CME Group (CME) 10-K risk factor changes: FY2019 vs FY2018

[removed: RISKS] [added: RISKS] RELATING TO OUR [removed: INDUSTRY][added: INDUSTRY]

[removed: Our] [added: Our] business is subject to the impact of [removed: domestic and international] [added: global] market, economic and political conditions that are beyond our control and that could significantly impact our business and make our financial results more [removed: volatile.][added: volatile.]

| • | legislative and regulatory changes, including any direct or indirect restrictions on or increased costs associated with trading in our [removed: markets;] [added: markets or our clearing services;] |

| • | changes in price levels, trading volumes and volatility in the derivatives, cash and OTC markets and in [added: their] underlying [removed: equity, foreign exchange, interest rate and commodity] markets; |

| • | shifts in [removed: global or regional] demand or supply in commodities underlying our products; |

Historically, periods of heightened uncertainty have tended to increase our trading volume due to increased hedging activity and the increased need to manage the risks associated with, or speculate on, [removed: volatility in the U.S. equity markets, fluctuations in interest rates and price changes in the foreign exchange, commodity and other markets.][added: volatility.]

We are primarily subject to the jurisdiction of the regulatory agencies in the United [removed: States] [added: States, United Kingdom] and Europe.

As a result of our global operations, we are also subject to the rules and regulations of the local jurisdictions in which we conduct business and offer our products and [removed: services.][added: services, as appropriate.]

Due to the global financial crisis that began in 2008, the United States and numerous other governments have undertaken reviews of the legal framework governing financial markets and have either [removed: passed] [added: enacted] new [removed: laws] [added: laws, rules] and regulations, or are in the process of [removed: debating or] enacting new [removed: laws] [added: laws, rules] and regulations that will impact our business.

[removed: Also, as noted above, EMIR 2.2, the legislation being considered by the European Commission, European Council, and European Parliament, and the] [added: The] implementation of the regulations under this [removed: legislation, have the potential to] [added: legislation may] increase our regulatory [removed: costs] [added: costs, including substantial new authority to impose fines,] and/or create a disincentive for certain clients to use our products.

The [removed: EU] [added: European Union] equivalence and recognition regime also has the potential to impact the cost and ease or difficulty for certain of [removed: NEX’s] [added: our] OTC execution platforms to provide access to customers on a global basis.

If we fail to comply with applicable laws, rules or regulations, we may be subject to censure, fines, cease-and-desist orders, suspension of our business, removal of personnel or other sanctions, including revocation of our designations as a contract market, derivatives clearing organization, swap execution facility or [removed: broker-dealer.][added: broker-dealer, or other regulatory penalties.]

Legislation may be proposed, both domestically and internationally, that could add a transaction tax on our products or change the way [removed: that] our market participants are taxed on the products they trade on our markets.

Please see "Item 1 [removed: –] [added: -] Business [removed: –] [added: -] Regulatory Matters" beginning on page 10 for additional information on our areas of regulatory focus.

[removed: We] [added: We] face intense competition from other companies.

If we are not able to successfully [removed: compete, our] [added: compete, our] business, financial condition and operating results will be materially [removed: harmed.][added: harmed.]

The industry in which we operate is highly competitive and we expect competition to continue to [removed: intensify, especially in light of the implementation of Dodd-Frank and other reforms of the financial services industry.][added: intensify.]

[removed: Many of our] [added: Our] competitors and potential competitors [added: may] have greater financial, marketing, technological and personnel resources than we do.

| • | develop products that are preferred by our [removed: customers;] [added: customers compared to those offered by CME Group;] |

| • | utilize better, more user-friendly [removed: and] [added: or] more reliable technology; |

| • | take greater advantage of acquisitions, alliances and other [removed: opportunities;] [added: opportunities that provide a competitive advantage;] |

| • | better leverage existing relationships with customers and alliance partners or exploit better recognized brand names to market and sell their services; [removed: and] [added: or] |

If our products, markets and services are not competitive, our business, financial condition and operating results [removed: will] [added: could] be [removed: materially harmed.][added: adversely affected.]

Please see "Item 1 [removed: –] [added: -] Business [removed: –] [added: -] Competition" beginning on page 9 for additional information on the competitive environment and its potential impact on our business.

[removed: Our] [added: Our] trading volume, and consequently our revenues and profits, would be adversely affected if we are unable to retain our current customers [added: at substantially similar trading levels] or attract new [removed: customers.][added: customers.]

To do so, we must maintain and expand our product offerings, our customer base and our trade execution [added: facilities, our pre-and post-trade services] and clearing facilities.

For example, some of our competitors have engaged in aggressive pricing strategies in the past, such as lowering the fees [removed: that] they charge for taking liquidity and increasing liquidity payments or rebates.

Additionally, from time to time, certain customers may represent a significant portion of the open interest in our individual product lines or [removed: contracts.][added: contracts and a substantial decrease in their trading activity could have a negative impact on the liquidity of the particular product line or contract.]

If we fail to maintain our trading [removed: volume; expand our product offerings or execution facilities; or lose] [added: volume, as] a [removed: substantial number] [added: result] of [removed: our current customers, or] a [removed: subset] [added: loss] of customers [removed: representing a significant percentage of trading volume] [added: or decrease] in [removed: a particular] [added: trading activity; expand our] product [removed: line;] [added: offerings] or [added: execution facilities; or] are unable to attract new customers, our business and revenues will be adversely affected.

[removed: Furthermore, declines] [added: Declines] in trading volume [removed: due to loss of customers] may [added: also] negatively impact market liquidity, which could lead to further loss of trading volume.

[removed: Our] [added: Our] role in the global marketplace places us at greater risk than other public companies for a cyber attack and other cyber security risks.

Our technology, our people and those of our third-party service providers may be vulnerable to cyber security threats, which could result in wrongful use of our information or [added: our customers’ information or] cause interruptions in our operations that cause us to lose customers and trading [removed: volume,] [added: volume] and result in substantial liabilities.

We also could be required to incur significant expense to protect our systems and/or investigate any alleged [removed: attack.][added: attack.]

We regard the secure [added: storage and] transmission of confidential information and the ability to continuously transact and clear on our electronic trading platforms as critical elements of our operations.

Our technology, our people and those of our third-party service providers and our customers may be vulnerable to targeted attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, "ransom" attacks, firewall or encryption failures [removed: and] [added: or] other security problems.

While [removed: the company has] [added: we have] not experienced cyber incidents that are individually, or in the aggregate, material, [removed: the company has] [added: we have] experienced cyber attacks of varying degrees in the past.

[removed: The company has] [added: We have] designed [removed: its] [added: our] cyber defense program to mitigate such attacks by preventative, detective, and responsive measures.

Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the services we provide that could potentially have an adverse effect on our business, while resulting in regulatory penalties or the imposition of [removed: burdensome] [added: additional] obligations by regulators.

As part of our global information security [removed: program,] [added: and privacy programs,] we employ resources to monitor and protect our technology infrastructure and employees against such cyber attacks, including the rapid response to zero-day vulnerabilities, and the potential misappropriation of our intellectual property assets.

Any security attack or breach could result in system failures and delays, [added: malfunctions in our operations,] loss of customers [removed: and] [added: or] lower trading volume, loss of competitive position, damage to our reputation, disruption of our business, legal liability or regulatory [removed: fines,] [added: fines and] significant costs, which in turn, may cause our revenues and earnings to decline.

We operate in a heavily regulated environment that imposes significant costs and competitive burdens on our business and our failure to maintain compliance with regulations, our status as a regulated entity, or BrokerTec Americas' status as a member in good standing at FICC, could result in the loss of customers.

Also, on January 1, 2020, amendments to the European Market Infrastructure Regulation (EMIR 2.2) became effective.

There is also the risk that new laws or regulations or changes in enforcement practices applicable to our businesses or those of our clients could be imposed in other jurisdictions.

This could adversely affect our ability to compete effectively with other institutions that are not affected in the same way or impact our clients’ overall trading volume and demand for our market data and other services.

Our broker-dealer and multilateral trading facility businesses, BrokerTec and EBS, are extensively regulated.

Legislative or regulatory changes could be adopted that would change the structure of our business, its current governance structure or impose significant costs on us by, for example, requiring more of our funds to be set aside for the guaranty fund.

Further, other jurisdictions could assert significant changes to our governance, business practices and costs in order to continue to make our services available in those jurisdictions.

participants to transfer positions of futures or options from an exchange-owned clearing house to a clearing house owned and controlled by clearing firms.

To the extent a clearing firm were to experience a decrease in capital and be unable to meet requirements, it may be required to decrease its trading activity.

As the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous and complex, any failure to comply may carry significant penalties and reputational damage.

Such events could also result in customer dissatisfaction and a decline in their willingness to trade on our markets.

Such attack may result in harm to our personnel,

We plan to migrate the BrokerTec and EBS platforms to CME Globex in 2020 and 2021, respectively.

While we are focused on the migration of the BrokerTec and EBS platforms to CME Globex from both a technology and a customer experience perspective, we cannot guarantee that we will not experience any client attrition and to the extent any such client attrition is significant, it could have an impact on our revenues.

adequately expand their services to meet our needs and the needs of our customers, we could experience decreased trading volume, lower revenues and higher costs.

A transition from the widespread use of LIBOR to alternative benchmark rates is likely to occur over the next several years.

In July 2017, the UK FCA, which regulates LIBOR, announced the desire to phase out the use of LIBOR by the end of 2021.

The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has recommended replacing U.S. Dollar LIBOR with other benchmark alternatives, such as SOFR.

It is unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR.

Any transition away from LIBOR to alternative reference rates is complex and could have a material adverse effect on our business, financial condition and results of operations.

We have closely engaged with the industry, regulators, and market participants to launch products using alternative reference rates, including our SOFR and Sterling Overnight Index Average (SONIA) futures contracts.

In November 2019, we shared via a public webinar details of improved fallback plans to convert Eurodollar futures and options into 3-month SOFR futures and options.

The level of trading activity by our customers may be affected by their profitability and capital constraints and may lead to a decreased demand for our market data.

Continued

The expansion of our global operations is complex and subjects us to increased business and economic risks that could adversely affect our financial results.

In connection with our expanded global operations, we face certain risks inherent in doing business internationally.

| • | fluctuations in currency exchange rates; |

| • | general economic, social and political conditions; |

| • | protectionist laws and business practices that favor local businesses in some countries; |

| • | reduced protection for intellectual property rights in some countries; |

| • | language and cultural differences; and |

If we are unable to manage the complexity of our global operations successfully, or if the risks above become substantial for us, our financial performance and operating results could suffer.

Further, any measures we may implement to reduce risks of our international operations may not be effective, may increase our expenses and may require significant management time and effort.

Further, allegations by regulatory or criminal authorities of improper trading activities could affect our brand and reputation and reduce the number of participants trading in our markets.

If that should occur, we could face a corresponding decline in trading volume and revenue.

