Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is provided as a supplement to, and should be read in conjunction with, the accompanying unaudited consolidated financial statements and notes in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.

References in this discussion and analysis to “we” and “our” are to CME Group Inc. (CME Group) and its consolidated subsidiaries, collectively. 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. (NYMEX), and Commodity Exchange, Inc. (COMEX), collectively, unless otherwise noted.

RESULTS OF OPERATIONS

Financial Highlights

The following summarizes significant changes in our financial performance for the periods presented.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions, except per share data)						2021						2020						Change						2021						2020						Change
Total revenues						$	1,109.9					$	1,080.7					3		%				$	3,542.4					$	3,785.1					(6)		%
Total expenses						496.2						555.7						(11)						1,528.9						1,662.7						(8)
Operating margin						55.3		%				48.6		%										56.8		%				56.1		%
Non-operating income (expense)						$	482.2					$	11.5					n.m.						$	560.8					$	64.7					n.m.
Effective tax rate						15.5		%				23.3		%										21.9		%				23.1		%
Net income attributable to CME Group						$	926.5					$	411.7					125						$	2,011.2					$	1,681.2					20
Diluted earnings per common share attributable to CME Group						2.58						1.15						124						5.60						4.69						19
Cash flows from operating activities																								1,734.1						2,055.3						(16)

Revenues

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions)						2021						2020						Change						2021						2020						Change
Clearing and transaction fees						$	878.9					$	835.4					5		%				$	2,815.8					$	3,054.4					(8)		%
Market data and information services						145.4						139.4						4						434.8						405.6						7
Other						85.6						105.9						(19)						291.8						325.1						(10)
Total Revenues						$	1,109.9					$	1,080.7					3						$	3,542.4					$	3,785.1					(6)

Clearing and Transaction Fees

Futures and Options Contracts

The following table summarizes our total contract volume, revenue and average rate per contract for futures and options. Total contract volume includes contracts that are traded on our exchange and cleared through our clearing house and certain cleared-only contracts. Volume is measured in round turns, which is considered a completed transaction that involves a purchase and an offsetting sale of a contract. Average rate per contract is determined by dividing total clearing and transaction fees by total contract volume. Contract volume and average rate per contract disclosures exclude trading volume for the cash markets business and interest rate swaps volume.

						Quarter Ended September 30,																		Nine Months Ended September 30,
						2021						2020						Change						2021						2020						Change
Total contract volume (in millions)						1,138.3						998.6						14		%				3,631.4						3,782.2						(4)		%
Clearing and transaction fees (in millions)						$	770.3					$	715.0					8						$	2,453.2					$	2,658.8					(8)
Average rate per contract						$	0.677					$	0.716					(5)						$	0.676					$	0.703					(4)

We estimate the following net changes in clearing and transaction fees based on changes in total contract volumes and changes in average rate per contract for futures and options during the third quarter and first nine months of 2021 when compared with the same periods in 2020.

(in millions)						Quarter Ended						Nine Months Ended
Increase (decrease) due to changes in total contract volumes						$	94.5					$	(101.9)
Decreases due to changes in average rate per contract						(39.2)						(103.7)
Net increase (decrease) in clearing and transaction fees						$	55.3					$	(205.6)

Average rate per contract is impacted by our rate structure, including volume-based incentives; product mix; trading venue, and the percentage of volume executed by customers who are members compared with non-member customers. Due to the relationship between average rate per contract and contract volume, the change in clearing and transaction fees attributable to changes in each is only an approximation.

Contract Volume

The following table summarizes average daily contract volume. Contract volume can be influenced by many factors, including political and economic conditions, the regulatory environment and market competition.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2021						2020						Change						2021						2020						Change
Average Daily Volume by Product Line:
Interest rates						8,111						5,315						53		%				8,995						8,628						4		%
Equity indexes						5,100						5,410						(6)						5,372						5,820						(8)
Foreign exchange						776						829						(6)						798						876						(9)
Agricultural commodities						1,141						1,372						(17)						1,412						1,396						1
Energy						2,178						1,852						18						2,166						2,548						(15)
Metals						480						825						(42)						573						744						(23)
Aggregate average daily volume						17,786						15,603						14						19,316						20,012						(3)
Average Daily Volume by Venue:
CME Globex						16,652						15,054						11						18,071						18,826						(4)
Open outcry						598						108						n.m.						640						457						40
Privately negotiated						536						441						21						605						729						(17)
Aggregate average daily volume						17,786						15,603						14						19,316						20,012						(3)
Electronic Volume as a Percentage of Total Volume						94%						96		%										94%						94		%

