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What changed in CME Group's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CME Group's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+296 added−295 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-27)

Top changes in CME Group's 2023 10-K

296 paragraphs added · 295 removed · 241 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

90 edited+27 added−14 removed63 unchanged
Biggest changeTreasury Bond Futures (2022) • Micro Bitcoin and Ether Options (2022) • Aluminum Options (2022) • Canadian Wheat Futures (2022) • Micro WTI Options (2022) • Six new E-mini sector index Futures (2022) • Euro-denominated Bitcoin and Ether Futures (2022) • Ether Options (2022) • Ten event contracts linked to our global benchmarks (2022) • TBA futures for Mortgage-backed Securities (2022) • Euro Short-Term Rate (€STR) Futures and RepoFunds Rate (RFR) Futures (2022) In addition to the individual product launches noted above, we have completed many product extensions across our asset classes, including short-dated options products (Monday and Wednesday weekly options on Gold, Silver and Copper and Tuesday and Thursday weekly options on the E-Mini S&P 500).
Biggest changeTreasury Bond Futures (2022) • Micro Bitcoin and Ether Options (2022) • Aluminum Options (2022) • Micro WTI Options (2022) • Six new E-mini sector index Futures (2022) • Euro-denominated Bitcoin and Ether Futures (2022) • Ether Options (2022) • Ten event contracts linked to our global benchmarks (2022) • TBA futures for Mortgage-backed Securities (2022) • Euro Short-Term Rate (€STR) Futures (2022) • Additional Cryptocurrency Reference Rates and Real-Time Indices (2022 and 2023) • Event contracts on Bitcoin Futures (2023) • Micro E-mini S&P MidCap 400 and Micro E-mini S&P SmallCap 600 Futures (2023) • Offshore Renminbi Options (2023) • Lithium Carbonate Futures (2023) • Ether/Bitcoin Ratio Futures (2023) • T-Bill Futures (2023) • Options on Micro Gold Futures (2023) • Cobalt Hydroxide Futures (2023) • Micro Henry Hub Futures and Options (2023) • Additional short-term Options on U.S.
Competition in our Derivatives Exchange Business We believe competition in the derivatives business is based on a number of factors, including, among others: • brand and reputation; • efficient and secure settlement, clearing and support services; • depth and liquidity of markets; • capital efficiencies; • diversity of product offerings and frequency and quality of new product development and innovative services; • ability to position and expand upon existing products to address changing market needs; • efficient and seamless customer experience; • transparency, reliability, anonymity and security in transaction processing; • regulatory environment; • connectivity, accessibility, flexibility in execution methods, and distribution; • technological capability and innovation; and • overall transaction costs.
Competition in our Derivatives Exchange Business We believe competition in the derivatives business is based on a number of factors, including, among others: • brand and reputation; • efficient and secure clearing, settlement and support services; • depth and liquidity of markets; • capital efficiencies; • diversity of product offerings and frequency and quality of new product development and innovative services; • ability to position and expand upon existing products to address changing market needs; • efficient and seamless customer experience; • transparency, reliability, anonymity and security in transaction processing; • regulatory environment; • connectivity, accessibility, flexibility in execution methods and distribution; • technological capability and innovation; and • overall transaction costs.
We believe we compete favorably with respect to these factors. Our deep, liquid markets; diverse and complementary product offerings; frequency and quality of new product development; and efficient, secure settlement, clearing and support services, distinguish us from others in the industry.
We believe we compete favorably with respect to these factors. Our deep, liquid markets; diverse and complementary product offerings; frequency and quality of new product development; and efficient, secure clearing, settlement and support services, distinguish us from others in the industry.
Our competitors in the clearing services space include, among others, companies such as ICE, LCH Group, the OCC, CBOE Clear, Depository Trust & Clearing Corporation, Hong Kong Exchanges and Clearing, Japan Securities Clearing Corporation, LME Clearing and Deutsche Börse AG.
Our competitors in the clearing services space include, among others, companies such as ICE, LCH Group, OCC, CBOE Clear, Depository Trust & Clearing Corporation, Hong Kong Exchanges and Clearing, Japan Securities Clearing Corporation, LME Clear and Deutsche Börse AG.
CME Group products are traded primarily through CME Globex, as well as by open outcry in Chicago for Eurodollar options and SOFR options and through privately negotiated transactions. We strive to provide the most flexible and scalable platforms to support the operational and capacity needs of our business along with the delivery of innovative technology solutions to the marketplace.
CME Group products are traded primarily through CME Globex, as well as by open outcry in Chicago for SOFR options (and previously, Eurodollar options) and through privately negotiated transactions. We strive to provide the most flexible and scalable platforms to support the operational and capacity needs of our business along with the delivery of innovative technology solutions to the marketplace.
Multiple other industry participants offer both referential and indicative pricing alternatives to CME offerings, which are widely distributed and available across a variety of media. Distributors and consumers of our market data also may use our market data as an input into products that compete against our traded or cleared products.
Multiple other industry participants offer both referential and indicative pricing alternatives to our offerings, which are widely distributed and available across a variety of media. Distributors and consumers of our market data also may use our market data as an input into products that compete against our traded or cleared products.
We offer equity index futures and options on key benchmarks, including S&P, Nasdaq, Dow Jones, FTSE Russell and fixed income index futures on the BSBY indexes. These products are listed by us subject to license agreements with the applicable owners of the indexes, some of which are exclusive.
We offer equity index futures and options on key benchmarks, including S&P, Nasdaq, Dow Jones, FTSE Russell and fixed income index futures. These products are listed by us subject to license agreements with the applicable owners of the indexes, some of which are exclusive.
We also provide the functionality to connect to CME Direct on a mobile device through our CME Direct Mobile application with full trading and on-the-go order management capabilities. 5 Table of Contents Together, our platforms offer: • certainty of execution; • extensive capabilities to facilitate complex and demanding trading; • direct market access; • fairness, price transparency and anonymity; • convenience and efficiency; • connectivity through highly secure, resilient and low-latency network options; • access to market data; and • global distribution, including connectivity through high-speed international telecommunications hubs in key financial centers or order routing to our global partner exchanges.