A failure to protect our intellectual property rights, or allegations that we have infringed the intellectual property rights of others, could adversely affect our business.

Our business is dependent on proprietary technology and other intellectual property that we own or license from third parties.

Notwithstanding the precautions we take to protect our proprietary

As a result, we may face allegations that we have infringed the intellectual property rights of third parties, which may be costly for us to defend against.

We could also be required to pay damages if we were found to infringe patents held by others, which could materially adversely affect our business, financial condition and operating results.

We operate in a heavily regulated environment that imposes significant costs and competitive burdens on our business.

We believe portions of Dodd-Frank and the corresponding regulations with respect to mandatory clearing and organized trading provide opportunities for our business.

However, other reforms could negatively impact our business and our ability to compete effectively.

In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, including the European Union General Data Protection Regulation that went into effect in May

2018, compliance with those requirements could also result in additional costs and may carry significant penalties for non-compliance.

Additionally, the operation of our technology platforms may place us at greater risk for misappropriation of our intellectual property, and persons who circumvent security measures could wrongfully use or steal our information or cause interruptions or malfunctions in our operations.

In the past, we have been the victim of trade secret theft by an employee.

While our derivatives exchange and clearing activities generally are protected by our rules limiting liability for system failures and certain forms of negligence and by statutory limits on the ability to bring private causes of actions in cases where we have not acted in bad faith, we could be exposed to substantial liability under federal and state laws and court decisions, as well as rules and regulations promulgated and/or direct actions brought by the SEC and the CFTC.

affect our ability to attract and retain employees.

In connection with the acquisition of NEX, we acquired the BrokerTec and EBS trading platforms, which will eventually be migrated to CME Globex.

Similarly, our BrokerTec and EBS trading platforms are expected by our customers to be regularly available and able to handle peak volumes.

Certain businesses acquired from NEX subject us to compliance and regulatory risks associated with being a regulated intermediary.

Regulatory oversight of our business has historically been extensive and focused on the adequacy of our self-regulatory oversight of our derivatives exchange and clearing activities and the security and safeguards of our systems.

The broker-dealer and multilateral trading facility businesses acquired from NEX (BrokerTec and EBS) are also extensively regulated, but with a focus on their role as intermediaries, which may create compliance and regulatory risks different than those to which we previously have been subject.

Our BrokerTec matched principal business is highly dependent on our status as a member in good standing of the Fixed Income Clearing Corporation (FICC), and our failure to maintain that status could adversely affect us.

In particular, on July 27, 2017, the Chief Executive of the FCA, which regulates LIBOR, announced that it intends to stop persuading banks to submit rates for the calibration of LIBOR to the administrator of LIBOR after 2021.

The announcement indicates that the continuation of LIBOR on the current basis cannot be guaranteed after 2021.

Additionally, certain of our other businesses, including our Reset offering, could be negatively affected by changes to LIBOR.

The required capital and posted collateral of our clearing firms may lose value given the volatility of the market.

We accept a variety of collateral to satisfy these requirements, including cash, regulated money market mutual funds, U.S. Treasury securities, U.S. Government Agency securities, letters of credit, gold, equities and select ETFs, foreign sovereign debt, Canadian Provincials and corporate bonds, and subject them to established haircuts based on the type of collateral and maturity.

To the extent a clearing firm is not compliant with capital, margin or guaranty fund requirements, it would be required to promptly come into compliance by adding capital or collateral, decreasing its proprietary trading activity and/or transferring customer accounts to another clearing firm.

These actions could result in a decrease in trading activity in our derivatives products.

formed ventures, in the exercise of influence over the activities of any ventures in which we do not have a controlling interest, as well as encounter potential conflicts with our joint venture or alliance partners.

Expansion of our global operations involves special challenges that we may not be able to meet, which could adversely affect our financial results.

We plan to continue to expand our global operations, including through our acquisition of NEX.

We face certain risks inherent in doing business in international markets, particularly in our regulated businesses.

| • | general economic and political conditions in the countries from which our markets are accessed, which may have an adverse effect on our volume from those countries; and |

We cannot assure you that we will be successful in marketing our products and services in international markets.

We also may experience difficulty in managing our international operations because of, among other things, competitive conditions overseas, management of FX risk, established domestic markets, language and cultural differences and economic or political instability.

Any of these factors could have a material adverse effect on the success of our international operations and, consequently, on our business, financial condition and operating results.

We face the risk of significant intervention by regulatory authorities, including extensive examination and surveillance activity.

For example, in 2013, the CFTC filed suit against NYMEX and two former employees alleging disclosure of confidential customer information in violation of the Commodity Exchange Act.

Based on our review of the allegations, we believe that we have strong factual and legal defenses to the claim.

Misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation.

It is not always possible to deter misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.

We could be harmed by misconduct occurring on our OTC trading platforms.

There have been a number of highly publicized cases involving manipulative activity or other misconduct in the OTC markets by wholesale market participants.

We may not be able to protect our intellectual property rights, which may materially harm our business.

Any infringement by us on patent rights of others could result in litigation and adversely affect our ability to continue to provide, or increase the cost of providing, our products and services.

Our operations of, and investments in, businesses outside of the United States subject us to currency risk.

[removed: INTRODUCTION][added: INTRODUCTION]

| • | [removed: Executive Summary:] [added: Executive Summary:] Includes an overview of our business; current economic, competitive and regulatory trends relevant to our business; our current business strategy; and our primary sources of operating and non-operating revenues and expenses. |

| • | [removed: Critical] [added: Critical] Accounting [removed: Policies:] [added: Policies:] Provides an explanation of accounting policies which may have a significant impact on our financial results and the estimates, assumptions and risks associated with those policies. |

| • | [removed: Recent] [added: Recent] Accounting [removed: Pronouncements:] [added: Pronouncements:] Includes an evaluation of recent accounting pronouncements and the potential impact of their future adoption on our financial results. |

| • | [removed: Results] [added: Results] of [removed: Operations:] [added: Operations:] Includes an analysis of our [removed: 2018, 2017] [added: 2019] and [removed: 2016] [added: 2018] financial results and a discussion of any known events or trends which are likely to impact future results. |

| • | [removed: Liquidity] [added: Liquidity] and Capital [removed: Resources:] [added: Resources:] Includes a discussion of our future cash requirements, capital resources, significant planned expenditures and financing arrangements. |

References to “exchange” are to Chicago Mercantile Exchange Inc. (CME), the Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. [removed: (NYMEX),] [added: (NYMEX) and] Commodity Exchange, Inc. (COMEX), [removed: and NEX,] collectively, unless otherwise noted.

[removed: EXECUTIVE SUMMARY][added: EXECUTIVE SUMMARY]

[removed: Business Overview][added: Business Overview]

Our exchange consists of designated contract markets for the trading of futures and options [removed: on futures] contracts.

We also clear futures, options [removed: on futures] and swaps contracts through our clearing house.

Futures contracts, options [removed: on futures] contracts and swaps contracts provide investors with vehicles for protecting against, and potentially profiting from, price changes in financial instruments and physical commodities.

We are a global [removed: exchange] [added: company] with customer access available virtually all over the world.

Our customers consist of professional traders, financial [removed: derivatives] institutions, individual and institutional investors, major corporations, manufacturers, [removed: producers] [added: producers, governments] and [removed: governments.][added: central banks.]

We offer our customers the opportunity to trade futures contracts and options [removed: on futures] contracts on a range of products including those based on interest rates, equity indexes, foreign exchange, agricultural commodities, energy and metals.

Through our [removed: acquisition of NEX,] [added: cash markets business,] we [removed: now] offer fixed income trading through BrokerTec and foreign currency trading through [removed: EBS, which are both included in the cash markets business.][added: EBS.]

[removed: Through the acquisition with NEX, we now] [added: We also] provide optimization services that deliver transaction lifecycle management and information services to help our customers optimize their capital, mitigate their risk and reduce operational costs.

Optimization services includes [removed: Traiana] [added: Traiana, TriOptima] and [removed: TriOptima.][added: Reset.]

[added: Additionally, the substitution of our] clearing house as the counterparty to every transaction allows our customers to establish a position with one party and offset the [removed: position with another party.]

[removed: Business Trends][added: Business Trends]

[added: Economic Environment.] Our customers continue to use our markets as an effective and transparent means to manage risk and meet their investment [removed: needs despite economic uncertainty and volatility.][added: needs.]

[added: Competitive Environment.] Our industry is competitive and we continue to encounter competition in all aspects of our business.

Competition is influenced by our brand and reputation; the efficiency and security of our [added: settlement, clearing and support] services; depth and liquidity of our markets; diversity of product offerings including [removed: rate] [added: frequency] and quality of new product development and innovative services; our ability to position and expand upon existing [removed: products;] [added: products to address changing market needs;] efficient and seamless customer experience; transparency, [removed: reliability and] [added: reliability,] anonymity [added: and security] of transaction processing; the regulatory environment; connectivity, accessibility, flexibility in execution [removed: methods; efficient] [added: methods] and [removed: innovative] [added: distribution;] technology [added: capability] and [removed: connectivity,] [added: innovation,] as well as [added: overall] transaction costs.

[added: Regulatory Environment.] Exchange-traded derivatives have historically been subject to extensive regulation.

[removed: Business Strategy][added: Business Strategy]

Our strategy focuses on maximizing futures and options growth globally, diversifying our business and revenues, and delivering unparalleled [removed: capital] [added: customer efficiencies] and [removed: cost efficiency solutions.][added: operational excellence.]

[removed: Revenues][added: Revenues]

[removed: Clearing] [added: Clearing] and [removed: transaction fees.][added: Transaction Fees]

[added: Clearing and transaction fees.] A majority of our revenue is derived from clearing and transaction fees, which include electronic trading fees, surcharges for privately negotiated transactions and other volume-related charges for exchange-traded and over-the-counter contracts.

[added: *Rate structure.*] Customers benefit from volume discounts and limits on fees as part of our effort to increase liquidity in certain products.

[added: *Product mix.*] We offer exchange-traded futures and options [removed: on futures] contracts as well as cleared-only interest rate swap contracts.

[added: *Venue.*] Our exchange and platforms are an international marketplace that brings together buyers and sellers mainly through our electronic trading as well as through open outcry trading and privately negotiated transactions.

[added: *Member/non-member mix.*] Generally, member customers are charged lower fees than our non-member customers.

[removed: Clearing] [added: *Clearing] and transaction fees for cash markets [removed: business.][added: business*.]

The cash markets business also includes BrokerTec [removed: U.S.,] [added: Americas,] which generates revenue from a matched principal business.

[added: Other sources.] Revenue is also derived from other sources including market data and information services and other various services related to our exchange operations.

[added: |] Market data and information [removed: services.][added: services | | 518.5 | | | | 449.6 | | | | 15 | |]

[added: *Market data and information services.*] We receive market data and information services revenue from the dissemination of our market data to subscribers.