---

n.m. not meaningful

Overall market volatility increased throughout the third quarter of 2021 following periods of lower volatility in 2020, particularly in the third quarter of 2020. In mid-2021, the Federal Reserve indicated a potential increase in interest rates earlier than many market participants expected, which resulted in higher volatility within the interest rate market. In addition, energy contract volume increased in the third quarter 2021 when compared with the same period in 2020, largely due to an increase in volatility within the crude oil market. The crude oil market exhibited higher volatility as a result of supply outages from Hurricane Ida and demand uncertainties related to the market impact of COVID-19. However, volatility within the equity, agriculture and metal markets subsided in the third quarter of 2021 when compared to the same period in 2020. We believe these factors led to the changes in contract volume during the third quarter and first nine months of 2021, when compared with the same periods in 2020.

Following the Illinois stay at home orders in March 2020, we closed the trading floor in Chicago. We began a limited re-opening of the trading floor in the third quarter of 2020. Only the Eurodollar options trading pit (where options on One-Month and Three-Month Secured Overnight Financing Rate (SOFR) futures also trade) remains open.

Interest Rate Products

The following table summarizes average daily contract volume for our key interest rate products. Eurodollar Front 8 futures include contracts expiring in two years or less. Eurodollar Back 32 futures include contracts with expirations after two years through ten years.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2021						2020						Change						2021						2020						Change
Eurodollar futures and options:
Front 8 futures						1,072						741						45		%				1,165						1,479						(21)		%
Back 32 futures						967						457						112						1,126						623						81
Options						890						422						111						986						1,254						(21)
U.S. Treasury futures and options:
10-Year						2,151						1,462						47						2,409						2,093						15
5-Year						1,113						777						43						1,244						1,146						9
Treasury Bond						508						422						20						562						471						19
2-Year						390						347						12						439						583						(25)
Federal Funds futures and options						71						87						(19)						87						256						(66)

In the third quarter and first nine months of 2021, overall interest rate contract volumes increased when compared with the same period in 2020. We believe these increases resulted from higher interest rate volatility due to changes in market expectations. Interest rate volatility increased following the Federal Reserve's indication that it would maintain its zero interest rate policy in the short term and potentially raise interest rates sooner than expected. In addition, we believe the increases in U.S. Treasury contract volumes were due to a record level of U.S. Treasury issuances, which has led to an increased need for market participants to manage their risk across the treasury yield curve.

The overall increase in interest rate contract volume in the first nine months of 2021 when compared with the same period in 2020 was offset by high volume in the first quarter of 2020 due to significant volatility as a result of economic uncertainty caused by the governmental and business response to the COVID-19 pandemic in early 2020.

Equity Index Products

The following table summarizes average daily contract volume for our key equity index products.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2021						2020						Change						2021						2020						Change
E-mini S&P 500 futures and options						2,940						3,311						(11)		%				3,081						3,728						(17)		%
E-mini Nasdaq 100 futures and options						1,391						1,397						—						1,499						1,265						18
E-mini Russell 2000 futures and options						348						285						22						358						311						15

In the third quarter and the first nine months of 2021, equity index contract volumes decreased when compared with the same periods in 2020. Volatility within the broad-based indexes, including the S&P 500, subsided in 2021 following significant equity market volatility in early 2020 resulting from uncertainty surrounding the economic impact of governmental and business actions to combat the COVID-19 pandemic. However, there was an increase in volatility within certain narrow-based small cap indexes, which resulted from a market repricing of certain stocks in early 2021. We believe this increase in volatility contributed to increases in E-mini Russell 2000 contract volumes.