We also provide the functionality to connect to CME Direct on a mobile device through our CME Direct Mobile application with full trading and on-the-go order management capabilities. 5 Table of Contents Together, our platforms offer: • certainty of execution; • extensive capabilities to facilitate complex and demanding trading; • direct market access; • open access, price transparency and anonymity; • convenience and efficiency; • connectivity through highly secure, resilient and low-latency network options; • access to market data; and • global distribution, including connectivity through high-speed international telecommunications hubs in key financial centers or order routing to our global partner exchanges.
We have increased our customer base and continue to target cross-asset sales across client segments and across cash and futures platforms, driving global sales and generating new client participation across all regions.
We have increased our customer base and continue to target cross-asset opportunities across client segments and across cash and futures platforms, driving global sales and generating new client participation across all regions.
Cutinho has served as our Chief Information Officer since February 2022 and previously served as President of CME Clearing since 2014. He joined CME Group in 2002 and since then has held various positions of increasing responsibility within the organization, including as Managing Director, Deputy Head of CME Clearing from April 2014 through September 2014. Lynne Fitzpatrick, 44. Ms.
Cutinho has served as our Chief Information Officer since February 2022 and previously served as President of CME Clearing since 2014. He joined CME Group in 2002 and since then has held various positions of increasing responsibility within the organization, including as Managing Director, Deputy Head of CME Clearing from April 2014 through September 2014. Lynne Fitzpatrick, 45. Ms.
Treasury securities as collateral could result in increased costs to us and our clearing firms. • The outcome of the debate regarding the regulation of cryptocurrencies, which may impact our existing offerings or our ability to provide future offerings. • New regulations governing treasury market structure, including potential clearing obligations or promotions of all-to-all cash treasury models.
Treasury securities as collateral could result in increased costs to us and our clearing firms. • The outcome of the debate regarding the regulation of cryptocurrencies, which may impact our existing offerings or o ur ability to provide future offerings. • New regulations governing treasury market structure, including potential clearing obligations or promotions of all-to-all cash models.
The settlement of matched principal and exchange-traded businesses requires access to clearing houses either directly or through third-party providers of clearing and settlement services. BrokerTec Americas is a member of the Fixed Inocme Clearing Corporation, through which it clears U.S. Treasury and repo products.
The settlement of matched principal and exchange-traded businesses requires access to clearing houses either directly or through third-party providers of clearing and settlement services. BrokerTec Americas is a member of the Fixed Income Clearing Corporation, through which it clears U.S. Treasury and repo products.
Competition in our Cash Markets Business The cash markets businesses face substantial competition across a wide and growing array of venues.
Competition in our Cash Markets Business The cash markets businesses face substantial competition across a wide array and growing number of venues.
Please also see "Item 1A - Risk Factors" beginning on page 15 for additional information on our areas of regulatory risks. Human Capital Management We rely on a highly skilled and experienced global workfor ce to meet our business objectives.
Please also see "Item 1A - Risk Factors" beginning on page 16 for additional information on our areas of regulatory risks. Human Capital Management We rely on a highly skilled and experienced global workfor ce to meet our business objectives.
Since 2015, she served as Managing Director, Credit & Liquidity Risk, Risk Policy & Banking, overseeing CME Clearing’s exposure to counterparty credit risk, liquidity risk management and financial performance, acceptable collateral and collateral services, risk management policies and procedures, financial operations, and banking. Jack Tobin, 59 . Mr. Tobin has served as Managing Director and Chief Accounting Officer since 2015.
Since 2015, she served as Managing Director, Credit & Liquidity Risk, Risk Policy & Banking, overseeing CME Clearing’s exposure to counterparty credit risk, liquidity risk management and financial performance, acceptable collateral and collateral services, risk management policies and procedures, financial operations, and banking. Jack Tobin, 60 . Mr. Tobin has served as Managing Director and Chief Accounting Officer since 2015.
Duffy previously served as our Executive Chairman and President since 2012 and as Executive Chairman from 2006. Mr. Duffy has been a member of our board of directors since 1995. He also served as President of TDA Trading, Inc. from 1981 to 2002 and has been a member of our CME exchange since 1981. Sunil Cutinho , 51 . Mr.
Duffy previously served as our Executive Chairman and President since 2012 and as Executive Chairman from 2006. Mr. Duffy has been a member of our board of directors since 1995. He also served as President of TDA Trading, Inc. from 1981 to 2002 and has been a member of our CME exchange since 1981. Sunil Cutinho , 52 . Mr.
We believe that in order to maintain our competitive position, we must continue to expand globally; develop and offer new and innovative products; enhance our technology infrastructure, including its reliability, functionality and security; maintain liquidity and low transaction costs; continue to strengthen our risk management capabilities and solutions; and implement customer protections designed to ensure the integrity of our market and the confidence of our customers.
We believe that in order to maintain our competitive position, we must continue to expand globally; develop and offer new and innovative products; enhance our technology infrastructure, including its reliability, functionality and security; maintain liquidity and low transaction costs; continue to strengthen our risk management 10 Table of Contents capabilities and solutions; and implement customer protections designed to ensure the integrity of our market and the confidence of our customers.
The SEC also maintains an Internet site that contains reports, proxy and information statements, and other reports that we file or furnish with the SEC at http://www.sec.gov. Copies of these materials also are available to shareholders free of charge upon request to Shareholder Relations, officeofthesecretary@cmegroup.com.
The SEC also maintains an Internet site that contains reports, proxy and information statements, and other reports that we file or furnish with the SEC at http:// 15 Table of Contents www.sec.gov. Copies of these materials also are available to shareholders free of charge upon request to Shareholder Relations, officeofthesecretary@cmegroup.com.
Please also refer to the discussion below and in " Item 1A - Risk Factors" beginning on page 15 for a description of competitive risks and uncertainties.
Please also refer to the discussion below and in " Item 1A - Risk Factors" beginning on page 16 for a description of competitive risks and uncertainties.
In the event a clearing firm were to withdraw, our experience indicates that the customer portion of the firm's trading activity would likely transfer to one or more other clearing firms of the exchange. Cash Markets Business: Our cash markets business is comprised of BrokerTec and EBS. Certain BrokerTec and EBS products are cleared at third-party clearing houses.