Increases or decreases in our market data and information services revenue are influenced by changes in our price structure [added: and incentive programs] for existing market data offerings, introduction of new market data services and changes in the number of devices in use.

[added: *Other revenues.*] Other revenue includes access and communication fees.

position with another party.

The competitive environment to which we are subject is discussed in "Item 1.

Business" on page 9.

This business serves as a fully matched counterparty to offsetting positions entered into by clients on its electronic trading platform to facilitate anonymity and access to clearing and settlement.

The calculation of our tax provision involves uncertainty in the application of complex tax regulations and we occasionally may consult with relevant tax authorities or engage third party expertise where appropriate.

For a comparison of our results of operations for the fiscal years ended December 31, 2018 and December 2017, see "Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on February 28, 2019.

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Revenues

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| Other | | 403.4 | | | | 192.8 | | | | 109 | |

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| | 2019 | | | | 2018 | | | | 2019-2018 | |

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| Aggregate average daily volume | | 19,167 | | | 19,224 | | | — | |

During 2019, volatility spiked in mid-2019 following a shift in expectations surrounding the Federal Reserve's interest rate policies.

In mid-2019, the Federal Reserve began cutting interest rates following earlier indications that it intended to continue to slowly increase interest rates throughout 2019.

Uncertainty surrounding the United States' foreign trade policy also increased mid-2019 following the threat of additional tariffs.

By the fourth quarter, market volatility generally declined as uncertainty surrounding the Federal Reserve's interest rate policy subsided.

Uncertainty surrounding the foreign trade policy also diminished following a preliminary trade agreement between the United States and China at the end of 2019.

We believe the net result of these factors lead to overall volume remaining relatively flat in 2019 when compared with 2018.

| | | | | | | Year-over-Year Change | |

In 2019 compared with 2018, overall interest rate contract volume increased slightly, particularly for short term contracts, due to volatility caused by continued uncertainty surrounding the Federal Reserve's interest rate policy.

We believe volatility increased in the middle of 2019 due to a shift in market expectations at that time following the Federal Reserve's decision to initiate interest rate cuts as well as uncertainty surrounding the United State's future economic growth.

Volume below for the year ended 2019 includes Micro-E-mini contract volumes for each index beginning on May 6, 2019, which was the date the contracts were launched.

| | | | | | | Year-over-Year Change | |

| (amounts in thousands) | | 2019 | | 2018 | | 2019-2018 | |

| E-mini Russell 2000 futures and options | | 168 | | 153 | | 10 | |

In 2019 compared with 2018, equity index contract volume decreased slightly due to lower overall volatility in the equity market in 2019, particularly in the fourth quarter.

The overall decrease in volume was partially offset by additional volume generated from the launch of Micro-E-mini equity index contracts in the second quarter of 2019, which have a notional size of one-tenth of the traditional E-mini contracts.

Average daily contract volume in 2019 included approximately 317,000 in Micro-E-mini equity index contracts.

| | |

| --- | --- |

Additionally, the substitution of our

Economic Environment.

Competitive Environment.

Regulatory Environment.

We focus specifically on opportunities created by increased market awareness and acceptance of derivatives, increased price volatility, technological advances and the increasing need for counterparty risk mitigation and clearing services.

Rate structure.

Product mix.

Venue.

Member/non-member mix.

Matched principal trades involve BrokerTec U.S. purchasing a financial instrument from one market participant and selling it to another market participant.

Other sources.

Other revenues.

Compensation and benefits.

As part of the acquisition of NEX, some of the expense associated with NEX awards will be settled in cash.

Depreciation and amortization.

Other expenses.

Valuation of financial instruments.

Goodwill and intangible assets.

Revenue recognition.

Income taxes.

The calculation of our tax provision involves uncertainty in the application of complex tax regulations.

Internal use software costs.

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| Market data and information services | | 449.6 | | | | 391.8 | | | | 406.5 | | | | 15 | | | (4 | ) |

| Other | | 192.8 | | | | 154.3 | | | | 152.3 | | | | 25 | | | 1 | |

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| | 2018 | | | | 2017 | | | | 2016 | | | | 2018-2017 | | | 2017-2016 | |

| Clearing and transaction fees (in millions) | $ | 3,513.9 | | | $ | 3,029.9 | | | $ | 2,974.4 | | | 16 | | | 2 | |

Due to the

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Overall contract volume increased from 2016 through 2018.

Overall market volatility remained high throughout the last two years as the markets continued to experience uncertainty surrounding the Federal Reserve's interest rate policy, the United States' foreign trade policies and future rates of inflation.

Throughout 2017 and 2018, the Federal Open Markets Committee raised the federal funds rate seven times, but raised the expectation of slower rate increases in 2019.

We believe these factors led to the overall increases in contract volumes from 2016 to 2018.

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[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

Debt outstanding at December 31, [removed: 2018] [added: 2019] consisted of fixed-rate borrowings of [removed: $4.4] [added: $3.7] billion (in U.S. dollar equivalent).

We did not have any variable-rate borrowings at December 31, [removed: 2018.][added: 2019.]

At December 31, [removed: 2018,] [added: 2019,] we maintained [removed: $389.9] [added: $303.8] million of commercial paper.

[removed: Credit Risk][added: Credit Risk]

[removed: CME] [added: *CME] Clearing [removed: House][added: House*]

| • | a financial safeguard package for all [removed: futures and] [added: futures,] options [added: and over-the-counter swap] contracts other than cleared interest rate swap contracts (base package); and |

We would then use guaranty fund contributions of other clearing firms within the [added: respective financial safeguard package and funds collected through an assessment against solvent clearing firms within the respective financial safeguard package to satisfy the deficit.]

We maintain a $7.0 billion 364-day multi-currency line of credit with a consortium of domestic and international banks to be used in certain situations by [removed: CME Clearing.][added: our clearing house.]

[removed: In addition to the 364-day multi-currency] line of credit, we also have the option to use our $2.4 billion multi-currency revolving senior credit facility to provide liquidity for our clearing house in the unlikely event of default.

At December 31, [removed: 2018,] [added: 2019,] aggregate performance bond deposits for clearing firms for both financial safeguard packages was [removed: $143.2] [added: $154.5] billion including [removed: $38.2 billion of] cash performance bond [removed: deposits] [added: deposits, non-cash deposits, Interest Earnings Facility funds] and [removed: $2.7 billion of] letters of credit.

The following shows the available assets at December 31, [removed: 2018] [added: 2019] in the event of a payment default by a clearing firm for the base financial safeguard package after first utilizing the defaulting firm's available assets:

| [removed: (in millions)] [added: (in millions)] | | [removed: CME Clearing Available Assets] [added: Clearing House Available Assets] | | |

| Guaranty fund contributions(2) | | [removed: 4,096.0] [added: 4,902.8] | | |

| Assessment powers(3) | | [removed: 11,264.0] [added: 13,482.7] | | |

| (1) | [removed: CME Clearing] [added: Our clearing house] designates $100.0 million of corporate contributions to satisfy a clearing firm default in the event that the defaulting clearing firm's guaranty contributions and performance bonds do not satisfy the deficit. |

The following shows the available assets for the interest rate swap financial safeguard package at December 31, [removed: 2018] [added: 2019] in the event of a payment default by a clearing firm that clears interest rate swap contracts, after first utilizing the defaulting firm's available assets:

| Guaranty fund contributions(2) | | [removed: 3,319.5] [added: 3,559.8] | | |

| Assessment powers(3) | | [removed: 1,121.9] [added: 1,609.9] | | |

| (1) | [removed: CME Clearing] [added: Our clearing house] designates $150.0 million of corporate contributions to satisfy a clearing firm default in the event that the defaulting clearing firm's guaranty contributions and performance bonds do not satisfy the deficit. |

| (3) | In the event of a clearing firm default, if a loss continues to exist after the utilization of the assets of the defaulted firm, our corporate contribution and the non-defaulting firms' guaranty fund contributions, we would assess non-defaulting clearing members as provided in the rules governing the interest rate swap guaranty fund. [added: Assessment powers are calculated to reflected the potential obligation that each clearing member could be called for based on potential failure of the third and fourth largest clearing.] |

[removed: BrokerTec] [added: *BrokerTec Americas] Matched Principal [removed: Business][added: Business*]

BrokerTec [added: Americas] maintains a matched principal business, where it serves as a fully matched counterparty to offsetting positions entered into by clients on its electronic trading platform to facilitate anonymity and access to clearing and settlement.

[added: BrokerTec Americas uses Fixed Income Clearing Corporation (FICC), a third-party central clearing house as well as a third-party clearing] bank for the settlement of transactions and is required to post short-term margin requirements twice a day that can vary based on the size of unsettled transactions and any adverse market changes.

At December 31, [removed: 2018,] [added: 2019,] the balance of the collateral at FICC was $100.0 million, which was included in other current assets on the consolidated balance sheet.

Without sufficient funds to meet its obligations, BrokerTec [added: Americas] could be exposed to risk of breach of contract with the counterparties and the inability to continue as a member of the third-party central clearing house.

For transactions with counterparties that are not members of the [added: third-party] clearing house, settlement typically occurs on the day following execution and, prior to settlement, BrokerTec [added: Americas] is exposed to the risk of loss in the event a [removed: counterparty fails to meet its obligations.]

If that were to occur, BrokerTec [added: Americas] would have the right to cover or liquidate the open position but could incur a loss as a result of market movements.

[removed: Foreign] [added: Foreign] Currency Exchange Rate [removed: Risk][added: Risk]

[removed: Foreign] [added: *Foreign] Currency Transaction [removed: Risk][added: Risk*]

Aggregate transaction gains (losses) for [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] were [removed: $(73.6)] [added: $(7.2)] million, [removed: $9.4] [added: $(73.6)] million and [removed: $(24.5)] [added: $9.4] million, respectively.

[removed: Foreign] [added: *Foreign] Currency Translation [removed: Risk][added: Risk*]

Aggregate translation gains (losses), net of tax, for [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] were [removed: $(2.5)] [added: $(0.6)] million, [removed: $7.5] [added: $(2.5)] million and [removed: $(6.9)] [added: $7.5] million, respectively.

[removed: Foreign] [added: *Foreign] Currency Exchange Risk Related to Customer [removed: Collateral][added: Collateral*]

In addition to the 364-day multi-currency

| (in millions) | | Clearing House Available Assets | | |

counterparty fails to meet its obligations.

On January 31, 2020, the United Kingdom (U.K.) formally withdrew from the European Union (EU) after a majority of voters in the U.K. approved an exit from the EU, commonly referred to as Brexit.

Brexit continues to generate economic and political uncertainty throughout the world, particularly throughout the U.K. and the EU.

This uncertainty could potentially lead to significant volatility with foreign currency exchange rates, which could result in additional foreign currency gain/loss.

respective financial safeguard package and funds collected through an assessment against solvent clearing firms within the respective financial safeguard package to satisfy the deficit.

