The SEC’s requirement also provides that equity capital may not be withdrawn or a cash dividend paid if certain minimum net capital requirements are not met. Cboe Trading, BIDS Trading, and Cboe Fixed Income compute the net capital requirements under the basic method provided for in Rule 15c3-1. As of December 31, 2023, Cboe Trading and BIDS Trading were required to maintain net capital equal to the greater of 6.67% of aggregate indebtedness items, as defined, or $0.1 million. Cboe Fixed Income was required to maintain net capital equal to the greater of 6.67% of aggregate indebtedness items, as defined, or $5.0 thousand.

As entities regulated by the FCA, Cboe Europe is subject to the Financial Resource Requirement (“FRR”) and Cboe Chi-X Europe is subject to the Capital Resources Requirement (“CRR”). As a RIE, Cboe Europe computes its FRR in accordance with its Financial Risk Assessment, as agreed by the FCA. In accordance with the Markets in Financial Instruments Directive of the FCA requirements, Cboe Chi-X Europe computes its CRR as the greater of the base requirement of $0.1 million as of December 31, 2023, or the summation of the credit risk, market risk and fixed overheads requirements, as defined.

On March 8, 2019, Cboe NL received approval from the Dutch Ministry of Finance to operate a RM, a MTF, and an approved publication arrangement in the Netherlands. As a RM, Cboe NL is subject to minimum capital requirements, as established by the Dutch Ministry of Finance in the license dated March 8, 2019.

Cboe Clear Europe was granted authorization under European Market Infrastructure Regulation (“EMIR”) by the National Competent Authority, DNB. Cboe Clear Europe is required by the EMIR, to maintain a minimum amount of capital to reflect an estimate of the capital required to wind down or restructure the activities of the clearinghouse, cover operational, legal and business risks and to reserve capital to meet credit, counterparty and market risks not covered by the clearing participants’ collateral and clearing funds.

Prior to the amalgamation of Cboe Canada and MATCHNow into Cboe Canada Inc., effective January 1, 2024, MATCHNow was regulated by CIRO. As of December 31, 2023, CIRO set and monitored regulatory capital requirements for MATCHNow to protect its clients and counterparties. MATCHNow was required to maintain a prescribed minimum level of risk adjusted capital in accordance with such requirements as CIRO may have from time to time prescribed. Effective January 1, 2024 the amalgamated Cboe Canada Inc. is regulated by the Ontario Securities Commission (“OSC”) in the same manner with which Cboe Canada is regulated by the OSC as described below.

As a designated contract market regulated by the CFTC, CFE is required to meet two capital adequacy tests: (i) its financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating costs. The amounts presented below represent the greater of the two capital adequacy requirements.

As a swap execution facility regulated by the CFTC, Cboe SEF is required to meet two capital adequacy tests: (i) its financial resources must exceed at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets must be equal to the greater of: (a) three months of projected operating costs or (b) its projected wind-down costs. The amounts presented below represent the greater of the two capital adequacy requirements.

As a designated contract organization regulated by the CFTC, Cboe Digital Exchange is required to meet two capital adequacy tests: (i) its financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating costs. The amounts presented below represent the greater of the two capital adequacy requirements.

As a derivatives clearing organization regulated by the CFTC, Cboe Clear Digital is required to meet two capital adequacy tests: (i) its financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating costs. The amounts presented below represent the greater of the two capital adequacy requirements.

Cboe Canada is regulated by the OSC. Cboe Canada is required to maintain sufficient financial resources for the proper performance of its functions and to meet its responsibilities. Cboe Canada must calculate the following financial ratios monthly: (i) current ratio, (ii) a debt to cash flow ratio, and (iii) a financial leverage ratio. Cboe Canada must report the monthly calculations to the OSC on a quarterly basis. Effective January 1, 2024 the amalgamated Cboe Canada Inc. is regulated by the OSC in the same manner.

Cboe Australia is regulated by the Australian Securities and Investments Commission (“ASIC”). Cboe Australia is required to maintain sufficient financial resources to operate the market properly in accordance with Section 794A(d) of the Corporations Act, which Cboe Australia satisfies by maintaining a prudent cash reserve, which must be equal to at least six months of its projected operating expenses.

Cboe Japan is regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”). Cboe Japan is required to maintain a minimum level of regulatory capital ratio of 120% in accordance with such requirements prescribed by the JFSA and JSDA.