In the event a clearing firm were to withdraw, our experience indicates that the customer portion of the firm's trading activity would likely transfer to one or more other clearing firms of the exchange. Cash Markets Business: Our cash markets business is comprised of BrokerTec and operated on CME Globex EBS. Certain BrokerTec products are cleared at third-party clearing houses.
In light of the implementation of new regulatory requirements and other financial 10 Table of Contents services reforms, we believe other exchanges and infrastructure providers also may undertake to provide clearing and other related post-trade services in the U.S. as CFTC-regulated clearing organizations.
In light of the implementation of new regulatory requirements and other financial services reforms, we believe other exchanges and infrastructure providers also may undertake to provide clearing and other related post-trade services in the U.S. as CFTC-regulated clearing organizations.
Regulation of our Market Data Business Our subsidiary, CME Group Benchmark Administration, is a registered benchmark administrator, authorized and supervised by the FCA under the UK Benchmark Regulations. CME Group Benchmark offers a variety of different multi-asset class data products, including CME Term SOFR.
Regulation of our Market Data Business Our subsidiary, CME Group Benchmark Administration Limited, is a registered benchmark administrator, authorized and supervised by the FCA under the UK Benchmark Regulations. CME Group Benchmark Administration Limited administers a variety of different multi-asset class data products, including CME Term SOFR.
Our CME Globex electronic platform is the trading engine for our central limit order book markets and is available on a global basis nearly 24 hours a day throughout the trading week. The CME Globex platform is accessible through a wide variety of vendor-provided and custom-built trading systems that benefit from our open application programming interface approach.
Our CME Globex electronic trading system operates our central limit order book markets and is available on a global basis nearly 24 hours a day throughout the trading week. The CME Globex platform is accessible through a wide variety of vendor-provided and custom-built trading systems that benefit from our open application programming interface approach.
We expect to continue to expand this Quant Analytics suite in the future as well. Our CME Liquidity Tool enables market participants to analyze liquidity across CME Group products during U.S., London or Singapore trading hours and was expanded to 37 products in 2021 to meet customer demand for our growing product suite.
We expect to continue to expand this Quant Analytics suite in the future as well. Our CME Liquidity Tool enables market participants to analyze liquidity across CME Group products during U.S., London or Singapore trading hours and covers 37 products to meet customer demand for our growing product suite.
Legislation to impose a financial transaction tax has been proposed previously in the U.S. Congress, Illinois General Assembly and State of New Jersey Legislature. Additionally, from time to time, including this fiscal year, the proposed U.S. Presidential budget request has included a proposal to impose a user fee to fund all or a portion of the budget of the CFTC.
Legislation to impose a financial transaction tax has been proposed previously in the U.S. Congress, Illinois General Assembly and State of New Jersey Legislature. Additionally, from time to time, the proposed U.S. Presidential budget request has included a proposal to impose a user fee to fund all or a portion of the budget of the CFTC.
Our license for the S&P 500 Index will be exclusive for futures and options until one year prior to the termination of the S&P License Agreement, and non-exclusive for the last year. The license for the other S&P stock indexes is generally exclusive for futures and options.
Our license for the S&P 500 Index will be exclusive for futures and options until one year prior to the termination of the S&P License Agreement, and non-exclusive for the last year. The license for the other S&P stock indexes 9 Table of Contents is generally exclusive for futures and options.
Our products provide a means for hedging, speculation and asset allocation related to the risks associated with, among other things, interest rate sensitive instruments, equity ownership, changes in the value of foreign currency and changes in the prices of agricultural, energy and metal commodities. • CME's product slate includes agricultural, equities, FX, cryptocurrencies/alternative investments and interest rate products, including Eurodollar futures and options, Secured Overnight Financing Rate (SOFR) futures and options, Bloomberg Short-Term Bank Yield (BSBY), livestock and cash-settled contracts based on the S&P 500, including the E-mini S&P 500 ESG (Environmental, Social and Governance) contract, Micro E-mini Equity Index contracts, Nasdaq-100, FTSE Russell and Bitcoin and Ether Reference Rate. • CBOT's product slate consists of agricultural, equities and interest rate products, including contracts for United States (U.S.) Treasury futures, soybean, corn, and wheat and contracts based on the Dow Jones Industrial Index. • NYMEX's product slate consists of energy and metals products, including contracts for crude oil, natural gas, heating oil, gasoline and emissions (GEO and NGO). • COMEX's product slate consists of metals products, including contracts for gold, silver, copper and other base metals.
Our products provide a means for hedging, speculation and asset allocation related to the risks associated with, among other things, interest rate sensitive instruments, equity ownership, changes in the value of foreign currency and changes in the prices of agricultural, energy and metal commodities. • CME's product slate includes agricultural, equities, FX, cryptocurrencies/alternative investments and interest rate products, including Secured Overnight Financing Rate (SOFR) futures and options, livestock and cash-settled contracts based on the S&P 500, including the E-mini S&P 500 ESG (Environmental, Social and Governance) contract, Micro E-mini Equity Index contracts, Nasdaq-100, FTSE Russell and Bitcoin and Ether Reference Rate. • CBOT's product slate consists of agricultural, equities and interest rate products, including contracts for United States (U.S.) Treasury futures, soybean, corn and wheat and contracts based on the Dow Jones Industrial Index. • NYMEX's product slate consists of energy and metals products, including contracts for crude oil, natural gas, heating oil, gasoline and emissions (GEO, N-GEO and C-GEO). • COMEX's product slate consists of metals products, including contracts for gold, silver, copper and other base, ferrous and battery metals.
Partnership with Google Cloud - In November 2021, we announced a 10-year strategic partnership with Google Cloud to accelerate CME Group’s move to the cloud, which we expect will transform derivatives markets by expanding access and creating efficiencies for market participants.
Treasury securities and CME interest rate futures. Partnership with Google Cloud - In November 2021, we announced a 10-year strategic partnership with Google Cloud to accelerate CME Group’s move to the cloud, which we expect will transform derivatives markets by expanding access and creating efficiencies for market participants.
In 2022, we invested $410.0 million in this joint venture to fund our portion of the acquisition of the IHS Markit indices business, which includes leading fixed income and credit indices, such as iBoxx, iTraxx and CDX. In 2021, CME Group and IHS Markit established a 50/50 joint venture, OSTTRA.