BrokerTec uses Fixed Income Clearing Corporation (FICC), a third-party central clearing house as well as a third-party clearing

During 2018, we maintained a restricted cash balance of $1.6 billion held for the acquisition of NEX, which was denominated in British pounds.

This cash balance contributed to a significant portion of the net foreign currency transaction loss incurred in 2018.

In conjunction with the acquisition, we assumed the outstanding debt of NEX on the acquisition date, which includes a €350.0 million Eurobond maturing in March 2019, a ¥19.1 billion term loan due in March 2019 and a €15.0 million fixed rate note maturing in May 2023.

Since the debt is denominated in euros and Japanese yen, we have foreign currency transaction risk related to changes in these currencies until the debt is repaid.

We maintain a hedge contract on the exchange rate risk between the Japanese yen and the British pound on the maturing principal and interest payments of the Japanese yen-based term loan, but we have foreign currency transaction risk between the U.S. dollar and the British pound until the Japanese yen-based term loan is repaid.

We also maintain a cross-currency swap on part of the outstanding par value on our €350.0 million Eurobond maturing in March 2019, which swaps our euro-based principal and interest payments for British pound-based payments.

CME Group enables clients to trade futures, options, cash and over-the-counter (OTC) markets, optimize portfolios, and analyze data [removed: —] [added: \-] empowering market participants worldwide to efficiently manage risk and capture opportunities.

[removed: GENERAL] [added: GENERAL] DEVELOPMENT OF [removed: BUSINESS][added: BUSINESS]

[removed: Our acquisitions include our merger with] [added: We subsequently acquired] CBOT Holdings, Inc. in 2007, [removed: our acquisition of] NYMEX and COMEX in [removed: 2008 and our acquisition] [added: 2008, the Kansas City Board] of [added: Trade in 2012 and] NEX Group plc (NEX) in November 2018.

[removed: Our combination with NEX] [added: It also] creates a leading, client-centric, global markets company, generating [removed: significant] [added: capital] efficiencies across futures, cash and OTC products for market participants seeking to lower their cost of trading and better manage risk.

[removed: It also will improve] [added: Our combination with NEX expands] our [added: global customer base and product] offerings [removed: to customers] through the complementary combination of CME Group’s exchange-traded derivative products and NEX’s cash and OTC products.

[removed: NARRATIVE] [added: NARRATIVE] DESCRIPTION OF [removed: BUSINESS][added: BUSINESS]

CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange (FX), [removed: energy, agricultural commodities] [added: agricultural, energy] and [removed: metals.][added: metal commodities.]

[removed: The company offers] [added: We offer] futures and options on futures trading across asset classes through the CME Globex platform, [added: cash and repo] fixed income trading via [removed: BrokerTec] [added: BrokerTec,] and [added: cash and OTC] FX trading [removed: on the EBS platform.][added: via EBS.]

In addition, [removed: it operates] [added: we operate] one of the world’s leading central counterparty clearing providers, CME [removed: Clearing.][added: Clearing, a division of CME.]

With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group [removed: also] offers optimization, reconciliation and processing services through [removed: TriOptima] [added: TriOptima, Traiana] and [removed: Traiana.][added: Reset.]

[removed: We] [added: Derivatives Exchange Business: Through our derivatives exchanges and clearing house, we] believe our customers choose to trade on our centralized market due to its liquidity, [added: diversity of products,] price transparency and technological capabilities.

Market liquidity [removed: —] [added: \-] or the ability of a market to absorb the execution of large purchases or sales quickly and [removed: efficiently, whereby the market recovers quickly following the execution of large orders —] [added: efficiently \-] is key to attracting [added: and retaining] customers and contributing to a market's success.

Our CME Group products provide a means for hedging, speculation and asset allocation [removed: relating] [added: related] to the risks associated with, among other things, interest rate sensitive instruments, equity ownership, changes in the value of foreign currency and changes in the prices of agricultural, energy and metal commodities.

| • | [removed: CME's] [added: CME's] product slate includes agricultural, equities, FX and interest rate products, including contracts for [removed: Eurodollars] [added: Eurodollars, Secured Overnight Financing Rate (SOFR)] and contracts based on the S&P, NASDAQ-100 and FTSE Russell Indexes. |

| • | [removed: CBOT's] [added: CBOT's] product slate consists of agricultural, equities, energy and interest rate products, including contracts for [removed: U.S.] [added: United States (U.S.)] Treasury futures, corn and other grains and contracts based on the Dow Jones Industrial Index. |

| • | [removed: NYMEX's] [added: NYMEX's] product slate consists of energy and metals products, including contracts for crude oil, natural gas, heating oil and gasoline. |

| • | [removed: COMEX's] [added: COMEX's] product slate consists of metals products, including contracts for gold, silver and copper. |

We believe the breadth and diversity of our product lines and the variety of their underlying contracts are beneficial to our [added: customers and CME Group's] overall performance.

Our CME Group products are traded primarily through CME Globex and other electronic trading platforms, by open outcry auction [removed: market] [added: markets] in Chicago, and through privately negotiated transactions.

CME [added: Direct includes CME One for mobile access and CME] Straight-Through [removed: Processing] [added: Processing, which] enables direct connectivity for trade information directly with customer order management and risk management systems and is designed to reduce errors and improve efficiency.

| • | [removed: vast] [added: extensive] capabilities to facilitate complex and demanding trading; |

We maintain comprehensive business continuity and disaster recovery plans and facilities [added: designed] to provide nearly continuous availability of our markets in the event of a business disruption or disaster.

In [removed: 2018, 84%] [added: 2019, 85%] of our contract volume was from trades by our members.

[removed: CME] [added: CME] Clearing [removed: Business:] [added: Business:] Through our clearing house, CME Clearing, which is a division of CME, [removed: we provide] [added: provides] clearing services for all of our exchange-traded contracts, for certain cleared-only products and for certain contracts traded on other exchanges.

Our integrated clearing function is designed to ensure the safety and the soundness of our exchange markets by serving as the counterparty to every [added: futures and options] trade, becoming the buyer to each seller and the seller to each buyer, and limiting counterparty credit risk.

CME Clearing marks open positions to market at least twice a day, requires [removed: payment] [added: payments] from clearing firms whose positions have lost value and makes payments to clearing firms whose positions have gained value.

[removed: One] [added: No individual] firm represented [added: at least] 10% of our clearing and transaction fees revenue for [removed: 2018.][added: 2019.]

| • | [removed: BrokerTec] [added: BrokerTec] is a global electronic platform for the trading of fixed income products, with a leading position in cash U.S. Treasuries, as well as activity in European government bonds and E.U. and U.S. repo fixed income instruments. It facilitates trading principally for banks and non-bank professional trading firms. |

| • | [removed: EBS] [added: EBS] is a global electronic platform for the trading of FX [removed: products. It is a reliable and trusted source of executable firm liquidity] [added: products] across major and emerging market currencies. EBS offers anonymous and disclosed trading venues, which [removed: give] [added: gives] clients multiple execution and distribution options and the benefit of an established and far-reaching distribution network of liquidity providers and consumers. It also offers execution of non-deliverable forwards through a CFTC-registered Swap Execution [removed: Facility.] [added: Facility (SEF).] |

[removed: Optimization Business:] [added: Optimization Business:] Our optimization services, which [removed: include the Traiana and] [added: includes Traiana,] TriOptima [removed: sub-brands acquired as part of NEX, deliver] [added: and Reset, delivers] transaction lifecycle management services to help our clients simplify their workflow, optimize their capital and resources, mitigate their risk, increase [removed: efficiency and] [added: efficiency,] reduce their operational costs and streamline complex processes.

| • | [removed: Trade] [added: Trade] and portfolio [removed: management] [added: management] comprises portfolio and margin reconciliation, monitoring pre-trade risk and automating post-trade processing of financial transactions. |

| • | [removed: Financial] [added: Financial] resource [removed: optimization] [added: optimization] comprises portfolio compression, basis risk mitigation, portfolio balancing and derivative pricing and risk analytics. |

| • | [removed: Regulatory reporting] [added: Regulatory reporting] comprises trade and position reporting (including licensed MiFID agent reporting to national regulators and the public), end-to-end multi-regime regulatory reporting, data normalization, enrichment, reconciliation, validation and cross-jurisdictional matching. |

[removed: Market] [added: Market] Data [removed: Business:] [added: Business:] We offer a variety of market data services for the futures, equities, OTC, cash and [removed: the] cleared swaps markets.

[removed: Our] [added: Our] Strategic [removed: Initiatives][added: Initiatives]

[removed: Maximize] [added: Maximize] Futures and Options [removed: on Futures] Growth [removed: Globally —] [added: Globally \-] We continue to focus on driving growth and new customer [removed: acquisition, growing,] [added: acquisition by expanding,] innovating and scaling our core offerings, and increasing participation from non-U.S. customers.

We do this by [added: expanding our global sales team,] cross-selling our products, expanding the strength of our existing benchmark products, launching new products and services and deepening open interest in our core futures and options [removed: on futures] offerings.

During this decade, our key product launches have included the Ultra U.S. Treasury Bond futures and [removed: options and most recently the Ultra 10-Year Treasury futures,] [added: options,] short-dated options across asset classes, new base metal products, expanded crude oil grades, Basis Trade at Index Close (BTIC) transactions, S&P Dividend futures, E-mini Russell 1000 and 2000 futures, [removed: and] a cash-settled bitcoin futures [removed: contract.][added: contract, and SOFR futures contracts.]

During [removed: 2018,] [added: 2019,] we experienced overall [removed: record] average daily volume of 19.2 million contracts, along with [removed: multiple] volume records [removed: across our core product portfolio, including] [added: in both] interest [removed: rates, FX, agricultural commodities] [added: rates] and metals.

We also had record volume in overall options, with electronic options representing [removed: 66%] [added: 64%] of total options volume in [removed: 2018.][added: 2019.]

It established CME Clearing as a division of CME in 1919.

Cash Markets Business: Our cash markets business is comprised of BrokerTec and EBS.

| • | Trade Processing comprises end-to-end automation, from trade execution notification to trade confirmation of post-trade processing, in real-time to reduce operational risks and costs. |

We continued to introduce new products in 2019, including Micro E-mini S&P 500 Equity Index futures, E-mini S&P 500 Environmental, Social and Governance (ESG) index futures, Shanghai Gold futures, physical Liquefied Natural Gas (LNG) futures and expanded our SOFR futures listings.

In continuing our commitment to expanding our international presence, we launched an interactive CME Liquidity Tool to help market participants analyze liquidity across CME Group products during U.S., London or Singapore trading hours.

We also launched bitcoin options and options on SOFR in January 2020.

Our penetration of these markets lags our development in the United States, and we believe that there is room for significant growth and development of these financial markets.

We also act as the joint ventures' licensing agent and distribution services provider.

In May 2019, we announced the launch of our next generation Standard Portfolio Analysis of Risk (SPAN) margin framework – CME SPAN 2.

The new framework will provide enhanced risk management capabilities in a single, unified interface by maintaining SPAN's current calculations and functions while incorporating several new modeling, reporting and margin replication enhancements.

CME SPAN 2 will be launched in a phased, multi-year approach and in compliance with regulatory responsibilities, beginning with energy products.

We plan to begin the roll-out in the first half of 2020, subject to receipt of final approvals.

In addition to providing trade reporting services in the United States, Europe, Canada and Australia, CME Group provides various tools and services to assist customers with capital and operational efficiencies.

For example:

| • | triReduce provides multilateral portfolio compression, which reduces notional outstanding exposure and line items in order to reduce operational resources and risks, minimize regulatory capital costs, and manage counterparty exposures. |

| • | Traiana provides various operational efficiencies and risk mitigation solutions to clients through bilateral and tri-party pre- and post-trade processing and credit risk management. |

| • | Reset provides risk mitigation services to clients looking to hedge short-term interest rate and options expiry exposure. |

of these licensing agreements.

The United Kingdom's Withdrawal Agreement Bill was signed into law on January 24, 2020 and the United Kingdom formally left the European Union on January 31, 2020.

Under the terms of the Withdrawal Agreement, there will be an 11-month transition period due to expire on December 31, 2020.

The settlement of matched principal and exchange-traded businesses requires access to clearing houses either directly or through third-party providers of clearing and settlement services.

BrokerTec Americas is a member of the Fixed Income Clearing Corp. (FICC) through which it clears U.S. Treasury, agency and repo products for its client base and is subject to its rules and regulations.

A portion of our market data business, offered by CME Group Benchmark Administration, is subject to regulation by the European Union Benchmarks Regulation, which regulates our RepoFunds Rate suite of daily euro repo indices.

| • | The potential impact of the adoption of EMIR 2.2 allowing for the direct regulation by the European Union of non-European Union clearing houses, like us, and resulting changes to the European Union equivalence and recognition regime on non-European Union clearing houses and exchanges with customers based in Europe. EMIR 2.2 became effective on January 1, 2020, and we are awaiting implementing regulations to determine its impact on our business and whether we will need to make any significant changes to how our clearing house operates. These potential changes could have negative implications for the markets we clear and our market participants by subjecting our clearing business to regulations that would conflict with the regulation imposed by U.S. law and the CFTC, prevent us from deploying our capital efficiently and increasing our regulatory costs. Further, ESMA could impose significant fines for non-compliance with their local European regulations, and we may have to consider material changes to certain of our risk management policies in order to reduce the risk of fines imposed under EMIR 2.2. A failure of our clearing house to retain its recognition may result in our clearing members and certain customers in Europe being subject to higher capital costs for participating in our markets, thus creating a disincentive to use our markets. The |

European Union equivalence and recognition regime also has the potential to impact the cost and ease or difficulty for certain of our OTC execution platforms to provide access to customers on a global basis.

| | |

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| --- | --- |

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| --- | --- |

| • | The FCA has indicated that it will no longer require banks to participate in the LIBOR panel after December 31, 2021. The possibility exists that the FCA may find LIBOR to not be representative of the underlying short-term interest rate pricing or unfit for such purpose, and thus may unfavorably impact our ability to list our existing suite of Eurodollar futures and options products. |

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| --- | --- |

| | |

| --- | --- |

| • | The implementation of the final phases of uncleared margin rules across jurisdictions and implications on customers management of exposures. |

At that time, Mr. Durkin will begin serving as a special advisor to the company.

Kendal Vroman, 48. Mr. Vroman has served as our Senior Managing Director, International and Optimization Services since February 2020.

He previously served as our Senior Managing Director, Cash Markets and Optimization Services.

It also expands our international footprint and global client base.

Derivatives Exchange Business: Through our derivatives exchanges and clearing house, we offer the widest range of global benchmark products across all major asset classes.

CME Direct includes CME One for mobile access, CME Messenger for instant-message capabilities and CME Straight-Through Processing.

Cash Markets Business: Our cash markets business is comprised of the BrokerTec and EBS sub-brands, which were acquired as part of NEX in November 2018.

| • | Analytics delivers data, analytics and workflow tools that enable hedge funds and asset managers to manage their relationships with prime brokers more effectively. These tools provide a complete view of an individual hedge fund's relationships across multiple counterparties, delivering insights on counterparty credit risk, collateral management, portfolio financing and treasury. |

We continued to build traction in key product launches in 2018, including our Secured Overnight Financing Rate (SOFR) futures contracts, Sterling Overnight Index Average (SONIA) futures contracts, CME FX Link, CME Eris Interest Rate Swap Futures and Physical WTI Houston Crude Oil contracts.

We are focused on core growth in global markets because we believe that Australia, Asia, Latin America, and other emerging markets will experience significant growth and development of their financial markets.

In addition, we continue to expand our presence in major global financial centers (including Europe), grow our business outside the United States and penetrate emerging markets, such as China, South Korea, Brazil and Mexico.

participants outside of North America.

The acquisition also expands our post-trade services and market data solutions beyond futures and options on futures into cash and OTC offerings.

In March 2018, we extended block trading to agricultural commodity products through CME ClearPort.

Also, in 2018, we extended our OTC clearing solutions to include clearing for the Chilean and Columbian Peso interest rate swaps.

CME Group continues to introduce tools and services to assist customers with portfolio margining.

As of December 31, 2018, 45 unique marketplace participants utilized CME Group’s portfolio margining services.

We also offer multilateral compression for our cleared swap customers through TriOptima, and we provide trade reporting services in the United States, Europe, Canada and Australia.

In 2018, we also introduced a multilateral compression service for our listed equity options.

We continue to believe these regulations provide opportunities for our business, which we continue to explore.

Our RepoFunds Rate suite of daily benchmarks for the euro, Italy, Germany, France, Spain, The Netherlands and Belgium are subject to the E.U. Benchmarks Regulations, and as such we are considered an approved Benchmark Administrator under the regulation.

| • | The potential impact of changes to the E.U. equivalence and recognition regime on non-European Union clearing houses and exchanges with customers based in Europe arising from the potential adoption of EMIR 2.2 legislation being considered by the European Commission, European Council, and European Parliament. This legislation, and the implementation of subsidiary regulations once the legislation is adopted, could require us to make changes to how our clearing house operates, subject us to greater regulatory oversight by ESMA and increase costs. A failure of our clearing house to retain its recognition may result in our clearing members and certain customers in Europe being subject to higher capital costs thus creating a disincentive to use our markets. The E.U. equivalence and recognition regime also has the potential to impact the cost and ease or difficulty for certain of NEX’s OTC execution platforms to provide access to customers on a global basis. |

| • | The potential for further regulation and/or industry changes flowing from the continuing review by the official sector and industry participants of the U.S. Treasury “flash rally” of October 15, 2014 and its implications for clearing and settlement in the U.S. Treasury market. |

Duffy, 60.

Cronin, 55.

Sunil Cutinho, 47.

Durkin, 58.

Julie Holzrichter, 50.

Kevin Kometer, 54.

Hilda Harris Piell, 51.

Pietrowicz, 54.

Derek Sammann, 50.

Jack Tobin, 55.

Sean Tully, 55.

Julie Winkler, 44.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: (Mark One)][added: (Mark One)]

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

[removed: For] [added: For] the Fiscal Year [removed: Ended December] [added: Ended December] 31, [removed: 2018][added: 2019]

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

[removed: Commission] [added: Commission] File [removed: Number 001-31553][added: Number 001-31553]

[removed: CME] [added: CME] GROUP [removed: INC.][added: INC.]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

| [removed: Delaware] [added: Delaware] | | [removed: 36-4459170] | [added: | 36-4459170 |]

| [removed: (State] [added: (State] or Other Jurisdiction [removed: of Incorporation] [added: of Incorporation] or [removed: Organization)] [added: Organization)] | | [removed: (IRS Employer Identification No.)] | [added: | (IRS Employer Identification No.) |]

| [removed: 20] [added: 20] South Wacker [removed: Drive, Chicago, Illinois] [added: Drive] | | [removed: 60606] [added: Chicago] | [added: Illinois | 60606 |]

| [removed: (Address] [added: (Address] of Principal Executive [removed: Offices)] [added: Offices)] | | [removed: (Zip Code)] | [added: | (Zip Code) |]

[removed: Registrant’s] [added: Registrant’s] telephone number, including area code: [removed: (312) 930-1000][added: (312) 930-1000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] Of Each [removed: Class] [added: Class] | [added: Trading symbol] | [removed: Name] [added: Name] Of Each Exchange On Which [removed: Registered] [added: Registered] |

| [removed: Class] [added: Class] A Common Stock $0.01 par [removed: value] [added: value] | [added: CME] | [removed: NASDAQ GLOBAL SELECT MARKET] [added: NASDAQ] |

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

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

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

| Large [removed: accelerated filer x] [added: Accelerated Filer] | [added: ☒] | [added: |] Accelerated filer [removed: o] | [added: ☐ |]

| Non-accelerated filer [removed: o] | [added: ☐] | [added: |] Smaller reporting company [removed: o Emerging growth company o] | [added: ☐ |]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, [removed: 2018,] [added: 2019,] was approximately [removed: $55.4] [added: $68.5] billion (based on the closing price per share of CME Group Inc. Class A common stock on the NASDAQ Global Select Market (NASDAQ) on such date).