Foreign Exchange Products

The following table summarizes average daily contract volume for our key foreign exchange products.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2021						2020						Change						2021						2020						Change
Euro						195						249						(22)		%				210						244						(14)		%
Japanese Yen						113						97						17						112						128						(13)
British Pound						100						114						(12)						100						113						(12)
Australian dollar						96						99						(3)						105						109						(4)

Overall foreign exchange contract volume decreased in the third quarter and first nine months of 2021 when compared with the same periods in 2020. Market volatility subsided in 2021 following very high foreign exchange volatility in early 2020 caused by significant uncertainty surrounding the economic impacts of the governmental and business actions to combat the COVID-19 pandemic. We believe these factors led to the overall decreases in foreign exchange contract volumes. However, in the third quarter of 2021 when compared with the same period in 2020, Japanese Yen contract volume increased due to risk aversion by market participants with other currencies, as the Japanese Yen is considered a safe haven currency.

Agricultural Commodity Products

The following table summarizes average daily contract volume for our key agricultural commodity products.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2021						2020						Change						2021						2020						Change
Corn						369						440						(16)		%				494						438						13		%
Soybean						205						292						(30)						284						280						1
Wheat						182						219						(17)						203						227						(11)

Overall commodity contract volume decreased in the third quarter of 2021 when compared with the same period in 2020. Corn and soybean contract volumes decreased due to lower volatility as a result of stable prices and demand following the 2021 growing season.

Commodity contract volume was flat for the first nine months of 2021 when compared to the same period in 2020, as market volatility subsided in the second half of 2021 following periods of high volatility in the first half of 2021 caused by expectations of lower than expected crop yields in 2021.

Energy Products

The following table summarizes average daily contract volume for our key energy products.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2021						2020						Change						2021						2020						Change
WTI crude oil						1,119						873						28		%				1,150						1,369						(16)		%
Natural gas						583						582						—						540						657						(18)
Refined products						355						307						16						351						379						(7)

Overall energy contract volume increased in the third quarter of 2021 when compared with the same period in 2020, largely due to an increase in volatility within the crude oil markets. We believe the crude oil market exhibited higher volatility as a result of supply outages from Hurricane Ida and demand uncertainties related to the market impact of COVID-19. We also believe the increase in crude oil volumes was due to rising oil prices, which created a greater need for hedging.

The decrease in energy contract volume in the first nine months of 2021 when compared to the same period in 2020 can be attributed to lower overall market volatility within the energy market. We believe this was due to a continued rebalance and reduction in demand in the crude oil markets as a result of the COVID-19 pandemic. In addition, forecasts of warmer than expected weather resulted in a decrease in natural gas contract volume compared to the same period in 2020.

Metal Products

The following table summarizes average daily volume for our key metal products.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in thousands)						2021						2020						Change						2021						2020						Change
Gold						294						526						(44)		%				341						490						(31)		%
Copper						87						99						(12)						108						101						7
Silver						78						180						(57)						102						129						(21)

In the third quarter and first nine months of 2021, metal contract volumes decreased when compared with the same periods in 2020. We believe the decreases are attributed to lower overall market volatility within the gold and silver markets. Volatility was higher in 2020, as investors were using gold and other precious metals as safe-haven investments as a result of uncertainty within other markets caused by the governmental and business actions to combat the COVID-19 pandemic.

Average Rate per Contract

The average rate per contract decreased in the third quarter and first nine months of 2021 when compared with the same periods in 2020. The decreases were largely due to a shift in product mix. In the third quarter of 2021, interest contract volume increased by 12 percentage points as a percentage of total volume, while all other product lines collectively decreased by 12 percentage points as a percentage of total volume. In the first nine months of 2021, interest contract volume increased by 3 percentage points as a percentage of total volume, while all other product lines collectively decreased by 3 percentage points as a percentage of total volume. Interest rate contracts have a lower average rate per contract compared with other product lines.

Cash Markets Business

Total clearing and transaction fees revenues in the third quarter and the first nine months of 2021 include $93.5 million and $314.4 million of transaction fees attributable to the cash markets business compared with $105.6 million and $342.4 million in the third quarter and first nine months of 2020, respectively. This revenue primarily includes BrokerTec Americas LLC's fixed income volume and EBS's foreign exchange volume.

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in millions)						2021						2020						Change						2021						2020						Change
BrokerTec U.S.'s fixed income transaction fees						$	38.8					$	39.8					(3)		%				$	125.5					$	133.3					(6)		%
EBS's foreign exchange transaction fees						40.7						42.3						(4)		%				129.0						136.9						(6)

The related average daily notional value for the third quarter and first nine months of 2021 were as follows:

						Quarter Ended September 30,																		Nine Months Ended September 30,
(amounts in billions)						2021						2020						Change						2021						2020						Change
U.S. Treasury						$	98.0					$	93.2					5		%				$	113.0					$	135.3					(16)		%
European Repo (in euros)						293.4						261.6						12						293.8						265.9						10
Spot FX						54.4						63.3						(14)						62.8						74.3						(15)

Overall average daily notional value for the cash markets business increased in the third quarter of 2021 compared with the same period in 2020. The increase in European Repo transactions was largely due to increased volatility as a result of the European Union unexpectedly leaving interest rates unchanged. Despite the increase in average daily notional value, transaction revenue decreased due to the tiered pricing structure and a rate reduction for certain customer groups.

Overall average daily notional value for the cash markets business decreased in the first nine months of 2021 compared with the same period in 2020. The decrease in trading was largely due to lower volatility as the first quarter of 2020 saw high volatility as a result of the uncertainty surrounding the COVID-19 pandemic.

Concentration of Revenue

We bill a substantial portion of our clearing and transaction fees directly to our clearing firms. The majority of clearing and transaction fees received from clearing firms represent charges for trades executed and cleared on behalf of their customers. One individual firm represented approximately 10% of our clearing and transaction fees in the first nine months of 2021. Should a clearing firm withdraw, we believe that the customer portion of the firm’s trading activity would likely transfer to another clearing firm of the exchange. Therefore, we do not believe we are exposed to significant risk from the ongoing loss of revenue received from or through a particular clearing firm.

Other Sources of Revenue

During the third quarter and first nine months of 2021, overall market data and information services revenues increased when compared with the same periods in 2020 largely due to price increases for certain products.

The two largest resellers of our market data represented approximately 33% of our market data and information services revenue in the first nine months of 2021. Despite this concentration, we consider exposure to significant risk of revenue loss to be minimal. In the event that one of these vendors no longer subscribes to our market data, we believe the majority of that vendor’s customers would likely subscribe to our market data through another reseller. Additionally, several of our largest institutional customers that utilize services from our two largest resellers report usage and remit payment of their fees directly to us.

In the third quarter and first nine months of 2021, the decreases in other revenues when compared with the same periods in 2020 were largely due to decreases in custody fees resulting from declines in the overall level of non-cash performance bonds and guaranty fund collateral. The decreases were also due to a reduction in reported revenue related to the deconsolidation of the net assets of our optimization business, which was contributed to OSTTRA, our new joint venture with IHS Markit. The joint venture was launched in September 2021.

Expenses

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions)						2021						2020						Change						2021						2020						Change
Compensation and benefits						$	198.6					$	216.4					(8)		%				$	635.3					$	640.9					(1)		%
Technology						49.3						48.1						3						146.8						144.9						1
Professional fees and outside services						45.2						48.4						(6)						119.4						141.3						(15)
Amortization of purchased intangibles						59.0						78.3						(25)						179.0						232.2						(23)
Depreciation and amortization						37.2						39.7						(6)						111.9						111.7						—
Licensing and other fee agreements						57.6						57.7						—						176.5						187.0						(6)
Other						49.3						67.1						(26)						160.0						204.7						(22)
Total Expenses						$	496.2					$	555.7					(11)						$	1,528.9					$	1,662.7					(8)

Operating expenses decreased by $59.5 million and $133.8 million in the third quarter and first nine months of 2021 when compared with the same periods in 2020. The following table shows the estimated impacts of key factors resulting in the change in operating expenses:

						Quarter Ended, September 30, 2021												Nine Months Ended, September 30, 2021
						Amount of Change						Change as a Percentage of Total Expenses						Amount of Change						Change as a Percentage of Total Expenses
(dollars in millions)
Amortization of purchased intangibles						$	(19.3)					(3)		%				$	(53.2)					(3)		%
Intangible and fixed asset impairments						(1.8)						—						(26.8)						(2)
Professional fees and outside services						(3.2)						(1)						(21.9)						(1)
Salaries, benefits and employer taxes						(14.8)						(3)						(16.7)						(1)
Stock-based compensation						(7.7)						(2)						(12.5)						(1)
Licensing and other fee agreements						(0.1)						—						(10.5)						(1)
Foreign currency exchange rate fluctuation						(9.3)						(1)						(2.2)						—
Employee separation and retention costs						0.9						—						10.2						1
Other expenses, net						(4.2)						(1)						(0.2)						—
Total decrease						$	(59.5)					(11)		%				$	(133.8)					(8)		%

Decreases in operating expenses in the third quarter and first nine months of 2021 when compared with the same periods in 2020 were as follows:

• Amortization of purchased intangibles was lower during the third quarter and first nine months of 2021, as intangible assets related to CME Group's optimization business were contributed to a joint venture with IHS Markit in September 2021. Prior to the completion of the joint venture, amortization was no longer taken on these intangible assets once they were classified as held for sale in January 2021 following approval by the company's Board of Directors.

• In the third quarter and first nine months of 2020, we recognized higher impairment charges on certain intangible assets and fixed assets related to a subsidiary.

• Professional fees and outside services expenses decreased due to a greater reliance on consultants for platform integrations, information security and systems enhancements in 2020 as well as a reduction in legal fees related to our business activities and product offerings. The decrease in consulting and legal fees was partially offset by one-time deal costs incurred in the third quarter of 2021 related to our joint venture with IHS Markit.

• Salaries, benefits and employer taxes were lower during the third quarter and first nine months of 2021 when compared to the same periods in 2020 due to higher reductions in workforce and the contribution of employees from CME Group's optimization businesses to the new joint venture with IHS Markit in September 2021.

• Decreases in stock-based compensation expense were primarily due to higher forfeitures resulting from reductions in headcount compared to the same periods in 2020.

• A decrease in licensing and other fee agreements expense was due to lower volumes for certain equity products during the first nine months of 2021 when compared to the same period in 2020.

• In the third quarter of 2021, we recognized a net gain of $3.2 million due to favorable changes in exchange rates on foreign liability balances, compared with a net loss of $6.1 million in the third quarter of 2020. In the first nine months of 2021, we recognized a net loss of $0.2 million, compared with a net loss of $2.4 million in the first nine months of 2020. Gains and losses from exchange rate fluctuations are recognized in the consolidated statements of net income when subsidiaries with a U.S. dollar functional currency hold certain monetary assets and liabilities denominated in foreign currencies.

Increases in operating expenses in the third quarter and first nine months of 2021 when compared with the same periods in 2020 were as follows:

• Employee separation and retention costs were higher during the third quarter and first nine months of 2021 due to a higher reduction in workforce compared to the same periods in 2020.

Non-Operating Income (Expense)

						Quarter Ended September 30,																		Nine Months Ended September 30,
(dollars in millions)						2021						2020						Change						2021						2020						Change
Investment income						$	145.8					$	23.6					n.m.						$	239.1					$	151.6					58		%
Interest and other borrowing costs						(41.8)						(41.7)						—						(125.0)						(124.5)						—
Equity in net earnings of unconsolidated subsidiaries						66.4						44.0						51						178.3						144.0						24
Other non-operating income (expense)						311.8						(14.4)						n.m.						268.4						(106.4)						n.m.
Total Non-Operating						$	482.2					$	11.5					n.m.						$	560.8					$	64.7					n.m.

n.m. not meaningful

Investment income. Investment income increased in the third quarter and first nine months of 2021 when compared with the same periods in 2020, largely due to increases in net realized and unrealized gains on investments. In the third quarter of 2021 when compared with the same period in 2020 there was an increase in earnings from cash performance bond and guaranty fund contributions that are reinvested due to higher reinvestment balances. In the first nine months of 2021, there was a decrease in earnings from cash performance bond and guaranty fund contributions that are reinvested. The decrease in earnings resulted largely from lower rates of interest earned in the cash account at the Federal Reserve Bank of Chicago following significant interest rate cuts in early 2020 by the Federal Reserve, despite an increase in reinvestment balances.

Equity in net earnings (losses) of unconsolidated subsidiaries. In September 2021, we began recognizing our share of net earnings in our investment in OSTTRA, our new joint venture with IHS Markit. Higher income generated from our S&P/Dow Jones Indices LLC (S&P/DJI) business venture also contributed to increases in equity in net earnings of unconsolidated subsidiaries in the third quarter and first nine months of 2021, when compared with the same periods in 2020.