The following table presents the Company’s subsidiaries with regulatory capital requirements discussed above, as well as the actual and minimum regulatory capital requirements of the subsidiary as of December 31, 2023 (in millions):


				Minimum
Subsidiary	Regulatory Authority	Actual		Requirement
Cboe Trading	FINRA/SEC	$	15.6	$	0.9
BIDS Trading	FINRA/SEC		3.4		0.4
Cboe Fixed Income	FINRA/SEC		6.4		0.1
Cboe Europe	FCA		71.4		29.5
Cboe Chi-X Europe	FCA		0.1		0.1
Cboe NL	Dutch Authority for Financial Markets		17.2		5.9
Cboe Clear Europe	DNB		80.9		49.1
MATCHNow	CIRO		6.3		0.2
CFE	CFTC		59.2		37.5
Cboe SEF	CFTC		2.4		2.1
Cboe Digital Exchange	CFTC		49.6		5.2
Cboe Clear Digital	CFTC		32.0		5.6
Cboe Australia	ASIC		12.0		5.1
Cboe Japan	JFSA		8.7		4.0

19. STOCK-BASED COMPENSATION

Stock-based compensation is based on the fair value of the award on the date of grant, which is recognized over the related service period, net of actual forfeitures. The service period is the period over which the related service is performed, which is generally the same as the vesting period. Vesting may be accelerated for certain officers and employees as a result of attaining certain age and service based requirements in the Company’s long-term incentive plan and award agreements.

Stock-based compensation expense relating to employee awards is included in compensation and benefits and acquisition-related costs in the consolidated statements of income. The Company recognized stock-based compensation expense related to employee awards of $33.9 million, $30.7 million, and $26.6 million for the years ended December 31, 2023, 2022, and 2021, respectively. Stock-based compensation expense relating to non-employee director awards is included in professional fees and outside services in the consolidated statements of income. The Company recognized stock-based compensation expense related to non-employee director awards of $1.9 million, $1.9 million, and $2.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. Stock-based compensation expense relating to Restricted Common Units and Warrant Units granted to investor members of Cboe Digital are recorded as contra-revenue in the consolidated statements of income and is outlined further below.

The activity in the Company's restricted stock, consisting of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”), was as follows:

RSAs and RSUs

The following table summarizes RSA and RSU activity during the years ended December 31, 2023, 2022 and 2021:


		Weighted
	Number of	average grant
	shares	date fair value
Nonvested stock at January 1, 2021	342,082	$	108.40
Granted	298,084		92.32
Vested	(166,598)		106.13
Forfeited	(30,249)		97.01
Nonvested stock at December 31, 2021	443,319	$	99.22
Granted	369,037		119.97
Vested	(201,457)		99.87
Forfeited	(54,837)		106.07
Nonvested stock at December 31, 2022	556,062	$	112.07
Granted	401,685		132.58
Vested	(237,315)		108.25
Forfeited	(82,251)		121.02
Nonvested stock at December 31, 2023	638,181	$	125.25

RSUs entitle the holder to one share of common stock upon vesting with the exception of certain jurisdictions where the RSUs are settled in cash, typically vest over a three-year period, and vesting accelerates upon death, disability, or the occurrence of a qualified termination following a change in control. Vesting will also accelerate upon a qualified retirement where applicable and permitted. Where applicable and permitted, qualified retirement eligibility occurs once achieving 55 years of age and 10 years of service. Further, in connection with the grants of new equity awards starting in 2024, the Board and Compensation Committee revised the award agreements to provide that in the event of a participant’s retirement, all unvested outstanding RSUs and a pro-rata portion of unvested outstanding PSUs will continue to vest and be distributed in accordance with the award’s original vesting and settlement schedule, even after the applicable retirement date. Retirement eligibility will require, in addition to attaining 55 years of age and 10 years of aggregate service, submission of 6 months of advanced written notice of a retirement and submission, approval, and satisfactory completion of a transition plan. Unvested RSUs will be forfeited if the officer, or employee leaves the Company prior to the applicable vesting date, except in limited circumstances.

RSUs granted to non-employee members of the Board of Directors have a one-year vesting period and vesting accelerates upon the occurrence of a change in control of the Company. Unvested portions of the RSUs will be forfeited if the director leaves the Board of Directors prior to the applicable vesting date.

The RSUs have no voting rights but entitle the holder to receive dividend equivalents.

There were no remaining nonvested RSAs as of December 31, 2023.

In the year ended December 31, 2023, to satisfy employees’ tax obligations upon the vesting of restricted stock, the Company purchased 85,001 shares of common stock totaling $11.2 million as the result of the vesting of 219,527 shares of restricted stock.