The number of shares outstanding of each of the registrant’s classes of common stock as of February [removed: 6, 2019] [added: 12, 2020] was as follows: [removed: 357,792,873] [added: 358,402,226] shares of Class A common stock, $0.01 par value; 625 shares of Class B common stock, Class B-1, $0.01 par value; 813 shares of Class B common stock, Class B-2, $0.01 par value; 1,287 shares of Class B common stock, Class B-3, $0.01 par value; and 413 shares of Class B common stock, Class B-4, $0.01 par value.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE:][added: REFERENCE:]

| [removed: Documents] [added: Documents] | | [removed: Form] [added: Form] 10-K [removed: Reference] [added: Reference] |

| Portions of the CME Group Inc.’s Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Shareholders | | Part III |

[removed: ANNUAL] [added: ANNUAL] REPORT ON FORM [removed: 10-K][added: 10-K]

[removed: INDEX][added: INDEX]

| | | [removed: Page] [added: Page] |

[removed: | [PART I.](#s020D68F575FA6907C54A09D08842F7C1) | | [3](#s020D68F575FA6907C54A09D08842F7C1) |][added: PART I]

| [removed: Item 1.] [added: Item 1.] | [removed: [Business](#s9EEFECC24EFE5BF3943309D06DB8FF81)] [added: [Business](#s677B5660696C5E2CA9F8EC9ED3555519)] | [removed: [5](#s9EEFECC24EFE5BF3943309D06DB8FF81)] [added: [5](#s677B5660696C5E2CA9F8EC9ED3555519)] |

| [removed: Item 1A.] [added: Item 1A.] | [removed: [Risk Factors](#s006B349A392B52F43DAA09D088991AB9)] [added: [Risk Factors](#s89D0AE5A8CCB58F0839464E4010D5D05)] | [removed: [13](#s006B349A392B52F43DAA09D088991AB9)] [added: [14](#s89D0AE5A8CCB58F0839464E4010D5D05)] |

| [removed: Item 1B.] [added: Item 1B.] | [removed: [Unresolved] [added: [Unresolved] Staff [removed: Comments](#s55FC72DCF4509115133B09D088C9B038)] [added: Comments](#s0A5D15D531685CD0B10D44ABBC54147E)] | [removed: [24](#s55FC72DCF4509115133B09D088C9B038)] [added: [24](#s0A5D15D531685CD0B10D44ABBC54147E)] |

| [removed: Item 2.] [added: Item 2.] | [removed: [Properties](#s22545C095C47A15CED0409D088E9D674)] [added: [Properties](#s7F8F43BBC8EF5A40A8F91F85A51A6783)] | [removed: [24](#s22545C095C47A15CED0409D088E9D674)] [added: [24](#s7F8F43BBC8EF5A40A8F91F85A51A6783)] |

| [removed: Item 3.] [added: Item 3.] | [removed: [Legal Proceedings](#s1622A05710CF8A85984F09D0891C2FB2)] [added: [Legal Proceedings](#sFBA2265CD3FE5BFA89DBA06CFAC481BF)] | [removed: [25](#s1622A05710CF8A85984F09D0891C2FB2)] [added: [25](#sFBA2265CD3FE5BFA89DBA06CFAC481BF)] |

| [removed: Item 4.] [added: Item 4.] | [removed: [Mine] [added: [Mine] Safety [removed: Disclosures](#sDA7320A655E9E9A1223909D0893CBAB0)] [added: Disclosures](#sB9CA9CD555085B998335F6E30671A21B)] | [removed: [25](#sDA7320A655E9E9A1223909D0893CBAB0)] [added: [25](#sB9CA9CD555085B998335F6E30671A21B)] |

| [removed: Item 5.] [added: Item 5.] | [removed: [Market] [added: [Market] for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#sF718FEAF1940A301D70C09D071220AA9)] [added: Securities](#sC25836AE88DB51AD9DCD6B002D005863)] | [removed: [25](#sF718FEAF1940A301D70C09D071220AA9)] [added: [25](#sC25836AE88DB51AD9DCD6B002D005863)] |

OR

| | | | | |

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

| | | | | |

____________________________________________________

Yes ☒ No ☐

Yes ☒ No ☐

Act.

| | | | | |

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

| | | | | |

| | | | Emerging growth company | ☐ |

Yes ☐ No ☒

CME GROUP INC.

| [PART II.](#sB7AA69A6682F5B789CC75B4B1AF8A181) | | [25](#sC25836AE88DB51AD9DCD6B002D005863) |

| [Signatures](#s836D80E2B04F52EA90E22D36CBBC28BB) | | [95](#s836D80E2B04F52EA90E22D36CBBC28BB) |

| • | our dependence on third-party providers and exposure to risk through third-parties, including risks related to the performance, reliability and security of technology used by our third-party providers; |

| | |

| --- | --- |

10-K 1 cme-2018123110k.htm FORM 10-K

_________________________________________________________

OR

| | | |

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| [PART II.](#s8FDC9A3EAD90FC24532E09D0896EAC8A) | | [25](#sF718FEAF1940A301D70C09D071220AA9) |

| [Signatures](#sAD73707F9594546531F909D094A0B025) | | [95](#sAD73707F9594546531F909D094A0B025) |

Our corporate headquarters are located at 20 South Wacker Drive, Chicago, IL, where we lease approximately 540,000 square feet of general office space.

This lease expires in 2032.

Our European headquarters are located at the London Fruit & Wool Exchange (LFWE) at 1 Duval Square, London, where we lease approximately 125,000 square feet of general office space.

This lease expires in 2038.

Our integration of NEX includes the consolidation of office space where we have shared locations, including the consolidation of our European headquarters to the LFWE.

Our trading floor is located at 333 S.

LaSalle Street, Chicago, IL, which we own.

The building is approximately 300,000 square feet, of which the trading floor occupies a portion of such space.

We also lease our largest data center from CyrusOne in Aurora, IL.

This lease expires in 2031.

In addition to above properties, we have other offices and data centers in various locations around the globe.

The company’s management believes that its properties are suitable for the purposes for which they are used and our current needs.

Please see note 7.

Property and note 13.

Leases and Other Commitments to the Consolidated Financial Statements for more information.

Our corporate headquarters are located in Chicago, Illinois, at 20 South Wacker Drive.

Our European headquarters are in London, where we plan to combine the NEX and CME Group offices at the London Fruit & Wool Exchange in 2019.

The following is a description of our key locations and facilities.

| | | | | | |

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

| Location | Primary Use | Owned/Leased | Lease Expiration | Approximate Size (in square feet)(1) | |

| 20 South Wacker Drive Chicago, Illinois | Global headquarters and office space | Leased | 2032(2) | 512,000 | |

| 141 West Jackson Chicago, Illinois | Office space | Leased | 2027(3) | 150,000 | |

| 333 S. LaSalle Chicago, Illinois | Chicago trading floor and office space | Owned | N/A | 300,000 | |

| 550 West Washington Chicago, Illinois | Office space | Leased | 2023 | 250,000 | |

| One North End New York, New York | Office space | Leased | 2028(4) | 222,000 | |

| 4 Times Square New York, New York | Office space | Leased | 2032(5) | 83,000 | |

| 2 Broadgate London | Office space | Leased | 2019 | 174,000 | |

| London Fruit and Wool Exchange London | Office space | Leased | 2038(6) | 125,000 | |

| Data Center 3 Chicagoland area | Business continuity and co-location | Leased | 2031(7) | 83,000 | |

| Bagmane Tech Park Bangalore, India | Office space | Leased | 2020(8) | 72,000 | |

| | |

| --- | --- |

| (1) | Size represents the amount of space leased or owned by us unless otherwise noted. |

| (2) | The extended lease expires in 2032 with various termination, extension, expansion and contraction options. |

| (3) | The initial lease expires in 2027 and contains options to extend the term and expand the premises. |

| (4) | The initial lease expires in 2028 and contains options to extend the term and expand the premises. |

| (5) | The initial lease expires in 2032 and contains options to extend the term as well as options to expand. |

| (6) | The initial lease expires in 2038 and contains the option to renew the lease. |

| (7) | In March 2016, the company sold its datacenter in the Chicago area for $130.0 million. At the time of the sale, the company leased back a portion of the property. |

| (8) | The initial lease expires in 2020 and contains an option to extend the term as well as an option to terminate early. |

[removed: PART II][added: PART II]

[removed: Class] [added: Class] A Common [removed: Stock][added: Stock]

Our Class A common stock is currently listed on NASDAQ under the ticker symbol "CME." As of February [removed: 6, 2019,] [added: 12, 2020,] there were approximately [removed: 7,100] [added: 6,310] holders of record of our Class A common stock.

[removed: Class] [added: Class] B Common [removed: Stock][added: Stock]

As of February [removed: 6, 2019,] [added: 12, 2020,] there were approximately 1,560 holders of record of our Class B common stock.

[removed: PERFORMANCE GRAPH][added: PERFORMANCE GRAPH]

The [removed: following] graph [removed: and table] [added: below] compares the cumulative five-year total return provided [removed: to] shareholders on [removed: our] [added: CME Group Inc.'s] Class A common stock relative to the cumulative total returns of the S&P 500 index and [removed: our] [added: two] customized peer [removed: group.][added: groups of three companies and five companies respectively, whose individual companies are listed in footnotes 1 and 2 below.]

[removed: The peer group includes CBOE Holdings, Inc., IntercontinentalExchange Group, Inc. and Nasdaq, Inc.] An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock, in [removed: the peer group] [added: each index] and [added: in each of] the [removed: S&P 500 index] [added: peer groups] on December 31, [removed: 2013,] [added: 2014] and its relative performance is tracked through December 31, [removed: 2018.][added: 2019.]

[removed: ][added: ]

[removed: The] [added: *The] stock price performance included in this graph is not necessarily indicative of future stock price [removed: performance.][added: performance.*]

| | [removed: 2014] [added: 2015] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2018] [added: 2019] | | |

[removed: Unregistered] [added: Unregistered] Sales of Equity [removed: Securities][added: Securities]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

| [removed: Period] [added: Period in 2019] | | [removed: Total Number of] [added: Total Number of] Shares (or [removed: Units) Purchased(1)] [added: Units) Purchased(1)] | | | [removed: Average Price Paid] [added: Average Price Paid] Per Share (or [removed: Unit)] [added: Unit)] | | | | [removed: Total] [added: Total] Number [removed: of Shares] [added: of Shares] (or Units) Purchased [removed: as Part] [added: as Part] of [removed: Publicly Announced Plans] [added: Publicly Announced Plans] or [removed: Programs] [added: Programs] | | | [removed: Maximum] [added: Maximum] Number (or Approximate Dollar [removed: Value) of] [added: Value) of] Shares (or Units) that May Yet Be Purchased [removed: Under the] [added: Under the] Plans or [removed: Programs (in millions)] [added: Programs (in millions)] | | |

| November 1 to November 30 | | [removed: 16] [added: —] | | | [removed: 183.75] [added: —] | | | | — | | | — | | |

| (1) | Shares purchased consist of an aggregate of [removed: 261] [added: 132] shares of Class A common stock surrendered to satisfy employee tax obligations upon the vesting of restricted stock. |

(1) There are three companies included in the company's 2018 customized peer group which are: Cboe Global Markets Inc, Intercontinental Exchange Inc and Nasdaq Inc.

(2) The five companies included in the company's 2019 customized peer group are: Cboe Global Markets Inc, Deutsche Boerse Ag, Intercontinental Exchange Inc, London Stock Exchange Group Plc and Nasdaq Inc. We complied this revised peer group to more closely reflect our competitors in our industry.

We believe the new peer group provides a more meaningful basis for comparison to our stock performance.

| CME Group Inc. | $ | 107.68 | | | $ | 144.21 | | | $ | 190.83 | | | $ | 252.13 | | | $ | 276.52 | |

| S&P 500 | 101.38 | | | | 113.51 | | | | 138.29 | | | | 132.23 | | | | 173.86 | | |

| 2018 Peer Group | 117.34 | | | | 132.98 | | | | 172.32 | | | | 176.08 | | | | 222.54 | | |

| 2019 Peer Group | 119.52 | | | | 124.64 | | | | 169.37 | | | | 174.13 | | | | 244.04 | | |

None.

| October 1 to October 31 | | 112 | | | $ | 210.07 | | | — | | | $ | — | |

| December 1 to December 31 | | 20 | | | 205.96 | | | | — | | | — | | |

| Total | | 132 | | | | | | | — | | | | | |

| CME Group Inc. | $ | 118.32 | | | $ | 127.40 | | | $ | 170.63 | | | $ | 225.79 | | | $ | 298.31 | |

| S&P 500 | 113.69 | | | | 115.26 | | | | 129.05 | | | | 157.22 | | | | 150.33 | | |

| Peer Group | 106.16 | | | | 124.56 | | | | 141.16 | | | | 183.02 | | | | 187.01 | | |

On November 2, 2018, CME Group and CME London Limited, a wholly-owned subsidiary of the company, completed their previously announced acquisition of NEX Group plc (NEX).

The acquisition of NEX was effected by means of a scheme of arrangement under Part 26 of the U.K. Companies Act 2006.

On November 5, 2018, as part of the consideration for the acquisition, the Company issued to NEX shareholders 16,926,582 shares of Company Class A Common Stock following the completion of the acquisition on November 2, 2018.

The issuance of these shares was not registered under the Securities Act of 1933, as amended (Securities Act) or any state securities laws and was made in reliance on an exemption from the registration requirements of the Securities Act pursuant to Section 3(a)(10) of the Securities Act.

| October 1 to October 31 | | 5 | | | $ | 181.22 | | | — | | | $ | — | |

| December 1 to December 31 | | 240 | | | 187.64 | | | | — | | | — | | |

| Total | | 261 | | | | | | | — | | | | | |

| | | [removed: Year] [added: Year] Ended or At December [removed: 31] [added: 31] | | | | | | | | | | | | | | | | | | |

| [removed: (in] [added: (in] millions, except per share [removed: data)] [added: data)] | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: Income] [added: Income] Statement [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Total revenues | | $ | [removed: 4,309.4] [added: 4,868.0] | | | $ | [removed: 3,644.7] [added: 4,309.4] | | | $ | [removed: 3,595.2] [added: 3,644.7] | | | $ | [removed: 3,326.8] [added: 3,595.2] | | | $ | [removed: 3,112.5] [added: 3,326.8] | |

| Operating income | | [removed: 2,607.6] [added: 2,587.8] | | | | [removed: 2,310.6] [added: 2,607.6] | | | | [removed: 2,200.5] [added: 2,310.6] | | | | [removed: 1,984.9] [added: 2,200.5] | | | | [removed: 1,764.6] [added: 1,984.9] | | |

| Non-operating income (expense) | | [added: 101.8 | | | |] 170.2 | | | | 215.7 | | | | 87.1 | | | | (28.1 | | ) | [removed: | 6.8 | | |]

| Income before income taxes | | [removed: 2,777.8] [added: 2,689.6] | | | | [removed: 2,526.3] [added: 2,777.8] | | | | [removed: 2,287.6] [added: 2,526.3] | | | | [removed: 1,956.8] [added: 2,287.6] | | | | [removed: 1,771.4] [added: 1,956.8] | | |

| Net income attributable to CME Group | | [removed: 1,962.2] [added: 2,116.5] | | | | [removed: 4,063.4] [added: 1,962.2] | | | | [removed: 1,534.1] [added: 4,063.4] | | | | [removed: 1,247.0] [added: 1,534.1] | | | | [removed: 1,127.1] [added: 1,247.0] | | |

| Basic | | $ | [removed: 5.73] [added: 5.93] | | | $ | [removed: 12.00] [added: 5.73] | | | $ | [removed: 4.55] [added: 12.00] | | | $ | [removed: 3.71] [added: 4.55] | | | $ | [removed: 3.37] [added: 3.71] | |

| Diluted | | [removed: 5.71] [added: 5.91] | | | | [removed: 11.94] [added: 5.71] | | | | [removed: 4.53] [added: 11.94] | | | | [removed: 3.69] [added: 4.53] | | | | [removed: 3.35] [added: 3.69] | | |

| Cash dividends per share | | [removed: 4.55] [added: 5.50] | | | | [removed: 6.14] [added: 4.55] | | | | [removed: 5.65] [added: 6.14] | | | | [removed: 4.90] [added: 5.65] | | | | [removed: 3.88] [added: 4.90] | | |

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

| Total assets | | $ | [removed: 77,475.7] [added: 75,215.3] | | | $ | [removed: 75,791.2] [added: 77,475.7] | | | $ | [removed: 69,369.4] [added: 75,791.2] | | | $ | [removed: 67,359.4] [added: 69,369.4] | | | $ | [removed: 72,228.6] [added: 67,359.4] | |

| Short-term debt | | [removed: 574.2] [added: —] | | | | [removed: —] [added: 574.2] | | | | — | | | | — | | | | — | | |

| Long-term debt | | [removed: 3,826.8] [added: 3,743.2] | | | | [removed: 2,233.1] [added: 3,826.8] | | | | [removed: 2,231.2] [added: 2,233.1] | | | | [removed: 2,229.3] [added: 2,231.2] | | | | [removed: 2,095.0] [added: 2,229.3] | | |

| CME Group shareholders’ equity | | [removed: 25,918.5] [added: 26,128.9] | | | | [removed: 22,411.8] [added: 25,918.5] | | | | [removed: 20,340.7] [added: 22,411.8] | | | | [removed: 20,551.8] [added: 20,340.7] | | | | [removed: 20,923.5] [added: 20,551.8] | | |

All amounts exclude our interest rate swaps and credit default swaps contracts as well as volume data for [removed: BrokerTec and EBS.][added: our cash markets business.]

| | | [removed: Year] [added: Year] Ended or At December [removed: 31] [added: 31] | | | | | | | | | | | | | |

| [removed: (in thousands)] [added: (in thousands)] | | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | |

| [removed: Average] [added: Average] Daily [removed: Volume:] [added: Volume:] | | | | | | | | | | | | | | | |

| [removed: Product Lines:] [added: Product Lines:] | | | | | | | | | | | | | | | |

| Interest rates | | [added: 10,349 | | |] 9,951 | | | 8,189 | | | 7,517 | | | 6,720 | | [removed: | 7,009 | |]

| Equity indexes | | [added: 3,459 | | |] 3,589 | | | 2,682 | | | 3,061 | | | 2,792 | | [removed: | 2,764 | |]

| Foreign exchange | | [added: 862 | | |] 1,004 | | | 922 | | | 858 | | | 872 | | [removed: | 803 | |]

| Agricultural commodities | | [added: 1,454 | | |] 1,480 | | | 1,353 | | | 1,321 | | | 1,265 | | [removed: | 1,120 | |]

| Energy | | [added: 2,375 | | |] 2,561 | | | 2,578 | | | 2,432 | | | 1,970 | | [removed: | 1,630 | |]

| Metals | | [added: 668 | | |] 639 | | | 568 | | | 460 | | | 344 | | [removed: | 337 | |]

| [removed: Total] [added: Total] Average Daily [removed: Volume] [added: Volume] | | [added: 19,167 | | |] 19,224 | | | 16,292 | | | 15,649 | | | 13,963 | | [removed: | 13,663 | |]

| [removed: Method] [added: Method] of [removed: Trade:] [added: Trade:] | | | | | | | | | | | | | | | |

| CME Globex | | [added: 17,182 | | |] 17,371 | | | 14,513 | | | 13,766 | | | 12,185 | | [removed: | 11,805 | |]

| Open outcry | | [added: 1,205 | | |] 1,168 | | | 1,107 | | | 1,149 | | | 1,139 | | [removed: | 1,176 | |]

| Privately negotiated | | [added: 780 | | |] 685 | | | 672 | | | 734 | | | 639 | | [removed: | 682 | |]

| [removed: Other Data:] [added: Other Data:] | | | | | | | | | | | | | | | |

| Total Contract Volume (round turn trades) | | [added: 4,830,043 | | |] 4,844,406 | | | 4,089,175 | | | 3,943,670 | | | 3,532,521 | | [removed: | 3,443,051 | |]

| Open Interest at Year End (contracts) | | [added: 113,330 | | |] 115,669 | | | 108,043 | | | 102,930 | | | 91,369 | | [removed: | 93,644 | |]

| Total Average Daily Volume | | 19,167 | | | 19,224 | | | 16,292 | | | 15,649 | | | 13,963 | |

In the first quarter of 2018, the company adopted the Financial Accounting Standards Board's (FASB) standards update on changes to the presentation of certain components of defined benefit pension costs.

Under previous accounting guidance, the components of pension costs were aggregated for reporting in the financial statements within compensation and benefits expense on the consolidated statements of income.

The amendments in the update require that the service cost component is reported in the same line as other compensation costs, whereas the other components of net benefit cost are required to be presented on the consolidated statements of income separately from the service cost component.

The company has included the other components within non-operating income (expense).

This update was adopted as of January 1, 2018 with retrospective application to the earliest period presented, as if the new accounting policy was in effect during those periods.

The change in accounting policy has been reflected in the following table.

[removed: CME] [added: CME] GROUP INC. AND [removed: SUBSIDIARIES][added: SUBSIDIARIES]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

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

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | [added: | 2017 | | |]

| [removed: Assets] [added: Assets] | | | | | | | |

| Cash and cash equivalents | $ | [added: 1,551.4 | | | $ |] 1,374.5 | | | $ | 1,903.6 | |

| Marketable securities | [removed: 72.9] [added: 83.2] | | | | [removed: 90.1] [added: 72.9] | | |

| Accounts receivable, net of allowance of [removed: $2.7] [added: $3.4] and [removed: $2.2] [added: $2.7] | [removed: 553.3] [added: 491.8] | | | | [removed: 359.7] [added: 553.3] | | |

| Other current assets (includes [removed: $1.5] [added: $4.3] and [removed: $0] [added: $1.5] in restricted cash) | [removed: 430.5] [added: 364.4] | | | | [removed: 367.8] [added: 430.5] | | |

| Performance bonds and guaranty fund contributions | [removed: 39,455.5] [added: 37,077.0] | | | | [removed: 44,185.3] [added: 39,455.5] | | |

| Total current assets | [removed: 41,886.7] [added: 39,567.8] | | | | [removed: 46,906.5] [added: 41,886.7] | | |

| Property, net | [removed: 448.7] [added: 544.0] | | | | [removed: 399.7] [added: 448.7] | | |

| Intangible assets—other, net | [removed: 5,500.1] [added: 5,117.7] | | | | [removed: 2,346.3] [added: 5,500.1] | | |

| [added: Total] Goodwill | [removed: 10,805.3] | [added: $] | [added: 7,569.0] | | [removed: 7,569.0] | [added: $] | [added: 3,236.3] | [added: | | $ | — | | | $ | 10,805.3 | |]

| Other assets (includes [removed: $1.2] [added: $0.9] and [removed: $2.4] [added: $1.2] in restricted cash) | [removed: 1,659.6] [added: 2,068.0] | | | | [removed: 1,394.4] [added: 1,659.6] | | |

| [removed: Total Assets] [added: Total Assets] | $ | [removed: 77,475.7] [added: 75,215.3] | | | $ | [removed: 75,791.2] [added: 77,475.7] | |

| [removed: Liabilities] [added: Liabilities] and [removed: Equity] [added: Equity] | | | | | | | |

| Accounts payable | $ | [removed: 116.0] [added: 61.9] | | | $ | [removed: 31.3] [added: 116.0] | |

| Short-term debt | [removed: 574.2] [added: —] | | | | [removed: —] [added: 574.2] | | |

| Other current liabilities | [removed: 1,126.9] [added: 1,384.8] | | | | [removed: 1,456.3] [added: 1,126.9] | | |

| Total current liabilities | [removed: 41,272.6] [added: 38,522.5] | | | | [removed: 45,672.9] [added: 41,272.6] | | |

| Long-term debt | [removed: 3,826.8] [added: 3,743.2] | | | | [removed: 2,233.1] [added: 3,826.8] | | |

| Deferred income tax liabilities, net | [removed: 5,665.9] [added: 5,635.2] | | | | [removed: 4,857.7] [added: 5,665.9] | | |

| Other liabilities | [removed: 745.1] [added: 1,155.1] | | | | [removed: 615.7] [added: 745.1] | | |

| Total Liabilities | [removed: 51,510.4] [added: 49,056.0] | | | | [removed: 53,379.4] [added: 51,510.4] | | |

| Preferred stock, $0.01 par value, 10,000 shares authorized as of December 31, [removed: 2018] [added: 2019] and [removed: 2017;] [added: 2018;] none issued | — | | | | — | | |

| Class A common stock, $0.01 par value, 1,000,000 shares authorized as of December 31, [removed: 2018] [added: 2019] and [removed: 2017, 356,824] [added: 2018, 357,469] and [removed: 339,235] [added: 356,824] shares issued and outstanding as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively | 3.6 | | | | [removed: 3.4] [added: 3.6] | | |

| Class B common stock, $0.01 par value, 3 shares authorized, issued and outstanding as of December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] | — | | | | — | | |

| Additional paid-in capital | [removed: 21,054.3] [added: 21,113.2] | | | | [removed: 17,896.9] [added: 21,054.3] | | |

| Retained earnings | [removed: 4,855.3] [added: 5,008.7] | | | | [removed: 4,497.2] [added: 4,855.3] | | |

| Accumulated other comprehensive income (loss) | [removed: 5.3] [added: 3.4] | | | | [removed: 14.3] [added: 5.3] | | |

| Total CME Group shareholders’ equity | [removed: 25,918.5] [added: 26,128.9] | | | | [removed: 22,411.8] [added: 25,918.5] | | |

| Non-controlling interests | [removed: 46.8] [added: 30.4] | | | | [removed: —] [added: 46.8] | | |

| Total Equity | [removed: 25,965.3] [added: 26,159.3] | | | | [removed: 22,411.8] [added: 25,965.3] | | |

| [removed: Total] [added: Total] Liabilities and [removed: Equity] [added: Equity] | $ | [removed: 77,475.7] [added: 75,215.3] | | | $ | [removed: 75,791.2] [added: 77,475.7] | |

[removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENTS OF [removed: INCOME][added: INCOME]

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

| | [removed: 2018] | | [added: 2019] | | [removed: 2017] | | [added: 2018] | | [removed: 2016] | | [added: 2017] | [added: | |]

| [removed: Revenues] [added: Revenues] | | | | | | | | | | | |

| Clearing and transaction fees | $ | [removed: 3,667.0] [added: 3,946.1] | | | $ | [removed: 3,098.6] [added: 3,667.0] | | | $ | [removed: 3,036.4] [added: 3,098.6] | |

| | 2019 | | | | 2018 | | |

| Goodwill | 10,742.5 | | | | 10,805.3 | | |

| Performance bonds and guaranty fund contributions | 37,075.8 | | | | 39,455.5 | | |

CME GROUP INC. AND SUBSIDIARIES

CME GROUP INC. AND SUBSIDIARIES

CME GROUP INC. AND SUBSIDIARIES

CME GROUP INC. AND SUBSIDIARIES

| Balance at December 31, 2018 | 356,824 | | 3 | | $ | 21,057.9 | | | $ | 4,855.3 | | | $ | 5.3 | | | $ | 25,918.5 | | | $ | 46.8 | | | $ | 25,965.3 | |

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)

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

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

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

| | Class A Common Stock (Shares) | | Class B Common Stock (Shares) | | Common Stock and Additional Paid-in Capital | | | | Retained Earnings | | | | Accumulated Other Comprehensive Income (Loss) | | | | Total CME Group Shareholders' Equity | | | | Non-controlling Interest | | | | Total Equity | | |

| Net income | | | | | | | | | 2,116.5 | | | | | | | | 2,116.5 | | | | (0.7 | | ) | | 2,115.8 | | |

| Impact of adoption of standards updates on leasing | | | | | | | | | 6.9 | | | | | | | | 6.9 | | | | | | | | 6.9 | | |

| Changes in non-controlling interest due to measurement period adjustments | | | | | | | | | | | | | | | | | — | | | | (15.7 | | ) | | (15.7 | | ) |

| Balance at December 31, 2019 | 357,469 | | 3 | | $ | 21,116.8 | | | $ | 5,008.7 | | | $ | 3.4 | | | $ | 26,128.9 | | | $ | 30.4 | | | $ | 26,159.3 | |

CME GROUP INC. AND SUBSIDIARIES

| Amortization of purchased intangibles | 314.7 | | | | 130.0 | | | | 95.5 | | |

| Depreciation and amortization | 158.6 | | | | 118.7 | | | | 113.0 | | |

| Net losses on assets held for sale and impaired | 61.1 | | | | — | | | | — | | |

CME GROUP INC. AND SUBSIDIARIES

| | Year Ended December 31, | | | | | | | | | | |

| Other | 37.6 | | | | 15.5 | | | | 39.5 | | |

CME GROUP INC. AND SUBSIDIARIES

1.

2.

The associated lease liability represents the present value of lease payments remaining in the lease term and is recorded within current and other liabilities depending upon the balance sheet classification of the payment obligations as short-term or long-term.

In certain circumstances, indefinite-lived

*Concentration of Revenue.* No individual clearing firm represented at least 10% of our clearing and transaction fees in 2019.

Upon adoption of the new standard on January 1, 2019, the company recognized a lease liability of $568.0 million and right-of-use asset of $448.2 million.

The company does not believe that the adoption of this guidance in 2020 will have a material impact on the consolidated financial statements.

In December 2019, the FASB issued an accounting update that is intended to reduce cost and complexity related to accounting for income taxes.

The update removes specific exceptions to the general principles for accounting for income taxes.

Specifically, it eliminates the need for an entity to analyze whether the following exceptions apply in a given period: incremental approach for intraperiod tax allocation, accounting basis differences when there are ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses.

The update also simplifies the accounting for the following: franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods.

Early adoption is permitted in any period for which the entity's financial statements have not yet been issued.

3.

| Goodwill | | 3,205.9 | | |

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

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

| Balance at December 31, 2015 | 336,938 | | 3 | | $ | 17,725.0 | | | $ | 2,907.6 | | | $ | (80.8 | ) | | $ | 20,551.8 | |

| Excess tax benefits from option exercises and restricted stock vesting | | | | | 9.5 | | | | | | | | | | | | 9.5 | | |

| Balance at December 31, 2016 | 338,240 | | 3 | | $ | 17,830.3 | | | $ | 2,524.5 | | | $ | (14.1 | ) | | $ | 20,340.7 | |

| Loss on datacenter | — | | | | — | | | | 27.1 | | |

| Gain on sale of BM&FBOVESPA shares | — | | | | (86.5 | | ) | | (48.4 | | ) |

| Gain on sale of Bolsa Mexicana de Valores, S.A.B de C.V. | — | | | | (2.3 | | ) | | — | | |

| Proceeds from sale of BM&FBOVESPA shares | — | | | | 244.0 | | | | 150.0 | | |

| Proceeds from sale of Bolsa Mexicana de Valores, S.A.B de C.V. | — | | | | 19.6 | | | | — | | |

| Proceeds from exercise of stock options | 11.5 | | | | 36.7 | | | | 51.8 | | |

| Proceeds from lease financing obligation | — | | | | — | | | | 130.0 | | |

| Excess tax benefits related to employee option exercises and restricted stock vesting | — | | | | — | | | | 9.5 | | |

| Other | 4.0 | | | | 2.8 | | | | 2.2 | | |

1.

2.

Basis of Presentation.

Use of Estimates.

Cash and Cash Equivalents.

Financial Investments.

For equity investments in privately-held entities that do not have a readily determinable fair value, our accounting policy is to utilize the measurement alternative for valuation of these investments, which permits the company to estimate fair value at cost minus impairment, plus or minus changes resulting from observable price movements.

Derivative Investments.

Accounts Receivable.

Property, Equipment and Leasehold Improvements.

Operating Leases.

rates, forecasted allocations of expense and risk-adjusted discount rates.

Business Combinations.

Revenue Recognition.

Clearing and Transaction Fees.

Other Revenues.

Concentration of Revenue.

One firm represented 13% and another firm represented 11% of clearing and transaction fees revenue in 2016.

reseller.

Share-Based Payments.

Beginning in 2017, the company recognizes expense for forfeitures of stock grants as they occur.

Marketing Costs.

Income Taxes.

Segment Reporting.

Newly Adopted Accounting Policies.

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard on revenue recognition that replaces numerous, industry-specific requirements and converges U.S. accounting standards with International Financial Reporting Standards.

[removed: Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures][added: Procedures]

[removed: Changes] [added: Changes] in Internal Control over Financial [removed: Reporting][added: Reporting]

As required by Rule 13a-15(d) under the Exchange Act, the company's management, including the company's Chief Executive Officer and Chief Financial Officer, have evaluated the company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to determine whether any changes occurred during the fourth quarter of [removed: 2018] [added: 2019] that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting.

[removed: During the fourth quarter] [added: The integration] of [removed: 2018, we acquired] NEX [removed: and are in the process of integrating the acquired business] into our overall internal control over financial reporting [removed: process.][added: process was completed during 2019.]

There were no other changes in the company’s internal control over financial reporting which occurred during [removed: 2018,] [added: 2019,] that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

[removed: Management’s] [added: Management’s] Annual Report on Internal Control over Financial [removed: Reporting][added: Reporting]

Management assessed the effectiveness of the [removed: Company’s] [added: company’s] internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]

Based on this assessment, management believes that, as of December 31, [removed: 2018,] [added: 2019,] our internal control over financial reporting is effective.

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in the report on page [removed: 86.][added: 88.]

[removed: Report] [added: Report] of Independent Registered Public Accounting [removed: Firm][added: Firm]

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of CME Group Inc. and subsidiaries (the Company) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).