Other income (e**xpense). In the third quarter of 2021, we recognized a net gain of $343.5 million on the deconsolidation and contribution of our optimization business to OSTTRA, which contributed to an increase in other income in the third quarter and first nine months of 2021. In the third quarter of 2021 when compared with the same period in 2020, we recognized higher expense related to the distribution of interest earned on performance bond collateral reinvestments to the clearing firms due to higher interest income earned on our reinvestment. In the first nine months of 2021 when compared with the same period of 2020, we recognized lower expense related to the distribution of interest earned on performance bond collateral reinvestments to the clearing firms caused by lower interest income earned on our reinvestment during the nine-month period due to a higher Federal Funds rate in early 2020.

Income Tax Provision

The following table summarizes the effective tax rates for the periods presented:

						2021						2020
Quarter ended September 30						15.5		%				23.3		%
Nine months ended September 30						21.9		%				23.1		%

The overall effective tax rate decreased in the third quarter of 2021 and first nine months of 2021 when compared with the same periods in 2020. In the third quarter of 2021, we recognized the gain on the deconsolidation and contribution of our optimization business to OSTTRA, which was not taxable.

Liquidity and Capital Resources

Sources and Uses of Cash*.* Net cash provided by operating activities decreased in the first nine months of 2021 when compared with the same period in 2020 largely due to a decrease in trading volume. Net cash used in investing activities was lower during the first nine months of 2021 when compared with the same period in 2020 largely due to an increase in proceeds from sales of investments. Cash used in financing activities was lower during the first nine months of 2021 when compared with the same period in 2020 due to net repayments of commercial paper made during the first nine months of 2020.

Debt Instruments*.* The following table summarizes our debt outstanding at September 30, 2021:

(in millions)			Par Value
Fixed rate notes due September 2022, stated rate of 3.00% (1)			$	750.0
Fixed rate notes due May 2023, stated rate of 4.30%			€	15.0
Fixed rate notes due March 2025, stated rate of 3.00% (2)			$	750.0
Fixed rate notes due June 2028, stated rate of 3.75%			$	500.0
Fixed rate notes due September 2043, stated rate of 5.30% (3)			$	750.0
Fixed rate notes due June 2048, stated rate of 4.15%			$	700.0

---

(1)We maintained a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of 3.32%.

(2)We maintained a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable on the notes effectively became fixed at a rate of 3.11%.

(3)We maintained a forward-starting interest rate swap agreement that modified the interest obligation associated with these notes so that the interest payable effectively became fixed at a rate of 4.73%.

We maintain a $2.4 billion multi-currency revolving senior credit facility with various financial institutions, which matures in November 2022. The proceeds from this facility can be used for general corporate purposes, which includes providing liquidity for our clearing house in certain circumstances at CME Group's discretion and, if necessary, for maturities of commercial paper. As long as we are not in default under this facility, we have the option to increase it up to $3.0 billion with the consent of the agent and lenders providing the additional funds. This facility is voluntarily pre-payable from time to time without premium or penalty. Under this facility, we are required to remain in compliance with a consolidated net worth test, which is defined as our consolidated shareholders' equity at September 30, 2017, giving effect to share repurchases made and special dividends paid during the term of the agreements (and in no event greater than $2.0 billion in aggregate), multiplied by 0.65. We currently do not have any borrowings outstanding under this facility, but any commercial paper balance if or when outstanding can be backstopped against this facility.

We maintain a 364-day multi-currency revolving secured credit facility with a consortium of domestic and international banks to be used in certain situations by the clearing house. The facility provides for borrowings of up to $7.0 billion. We may use the proceeds to provide temporary liquidity in the unlikely event a clearing firm fails to promptly discharge an obligation to CME Clearing, in the event of a liquidity constraint or default by a depositary (custodian for our collateral), in the event of a temporary disruption with the domestic payments system that would delay payment of settlement variation between us and our clearing firms, or in other cases as provided by the CME rulebook. Clearing firm guaranty fund contributions received in the form of cash or U.S. Treasury securities as well as the performance bond assets (pursuant to the CME rulebook) can be used to collateralize the facility. At September 30, 2021, guaranty fund contributions available to collateralize the facility totaled $8.6 billion. We have the option to request an increase in the line from $7.0 billion to $10.0 billion. Our 364-day facility contains a requirement that CME remain in compliance with a consolidated tangible net worth test, defined as CME consolidated

shareholder's equity less intangible assets (as defined in the agreement), of not less than $800.0 million. We currently do not have any borrowings outstanding under this facility.

The indentures governing our fixed rate notes, our $2.4 billion multi-currency revolving senior credit facility and our 364-day multi-currency revolving secured credit facility for $7.0 billion do not contain specific covenants that restrict the ability to pay dividends. These documents, however, do contain other customary financial and operating covenants that place restrictions on the operations of the company that could indirectly affect the ability to pay dividends.

At September 30, 2021, we have excess borrowing capacity for general corporate purposes of approximately $2.4 billion under our multi-currency revolving senior credit facility.

At September 30, 2021, we were in compliance with the various financial covenant requirements of all our debt facilities.

CME Group, as a holding company, has no operations of its own. Instead, it relies on dividends declared and paid to it by its subsidiaries in order to provide the funds which it uses to pay dividends to its shareholders.

To satisfy our performance bond obligation with Singapore Exchange Limited, we may pledge irrevocable standby letters of credit. At September 30, 2021, the letters of credit totaled $310.0 million. We also maintain a $350.0 million line of credit to meet our obligations under this agreement.

The following table summarizes our credit ratings at September 30, 2021:

						Short-Term						Long-Term
Rating Agency						Debt Rating						Debt Rating						Outlook
Standard & Poor’s Global Ratings						A1+						AA-						Stable
Moody’s Investors Service, Inc.						P1						Aa3						Stable

Given our cash flow generation, our ability to pay down debt levels and our ability to refinance existing debt facilities if necessary, we expect to maintain an investment grade rating. If our ratings are downgraded below investment grade due to a change of control, we are required to make an offer to repurchase our fixed rate notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest.

Liquidity and Cash Management. Cash and cash equivalents totaled $1.5 billion and $1.6 billion at September 30, 2021 and December 31, 2020, respectively. The balance retained in cash and cash equivalents is a function of anticipated or possible short-term cash needs, prevailing interest rates, our corporate investment policy and alternative investment choices. A majority of our cash and cash equivalents balance is invested in money market mutual funds that invest only in U.S. Treasury securities, U.S. government agency securities and U.S. Treasury security reverse repurchase agreements and short-term bank deposits. Our exposure to credit and liquidity risk is minimal given the nature of the investments. Cash that is not available for general corporate purposes because of regulatory requirements or other restrictions is classified as restricted cash and is included in other current assets or other assets in the consolidated balance sheets.

Regulatory Requirements*.* CME is regulated by the CFTC as a U.S. Derivatives Clearing Organization (DCO). DCOs are required to maintain capital, as defined by the CFTC, in an amount at least equal to one year of projected operating expenses as well as cash, liquid securities, or a line of credit at least equal to six months of projected operating expenses. CME was designated by the Financial Stability Oversight Council as a systemically important financial market utility under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. As a result, CME must comply with CFTC regulations applicable to a systemically important DCO for financial resources and liquidity resources. CME is in compliance with all DCO financial requirements.

CME, CBOT, NYMEX and COMEX are regulated by the CFTC as Designated Contract Markets (DCM). DCMs are required to maintain capital, as defined by the CFTC, in an amount at least equal to one year of projected operating expenses as well as cash, liquid securities or a line of credit at least equal to six months of projected operating expenses. Our DCMs are in compliance with all DCM financial requirements.

BrokerTec Americas LLC is required to maintain sufficient net capital under Securities Exchange Act of 1934, as amended (Exchange Act), Rule 15c3-1 (the Net Capital Rule). The Net Capital Rule focuses on liquidity and is designed to protect securities customers, counterparties, and creditors by requiring that broker-dealers have sufficient liquid resources on hand at all times to satisfy claims promptly. Rule 15c3-3, or the customer protection rule, which complements rule 15c3-1, is designed to ensure that customer property (securities and funds) in the custody of broker-dealers is adequately safeguarded. By law, both of these rules apply to the activities of registered broker-dealers, but not to unregistered affiliates. The firm began operating as a (k)(2)(i) broker dealer in November 2017 following notification to the Financial Industry Regulatory Authority and the SEC. A company operating under the (k)(2)(i) exemption is not required to lock up customer funds as would otherwise be required under Exchange Act Rule 15c3-3.