PSUs

The following table summarizes restricted stock units contingent upon achievement of performance conditions, also known as PSUs, activity during the years ended December 31, 2023, 2022 and 2021:


		Weighted
	Number of	average grant
	Shares	date fair value
Nonvested stock at January 1, 2021	122,666	$	115.18
Granted	71,302		98.32
Vested	(29,468)		111.45
Forfeited	(12,090)		110.20
Nonvested stock at December 31, 2021	152,410	$	108.41
Granted	64,668		141.41
Vested	(16,834)		96.00
Forfeited	(33,542)		95.40
Nonvested stock at December 31, 2022	166,702	$	125.08
Granted	87,146		144.35
Vested	(55,399)		130.05
Forfeited	(63,965)		141.49
Nonvested stock at December 31, 2023	134,484	$	127.72

PSUs include awards related to earnings per share during the performance period as well as awards related to total shareholder return during the performance period. The Company used the Monte Carlo valuation model method to estimate the fair value of the total shareholder return PSUs which incorporated the following assumptions for awards granted in February 2023: risk-free interest rate (4.10)%, three-year volatility (33.5)% and three-year correlation with S&P 500 Index (0.53). Each of these performance shares has a performance condition under which the number of units ultimately awarded will vary from 0% to 200% of the original grant, with each unit representing the contingent right to receive one share of the Company’s common stock. The vesting period for the PSUs contingent on the achievement of performance conditions is three years. For each of the performance awards, the PSUs will be settled in shares of the Company’s common stock following vesting of the PSU assuming that the participant has been continuously employed during the vesting period, subject to acceleration upon death, disability, or the occurrence of a qualified termination following a change in control. Participants have no voting rights with respect to the PSUs until the issuance of the shares of common stock. Dividends are accrued by the Company and will be paid once the PSUs, contingent on the achievement of performance conditions, vest.

In the year ended December 31, 2023, to satisfy employees’ tax obligations upon the vesting of performance stock, the Company purchased 21,459 shares of common stock totaling $2.7 million as the result of the vesting of 55,399 shares of performance stock.

As of December 31, 2023, there were $49.0 million in total unrecognized compensation costs related to restricted stock, restricted stock units, and performance stock units. These costs are expected to be recognized over a weighted average period of 2.0 years. Forfeited PSUs include certain awards forfeited by Edward T. Tilly, former Chief Executive Officer of the Company, who resigned and voluntarily terminated his employment with the Company on September 18, 2023.

Employee Stock Purchase Plan

In May 2018, the Company’s stockholders approved an Employee Stock Purchase Plan, (“ESPP”), under which a total of 750,000 shares of the Company’s common stock will be made available for purchase to employees. The ESPP is a broad-based plan that permits employees to contribute up to 10% of wages and base salary to purchase shares of the Company’s common stock at a discount, subject to applicable annual Internal Revenue Service (“IRS”) limitations. Under the ESPP, a participant may not purchase more than a maximum of 312 shares of the Company’s common stock during any single offering period. No participant may accrue options to purchase shares of the Company’s common stock at a rate that exceeds $25,000 in fair market value of the Company’s common stock (determined at the time such options are granted) for each calendar year in which such rights are outstanding at any time. The exercise price per share of common stock shall be 85% (for eligible U.S. and international employees) of the lesser of the fair value of the stock on the first day of the applicable offering period or the applicable exercise date.

The Company records compensation expense over the offering period related to the discount that is given to employees, which totaled $2.7 million, $0.6 million, and $0.4 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, 552,734 shares were reserved for future issuance under the ESPP.

Cboe Digital Restricted Common Units

On November 18, 2022, Cboe Digital Holdings entered into minority interest purchase agreements with certain digital asset industry participants, pursuant to which Cboe Digital Holdings agreed to issue 185 Restricted Common Units in Cboe Digital. In addition, certain investor members and their affiliates are our customers, including trading permit holders, trading privilege holders, participants, and members. Certain Cboe Digital investor members paid for the Restricted Common Units through the issuance of promissory notes, which are nonrecourse in nature. The issuances of Restricted Common Units for nonrecourse promissory notes are accounted for as in-substance stock options. The promissory notes generally bear interest at a rate of 5% per annum and mature upon the earlier of the sale of vested Restricted Common Units, or either November 18, 2032 or November 18, 2037. One Cboe Digital investor member paid for the Restricted Common Units in exchange for cash.

The following table summarizes the option activity during the years ended December 31, 2023 and 2022 (in millions, except number of shares and contractual term):


						Weighted
		Weighted				average
	Number of	average		Aggregate		remaining
	shares	exercise price		intrinsic value		contractual term
Outstanding at January 1, 2022	—	$	—	$	—	—
Granted	185		0.3		—	6 years
Vested	—		—		—	—
Outstanding at December 31, 2022	185	$	0.3	$	—	6 years
Granted	—		—		—	—
Vested	—		—		—	—
Outstanding at December 31, 2023	185	$	0.3	$	—	5 years

Vesting of Restricted Common Units is based on certain conditions relating to the participation and performance of the Cboe Digital investor members on the Cboe Digital platforms, generally over a five-year period. Performance is generally measured based on participation on the Cboe Digital platforms and the investor members maintaining certain average daily volumes on the platforms. Due to the existence of an option for investor members to sell their shares immediately after vesting, the options are liability classified. The options expire upon the maturity of the promissory notes, which is either November 18, 2032 or November 18, 2037, unless the options are exercised.

The cost associated with the options will be recognized as contra-revenue, net of actual forfeitures and based on the continued probability of the satisfaction of performance conditions ratably over the vesting period. At December 31, 2022, $14.0 million of contra-revenue related to the options grants was included in other assets, net within the consolidated balance sheet. At March 31, 2023 the contra-revenue balance included in other assets, net within the consolidated balance sheet included a $0.1 million adjustment to the Restricted Common Units contra-revenue asset as a result of the finalization of the initial grant date fair value calculation. For the years ended December 31, 2023 and 2022, $3.1 million and zero contra-revenue related to the options grants was recognized, respectively. As of December 31, 2023 and 2022, $11.0 million and $14.0 million of contra-revenue related to the options grants was included in other assets, net on the consolidated balance sheets, respectively, and is expected to be recognized as contra-revenue in the consolidated statements of income over the remaining contractual term.

Changes in the fair value of the options, subsequent to the grant date, is recognized in other income (expense), net in the consolidated statements of income in the period in which the fair value of the options changes. The Company uses a Black Scholes pricing model to estimate the fair value of the in-substance stock options which incorporated the following assumptions as of December 31, 2023: risk-free interest rate range (3.81 to 3.90)%, expected dividend rate (0)%, expected volatility (60 to 65)%, and expected term of 3.9 to 5.9 years. For the year ended December 31, 2023, there was no change in the fair value of the options grants since the grant date.

Certain Cboe Digital investor members can earn additional Incentive Program Units. The Incentive Program Units are subject to the same terms and conditions as the other Restricted Common Units and are similarly liability-classified awards. Cboe Digital authorized a maximum of 20 Common Units to be distributed over the two-year life of the incentive program. For the year ended December 31, 2023, $0.6 million of contra-revenue related to the Incentive Program Units was recognized. As of December 31, 2023, $2.5 million of contra-revenue related to the Incentive Program Units is

included in other assets, net within the consolidated balance sheet and is expected to be recognized as contra-revenue in the consolidated statements of income over the remaining service period associated with the Incentive Program Units.

Cboe Digital Warrant Units

On November 18, 2022, Cboe Digital Holdings entered into a Warrant Agreement with an investor member to acquire up to 80 Common Units of Cboe Digital, subject to certain vesting events. The investor member is a customer of Cboe Digital. The vesting of the Warrant Units is based upon the achievement of certain conditions relating to the service provided by the investor member over a two-year period, of which some conditions represent conditions that are not service, performance, or market conditions and, therefore, the Warrant Units are liability classified. As of December 31, 2023, 40 Warrant Units have vested, but no Warrant Units have been exercised.

The cost associated with the Warrant Units will be recognized as contra-revenue ratably throughout the expected life of the Warrant Units before exercise. For the years ended December 31, 2023 and 2022, $1.3 million and zero contra-revenue related to the Warrant Units was recognized, respectively. As of December 31, 2023 and 2022, $4.6 million and $5.9 million of contra-revenue related to the Warrant Units is included in other assets, net within the consolidated balance sheets, respectively, and is expected to be recognized as contra-revenue in the consolidated statements of income over the remaining life of the Warrant Units.

The following table summarizes the Warrant Unit activity during the years ended December 31, 2023 and 2022 (in millions, except number of shares):


		Weighted
	Number of	average
	shares	exercise price
Outstanding at January 1, 2022	—	$	—
Granted	80		0.2
Vested	—		—
Outstanding at December 31, 2022	80	$	0.2
Granted	—		—
Vested, but not exercised	40		0.2
Outstanding and exercisable at December 31, 2023	40		0.2
Outstanding at December 31, 2023	80	$	0.2

Changes in the fair value of the Warrant Units, subsequent to the grant date, is recognized in other income (expense), net in the consolidated statements of income in the period in which the fair value of the Warrant Units change. The Company uses a Black Scholes pricing model to estimate the fair value of the Warrant Units which incorporated the following assumptions as of December 31, 2023: risk-free interest rate (3.89)%, expected dividend rate (0)%, expected volatility (65)%, and expected term of 4.0 years. For the year ended December 31, 2023, there was no change in the fair value of the Warrant Units since the grant date.

20. EQUITY

Common Stock

The Company’s common stock is listed on Cboe BZX under the trading symbol CBOE. As of December 31, 2023, 325,000,000 shares of the Company’s common stock were authorized, $0.01 par value, and 105,556,817 and 105,527,815 shares were issued and outstanding, respectively. The holders of common stock are entitled to one vote per share.

Common Stock in Treasury, at Cost

The Company accounts for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Cboe stockholders’ equity and included in common stock in treasury, at cost in the consolidated balance sheets. Shares repurchased under the Company’s share repurchase program are retired or they are available to be redistributed. When treasury shares are redistributed, they are recorded at the average cost of the treasury shares acquired. When treasury shares are retired, they are removed from the common stock in treasury balance. The Company held 29,002 and 1,719,049 shares of common stock in treasury as of December 31, 2023 and December 31, 2022, respectively.

On December 14, 2023, the Board of Directors approved the retirement of 2,453,428 shares of treasury stock. These shares represent shares that were repurchased as part of the Company's share repurchase program since October, 2022, and shares purchased from employees to cover payroll withholding taxes in connection with the vesting of restricted stock. The retirement was recorded as a decrease to treasury stock, common stock, retained earnings, and additional paid-in capital on the consolidated balance sheets.

Share Repurchase Program

In 2011, the Board of Directors approved an initial authorization for the Company to repurchase shares of its outstanding common stock of $100 million and subsequently approved additional authorizations, for a total authorization of $1.8 billion. The Company expects to fund repurchases primarily through the use of existing cash balances. The program permits the Company to purchase shares, through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any repurchases at any specific time or situation.

On August 16, 2022, President Biden signed into law H.R. 5376 (commonly known as the Inflation Reduction Act of 2022 or simply the “IRA”). Tax measures contained in the IRA include, among other items, a new excise tax of 1% on repurchases of stock by domestic corporations with stock traded on established securities markets. The amount on which the tax is imposed is reduced by the value of any stock issued by such corporation during the tax year and the tax generally applies to stock buy-back transactions occurring after December 31, 2022. This new tax has not had a material impact to the Company as of December 31, 2023.

Under the program, for the year ended December 31, 2023, the Company has repurchased 661,721 shares of common stock at an average cost per share of $126.80, totaling $83.9 million. Since inception of the program through December 31, 2023, the Company has repurchased 19,610,088 shares of common stock at an average cost per share of $72.21, totaling $1.4 billion.

As of December 31, 2023, the Company had $384.0 million of availability remaining under its existing share repurchase authorizations.

The table below shows the repurchased shares of common stock under the Company’s share repurchase program during the periods presented as follows:


			Average Repurchase		Amount of Repurchases
	Shares Repurchased		Price Per Share		(in millions)
2023
Fourth quarter		33,507	$	173.59	$	5.8
Third quarter		—		—		—
Second quarter		61,141		132.45		8.1
First quarter		567,073		123.42		70.0
Total open market common stock repurchases		661,721				83.9

2022
Fourth quarter		132,111	$	116.07	$	15.3
Third quarter		—		—		—
Second quarter		147,139		106.12		15.6
First quarter		596,988		117.25		70.0
Total open market common stock repurchases		876,238				100.9

2021
Fourth quarter		—	$	—	$	—
Third quarter		—		—		—
Second quarter		331,373		101.57		33.7
First quarter		490,632		96.97		47.6
Total open market common stock repurchases		822,005				81.3

Purchase of Common Stock from Employees

The Company purchased 106,460 and 74,117 shares that were not part of the publicly announced share repurchase authorization from employees for an average price paid per share of $130.35 and $119.45 during the years ended December 31, 2023 and 2022, respectively. These shares consisted of shares retained to cover payroll withholding taxes in connection with the vesting of restricted stock units and performance share awards.

Preferred Stock

The Company has authorized the issuance of 20,000,000 shares of preferred stock, par value $0.01 per share, issuable from time to time in one or more series. For the years ended December 31, 2023, and 2022, the Company had no shares of preferred stock issued or outstanding.

Dividends

During the year ended December 31, 2023, the Company declared and paid cash dividends per share of $2.10, for an aggregate payout of $223.5 million. During the year ended December 31, 2022, the Company declared and paid cash dividends per share of $1.96, for an aggregate payout of $209.4 million.

Each share of common stock, including RSUs and PSUs, is entitled to receive dividend and dividend equivalents, respectively, if, as and when declared by the Board of Directors of the Company. The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within the discretion of the Company’s Board of Directors and may be affected by various factors, including earnings, financial condition, capital requirements, level of indebtedness and other considerations the Board of Directors deems relevant. Future debt obligations and statutory provisions, among other things, may limit, or in some cases prohibit, the Company’s ability to pay dividends.

As a holding company, the Company’s ability to declare and continue to pay dividends in the future with respect to its common stock will also be dependent upon the ability of its subsidiaries to pay dividends to it under applicable corporate law.

21. INCOME TAXES

Net deferred tax assets and liabilities consist of the following as of December 31, 2023 and 2022 (in millions):


	As of December 31,
	2023		2022
Deferred tax assets:
Accrued compensation and benefits	$	19.3	$	16.1
Property, equipment and technology, net		12.7		16.0
Investments		83.7		95.1
Operating leases		42.6		37.1
Other		84.2		75.7
Subtotal		242.5		240.0
Valuation allowances		(11.8)		(17.5)
Total deferred tax assets		230.7		222.5
Deferred tax liabilities:
Intangibles		(384.7)		(390.1)
Property, equipment and technology, net		(17.4)		(20.4)
Prepaid expenses or assets		(4.4)		(4.4)
Operating leases		(33.9)		(28.2)
Total deferred tax liabilities		(440.4)		(443.1)
Net deferred tax liabilities	$	(209.7)	$	(220.6)

The Company provides valuation allowances against deferred tax assets if, based on management’s assessment of historical and projected future operating results and other available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Valuation allowances of $11.8 million and $17.5 million were recorded against gross deferred tax assets for certain investments, net operating and capital losses as of December 31, 2023 and 2022, respectively.

As of December 31, 2023, the Company has capital loss carryforwards of $5.0 million, which, if unused, will expire in 2024 and 2025. The Company also has net operating loss carryforwards of $16.7 million, most of which have a 20 year carryforward period.

The Company considers its non-U.S. earnings to be indefinitely reinvested outside of the U.S. to the extent these earnings are not subject to U.S. income tax under an anti-deferral tax regime. As of December 31, 2023, the cumulative amount of undistributed earnings in these subsidiaries is $116.6 million. Given our intent to reinvest these earnings for an indefinite period of time, the Company has not accrued a deferred tax liability on these earnings. A determination of an unrecognized deferred tax liability related to these earnings is not practicable.

The provision for income taxes for the years ended December 31, 2023, 2022 and 2021 consists of the following (in millions):


	Year Ended December 31,
	2023		2022		2021
Current tax expense:
Federal	$	188.1	$	210.4	$	148.4
State		97.8		130.2		83.4
Foreign		15.5		13.0		14.2
Total current tax expense		301.4		353.6		246.0
Deferred income tax (benefit) expense:
Federal		(3.4)		(126.2)		(24.3)
State		1.5		(22.7)		(7.3)
Foreign		(13.3)		(6.8)		12.7
Total deferred income tax benefit		(15.2)		(155.7)		(18.9)
Total	$	286.2	$	197.9	$	227.1

For the years ended December 31, 2023, 2022, and 2021, income before taxes consists of the following (in millions):


	Year Ended December 31,
	2023		2022		2021
U.S. operations	$	1,010.5	$	401.3	$	714.0
Foreign operations		37.1		31.6		42.1
Total	$	1,047.6	$	432.9	$	756.1

A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2023, 2022, and 2021 is as follows:


	Year Ended December 31,
	2023		2022		2021
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
Impact of federal, state and local tax law & rate changes, net	—	%	(0.5)	%	1.9	%
State taxes, net of federal benefit	4.3	%	4.5	%	4.3	%
Uncertain tax positions	2.9	%	20.6	%	3.2	%
Deduction for foreign-derived intangible income	(0.4)	%	(1.0)	%	(0.6)	%
Valuation allowances	(0.5)	%	0.6	%	—	%
Other, net	—	%	0.5	%	0.2	%
Effective income tax rate	27.3	%	45.7	%	30.0	%

A reconciliation of the beginning and ending unrecognized tax benefits, excluding interest and penalties, is as follows (in millions):


	2023		2022		2021
Balance as of January 1	$	212.1	$	162.1	$	138.6
Gross increases related to prior year tax positions		—		21.8		3.4
Gross decreases related to prior year tax positions		(1.5)		—		(0.2)
Gross increases related to current year tax positions		31.1		32.9		26.5
Settlements		(2.5)		(3.7)		—
Lapse of statute of limitations		(1.7)		(1.0)		(6.2)
Balance as of December 31	$	237.5	$	212.1	$	162.1

As of December 31, 2023, 2022 and 2021, the Company had $196.6 million, $177.1 million, and $162.1 million, respectively, of unrecognized tax benefits, net of federal benefit, which, if recognized in the future, would affect the effective income tax rate. Reductions to unrecognized tax benefits from the lapse of the applicable statutes of limitations and potential audit settlements during the next twelve months are estimated to be approximately $49.9 million.

Estimated interest costs and penalties are classified as part of the provision for income taxes in the Company's consolidated statements of income and were $14.3 million, $39.1 million, and $9.7 million, for the periods ended December 31, 2023, 2022 and 2021, respectively. Accrued interest and penalties were $88.5 million, $74.4 million and $35.8 million as of December 31, 2023, 2022 and 2021, respectively.

The following table summarizes the tax years that are either currently under audit or remain open and subject to examination by the tax authorities in the most significant jurisdictions in which Cboe operates:


U.S. Federal		2020-2023
California		2015-2023
Illinois		2020-2023
New York		2015-2023
New York City		2015-2023
United Kingdom		2020-2023
Netherlands		2017-2023

During 2023 the Company reached a settlement with the IRS under which the Company agreed to concede all claimed Section 199 deductions in exchange for concession of the IRS asserted penalties. The Company accordingly remeasured its Section 199 tax reserves and released its reserves associated with penalties and interest thereon during the year.

22. EARNINGS PER SHARE

The computation of basic net income per common share is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders.

The computation of diluted net income per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2023, 2022, and 2021 (in millions, except per share data):


	Year Ended December 31,
	2023		2022		2021
Basic earnings per share numerator:
Net income	$	761.4	$	235.0	$	529.0
Net income allocated to participating securities		(3.9)		(0.9)		(1.7)
Net income allocated to common stockholders	$	757.5	$	234.1	$	527.3
Basic earnings per share denominator:
Weighted average shares outstanding		105.8		106.3		107.0
Basic earnings per share	$	7.16	$	2.20	$	4.93

Diluted earnings per share numerator:
Net income	$	761.4	$	235.0	$	529.0
Net income allocated to participating securities		(3.9)		(0.9)		(1.7)
Net income allocated to common stockholders	$	757.5	$	234.1	$	527.3
Diluted earnings per share denominator:
Weighted average shares outstanding		105.8		106.3		107.0
Dilutive common shares issued under stock program		0.4		0.4		0.2
Total dilutive weighted average shares		106.2		106.7		107.2
Diluted earnings per share	$	7.13	$	2.19	$	4.92

For the periods presented, the Company did not have shares of stock-based compensation that would have an anti-dilutive effect on the computation of diluted earnings per share.

23. COMMITMENTS, CONTINGENCIES, AND GUARANTEES

Legal Proceedings

As of December 31, 2023, the Company was subject to the various legal proceedings and claims discussed below, as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.

The Company reviews its legal proceedings and claims, regulatory reviews and inspections and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and the Company discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the consolidated financial statements to not be misleading. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. The Company’s assessment of whether a loss is remote, reasonably possible, or probable is based on its assessment of the ultimate outcome of the matter following all appeals.

As of December 31, 2023, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these legal proceedings and claims, regulatory reviews, inspections or other legal proceedings, if any, has been incurred. While the consequences of certain unresolved proceedings are not presently determinable, the outcome of any proceeding is inherently uncertain and an adverse outcome from certain matters could have a material effect on the financial position, results of operations, or cash flows of the Company in any given reporting period.

CAT Funding Model Order Litigation

On September 6, 2023, the SEC issued an order approving an amendment to the CAT National Market System Plan to implement a revised funding model for CATLLC to fund the CAT (“CAT Funding Model Order”). The approved CAT Funding Model contemplates two categories of CAT fees calculated based on the “executed equivalent shares” of transactions in eligible securities: (i) CAT fees assessed by CATLLC to Industry Members who are CAT Executing Brokers to recover a portion of historical CAT costs previously paid to CATLLC by the Plan Participants; and (ii) CAT fees assessed by CATLLC to CAT Executing Brokers and Plan Participants to fund prospective CAT costs.

On October 17, 2023, the American Securities Association (“AMA”) and Citadel Securities, LLC (“Citadel”) filed a Petition for Review of the CAT Funding Model Order in the U.S. Court of Appeals for the 11th Circuit (“11th Circuit”). On November 16, 2023, the Cboe securities exchanges, the NYSE securities exchanges, the Nasdaq securities exchanges and CATLLC filed motions to intervene on behalf of the SEC. On January 17, 2024, the 11th Circuit granted each of the motions to intervene on behalf of the SEC and established a briefing schedule. Briefing is expected to conclude during the second quarter of 2024. This challenge or any other challenge to the SEC order approving the CAT Funding Model and/or Plan Participant(s) fee filings may significantly delay implementation efforts. As a result, the Plan Participants may continue to incur additional significant costs, and/or it may result in them not being able to collect on the promissory notes related to the funding of the implementation and operation of the CAT. The Company believes the appeal is without merit and intends to vigorously litigate the matter.

Other

As self-regulatory organizations under the jurisdiction of the SEC, Cboe Options, C2, BZX, BYX, EDGX and EDGA are subject to routine reviews and inspections by the SEC. As a designated contract market under the jurisdiction of the CFTC, CFE, and Cboe Digital Exchange are subject to routine rule enforcement reviews and examinations by the CFTC. As a derivatives clearing organization under the jurisdiction of the CFTC, Cboe Clear Digital is also subject to routine audits and examinations by state regulators. Cboe SEF, LLC is a swap execution facility registered with the CFTC and subject to routine rule enforcement reviews and examinations by the CFTC. Cboe Trading, BIDS Trading and Cboe Fixed Income are subject to reviews and inspections by FINRA. The Company has from time to time received inquiries and investigative requests from the SEC’s Division of Examinations and the CFTC’s Division of Market Oversight as well as the SEC Division of Enforcement and CFTC Division of Enforcement seeking information about the Company’s compliance with its obligations as a self-regulatory organization under the federal securities laws and Commodity Exchange Act as well as members’ compliance with the federal securities laws and Commodity Exchange Act.

In addition, while Cboe Europe, Cboe Chi-X Europe, Cboe Clear Europe, Cboe NL, Cboe Australia, Cboe Japan, MATCHNow, and Cboe Canada have not been the subject of any litigation or regulatory investigation in the past that resulted in a material impact on the Company’s financial position, results of operations, liquidity or capital resources, there is always the possibility of such action in the future. As Cboe Europe and Cboe Chi-X Europe are domiciled in the UK, it is likely that any action would be taken in the UK courts in relation to litigation or by the FCA in relation to any regulatory enforcement action. As Cboe Clear Europe is domiciled in the Netherlands, it is likely that any action would be taken in the Dutch courts in relation to litigation or by the DNB or Dutch Authority for Financial Markets in relation to any regulatory enforcement action. For Cboe NL, also domiciled in the Netherlands, it is likely that any actions would be taken in the Dutch courts in relation to litigation or Dutch Authority for Financial Markets in relation to any regulatory enforcement action. As Cboe Australia is domiciled in Australia, it is likely that any action would be taken in the Australian courts in relation to litigation or by the ASIC, in relation to any regulatory enforcement action. As Cboe Japan is domiciled in Japan, it is likely that any action would be taken in the Japanese courts in relation to litigation or by the JFSA or the JSDA in relation to any regulatory enforcement action. As Cboe Canada Inc. is domiciled in Canada, it is likely that any action would be taken in the Canadian courts in relation to litigation or by the OSC and/or CIRO in relation to any regulatory enforcement action.

Cboe Digital has committed to securely store all digital assets it holds on behalf of users. As such, Cboe Digital may be liable to its users for losses arising from theft or loss of user private keys. Cboe Digital has no reason to believe it will

incur any expense associated with such potential liability because (i) it has no known or historical experience of claims to use as a basis of measurement, (ii) it accounts for and continually verifies the amount of digital assets within its control, and (iii) it has established security around custodial private keys to minimize the risk of theft or loss. There were no loss events impacting safeguarded assets caused by the theft or loss of digital asset user private keys as of December 31, 2023.

The Company is also currently a party to various other legal proceedings in addition to those already mentioned. Management does not believe that the likely outcome of any of these other reviews, inspections, investigations or other legal proceedings is expected to have a material impact on the Company’s financial position, results of operations, liquidity or capital resources.

See also Note 8 (“Credit Losses”) for information on promissory notes related to the CAT.