In 2022, we invested $410.0 million in this joint venture to fund our portion of the acquisition of the IHS Markit indices business, which includes leading fixed income and credit indices, such as iBoxx, iTraxx and CDX. In 2021, CME Group and IHS Markit (later acquired by S&P Global) established a 50/50 joint venture, OSTTRA.
Information made available on our website does not constitute a part of this Annual Report on Form 10-K. Information about our Executive Officers The following are CME Group's executive officers. Ages are as of February 8, 2023. Terrence A. Duffy, 64. Mr. Duffy has served as our Chairman and Chief Executive Officer since 2016. Mr.
Information made available on our website does not constitute a part of this Annual Report on Form 10-K. Information about our Executive Officers The following are CME Group's executive officers. Ages are as of February 7, 2024. Terrence A. Duffy, 65. Mr. Duffy has served as our Chairman and Chief Executive Officer since 2016. Mr.
The majority of our clearing volumes and activities are related to our listed futures and options, which represents 8 Table of Contents the majority of our open interest and collateral held against these positions. We also offer clearing services for OTC interest rate swaps, FX forwards and commodity swaps.
The majority of our clearing volumes and activities are related to our listed futures and options, which represent the majority of our open interest and collateral held against these positions. We also offer clearing services for OTC interest rate swaps, FX forwards and commodity swaps.
Developments in the regulatory environment therefore have the potential to significantly affect our businesses. Please also refer to the discussion below and in "Item 1A - Risk Factors" beginning on page 15 for a description of regulatory and legislative risks and uncertainties.
Developments in the regulatory environment therefore have the potential to significantly affect our businesses. 11 Table of Contents Please also refer to the discussion below and in "Item 1A - Risk Factors" beginning on page 16 for a description of regulatory and legislative risks and uncertainties.
Members of our management team and employees from across our global workforce serve on the Council, representing a wide variety of backgrounds and perspectives. For more information regarding our sustainability practices and to review our annual Corporate Citizenship & Sustainability Reports, including our report for 2022 when issued, please visit: https://www.cmegroup.com/company/corporate-citizenship/esg.html.
Members of our management team and employees from across our global workforce serve on the D&I Council, representing a wide variety of backgrounds and perspectives. For more information regarding our D&I and sustainability practices and to review our annual Environmental, Social and Governance Reports, including our report for 2023 when issued, please visit: https://www.cmegroup.com/company/corporate-citizenship/esg.html.
Julie Winkler, 48 . Ms. Winkler has served as our Senior Managing Director, Chief Commercial Officer since 2016. She leads the company’s sales, product marketing, research and product development, data analytics, and innovation lab functions, as well as the data services business line.
Julie Winkler, 49 . Ms. Winkler has served as our Chief Commercial Officer since 2016. She leads the company’s sales, product marketing, research and product development, data analytics, and innovation lab functions, as well as the data services business line.
The FX and Metals Market Profile Tool on Quant Analytics offers a simple but effective method for clients to compare and contrast our leading FX and metals products and liquidity pools side-by-side, which in turn enables clients to analyze their opportunity to minimize costs and achieve best execution by accessing highly complementary liquidity pools across cash and futures markets.
The FX and Metals Market Profile Tools on Quant Analytics offer simple, but effective methods for clients to compare and contrast our leading FX and metals products and liquidity pools side-by-side, which in turn enables clients to analyze their opportunity to minimize costs and achieve best execution by accessing highly complementary liquidity pools across cash and futures markets.
Although we may receive license fees for such products, such fees may not offset the impact of any loss in revenue from our comparable product. Regulatory Matters Our businesses are regulated and serve a customer base that includes regulated market participants, and as such, we are subject to extensive regulation, primarily in the United States and Europe.
Although we may receive license fees for such products, such fees may not offset the impact of any loss in revenue from our comparable product. Regulatory Matters Our businesses are regulated and serve a customer base that includes regulated market participants, and as such, we are subject to extensive regulation, primarily in the U.S., U.K. and E.U.
Marcus also served as the CFTC's Deputy General Counsel for Litigation and as an Assistant to the Solicitor General of the United States. His career also includes senior roles at other nationally recognized law firms and he began his career as a clerk for Judge Jose Cabranes of the U.S. Court of Appeals for the Second Circuit .
Marcus also served as the CFTC's Deputy General Counsel for Litigation and as an Assistant to the Solicitor 14 Table of Contents General of the United States. His career also includes senior roles at other nationally recognized law firms and he began his career as a clerk for Judge Jose Cabranes of the U.S.
Regulation of our Derivatives Business, CME Clearing and our SEF Our operation of U.S. futures exchanges, CME Clearing and our SEF is subject to extensive regulation by the CFTC that requires our regulated subsidiaries to satisfy the requirements of certain core principles relating to the operation and oversight of our markets and our clearing house.
Regulation of our Derivatives Business, CME Clearing, the NEX SEF and Swap Data Repositories Our operation of our U.S. futures exchanges, CME Clearing and the NEX SEF are subject to extensive regulation by the CFTC that requires our regulated subsidiaries to satisfy the requirements of certain core principles relating to the operation and oversight of our markets and our clearing house.
We compete in a large and expanding financial services trading, clearing and settlement marketplace globally. Our competitors include, among other entities, exchanges such as Intercontinental Exchange, Inc. (ICE), the Hong Kong Exchanges and Clearing Limited and Deutsche Börse AG.
We compete in a large and expanding financial services trading, clearing and settlement marketplace globally. Our competitors include, among other entities, exchanges such as Intercontinental Exchange, Inc. (ICE), the Chicago Board Options Exchange (CBOE), Euronext N.V., the Hong Kong Exchanges and Clearing Limited and Deutsche Börse AG.
In addition, we cannot guarantee that others will not succeed in creating stock index futures based on information similar to that which we own or have obtained by license, or that market participants will not increasingly use other instruments, including securities and options based on the S&P, Dow Jones, 9 Table of Contents Nasdaq or FTSE Russell indexes, to manage or speculate on U.S. stock risks.
In addition, we cannot guarantee that others will not succeed in creating stock index futures based on information similar to that which we own or have obtained by license, or that market participants will not increasingly use other instruments, including securities and options based on the S&P, Dow Jones, Nasdaq or FTSE Russell indexes, to manage or speculate on U.S. stock risks or clients to select another interest rate alternative.
In 2022, 83% of our contract volume was from trades by our members. CME Clearing Business: Through our clearing house, CME Clearing, which is operated by CME, we provide clearing and settlement services for a broad range of exchange-traded futures and options on futures contracts and OTC derivatives.
In 2023 , 84% of our contract volume was from trades by our members. CME Clearing Business: Through our clearing house, we provide clearing and settlement services for a broad range of exchange-traded futures and options on futures contracts and OTC derivatives.
Information regarding our sustainability practices is available in our annual Corporate Citizenship & Sustainability Reports, including our report for 2022 when issued, at the following: https://www.cmegroup.com/company/corporate-citizenship/esg.html.
Information regarding our sustainability practices is available in our annual Environmental, Social and Governance Reports, including our report for 2023 when issued, at the following: https://www.cmegroup.com/company/corporate-citizenship/esg.html.
We have further focused on building upon cloud-based data distribution capabilities as a more flexible and potentially cost-effective means of providing data to our clients. In 2022, CME Group futures and options had an average daily volume of 23.3 million contracts, with a volume record in our equity asset class for the seventh consecutive year.
We have further focused on building upon cloud-based data distribution capabilities as a more flexible and potentially cost-effective means of providing data to our clients. In 2023, CME Group futures and options had a record average daily volume of 24.4 million contracts , with a volume record in our interest rates asset class for the second consecutive year.
CME Group is also the distributor of leading benchmark equity and commodity indices on behalf of third parties as well as our own proprietary benchmarks and indices, including CME Term SOFR Reference Rates (CME Term SOFR), which is a benchmark designed to adhere to the IOSCO Principles for Financial Benchmarks.
CME Group is also the distributor of leading benchmark equity and commodity indices on behalf of third parties, as well as a distributor and licensor of our own proprietary benchmarks and indices, including CME Term SOFR Reference Rates (CME Term SOFR), which are designed to adhere to the IOSCO Principles for Financial Benchmarks and are administered by our U.K. regulated subsidiary, CME Benchmark Administration Limited.
We have registered many of our most important trademarks in the U.S. and other countries. We hold the rights to a number of patents and have a number of patent applications pending. Our patents cover match engine, trader user interface, trading floor support, market data, general technology and clearing house functionalities. We also own copyrights to a variety of materials.
We hold the rights to a number of patents and have a number of patent applications pending. Our patents cover match engine, trader user interface, trading floor support, market data, general technology and clearing house functionalities. We also own copyrights to a variety of materials.
Diversify our Business and Revenue - Our acquisition of NEX in 2018 strengthened our role in global financial markets infrastructure and information services, adding complementary cash and OTC businesses and scale to our listed interest rate and FX products, while broadening our global client base.
We are expecting to start client testing in the second half of 2024. Diversify our Business and Revenue - Our acquisition of NEX strengthened our role in global financial markets infrastructure and information services, adding complementary cash and OTC businesses and scale to our listed interest rate and FX products, while broadening our global client base.
Regulations on Benchmarks have yet to come into effect, and prices and data provided by CME Group for use by E.U. supervised entities and use of those benchmarks may be impacted. • Concerns that European legislators will prohibit or restrict exclusive licenses for benchmark indexes, which might impact the profitability of several of our most popular contracts. • The implementation of rules resulting in negative treatment of the liquidity profile of U.S.
It remains possible that data, pricing and analytics provided by CME Group for use by E.U. supervised entities and use of those benchmarks may be impacted in the future. • Concerns that European legislators will prohibit or restrict exclusive licenses for benchmark indexes, which might impact the profitability of several of our most popular contracts. • The implementation of rules resulting in negative treatment of the liquidity profile of U.S.
CME Group provides various tools and services to assist customers with capital and operational efficiencies, including: • CME Clearing provides compression via coupon blending as well as CME CORE, an interactive margin calculator that enables clients to optimize their capital by providing insights on margin requirements prior to trading. • Portfolio margining allows firms to capitalize on margin offsets between futures, options and cleared OTC instruments with common risk factors. • Cross-margining allows firms to achieve portfolio margin efficiencies for offsetting positions between two clearing houses, including CME and Fixed Income Clearing Corporation (FICC) or CME and Options Clearing Corporation (OCC), through reduced performance bond requirements.
CME Group provides various tools and services to assist customers with capital and operational efficiencies, including: • CME Clearing provides compression via coupon blending as well as CME CORE, an interactive margin calculator that enables clients to optimize their capital by providing insights on margin requirements prior to trading. • Portfolio margining allows firms to capitalize on margin offsets between futures, options and cleared OTC instruments with common risk factors.
We contributed to OSTTRA our post-trade businesses (Traiana, TriOptima and Reset) and IHS Markit contributed its MarkitSERV business. OSTTRA serves as the leading optimization business and provider of progressive post-trade solutions for the global OTC markets across interest rate, FX, equity and credit asset classes. In February 2022, IHS Markit was acquired by S&P Global.
We contributed to OSTTRA our trade processing/post-trade businesses (Traiana, TriOptima and Reset) and IHS Markit contributed 8 Table of Contents its MarkitSERV business. OSTTRA serves as the leading optimization business and provider of progressive post-trade solutions for the global OTC markets across interest rate, FX, equity and credit asset classes.
CME Group Volatility Indexes (CVOL) comprises a total of 39 indexes, including six unique broad-based benchmarks such as the Treasury Volatility Index and Commodity Volatility Index. In 2022, we launched real-time streaming versions of the CVOL indexes. CVOL provide a representative measure of the market expectation of 30-day forward risk, comprising both end of day and live streaming values.
CME Group Volatility Indexes (CVOL) comprises a total o f 42 ind exes, including 7 unique broad-based benchmarks such as the Treasury Volatility Index and Commodity Volatility Index. Our real-time streaming versions of the CVOL indexes provide a representative measure of the market expectation of 30-day forward risk, comprising both end of day and live streaming values.
The partnership will focus on expanding access to CME Group’s infrastructure, advancing real-time data and analytics capabilities, co-innovating new products and services, increasing efficiencies and driving resiliency in the financial markets’ ecosystem. 2022 was a foundational year, where we built the Cloud platform and successfully migrated some applications.
The partnership will focus on expanding access to CME Group’s infrastructure, advancing real-time data and analytics capabilities, co-innovating new products and services, increasing efficiencies and driving resiliency in the financial markets’ ecosystem. In 2022, we built our cloud instance on the Google Cloud platform.
Marcus most recently worked in priv ate practice as a partner at Reed Smith LLP, where he specialized in derivatives regulation, litigation and enforcement. He previously served as General Counsel of the CFTC from 2013 to 2017. Mr.
Marcus has served as our Senior Managing Director and General Counsel since October 2022. Prior to joining CME Group, Mr. Marcus most recently worked in priv ate practice as a partner at Reed Smith LLP, where he specialized in derivatives regulation, litigation and enforcement. He previously served as General Counsel of the CFTC from 2013 to 2017. Mr.
Legislation would be necessary to impose such a fee. Federal legislation was also recently proposed by Congress that would impose a user fee on digital asset spot markets to fund CFTC regulation of those assets.
Legislation would be necessary to impose such a fee. Federal legislation has previously been proposed by Congress that would impose a user fee on digital asset spot markets to fund CFTC regulation of those 12 Table of Contents assets.
The CME ClearPort front-end system provides access to our flexible clearing services for block transactions, bi-lateral trades and swaps. The majority of clearing and transaction fees received from clearing firms represents charges for trades executed and cleared on behalf of their customers. One firm represented at least 10% of our clearing and transaction fees revenue for 2022.
The CME ClearPort front-end system provides access to our flexible clearing services over multiple asset classes. The majority of clearing and transaction fees received from clearing firms represents charges for trades executed and cleared on behalf of their customers. No firm represented at least 10% of our clearing and transaction fees revenue for 2023.
We provide our workforce with a compelling employee experience that allows us to attract, retain and develop industry-leading talent. We are continually seeking new ways to challenge, develop and support our employees.
We recognize that fostering a diverse and inclusive global culture is critical to our business success. We provide our workforce with a compelling employee experience that allows us to attract, retain and develop industry-leading talent. We are continually seeking new ways to challenge, develop and support our employees.
During fiscal year 2022, our performance against these metrics was: • 10.2% voluntary turnover • 43.7% of open roles filled with internal candidates • 21.5% of employees promoted Diversity and Inclusion At CME Group, we embrace an exchange of ideas driven by the rich diversity of our people, cultures and experiences.
During 2023, our performance against these metrics was: • 5.6% voluntary turnover • 30.4% of open roles filled with internal candidates • 17.1% of employees promoted Diversity and Inclusion At CME Group, we embrace an exchange of ideas driven by the rich diversity of our people, cultures and experiences.
Vroman has served as our Senior Managing Director, Chief Transformation Officer since November 2021. He previously served as Senior Managing Director, International and Optimization Services since February 2020 and as our Senior Managing Director, Cash Markets and Optimization Service since 2018.
Tobin is a registered certified public accountant. Kendal Vroman, 52. Mr. Vroman has served as our Chief Transformation Officer since November 2021. He previously served as Senior Managing Director, International and Optimization Services since February 2020 and as our Senior Managing Director, Cash Markets and Optimization Service since 2018.
Securities and Exchange Commission (SEC) as a broker-dealer and alternative trading system operator. It also subjects us to regulation by authorities in the E.U. as a multilateral trading facility and regulated market and by the applicable regulators in 11 Table of Contents Singapore and Canada.
Securities and Exchange Commission (SEC) as a broker-dealer and alternative trading system operator. BrokerTec is also subject to regulation by the FCA in the U.K., as a multilateral trading facility, in the E.U., under the AFM, as a regulated market and by the applicable regulators in Singapore and Canada.
In addition, we operate one of the world’s leading central counterparty clearing providers, CME Clearing, operated by CME. Derivatives Exchange Business: Through our derivatives exchanges and clearing house, we believe our customers prefer CME Group's diversity of products, liquidity, price transparency and technological capabilities.
We also offer cash and repo fixed income trading via BrokerTec, and cash and OTC FX trading via EBS. Additionally, we operate one of the world’s leading central counterparty clearing providers. Derivatives Exchange Business: Through our derivatives exchanges and clearing house, we believe our customers prefer CME Group's diversity of products, liquidity, price transparency and technological capabilities.
We do this by expanding our global sales team, cross-selling our products, expanding the strength of our existing benchmark products, launching new products and services and deepening open interest in our core futures and options offerings.
We do this by optimizing our global sales team, cross-selling certain products, expanding the strength of our existing benchmark products, launching new products and services, strengthening our existing product and service offerings, securing intellectual property rights to new products, enhancing our relationships and broadening our base of distribution partners, and deepening open interest in our core futures and options offerings.
Prior to joining us, Mr. Sammann served as Managing Director, Global Head of FX Options and Structured Products at Calyon Corporate and Investment Bank in London from 1997 to 2006. Suzanne Sprague, 42. Ms. Sprague has served as Senior Managing Director & Global Head of Clearing and Post-Trade Services for CME Group since February 2022.
Prior to joining us, Mr. Sammann served as Managing Director, Global Head of FX Options and Structured Products at Calyon Corporate and Investment Bank in London from 1997 to 2006. Mr.
Market Data Business: We offer a variety of market data services through industry-leading market data platforms and third-party distribution partners, which are designed to meet the risk-management, trading, investment and business needs of our 6 Table of Contents global client base.
Market Data Business: We offer a variety of market data services through industry-leading market data platforms and third-party distribution partners, which are designed to meet the risk-management, trading, investment and business needs of our global client base. As such, we provide proprietary real-time and historical market data related to CME Group’s deeply liquid exchanges and cash markets businesses.
The acquisition added strength in underlying customer marketplaces, especially around regional bank customers and other market participants outside of North America, and expanded our market data solutions beyond futures and options into cash and OTC offerings.
The acquisition added strength in underlying customer marketplaces, especially around regional bank customers and other market participants outside of North America and expanded our market data solutions beyond futures and options into cash and OTC offerings. CME Group is well-positioned to capitalize on its ability to license CME Term SOFR, administered by our subsidiary, CME Group Benchmark Administration Limited.
Holzrichter previously held positions of increasing responsibility in our organization from 1986 to 2003 in trading operations. Ms. Holzrichter also serves as a director of Constellation Energy Corporation. Jonathan Marcus, 54. Mr. Marcus has served as our Senior Managing Director and General Counsel since October 2022. Prior to joining CME Group, Mr.
Holzrichter rejoined us in 2006 as our Managing Director, CME Globex Services and Technology Integration. Ms. Holzrichter previously held positions of increasing responsibility in our organization from 1986 to 2003 in trading operations. Ms. Holzrichter also serves as a director of Constellation Energy Corporation. Jonathan Marcus, 55. Mr.
In 2023, we plan to accelerate our application migration, including launching and commercializing data products in the Cloud. Patents, Trademarks and Licenses We own the rights to a large number of trademarks, service marks, domain names and trade names in the U.S., Europe and other parts of the world.
Patents, Trademarks and Licenses We own the rights to a large number of trademarks, service marks, domain names and trade names in the U.S., Europe and other parts of the world. We have registered many of our most important trademarks in the U.S. and other countries.
Our EBS business holds various permissions, approvals and exemptions globally, including those that subject certain of its activities to CFTC, FCA, AFM, Monetary Authority of Singapore, Australian Securities and Investments Commission and Hong Kong Monetary Authority oversight.
Our EBS business is regulated by the Commodity Futures Trading Commission (CFTC) as a registered swap execution facility (SEF) and by the Financial Conduct Authority (FCA) as a MiFID Multi-Lateral Trading Facility (MTF) and holds various permissions, approvals and exemptions globally, including those that subject certain of its activities to CFTC, FCA, AFM, Monetary Authority of Singapore, Australian Securities and Investments Commission, Hong Kong Monetary Authority and Canadian oversight.
Piell previously held positions of increasing responsibility in our Legal & Market Regulation division, most recently as Managing Director and Senior Associate General Counsel. Prior to joining CME Group in 2000, Ms. Piell served as Associate Commercial Counsel at MCI Telecommunications (1996-2000) and Associate Litigation Attorney at Jenner & Block (1992-1996).
Piell has served as our Chief Human Resources Officer since 2007. A practicing attorney for seventeen years, Ms. Piell previously held positions of increasing responsibility in our Legal & Market Regulation division, most recently as Managing Director and Senior Associate General Counsel. Prior to joining CME Group in 2000, Ms.
As of December 31, 2022, our global employee population consisted of approximately 3,460 staff, with 66% (approximately 2,280) of these employees working in the United States. and the remaining 34% (approximately 1,180) working in our various non-U.S. locations (Australia, Brazil, Canada, China, France, Hong Kong, India, Israel, Japan, Netherlands, Singapore, South Korea, Sweden, Switzerland and the U.K.). 12 Table of Contents We recognize that fostering a diverse and inclusive global culture is critical to our business success.
As of December 31, 2023, our global employee population consisted of approximately 3,565 staff, with 62% (approximately 2,200) of these employees working in the United States. and the remaining 38% (approximately 1,365) working in our various non-U.S. locations (Australia, Brazil, Canada, China, France, Hong Kong, India, Japan, Mexico, Netherlands, Singapore, South Korea, Sweden, Switzerland and the U.K.).
Treasuries, E.U. and U.S. repo fixed income instruments and European Government Bonds. It facilitates trading for banks and non-bank professional trading firms. BrokerTec Quote is a third party Request For Quote platform that offers a dealer-to-client trading solution for the European and U.S. government repo markets. BrokerTec Stream is a relationship-based trading platform offering U.S.
It facilitates trading for banks and non-bank professional trading firms. The BrokerTec Central Limit Order Book is a dealer-to-dealer electronic trading platform operated on CME Globex. BrokerTec Quote is a Request For Quote platform provided on third party technology, that offers a dealer-to-client trading solution for the European, U.K. and U.S. government repo markets.
We pay the applicable third-party, per-trade fees based on contract volume under the terms of these licensing agreements. A copy of the S&P License Agreement has been filed as a material contract. CME Group is the owner of CME Term SOFR, a daily set of forward-looking interest rate estimates, calculated and published for 1-month, 3-month and 12-month tenors.
We pay the applicable third-party, per-trade fees based on contract volume under the terms of these licensing agreements. A copy of the S&P License Agreement has been filed as a material contract.
Tim McCourt, 44 . Mr. McCourt has served as Senior Managing Director, Global Head of Equity and FX Products since February 2022. He is responsible for leading the development and execution of the company’s global equity index, foreign exchange, cryptocurrency and alternative investment product strategies. He serves on the CME Ventures Investment Committee and the S&P Dow Jones Indices U.S.
He is responsible for leading the development and execution of the company’s global interest rate, equity index, foreign exchange, OTC, cryptocurrency and alternative investment product strategies. He also serves on the S&P Dow Jones Indices U.S. Advisory Panel. Before joining CME Group in 2013 as Global Head of Equity Products, Mr.
Holzrichter has served as our Senior Managing Director, Chief Operating Officer since 2014 and in February 2022, her role expanded to oversee Global Operations and CME Clearing. She previously served as our Senior Managing Director, Global Operations from 2007. Ms. Holzrichter rejoined us in 2006 as our Managing Director, CME Globex Services and Technology Integration. Ms.
Prior to CME Group she worked as an investment banker at Credit Suisse and UBS. Julie Holzrichter, 55. Ms. Holzrichter has served as our Chief Operating Officer since 2014 and in February 2022, her role expanded to also oversee our Clearing and Post-Trade division. She previously served as our Senior Managing Director, Global Operations from 2007. Ms.
Fitzpatrick has served as Senior Managing Director & Deputy Chief Financial Officer since February 2022. She previously served as Managing Director of Corporate Development and Treasurer of CME Group since 2017, leading the company’s business development, mergers and acquisitions, CME Ventures and corporate treasury functions. Since joining the company in 2006, Ms.
She previously served as Deputy Chief Financial Officer since 2022 and Managing Director of Corporate Development and Treasurer of CME Group since 2017. Since joining the company in 2006, Ms. Fitzpatrick has held a variety of positions with increasing levels of responsibility within the finance organization.
It was also a year of volume records for multiple products, including Ultra 10 Year Treasury Note futures, SOFR futures, Bitcoin futures, Micro E-Mini Equity Index futures and a record number of contracts executed via Basis Trade at Index Close.
It was also a year of volume records for multiple products, including Ultra 10 Year Treasury Note futures, SOFR futures, Bitcoin futures and a record number of contracts executed via Basis Trade at Index Close. We continue to expand and deepen our customer base worldwide and offer customers around the world the most broad and diversified portfolio of benchmark products.
Select highlights of our employee experience include the following: • We offer a wide range of benefits designed to support our employees’ health and well-being, retirement needs, and work/life balance. • We provide a variety of avenues for employees to grow their expertise, including tuition assistance for continuing education, onsite professional development training courses, access to external seminars and technical skills training, as well as an integrated series of leadership development programs to prepare employees for each stage of their careers. • Our competitive compensation programs align employee rewards with shareholder interests and emphasize our pay-for-performance philosophy. • Our Employee Resource Groups (ERGs) are essential to fostering an inclusive culture grounded in mutual respect.
Select highlights of our employee experience include the following: • We offer a wide range of benefits designed to support our employees’ health and well-being, retirement needs and work/life balance. • We provide a variety of avenues for employees to grow their expertise, including tuition assistance for continuing education, onsite and virtual-led professional development training courses, access to external seminars and technical skills training and over 10,000 online educational courses.
ITEM 1. BUSINESS CME Group provides market participants worldwide the ability to efficiently manage risk within and across multiple asset classes, by trading futures, options, cash and over-the-counter (OTC) products.
ITEM 1. BUSINESS CME Group enables clients to trade futures, options, cash and over-the-counter (OTC) products, optimize portfolios, and analyze data - empowering market participants worldwide the ability to efficiently manage risk and capture opportunities.
BrokerTec and EBS offer anonymous and disclosed trading venues, offering clients multiple execution and distribution options and the benefit of an established and far-reaching distribution network of liquidity providers and consumers.
BrokerTec and EBS offer anonymous and disclosed trading venues, offering clients multiple execution and distribution options and the benefit of an established and far-reaching distribution network of liquidity providers and consumers. • BrokerTec operates global electronic trading for fixed income products, with a leading position in cash U.S. Treasuries, E.U. and U.S. repo fixed income instruments and European Government Bonds.
As such, we provide proprietary real-time and historical market data related to CME Group’s vibrant and deeply liquid exchanges and cash markets businesses. We further offer derived cash markets pricing, third-party and alternative data sets, as well as a wide range of analytic tools.
We further offer derived cash markets pricing, third-party and alternative data sets, as 6 Table of Contents well as a wide range of analytic tools.
GENERAL DEVELOPMENT OF BUSINESS CME was founded in 1898 as a not-for-profit corporation. It established its clearing house in 1919, which is operated as part of CME. CME demutualized in 2000, and in 2002 its parent company, CME Group, completed an initial public offering of its Class A common stock (Nasdaq: CME).
In addition, it operates one of the world's leading central counterparty clearing providers. GENERAL DEVELOPMENT OF BUSINESS CME was founded in 1898 as a not-for-profit corporation. It established its clearing house in 1919, which is operated as part of CME.
Treasury securities and repurchase agreements; how the SEC finalizes this rule could have an impact on trading in our markets. • The potential for regulatory or policy actions that could result in changes to market structure for the clearing of derivative transactions, which may impact our business model or the competitive landscape of the industry.
The FSB consultation also supports early intervention by resolution authorities which could preempt CCP recovery efforts and the role of the CFTC. • The potential for regulatory or policy actions that could result in changes to market structure for the clearing of derivative transactions, which may impact our business model or the competitive landscape of the industry.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile we have not experienced cyber incidents that are individually, or in the aggregate, material, we have experienced cyber attacks of varying degrees in the past. Our usage of mobile, web, and cloud technologies, such as those pursuant to our partnership with Google Cloud, may increase our risk of a cyber attack.
Biggest changeWhile to date we have not experienced cyber incidents that are individually, or in the aggregate, material, we and certain of our third party providers have experienced cyber attacks of varying degrees in the past.
The success of our markets depends on our ability to complete development of, successfully implement and maintain the electronic trading and clearing systems that have the functionality, performance, availability and resilience, capacity, security and speed required by our customers.
The success of our markets depends on our ability to complete development of, successfully implement and maintain electronic trading and clearing systems that have the functionality, performance, availability and resilience, capacity, security and speed required by our customers.
We may issue additional equity and/or debt or, as was the case in connection with our transaction with Google Cloud, issue additional equity as part of strategic partnerships with third parties. The issuance of additional equity in connection with any future transaction could be substantially dilutive to our existing shareholders. The issuance of additional debt could increase our leverage substantially.
We may issue additional equity and/or debt as part of strategic partnerships with third parties, as was the case in connection with our transaction with Google Cloud. The issuance of additional equity in connection with any future transaction could be substantially dilutive to our existing shareholders. The issuance of additional debt could increase our leverage substantially.
If we do not successfully enhance our electronic trading systems and technology offerings, including the development and migration of our marketplace and supporting operational and business functions to the Cloud, if we are unable to develop our trading systems and technology offerings to include other products and markets, or if they do not have the required functionality, performance, availability and resilience, capacity, security and speed desired by our customers, our ability to successfully compete and our revenues and profits will be adversely affected.
If we do not continue to enhance our electronic trading systems and technology offerings, including the development and migration of our marketplace and supporting operational and business functions to the cloud, if we are unable to develop our trading systems and technology offerings to include other products and markets, or if they do not have the required functionality, performance, availability and resilience, capacity, security and speed desired by our customers, our ability to successfully compete and our revenues and profits will be adversely affected.
In addition, the agreements governing our outstanding indebtedness do not significantly limit our ability to incur additional indebtedness, which, particularly given the recent changes in interest rates could increase the risks described above to the extent that we incur additional debt. Our regulated businesses are also required to maintain minimum capital requirements set by their applicable regulators.
In addition, the agreements governing our outstanding indebtedness do not significantly limit our ability to incur additional indebtedness, which, particularly given changes in interest rates could increase the risks described above to the extent that we incur additional debt. