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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided to assist the reader in understanding the results of operations, liquidity and capital resources, and critical accounting estimates and policies through the eyes of our management team. The following discussion should be read in conjunction with the consolidated financial statements of the Company and the notes thereto included in Item 8 of this Annual Report on Form 10-K. The following discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. See “Risk Factors” and “Forward-Looking Statements” above.

A detailed comparison of the Company’s 2020 operating results to its 2019 operating results can be found in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in the Company’s 2020 Annual Report on Form 10-K filed February 19, 2021 at www.sec.gov.

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations is organized as follows:

EXECUTIVE SUMMARY

Overview

Cboe Global Markets, Inc. (“Cboe” or “the Company”), a leading provider of market infrastructure and tradable products, delivers cutting-edge trading, clearing and investment solutions to market participants around the world. The Company is committed to operating a trusted, inclusive global marketplace, providing leading products, technology and data solutions that enable participants to define a sustainable financial future. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives and FX, across North America, Europe, and Asia Pacific.

Cboe’s subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In addition, the Company operates one of the largest stock exchanges by value traded in Europe, and owns EuroCCP, a leading pan-European equities and derivatives clearinghouse, BIDS Trading, a leading block-trading ATS by volume in the U.S., MATCHNow, a leading equities ATS in Canada, and Cboe Australia, an operator of trading venues in Australia, and Cboe Japan, an operator of trading venues in Japan. Cboe also is a leading market globally for exchange-traded products (“ETPs”) listings and trading.

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

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Recent Developments

Acquisition of BIDS Holdings

On December 31, 2020, the Company completed the acquisition of BIDS Holdings, which is included in the Company’s North American Equities segment. BIDS Holdings owns BIDS Trading, a registered broker-dealer and the operator of the BIDS ATS, the largest block-trading ATS by volume in the U.S. The BIDS ATS is not a registered national securities exchange or a facility thereof. The acquisition follows Cboe and BIDS Trading’s successful partnership in Europe, which began in 2016 with the creation of Cboe LIS for European equities block-trading. Since its launch, Cboe LIS has grown to become one of the largest block-trading platforms in Europe. BIDS Trading’s proven block-trading capability provides the Company a foothold in the off-exchange segment of the U.S. equities market. Additionally, BIDS Trading’s differentiated network of global buy-side investment managers and sell-side constituents provides the foundation for Cboe to potentially build more off-exchange products and services in non-U.S. equities or options products and in geographies beyond the U.S.

Acquisition of Chi-X Asia Pacific

On July 1, 2021, the Company completed the acquisition of Chi-X Asia Pacific Holdings, Ltd., a holding company of alternative market operators and providers of innovative market solutions. This acquisition provides the Company with a single point of entry into two key capital markets, Australia and Japan, helps enable it to expand its global equities and market data business into the Asia Pacific region, bring other products and services to the region, and further expand access to its unique proprietary product suite in the region. The transaction closed on July 1, 2021 based upon the time zone of both the acquiree, Chi-X Asia Pacific, and the acquiror, Cboe Worldwide Holdings Limited, a subsidiary of the Company.

Investment in Trading Technologies

On October 31, 2021, the Company, through a wholly-owned subsidiary, became a limited partner of 7Ridge Investments 3 LP (“7Ridge Fund”) in connection with 7Ridge Fund’s planned acquisition of Trading Technologies International, Inc. (“Trading Technologies”). On December 13, 2021, the Company’s subsidiary provided its financial commitment to 7Ridge Fund, and on December 21, 2021, 7Ridge Fund completed the acquisition of Trading Technologies. Trading Technologies is a global provider of next-generation professional trading software, connectivity and data solutions. The Company is strategically aligned with Trading Technologies’ vision of delivering a leading trading, connectivity and data network to the global trading community.

Planned acquisition of ErisX

On October 20, 2021, the Company announced it entered into a definitive agreement to acquire Eris Digital Holdings, LLC (“ErisX”). ErisX operates a U.S.-based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. Ownership of ErisX presents a unique opportunity for the Company to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency. The transaction is expected to close in the first half of 2022; subject to regulatory review and other customary closing conditions.

Planned acquisition of NEO

On November 15, 2021, the Company announced it entered into a definitive agreement to acquire Aequitas Innovations, Inc. (“NEO”). NEO is a fintech organization that is comprised of a fully registered Tier-1 Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equity trading. Ownership of NEO will help allow the Company to provide a more fulsome Canadian equities offering, operating the NEO Exchange, a national securities exchange with trading, listings, and other services, in addition to MATCHNow, the ATS acquired by the Company in 2020. The transaction is expected to close in the first half of 2022; subject to regulatory review and other customary closing conditions.

Business Segments

The Company reports five business segments: Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX. Segment performance is primarily based on operating income (loss). The Company has aggregated all of its corporate costs and eliminations, as well as other business ventures, within Corporate Items and Eliminations;

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however, operating expenses that relate to activities of a specific segment have been allocated to that segment. Our management allocates resources, assesses performance and manages our business according to these segments:

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

North American Equities. The North American Equities segment includes listed U.S. equities and ETP transaction services that occur on fully electronic exchanges owned and operated by BZX, BYX, EDGX, and EDGA, equities transactions that occur on the BIDS Trading platform, and Canadian equities and other transaction services that occur on or through the MATCHNow ATS. The North American Equities segment also includes ETP listings on BZX, the Cboe Global Markets, Inc. common stock listing, applicable market data revenue generated from the consolidated tape plans, the licensing of proprietary equities market data, routing services, and access and capacity services.

Europe and Asia Pacific. The Europe and Asia Pacific segment includes the pan-European listed equities and derivatives transaction services, ETPs, exchange-traded commodities, and international depository receipts that are hosted on MTFs operated by Cboe Europe Equities (Cboe Europe and Cboe NL) and Cboe Europe Derivatives (“CEDX”). It also includes the ETP listings business on RMs and clearing activities of EuroCCP, as well as the equities transaction services of Cboe Australia and Cboe Japan, each operators of trading venues in Australia and Japan. This segment was previously referred to as the European Equities segment but was updated to the Europe segment in the first quarter of 2021 as a result of the launch of Cboe Europe Derivatives, a pan-European derivatives platform in September 2021. The segment was subsequently updated to Europe and Asia Pacific to reflect the acquisition of Chi-X Asia Pacific in July 2021. Cboe Europe operates lit and dark books, a periodic auctions book, and a Large-in-Scale (“LIS”) trading negotiation facility for UK symbols. Cboe NL, launched in October 2019 and based in Amsterdam, operates similar business functionality to that offered by Cboe Europe, and provides for trading only in European Economic Area (“EEA”) symbols. The new Cboe Europe Derivatives venue offers futures and options based on Cboe Europe equity indices. This segment also includes Cboe Europe, Cboe NL, CEDX, Cboe Australia, and Cboe Japan revenue generated from the licensing of proprietary market data and from access and capacity services.

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

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

General Factors Affecting Results of Operations

In broad terms, our business performance is impacted by a number of drivers, including macroeconomic events affecting the risk and return of financial assets, investor sentiment, the regulatory environment for capital markets, geopolitical events, tax policies, central bank policies and changing technology, particularly in the financial services industry. We believe our future revenues and net income will continue to be influenced by a number of domestic and international economic trends, including:

● consolidation and expansion of our customers and competitors in the industry;

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A number of significant structural, political and monetary issues and the COVID-19 pandemic continue to confront the global economy, and instability could continue, resulting in an increased or subdued level of inflation, market volatility, supply chain constraints, changes in trading volumes and greater uncertainty. Inflationary increases in our expenses, such as compensation inflation, may have an adverse effect on our financial results.

We continue to closely monitor developments around COVID-19 and follow guidance provided by governmental and public health agencies. In response to COVID-19, we have provided frequent communications to employees, customers, regulators, critical vendors, technology equipment suppliers, data and disaster recovery centers, and other service providers and instructed non-essential employees to work from home on a temporary basis, implemented travel restrictions, and temporarily suspended open outcry trading between March 13, 2020 and June 14, 2020, without any known significant disruptions to our business or control processes. We expect to continue to take further actions as necessary in response to addressing COVID-19. Our business and operations could be materially and adversely affected by the effects of COVID-19, however, the extent to which our results could be affected by COVID-19 largely depends on future developments which cannot be accurately predicted and are uncertain. Further, changes in trading behavior, additional suspensions of open outcry trading, market disruptions and other future developments caused by the effects of COVID-19 could impact trading volumes and the demand for our products, market data, and services, which could have a material adverse effect on our business, financial condition, operating results and cash flows for fiscal year 2021 and could be material during any future period impacted either directly or indirectly by this pandemic.

Components of Revenues

Transaction and Clearing Fees

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

Access and Capacity Fees

Access and capacity fees represent fees assessed for the opportunity to trade, including fees for trading-related functionality across all segments, terminal and other equipment rights, maintenance services, trading floor space and telecommunications services. Facilities, systems services and other fees are generally monthly fee-based. These fees are billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the performance obligation is met. All access and capacity fees associated with the trading floor are recognized in the Options segment. There is no remaining performance obligation after revenue is recognized.

Market Data Fees

Market data fees represent the fees from the U.S. tape plans and fees from customers for proprietary market data. Fees from the U.S. tape plans are collected monthly based on published fee schedules and distributed quarterly to the Exchanges based on a known formula using trading and/or quoting activity. A contract for proprietary market data is entered into and charged on a monthly basis in accordance with the Company’s published fee schedules as the service is provided. Both types of market data are satisfied over time, and revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the Company provides the data. U.S. tape plan market data is

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recognized in the North American Equities and Options segments. Proprietary market data fees are recognized across all segments.

Regulatory Fees

Regulatory fees primarily represent fees collected by the Company to cover the Section 31 fees charged to the Exchanges under the authority of the SEC (Cboe Options, C2, BZX, BYX, EDGX, and EDGA) and are charged by the SEC. Consistent with industry practice, the fees charged to customers are based on the fee set by the SEC per notional value of U.S. Equities exchange transactions and per round turn of Options transactions executed on the Company’s U.S. securities markets. These fees are calculated and billed monthly and are recognized in the North American Equities and Options segments. As the Exchanges are responsible for the ultimate payment to the SEC, the Exchanges are considered the principals in these transactions. Regulatory fees also include the options regulatory fee (“ORF”) which supports the Company’s regulatory oversight function in the Options segment, along with other miscellaneous regulatory fees, and neither can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the performance obligation is fulfilled.

Other Revenue

Other revenue primarily consists of revenue from various licensing agreements, interest income from clearing operations, all fees related to the trade reporting facility operated in the Europe and Asia Pacific segment, and listing fees.

Components of Cost of Revenues

Liquidity Payments

Liquidity payments are directly correlated to the volume of securities traded on our markets. As stated above, we record the liquidity rebates paid to market participants providing liquidity, in the case of C2, BZX, EDGX, and Cboe Europe, as cost of revenue. BYX and EDGA offer a pricing model where we rebate liquidity takers for executing against an order resting on our book, which is also recorded as a cost of revenues.

Routing and Clearing

Various rules require that U.S. options and equities trade executions occur at the NBBO displayed by any exchange. Linkage order routing consists of the cost incurred to provide a service whereby Cboe equities and options exchanges deliver orders to other execution venues when there is a potential for obtaining a better execution price or when instructed to directly route an order to another venue by the order provider. The service affords exchange order flow providers an opportunity to obtain the best available execution price and may also result in cost benefits to those clients. Such an offering improves our competitive position and provides an opportunity to attract orders which would otherwise bypass our exchanges. We utilize third-party brokers or our broker-dealer, Cboe Trading, to facilitate such delivery. Also included within routing and clearing are the Order Management System and Execution Management System (“OMS” and “EMS”, respectively) fees incurred for U.S. Equities Off-Exchange order execution, as well as settlement costs incurred for the settlement process executed by EuroCCP.

Section 31 Fees

Exchanges under the authority of the SEC (Cboe Options, C2, BZX, BYX, EDGX, and EDGA) are assessed fees pursuant to the Exchange Act designed to recover the costs to the U.S. government of supervision and regulation of securities markets and securities professionals. We treat these fees as a pass-through charge to customers executing eligible listed equities and listed equity options trades. Accordingly, we recognize the amount that we are charged under Section 31 as a cost of revenues and the corresponding amount that we charge our customers as regulatory transaction fees revenue. Since the regulatory transaction fees recorded in revenues are equal to the Section 31 fees recorded in cost of revenues, there is no impact on our operating income. CFE, Cboe Europe, Cboe NL, BIDS, MATCHNow, Cboe FX, Cboe Australia and Cboe Japan are not U.S. national securities exchanges, and accordingly are not charged Section 31 fees.

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Royalty Fees

Royalty fees primarily consist of license fees paid by us for the use of underlying indices in our proprietary products usually based on contracts traded. The Company has licenses with the owners of the S&P 500 Index, S&P 100 Index and certain other S&P indices, FTSE Russell indices, the DJIA, MSCI, and certain other index products. This category also includes fees related to the dissemination of market data related to S&P indices and other products through Cboe Streaming Market Indices (“CSMI”).

Other Cost of Revenues

Other cost of revenues primarily consists of interest expense from clearing operations, electronic access permit fees and other miscellaneous costs associated with other revenue.

Components of Operating Expenses

Compensation and Benefits

Compensation and benefits represent our largest expense category and tend to be driven by our staffing requirements, financial performance, and the general dynamics of the employment market. Stock-based compensation is a non-cash expense related to equity awards. Stock-based compensation can vary depending on the quantity and fair value of the award on the date of grant and the related service period.

Depreciation and Amortization

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

Technology Support Services

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

Professional Fees and Outside Services

Professional fees and outside services consist primarily of consulting services, which include supplemental staff activities primarily related to systems development and maintenance, legal, regulatory and audit, and tax advisory services.

Travel and Promotional Expenses

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

Facilities Costs

Facilities costs primarily consist of expenses related to owned and leased properties including rent, maintenance, utilities, real estate taxes and telecommunications costs.

Acquisition-Related Costs

Acquisition-related costs relate to acquisitions and other strategic opportunities, including the Merger. The acquisition-related costs include fees for investment banking advisors, lawyers, accountants, tax advisors, public relations firms, severance and retention costs, impairment of goodwill, capitalized software and facilities, and other external costs directly related to the mergers and acquisitions.

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Other Expenses

Other expenses represent costs necessary to support our operations that are not already included in the above categories.

Non-Operating (Expenses) Income

Income and expenses incurred through activities outside of our core operations are considered non-operating and are classified as other (expense) income. These activities primarily include interest earned on the investing of excess cash, interest expense related to outstanding debt facilities, dividend income, income and unrealized gains and losses related to investments held in a trust for the Company’s non-qualified retirement and benefit plans, and equity earnings or losses from our investments in other business ventures.

RESULTS OF OPERATIONS

The following are summaries of changes in financial performance and include certain non-GAAP financial measures. Management uses these non-GAAP measures internally in conjunction with GAAP measures to help evaluate our performance and to help make financial and operational decisions. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision making by removing the impact of certain items management believes do not reflect our underlying operations.

We believe our presentation of these measures provides investors with greater transparency into financial measures used by management and is useful to investors for period-to-period comparisons of our ongoing operating performance.

These non-GAAP financial measures are not presented in accordance with, or as an alternative to, GAAP financial measures and may be calculated differently from non-GAAP measures used by other companies, which reduces their usefulness as comparative measures. We encourage analysts, investors and other interested parties to use these non-GAAP measures as supplemental information to the GAAP financial measures included herein, including our consolidated financial statements, to enhance their analysis and understanding of our performance and in making comparisons. Please see the footnotes below for definitions, additional information, and reconciliations from the closest GAAP measure.

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Comparison of Years Ended December 31, 2021 and 2020

Overview

The following summarizes changes in financial performance for the year ended December 31, 2021, compared to the year ended December 31, 2020:

Year Ended

December 31, Increase/ Percent

Basic earnings per share $ 4.93 $ 4.28 $ 0.65 15 %

Diluted earnings per share 4.92 4.27 0.65 15 %

Adjusted EBITDA margin (4) 66.9 % 69.7 % (2.8) % *

Adjusted earnings margin (5) 44.0 % 46.0 % (2.0) % *

Adjusted Diluted earnings per share (6) $ 6.05 $ 5.27 $ 0.78 15 %

* Not meaningful

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Year Ended

December 31,

Revenues less cost of revenues $ 1,476.1 $ 1,254.3

Recent acquisitions:

Acquisition revenues less cost of revenues $ (82.8) $ —

(3) EBITDA margin represents EBITDA divided by revenues less cost of revenues.

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The following is a reconciliation of net income (loss) allocated to common stockholders to EBITDA and adjusted EBITDA (in millions):

Year Ended December 31,

Interest expense, net — — 12.4 — — 35.0 47.4

Acquisition-related costs 0.3 2.8 1.4 — — 11.1 15.6

Impairment of investment — — — — — 5.0 5.0

Year Ended December 31,

Interest expense, net — — 6.9 — — 30.7 37.6

Acquisition-related costs 12.9 15.1 — — — 17.2 45.2

Provision for notes receivable 1.7 5.0 — — — — 6.7

Bargain purchase gain — — (32.0) — — (0.6) (32.6)

The following is a reconciliation of net income allocated to common stockholders to adjusted earnings (in millions):

Year Ended December 31,

Net income allocated to common stockholders $ 527.3 $ 467.0

Acquisition-related costs 15.6 45.2

Provision for notes receivable — 6.7

Bargain purchase gain — (32.6)

Impairment of investment 5.0 —

Change in contingent consideration (2.7) —

Tax effect of adjustments (31.8) (38.0)

Release of tax reserves (5.4) —

Deferred tax re-measurements 14.6 4.1

Net income allocated to participating securities (0.4) (0.6)

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The following summarizes changes in certain operational and financial metrics for the year ended December 31, 2021 compared to the year ended December 31, 2020:

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The following table includes operational and financial metrics for our Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX segments. The metrics listed for Canadian Equities, EuroCCP, BIDS Trading, Australian Equities, and Japanese Equities in the table below are included as a result of acquisitions completed during 2020 and 2021. Therefore, the table does not include results from the periods preceding each acquisition for the applicable metrics. The following summarizes changes in certain operational and financial metrics for the year ended December 31, 2021, compared to the year ended December 31, 2020.

Year Ended

December 31, Increase/ Percent

(in millions, except percentages, trading days, and as noted below)

Options:

Average daily volume (ADV) (in millions of contracts):

Total touched contracts (1) 12.1 10.1 2.0 20 %

Index contract ADV 2.0 1.8 0.2 11 %

Multi-Listed contract ADV 10.1 8.3 1.8 22 %

Number of trading days 252 253 (1) (0) %

Total Options Market Share 30.8 % 34.3 % (3.5) % *

Multi-Listed Options Market Share 27.1 % 30.0 % (2.9) % *

Index Options Market Share 98.7 % 99.2 % (0.5) % *

North American Equities:

U.S. Equities:

U.S. Equities - Exchange:

ADV:

Total touched shares (in billions) (1) 1.7 1.8 (0.1) (6) %

Market ADV (in billions) 11.4 10.9 0.5 5 %

Market share 14.2 % 15.8 % (1.6) % *

U.S. ETPs: launches (number of launches) 117 114 3 3 %

U.S. ETPs: listings (number of listings) 539 437 102 23 %

U.S. Equities - Off-Exchange (3):

ADV:

Total touched shares (in millions) (1) 83.0 — 83 — %

Trading days 252 253 (1) — %

Canadian Equities:

ADV (matched shares, in millions) (6) 49.4 43.1 6.3 15 %

Europe and Asia Pacific:

European Equities:

ADNV:

Matched ADNV (in billions) (8) € 7.7 € 6.9 € 0.8 12 %

Market ADNV (in billions) 42.6 40.1 2.5 6 %

Trading days 258 258 — — %

Market share 18.1 % 17.2 % 0.9 % *

EuroCCP:

Fee per trade cleared (11) € 0.011 € 0.011 € — — %

Net settlement volume (12) 9.9 4.1 5.8 141 %

Australian Equities:

ADNV (AUD billions) $ 0.8 $ — $ 0.8 — %

Trading days 130 — 130 — %

Market share - Continuous 15.9 % — % 15.9 % *

Japanese Equities:

ADNV (JPY billions) ¥ 100.1 ¥ — ¥ 100.1 — %

Trading days 123 — 123 — %

Market share - Lit Continuous 2.7 % — % 2.7 % *

Futures:

Trading days 252 253 (1) (0) %

Global FX:

ADNV (in billions) $ 33.9 $ 34.7 $ (0.8) (2) %

Trading days 260 260 — — %

Average Euro/U.S. dollar exchange rate $ 1.183 $ 1.141 $ 0.042 4 %

Average Euro/British pound exchange rate £ 0.860 £ 0.889 £ (0.029) (3) %

Average Japanese Yen/U.S. dollar exchange rate $ 0.009 $ — $ 0.009 — %

* Not meaningful

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Revenues

Total revenues for the year ended December 31, 2021 increased $67.7 million, or 2%, compared to the prior period primarily due to a $275.1 million, or 11%, increase in transaction and clearing fees as a result of increased volumes traded on the Options exchanges and additional revenues attributable to acquisitions made in 2020 and 2021, partially offset by a decrease in regulatory fees as a result of a decline in the Section 31 fee rate. The following summarizes changes in revenues for the year ended December 31, 2021 compared to the year ended December 31, 2020 (in millions, except percentages):

Year Ended

December 31, Increase/ Percent

Transaction and Clearing Fees

Transaction and clearing fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a 33% increase in overall options market ADV, including a 22% increase in multi-listed options ADV, additional transaction and clearing fees attributed to EuroCCP and BIDS, which the Company acquired in the third quarter of 2020 and the end of the fourth quarter of 2020, respectively, and a 12% increase in European Equities matched ADNV.

Access and Capacity Fees

Access and capacity fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to increases in subscribers which results in an increase in logical port revenue across the Options, Europe and Asia Pacific, and North American Equities segments, coupled with an increase in physical port revenue in the North American Equities and Options segments.

Market Data Fees

Market data fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to an increase in subscribers and additional revenue attributed to Chi-X Asia Pacific, which the Company acquired in the third quarter of 2021.

Regulatory Fees

Regulatory fees decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a decrease in Section 31 fees as the result of a 64% decline in the Section 31 fee rate, from an average rate of $21.90 per million dollars of covered sales in 2020 to an average rate of $7.80 per million dollars of covered sales in 2021.

Other Revenue

Other revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to additional interest income from EuroCCP, as well as an increase in trade reporting revenue within the Europe and Asia Pacific segment.

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Cost of Revenues

Cost of revenues decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to lower Section 31 fees as a result of a decline in the Section 31 fee rate, partially offset by higher liquidity payments as a result of increased volumes traded on the Options exchanges. The following summarizes changes in cost of revenues for the year ended December 31, 2021 compared to the year ended December 31, 2020 (in millions, except percentages):

Year Ended

December 31, Increase/ Percent

* Not meaningful

Liquidity Payments

Liquidity payments increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to an increase in volumes traded on the Options exchanges.

Routing and Clearing

The increase in routing and clearing fees for the year ended December 31, 2021 compared to the same period in 2020 was primarily due to an increase in routing and clearing fees attributed to EuroCCP and BIDS, partially offset by a decrease in routed shares on the U.S. Equities exchanges.

Section 31 Fees

Section 31 fees decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a 64% decline in the Section 31 fee rate, from an average rate of $21.90 per million dollars of covered sales in 2020 to an average rate of $7.80 per million dollars of covered sales in 2021.

Royalty Fees

Royalty fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to an increase in trading volume in licensed products and increased fees related to the dissemination of market data through CSMI, partially offset by a decline in fees from PULSe, which was decommissioned in the fourth quarter of 2020.

Other Cost of Revenues

Other cost of revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to additional interest expense from EuroCCP.

Revenues Less Cost of Revenues

Revenues less cost of revenues increased $221.8 million, or 18%, for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a $161.1 million, or 20%, increase in transaction and clearing fees less liquidity payments and routing and clearing costs, coupled with increases in access and capacity fees and market data fees.

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The following summarizes the components of revenues less cost of revenues for the year ended December 31, 2021, presented as a percentage of revenues less cost of revenues and compared to the year ended December 31, 2020 (in millions, except percentages):

Percentage of

Revenues Less

Cost of

Revenues

Year Ended Year Ended

December 31, Percent December 31,

Regulatory fees, less Section 31 fees 28.7 35.2 (18) % 2 % 3 %

Royalty fees (86.3) (83.4) (3) % (6) % (7) %

Transaction and Clearing Fees Less Liquidity Payments and Routing and Clearing Costs

Transaction and clearing fees less liquidity payments and routing and clearing costs (“Net Transaction and Clearing Fees”) increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a 33% increase in overall options market ADV, additional net transaction and clearing fees attributed to BIDS and EuroCCP, and a 12% increase in European Equities matched ADNV, partially offset by a 5% decrease in net capture on the U.S. Equities exchanges.

Access and Capacity Fees

Access and capacity fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to an increase in logical port revenue across the Options, Europe and Asia Pacific, and North American Equities segments, coupled with an increase in physical port revenue in the North American Equities and Options segments.

Market Data Fees

Regulatory Fees, Less Section 31 Fees

Regulatory fees, less Section 31 fees, decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a decline in the ORF rate effective August 2, 2021, coupled with a decrease in fines and assessment fees.

Royalty Fees

Other

Other revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to additional net interest income from EuroCCP, as well as an increase in trade reporting revenue within the Europe and Asia Pacific segment.

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Operating Expenses

For the year ended December 31, 2021 compared to the year ended December 31, 2020, total operating expenses increased primarily due to increases in compensation and benefits, professional fees and outside services, and technology support services, partially offset by a decline in acquisition-related costs. The following summarizes changes in operating expenses for the year ended December 31, 2021 compared to the year ended December 31, 2020 (in millions, except percentages):

Year Ended

December 31, Increase/ Percent

Depreciation and amortization 167.4 158.5 8.9 6 %

Professional fees and outside services 83.7 60.6 23.1 38 %

Travel and promotional expenses 9.7 6.6 3.1 47 %

Acquisition-related costs 15.6 45.2 (29.6) (65) %

Compensation and Benefits

Compensation and benefits increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a $62.4 million increase in salaries, wages, bonuses, and benefits, driven by a $30.9 million increase in compensation and benefits expense related to acquisitions made in 2020 and 2021, as well as a $30.5 million increase in compensation and benefits expense related to increased headcount excluding acquisitions, partially offset by a $3.7 million increase in capitalized wages due to an increase in software projects eligible for capitalization.

Depreciation and Amortization

Depreciation and amortization increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to an increase in depreciation and amortization expense resulting from acquisitions made in 2020 and 2021, coupled with an increase in leasehold improvements related to the new headquarters location, partially offset by a decline in amortization under the discounted cash flow method for the intangibles acquired in the Bats acquisition.

Technology Support Services

Technology support services costs increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to increased market data support services fees, data center hosting, network and phone connectivity support services fees, and hardware maintenance fees related to acquisitions made in 2020 and 2021.

Professional Fees and Outside Services

Professional and outside services fees increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to increases in legal fees of $7.8 million driven by additional litigation fees and higher general legal fees, regulatory fees of $5.4 million driven by rising CAT costs, $3.7 million in contract services, and $2.4 million in consulting fees in connection with acquisitions made in 2020 and 2021.

Travel and Promotional Expenses

Travel and promotional expenses increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to an increase in marketing and advertising expenses attributable to promotional efforts.

Facilities Costs

Facilities costs increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to an increase in rent expense related to the new headquarters building, additional office locations due to acquisitions made in 2020 and 2021, and the new trading floor location.

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Acquisition-Related Costs

Acquisition-related costs decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a decrease in overall acquisition activity, partially offset by the $11.0 million write-off of the Company’s investment in Signal Trading Systems, LLC in the fourth quarter of 2020, coupled with the $8.1 million facilities-related impairment charge in the second quarter of 2020.

Other Expenses

Other expenses decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to a $6.7 million provision for notes receivable recorded in the third quarter of 2020, related to the CAT, as well as a gain on change in contingent consideration related to MATCHNow recorded in the fourth quarter of 2021, partially offset by increases in taxes, licenses, permits, and training and education expenses.

Operating Income

As a result of the items above, operating income for the year ended December 31, 2021 was $805.9 million, compared to $662.2 million for the year ended December 31, 2020, an increase of $143.7 million, or 22%.

Interest Expense, Net

Net interest expense increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to commitment fees related to the EuroCCP Credit Facility, which was entered into in July 2020 and subsequently amended and restated in July 2021, as well as additional interest expense related to the 1.625% Senior Notes issued in the fourth quarter of 2020.

Other (Expense) Income, Net

Net other (expense) income decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to the $32.6 million bargain purchase gain related to the EuroCCP acquisition recorded in the third quarter of 2020, coupled with a $5.0 million impairment on investment recorded in the third quarter of 2021.

Income Before Income Tax Provision

As a result of the above, income before income tax provision for the year ended December 31, 2021 was $756.1million compared to $660.4 million for the year ended December 31, 2020, an increase of $95.7million, or 14%.

Income Tax Provision

For the year ended December 31, 2021, the income tax provision was $227.1 million compared to $192.2 million for the year ended December 31, 2020, an increase of $34.9 million, primarily due to the increase in income before income tax provision and a higher effective tax rate for the year ended December 31, 2021. The effective tax rate for the year ended December 31, 2021 was 30.0%, compared to a rate of 29.1% for the year ended December 31, 2020.

Net Income

As a result of the items above, net income for the year ended December 31, 2021 was $529.0 million, or 36% of revenues less cost of revenues, compared to $468.2million, or 37% of revenues less cost of revenues, for the year ended December 31, 2020, an increase of $60.8 million, or 13%.

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Segment Operating Results

We report results from our five segments: Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX. Segment performance is primarily based on operating income (loss). We have aggregated all corporate costs, as well as other business ventures, within Corporate Items and Eliminations as those activities should not be used to evaluate a segment's operating performance. All operating expenses that relate to activities of a specific segment have been allocated to that segment.

The following summarizes our total revenues by segment (in millions, except percentages):

Percentage of

Total

Revenues

Year Ended Year Ended

December 31, Percent December 31,

Corporate 0.3 — * — % — %

* Not meaningful

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The following summarizes our revenues less cost of revenues by segment (in millions, except percentages):

Percentage of

Total Revenues

less Cost of Revenues

Year Ended Year Ended

December 31, Percent December 31,

Corporate 0.3 — * — % — %

* Not meaningful

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Options

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and EBITDA margin for our Options segment (in millions, except percentages):

Percentage

of Total

Revenues

Year Ended Year Ended

December 31, Percent December 31,

Revenues less cost of revenues $ 755.0 $ 649.7 16 % 50 % 49 %

EBITDA margin (2) 74.9 % 71.0 % * * *

* Not meaningful

(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $105.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to a 22% increase in multi-listed options ADV, coupled with an 11% increase in index options ADV and an 18% increase in multi-listed options RPC. For the year ended December 31, 2021, operating income increased $107.6 million compared to the year ended December 31, 2020 primarily due to an increase in revenues less cost of revenues. Operating expenses decreased $2.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to a decrease in acquisition-related costs, partially offset by increases in compensation and benefits, facilities costs, and travel and promotional expenses.

North American Equities

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and EBITDA margin for our North American Equities segment (in millions, except percentages):

Percentage

of Total

Revenues

Year Ended Year Ended

December 31, Percent December 31,

Revenues less cost of revenues $ 362.5 $ 326.6 11 % 23 % 18 %

EBITDA margin (2) 63.8 % 69.8 % * * *

* Not meaningful

(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $35.9 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to additional revenue attributed to BIDS. For the year ended December 31, 2021, operating income decreased $3.4 million compared to the year ended December 31, 2020 due to an increase in operating expenses, partially offset by an increase in revenues less cost of revenues. Operating expenses increased $39.3 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to increases in compensation and benefits and professional fees and outside services, partially offset by decreases in acquisition-related costs and other expenses.

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Europe and Asia Pacific

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and EBITDA margin for our Europe and Asia Pacific segment (in millions, except percentages):

Percentage

of Total

Revenues

Year Ended Year Ended

December 31, Percent December 31,

Revenues less cost of revenues $ 183.9 $ 114.4 61 % 77 % 81 %

EBITDA margin (2) 50.4 % 83.1 % * * *

* Not meaningful

(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $69.5 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to additional revenue attributed to EuroCCP, Cboe Australia, and Cboe Japan, as well as a 12% increase in European Equities matched ADNV. For the year ended December 31, 2021, operating income increased $22.5 million compared to the year ended December 31, 2020 due to an increase in revenues less cost of revenues, partially offset by an increase in operating expenses. Operating expenses increased $47.0 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to increases in compensation and benefits, technology support services, depreciation and amortization, and professional fees and outside services.

Futures

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA, and EBITDA margin for our Futures segment (in millions, except percentages):

Percentage

of Total

Revenues

Year Ended Year Ended

December 31, Percent December 31,

Revenues less cost of revenues $ 116.8 $ 105.8 10 % 97 % 97 %

Operating expenses 50.8 52.0 (2) % 42 % 48 %

EBITDA margin (2) 58.8 % 53.8 % * * *

* Not meaningful

(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $11.0 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to a 15% increase in Futures ADV. For the year ended December 31, 2021, operating income increased $12.2 million compared to the year ended December 31, 2020 due to an increase in revenues less cost of revenues. Operating expenses decreased $1.2 million for the year ended December 31, 2021

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compared to the year ended December 31, 2020 primarily due to decreases in other expenses, compensation and benefits, and technology and support services, partially offset by an increase in travel and promotional expenses.

Global FX

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA and EBITDA margin for our Global FX segment (in millions, except percentages):

Percentage

of Total

Revenues

Year Ended Year Ended

December 31, Percent December 31,

Revenues less cost of revenues $ 57.6 $ 57.8 (0) % 99 % 100 %

Operating income (loss) $ 2.7 $ 6.0 (55) % 5 % 10 %

EBITDA margin (2) 46.7 % 56.1 % * * *

* Not meaningful

(2) EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues decreased $0.2 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to a 2% decrease in Global FX ADNV. For the year ended December 31, 2021, operating income decreased $3.3 million compared to the year ended December 31, 2020 due to an increase in operating expenses. Operating expenses increased $3.1 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to increases in compensation and benefits and professional fees and outside services, partially offset by a decrease in depreciation and amortization.

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LIQUIDITY AND CAPITAL RESOURCES

Below are charts that reflect elements of our capital allocation:

We expect our cash on hand at December 31, 2021 and other available resources, including cash generated from operations, to be sufficient to continue to meet our cash requirements for the foreseeable future. In the near term, we expect that our cash from operations and availability under the Revolving Credit Facility will meet our cash needs to fund our operations, capital expenditures, interest payments on debt, debt repayments, any dividends, and opportunities for common stock repurchases under the previously announced program. We may also utilize excess cash on hand to pay down amounts outstanding under the Term Loan Agreement. See Note 12 (“Debt”) to the consolidated financial statements for further information. To the extent that our cash sources are insufficient to fund our potential acquisitions, we may participate in future financing transactions to obtain additional capital.

EuroCCP also has a €1.5 billion committed syndicated multicurrency revolving and swingline credit facility agreement with EuroCCP as borrower and the Company as guarantor of scheduled interest and fees on borrowings (but not the principal amount of any borrowings), (the “Facility”). The Facility is available to be drawn by EuroCCP towards (a) financing unsettled amounts in connection with the settlement of transactions in securities and other items processed through EuroCCP’s clearing system and (b) financing any other liability or liquidity requirement of EuroCCP incurred in the operation of its clearing system. Borrowings under the Facility are secured by cash, eligible bonds and eligible equity assets deposited by EuroCCP into secured accounts. As a result, should the Facility be drawn by EuroCCP it could potentially impact EuroCCP’s liquidity, and we can give no assurance that this Facility will be sufficient to meet all of such obligations or sufficiently mitigate EuroCCP’s liquidity risk to meet its payment obligations when due. Additionally, a default of the Facility may allow lenders, under certain circumstances, to accelerate any related drawn amounts and may result in the acceleration of the Company’s other outstanding debt to which a cross-acceleration or cross-default provision applies, which may limit the Company’s liquidity, business and financing activities. The Facility is expected to terminate on June 30, 2022 and we may not be able to enter into a replacement facility on commercially reasonable terms, or at all.

Our long-term cash needs will depend on many factors, including an introduction of new products, enhancements of current products, the geographic mix of our business and any potential acquisitions. We believe our cash from operations and the availability under our Revolving Credit Facility will meet any long-term needs unless a significant acquisition or acquisitions are identified, in which case we expect that we would be able to borrow the necessary funds and/or issue additional shares of our common stock to complete such acquisition(s). In addition, we do not expect COVID-19 to have a material impact on our liquidity or capital resources, including cash from operations or uses of cash, or change our ability to access capital markets in the near term or the foreseeable future.

Cash and cash equivalents include cash in banks and all non-restricted, highly liquid investments with original maturities of three months or less at the time of purchase. Cash and cash equivalents as of December 31, 2021 increased

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$96.5 million from December 31, 2020 primarily due to results of operations, adjustment for depreciation expense, proceeds from available-for-sale financial investments, and proceeds from the term loan modification, partially offset by contributions to investments, cash dividends paid on common stock, and acquisitions, net of cash acquired. See “Cash Flow” below for further discussion.

Our cash and cash equivalents held outside of the United States in various foreign subsidiaries totaled $185.9 million and $128.2 million as of December 31, 2021 and December 31, 2020, respectively. The remaining balance was held in the United States and totaled $156.0 million and $117.2 million as of December 31, 2021 and December 31, 2020, respectively. The majority of cash held outside the United States is available for repatriation, but under current law, could subject us to additional United States income taxes, less applicable foreign tax credits.

Our financial investments include deferred compensation plan assets as well as investments with original or acquired maturities longer than three months but that mature in less than one year from the balance sheet date and are recorded at fair value. As of December 31, 2021, financial investments consisted of U.S. Treasury securities and deferred compensation plan assets.

Our off-balance sheet arrangements include clearing operations related to EuroCCP. See Note 14 (“Clearing Operations”) for discussion of contingent assets and liabilities related to clearing operations in connection with the Company’s acquisition of EuroCCP.

Cash Flow

The following table summarizes our cash flow data for the years ended December 31, 2021, 2020 and 2019 (in millions):

For the Year Ended

December 31,

Net cash provided by operating activities $ 596.8 $ 1,458.8 $ 632.8

Net cash used in investing activities (352.7) (430.5) (15.9)

Net cash used in financing activities (200.3) (201.7) (662.9)

As of December 31,

Net Cash Flows Provided by Operating Activities

During the year ended December 31, 2021, net cash provided by operating activities was $67.8 million higher than net income. The variance is primarily attributable to the adjustment for depreciation and amortization expense of $167.4 million, the change in accounts payable and accrued liabilities of $45.0 million, and the change in unrecognized tax benefits of $33.2 million, partially offset by the change in Section 31 fees payable of $112.1 million and the change in restricted cash and cash equivalents, driven by a $66.2 million decrease in margin deposits and clearing funds related to EuroCCP for the year ended December 31, 2021.

Net cash flows provided by operating activities were $596.8 million and $1,458.8 million for the years ended December 31, 2021 and 2020, respectively. The change in net cash flows provided by operating activities was primarily due to the change in restricted cash and cash equivalents, driven by margin deposits and clearing funds related to EuroCCP, as well as the change in Section 31 fees payable, partially offset by the change in accounts receivable, as well as the change in the bargain purchase gain and provision for deferred income taxes for the year ended December 31, 2021 compared to the year ended December 31, 2020.

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Net cash provided by operating activities was $990.6 million higher than net income for the fiscal year ended December 31, 2020. The variance is primarily attributed to the addition of $812.1 million of restricted cash and cash equivalents, driven by margin deposits and clearing funds related to EuroCCP, the adjustment for depreciation and amortization expense of $158.5 million, the change in accounts payable and accrued liabilities of $59.4 million, and the change in Section 31 fees payable of $53.9 million, partially offset by the change in accounts receivable of $90.0 million.

Net cash provided by operating activities was $1,458.8 million and $632.8 million for the years ended December 31, 2020 and 2019, respectively. The increase in net cash flows provided by operating activities was primarily due to the addition of margin deposits and clearing funds resulting from the EuroCCP acquisition and the increase in net income.

Net Cash Flows Used in Investing Activities

During the year ended December 31, 2021, net cash used in investing activities primarily consisted of contributions to investments of $209.8 million, acquisitions, net of cash acquired of $151.5 million, and purchases of available-for-sale financial investments of $101.2 million, partially offset by proceeds from available-for-sale financial investments of $160.2 million.

Net cash flows used in investing activities were $352.7 million and $430.5 million for the years ended December 31, 2021 and 2020, respectively. The variance is primarily due to the change in acquisitions, net of cash acquired, and the change in purchases of available-for-sale financial investments, partially offset by contributions to investments and the change in proceeds from available-for-sale financial investments for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Net cash flows used in investing activities totaled $430.5 million and $15.9 million for the years ended December 31, 2020 and 2019, respectively. The variance is primarily due to acquisitions, net of cash acquired in 2020 and the return of capital from investments in 2019.

Capital expenditures are expected to be in the range of $47.0 million to $52.0 million, reflecting expenditures associated with the Company’s trading floor relocation, which is anticipated to occur in the second quarter of 2022, ongoing capacity and technology-related investments, as well as anticipated project delays due to supply chain interruptions.

Net Cash Flows Used in Financing Activities

During the year ended December 31, 2021, net cash used in financing activities primarily consisted of cash dividends paid on common stock of $193.3 million and share repurchases of $81.3 million, partially offset by proceeds from long-term debt of $110.0 million.

Net cash flows used in financing activities were $200.3 million and $201.7 million for the years ended December 31, 2021 and 2020, respectively. The variance is primarily due to the change in share repurchases, as well as the change in principal payments of long-term debt, partially offset by the change in proceeds from long-term debt.

For the year ended December 31, 2020, the Company received proceeds from long-term debt of $493.7 million, of which $70.0 million was used to pay down the revolving credit facility draw taken in the third quarter of 2020, repurchased $349.1 million of common stock, paid dividends totaling $170.6 million, and paid down $155.0 million of long-term debt.

Net cash flows used in financing activities totaled $662.9 million for the year ended December 31, 2019. The Company paid down $350.0 million of long-term debt, repurchased $156.9 million of common stock, and paid dividends of $150.0 million.

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Financial Assets

The following summarizes our financial assets excluding margin deposits and clearing funds as of December 31, 2021, 2020 and 2019 (in millions):

As of December 31,

Less deferred compensation plan assets (28.0) (24.5) (23.4)

Less cash collected for Section 31 fees (25.9) (103.0) (69.0)

Debt

The following summarizes our debt obligations as of December 31, 2021, 2020 and 2019 (in millions):

As of December 31,

Revolving Credit Agreement — — —

EuroCCP Credit Facility — — —

At December 31, 2021, we were in compliance with the covenants of our debt agreements.

In addition to the debt outstanding, as of December 31, 2021, we had an additional $250.0 million available through our revolving credit facility, with the ability to borrow another $100.0 million by increasing the commitments under the facility. Together with adjusted cash, we had $675.1 million available to fund our operations, capital expenditures, potential acquisitions, debt repayments and any dividends as of December 31, 2021.

Dividends

The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within the discretion of the Company's Board of Directors and may be affected by various factors, including our earnings, financial condition, capital requirements, level of indebtedness and other considerations our Board of Directors deems relevant. Future debt obligations and statutory provisions, among other things, may limit, or in some cases prohibit, our ability to pay dividends.

Share Repurchase Program

In 2011, the Board of Directors approved an initial authorization for the Company to repurchase shares of its outstanding common stock of $100 million and approved additional authorizations of $100 million in each of 2012, 2013, 2014, 2015 and 2016, $250 million in each of 2018, 2019 and 2020, and $200 million in February 2021, for a total authorization of $1.6 billion. The program permits the Company to purchase shares through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any repurchases at any specific time or situation.

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Under the program, for the year ended December 31, 2021, the Company repurchased 822,005 shares of common stock at an average cost per share of $98.82, totaling $81.3 million. Since inception of the program through December 31, 2021, the Company has repurchased 18,072,129 shares of common stock at an average cost per share of $68.12, totaling $1.2 billion.

As of December 31, 2021, the Company had $318.9 million of availability remaining under its existing share repurchase authorizations.

Lease and Obligations

The Company currently leases additional office space, data centers and remote network operations center, with lease terms remaining from 7 months to 186 months as of December 31, 2021. In September 2019, we entered into two leases that commenced in 2020 for a new principal office space and trading floor space, both located in Chicago, Illinois. Additionally, in October 2021, the Company signed a new lease that commenced in February 2022 for a new principal office space in Amsterdam. See Note 24 (“Leases”) to the consolidated financial statements for additional information.

Total rent expense related to current and former lease obligations for the years ended December 31, 2021, 2020 and 2019 totaled $25.6 million, $20.2 million and $12.4 million, respectively. In addition to our lease obligations, we have contractual obligations related to certain operating leases, data and telecommunications agreements, and our long-term debt outstanding.

Purchase obligations include our estimate of the minimum outstanding obligations under agreements to purchase goods or services that we believe are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed or minimum and maximum amounts to be paid; and the approximate timing of the transaction. Purchase obligations include certain licensing agreements with various licensors which contain annual minimum fee requirements as well as payments calculated using agreed upon contract rates and reported cleared volumes. Purchase obligations exclude agreements that are cancellable at any time without penalty.

We have excluded from the contractual obligations listed below $745.9 million in cash margin deposits and clearing funds. Clearing participants of EuroCCP are required to make deposits to a clearing fund. The cash deposits made by clearing participants are recorded in the consolidated balance sheet as current assets with equal and offsetting current liabilities. See Note 14 (“Clearing Operations”) to the consolidated financial statements for additional information on EuroCCP and the margin deposits and clearing funds.

Future minimum payments under these leases and agreements were as follows as of December 31, 2021:

Payments Due by Period

Less than More than

Total 1 year 1 year

Contractual Obligations

Commercial Commitments and Contractual Obligations

As of December 31, 2021, our commercial commitments and contractual obligations included operating leases, data and telecommunications agreements, equipment leases, our long-term debt outstanding, contingent considerations and other obligations. See Note 23 (“Commitments, Contingencies, and Guarantees”) to the consolidated financial statements for a discussion of commitments and contingencies, Note 12 (“Debt”) for a discussion of the outstanding debt, Note 14 (“Clearing Operations”) for information on EuroCCP’s clearinghouse exposure guarantee, and Note 24 (“Leases”) for discussion on operating leases and equipment leases.

Guarantees

We use Wedbush and Morgan Stanley to clear our routed equities transactions for our U.S. Equities exchanges. Wedbush and Morgan Stanley guarantee the trade until one day after the trade date, after which time the NSCC provides a guarantee. The BIDS Trading ATS platform delivers matched trades to BOA, which delivers the matched trades to the NSCC. BOA guarantees the trade until one day after the trade date, after which time the NSCC provides a guarantee. In

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the case of failure to perform on the part of Wedbush or Morgan Stanley on routed transactions for our U.S. Equities exchanges, we provide the guarantee to the counterparty to the trader. In the case of failure to perform on the part of BOA on transactions for the BIDS Trading ATS platform, BIDS has obligations to the counterparties to satisfy the trades. OCC acts as a central counterparty on all transactions in listed equity options in our Options segment, and as such, guarantees clearance and settlement of all of our options transactions. We believe that any potential requirement for us to make payments under these guarantees is remote and accordingly, have not recorded any liability in the consolidated financial statements for these guarantees. Similarly, with respect to U.S. listed equity options and futures, we deliver matched trades of our customers to the OCC, which acts as a central counterparty on all transactions occurring on Cboe Options, C2, BZX, EDGX, and CFE and, as such, guarantees clearance and settlement of all of our matched options and futures trades. With respect to Canadian equities, we deliver matched trades of our customers to The Canadian Depository for Securities, which acts as a central counterparty on all transactions occurring on MATCHNow and, as such, guarantees clearance and settlement of all of our matched Canadian equities trades. With respect to Australian equities and derivatives, we deliver matched trades of our customers to ASX Clear Pty Ltd and ASX Settlement Pty Ltd. ASX Clear Pty Ltd acts as a central counterparty on all transactions occurring on Cboe Australia and, as such, guarantees clearance and settlement on all of our matched trades in Australia. With respect to Japanese equities, we deliver matched trades of our customers to the Japanese Securities Clearing Corporation, which acts as a central counterparty on all transactions occurring on Cboe Japan and, as such, guarantees clearance and settlement on all of our matched trades in Japan.

CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of the amounts of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. The Company bases its estimates on historical experience, observance of trends in particular areas, information available from outside sources and various other assumptions that are believed to be reasonable under the circumstances. Information from these sources form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources.

We have identified the estimates below as critical to our business operations and the understanding of our results of operations. The impact of, and any associated risks related to, these estimates on our business operations is discussed throughout "Management's Discussion and Analysis of Financial Condition and Results of Operations." For a detailed discussion on these estimates and other accounting policies, see Note 2 (“Summary of Significant Accounting Policies”) to the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

Goodwill and Other Intangible Assets

Description

Our acquisitions of Bats, Cboe Vest Financial Group Inc. (“Vest”), Silexx Financial Systems, LLC (“Silexx”), LiveVol, Hanweck, FT Options, Trade Alert, MATCHNow, BIDS Holdings and Chi-X APAC resulted in the recording of goodwill and other intangible assets, while our acquisition of EuroCCP, resulted in a bargain purchase gain and other intangible assets. In accordance with ASC 350—Intangibles—Goodwill and Other, we test the carrying values of goodwill and indefinite-lived intangible assets for impairment at least annually, or more frequently when events or changes in circumstances signal indicators of impairment are present.

Judgments and Uncertainties

The estimated fair values of our reporting units are based on the market approach and the income approach (using discounted estimated future cash flows). The estimated fair values of indefinite-lived intangibles used the income approach. The discounted estimated future cash flow analysis requires judgments about the discount rate, forecasted revenue growth rate, and operating expenses, that are inherent in these fair value estimates over the estimated remaining operating period. Additionally, the analysis contains uncertainty surrounding future events. As such, actual results may differ from these estimates and lead to a revaluation of our goodwill and indefinite-lived intangible assets.

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Effect if Actual Results Differ from Assumptions

If updated estimates indicate that the fair value of goodwill or any indefinite-lived intangibles is less than the carrying value of the asset, an impairment charge is expected to be recorded in the consolidated statements of income in the period of the change in estimate, which could result in a material change to the consolidated financial statements. However, due to the results of our impairment analyses in 2021, in which all reporting units estimated fair value exceeded their carrying value, we do not consider our goodwill and indefinite-lived intangibles to have a significant risk of impairment.

Income Taxes

Description

The Company’s consolidated global income tax provision, deferred tax assets and liabilities, valuation allowances, and liabilities for unrecognized tax benefits are determined through the interpretation of tax laws and assumptions of future events to calculate an expectation of future tax consequences.

Judgments and Uncertainties

On an ongoing basis, the Company evaluates its tax estimates and judgments. This evaluation is based on factors including historical experience, such as the conclusions of examinations by tax authorities, changes in tax laws or rates, new examination activity, and results of any related legal processes. We use judgment in the evaluation of uncertain tax positions and the estimation of unrecognized tax benefits when determining the largest amount greater than 50% likely to be realized upon ultimate settlement with the taxing authority, assessing the likelihood of the benefit being realized upon settlement, and the calculating expected ultimate settlement amount.

Effect if Actual Results Differ from Assumptions

Significant changes in these estimates or judgments may result in an increase or decrease to our tax provision in a future period. Additionally, it is possible that the ultimate settlement may differ from the liabilities for unrecognized tax benefits currently reported if tax authorities ultimately reach a conclusion that differs from the Company’s expectation. We believe assumptions made regarding income taxes to be reasonable and do not believe any change in the judgments made by management would result in a material change to the consolidated financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 3 (“Recent Accounting Pronouncements”) to the consolidated financial statements for further discussion of recently adopted and recently issued accounting pronouncements that are applicable to the Company.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

As a result of our operating activities, we are exposed to market risks such as foreign currency exchange rate risk, equity risk, credit risk, interest rate risk, and liquidity risk. We have implemented policies and procedures to measure, manage and monitor and report risk exposures, which are reviewed regularly by management and our Board of Directors.

Foreign Currency Exchange Rate Risk

Our operations in Europe, Canada and Asia are subject to increased currency translation risk as revenues and expenses are denominated in foreign currencies, primarily the British pound, Canadian dollar, Singapore dollar, Hong Kong dollar, Euro, Australian dollar, and Japanese Yen. We also have de minimis exposure to other foreign currencies, including the Swiss Franc, Norwegian Kroner, Swedish Krona, Danish Kroner, and Philippine Peso.

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For the year ended December 31, 2021, our exposure to foreign-denominated revenues and expenses is presented by primary foreign currency in the following table (in millions, except percentages):

Year Ended

British Australian

Pounds (1) Euros (1) Dollars (1)

Foreign denominated % of:

Revenues 1.9 % 2.8 % 0.3 %

Cost of revenues 0.2 % 2.1 % 0.0 %

Operating expenses 3.5 % 5.7 % 1.4 %

Impact of 10% adverse currency fluctuation on:

Revenues $ 6.6 $ 9.5 $ 1.1

Cost of revenues 0.4 4.0 0.0

Operating expenses 2.3 3.8 0.9

Equity Risk

Our investment in European, Canadian, and Asia Pacific operations is exposed to volatility in currency exchange rates through translation of our net assets or equity to U.S. dollars. The assets and liabilities of our European businesses are denominated in British pounds or Euros. The assets and liabilities of our Canadian businesses are denominated in Canadian dollars. The assets and liabilities of our Asia Pacific businesses are denominated in Hong Kong dollars, Australian dollars, Japanese Yen, or Philippine Pesos. Fluctuations in currency exchange rates may create volatility in our reported results as we are required to translate foreign currency reported statements of financial condition and operational results into U.S. dollars for consolidated reporting. The translation of these non-U.S. dollar statements of financial condition into U.S. dollars for consolidated reporting results in a cumulative translation adjustment, which is recorded in accumulated other comprehensive income, net within stockholders' equity on our consolidated balance sheet.

Our primary exposure to this equity risk as of December 31, 2021 is presented by foreign currency in the following table (in millions):

British Canadian

Pounds (1) Euros (1) Dollars (1)

Credit Risk

We are exposed to credit risk from third parties, including customers, counterparties and clearing agents. These parties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. We limit our exposure to credit risk by considering such risk when selecting the counterparties with which we make investments and execute agreements.

We do not have counterparty credit risk with respect to trades matched on our exchanges in the U.S., Canada, and Europe. With respect to listed equities, we deliver matched trades of our customers to the NSCC without taking on counterparty risk for those trades. NSCC acts as a central counterparty on all equity transactions occurring on BZX, BYX, EDGX and EDGA and, as such, guarantees clearance and settlement of all of our matched equity trades. Similarly, with respect to U.S. listed equity options and futures, we deliver matched trades of our customers to the OCC, which acts as a central counterparty on all transactions occurring on Cboe Options, C2, BZX, EDGX and CFE and, as such, guarantees clearance and settlement of all of our matched options and futures trades. With respect to Canadian equities, we deliver matched trades of our customers to The Canadian Depository for Securities, which acts as a central counterparty on all transactions occurring on MATCHNow and, as such, guarantees clearance and settlement of all of our matched Canadian equities trades. The BIDS Trading ATS platform delivers matched trades to BOA, which delivers the matched trades to the NSCC. BOA guarantees the trade until one day after the trade date, after which time the NSCC provides a guarantee.

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Thus, BIDS Trading is potentially exposed to credit risk to the counterparty between the trade date and one day after the trade date in the event BOA fails. With respect to Australian equities and derivatives, we deliver matched trades of our customers to ASX Clear Pty Ltd and ASX Settlement Pty Ltd. ASX Clear Pty Ltd acts as a central counterparty on all transactions occurring on Cboe Australia and, as such, guarantees clearance and settlement on all of our matched trades in Australia. With respect to Japanese equities, we deliver matched trades of our customers to the Japanese Securities Clearing Corporation, which acts as a central counterparty on all transactions occurring on Cboe Japan and, as such, guarantees clearance and settlement on all of our matched trades in Japan.

With respect to orders Cboe Trading routes to other markets for execution on behalf of our customers, Cboe Trading is exposed to some counterparty credit risk in the case of failure to perform on the part of our clearing firms, Morgan Stanley or Wedbush. Morgan Stanley and Wedbush guarantee trades until one day after the trade date, after which time NSCC provides a guarantee. The BIDS Trading ATS platform delivers matched trades to BOA, which delivers the matched trades to the NSCC.Thus, Cboe Trading is potentially exposed to credit risk to the counterparty to a trade routed to another market center between the trade date and one day after the trade date in the event that Morgan Stanley or Wedbush fails. The BIDS Trading ATS platform is potentially exposed to counterparty credit risk on equities trades between the trade date and one day after the trade date in the event that BOA fails. We believe that any potential requirement for us to make payments under these guarantees is remote and accordingly, have not recorded any liability in the consolidated financial statements for these guarantees.

Historically, we have not incurred any liability due to a customer’s failure to satisfy its contractual obligations as counterparty to a system trade. Credit difficulties or insolvency, or the perceived possibility of credit difficulties or insolvency, of one or more larger or more visible market participants could also result in market-wide credit difficulties or other market disruptions.

We do not have counterparty credit risk with respect to institutional spot FX trades occurring on our platform because Cboe FX is not a counterparty to any FX transactions. All transactions occurring on our platform occur bilaterally between two banks or prime brokers as counterparties to the trade. While Cboe FX does not have direct counterparty risk, Cboe FX may suffer a decrease in transaction volume if a bank or prime broker experiences an event that causes other prime brokers to decrease or revoke the credit available to the prime broker experiencing the event. Therefore, Cboe FX may have risk that is related to the credit of the banks and prime brokers that trade FX on the Cboe FX platform.

We also have credit risk related to transaction fees that are billed in arrears to customers on a monthly basis. Our potential exposure to credit losses on these transactions is represented by the receivable balances in our balance sheet. Our customers are financial institutions whose ability to satisfy their contractual obligations may be impacted by volatile securities markets.

As a result of the acquisition of EuroCCP on July 1, 2020, the Company is exposed to further credit risk through our clearing operations. EuroCCP holds material amounts of clearing participant collateral, both cash and non-cash deposits, which are held or invested primarily to provide security of capital while minimizing credit risk as well as liquidity and market risks. The following is a summary of the risks associated with these deposits and how these risks are mitigated:

•Credit Risk -The credit risk is predominantly in the event a clearing participant fails to meet a financial or contractual obligation. EuroCCP attempts to mitigate this risk through minimum participant requirements for clearing participants and monitoring their financial health. To cover potential loss to EuroCCP in the event of a clearing participant default, collateral is required from clearing participants. Besides potential defaults of clearing participants, the main credit risk faced by the clearinghouse is exposure to clearing participants when a trade fails to settle. To help mitigate this risk, a fail fee is charged to discourage late settlements. This fee covers EuroCCP’s costs but also acts as a deterrent as required by Regulation (EU) No 236/2012 on short selling, together with certain aspects of credit default swaps.

•Liquidity Risk -Liquidity risk is the risk EuroCCP may not be able to meet its payment obligations in the right currency, in the right place and at the right time. To help mitigate this risk, EuroCCP monitors its liquidity requirements closely and maintains funds and assets in a manner which attempt to minimize the risk of loss or delay in the access by the clearinghouse to such funds and assets. For example, holding funds with a central bank where possible or making only short-term investments serves to help reduce liquidity risks. Liquidity is mainly required for securities settlement. The payment and settlement obligations generally stem from the function of EuroCCP as a cash equity clearinghouse: shares are bought and sold by clearing participants on a trading platform or OTC, and netted to settle two days later. During the settlement the actual payment for and delivery of the shares take place, this process requires intraday liquidity. If

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counterparties, which receive shares against payment, are unable to settle, an overnight liquidity need arises. The overnight liquidity is typically very short term, and is usually limited to a few days.

•Market Risk - EuroCCP is also exposed to market risk in the event that a clearing participant defaults and the market prices of the securities in its open positions have moved adversely so the clearinghouse can only close out the participant’s obligations at a loss. To help mitigate market risk, EuroCCP collects collateral from clearing participants to cover for the probable loss during normal market conditions, together with contributions to the clearing fund to cover losses if a default occurred during extreme but plausible market conditions. Adverse movements in exchange rates affecting the value of obligations and collateral are factored into the calculation of the amount of collateral to be collected.

On a regular basis, we review and evaluate changes in the status of our counterparties’ creditworthiness. Credit losses such as those described above could adversely affect our consolidated financial position and results of operations. Any such effects to date have been minimal.

Interest Rate Risk

We have exposure to market risk for changes in interest rates relating to our cash and cash equivalents, financial investments, and indebtedness. As of December 31, 2021 and 2020, our cash and cash equivalents and financial investments were $379.0 million and $337.8 million, respectively, of which $185.9 million and $128.0 million is held outside of the United States in various foreign subsidiaries in 2021 and 2020, respectively. The remaining cash and cash equivalents and financial investments are denominated in U.S. dollars. We do not use our investment portfolio for trading or other speculative purposes. Due to the nature of these investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates, assuming no change in the amount or composition of our cash and cash equivalents and financial investments.

As of December 31, 2021, we had $1,299.3 million in outstanding debt, of which $1,139.9 million relates to our Senior Notes, which bear interest at fixed interest rates. Changes in interest rates will have no impact on the interest we pay on fixed-rate obligations. The remaining amounts outstanding of $159.5 million relates to the Term Loan Agreement, which bears interest at fluctuating rates and, therefore, subjects us to interest rate risk. A hypothetical 100 basis point increase in interest rates relating to the amounts outstanding under the Term Loan Agreement as of December 31, 2021 would decrease annual pre-tax earnings by $1.6 million, assuming no change in the composition of our outstanding indebtedness. We are also exposed to changes in interest rates as a result of borrowings under our Revolving Credit Agreement and the EuroCCP Credit Facility, as these facilities bear interest at fluctuating rates. As of December 31, 2021, there were no outstanding borrowings under our Revolving Credit agreement and no outstanding borrowings under the EuroCCP Credit Facility. See Note 12 (“Debt”) to the consolidated financial statements for a discussion of debt agreements.

Liquidity Risk

We are exposed to liquidity risk under certain circumstances in relation to the cross-acceleration and cross-default provisions within the Term Loan Agreement and the Revolving Credit Agreement as a result of the Company, as guarantor, entering into the EuroCCP Credit Facility. A default of the Facility may allow lenders to accelerate any related drawn amounts and may result in the acceleration of the Company’s other outstanding debt to which a cross-acceleration or cross-default provision applies, which may limit the Company’s liquidity, business and financing activities. See Note 12 (“Debt”) to the consolidated financial statements for a discussion of debt agreements.

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Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Cboe Global Markets, Inc. and Subsidiaries

Consolidated Financial Statements:

CBOE US Equity

CBOE · 10-K · period ended 2021-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

CBOE US Equity☆

CBOE · 10-K · period ended 2021-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

CBOE US Equity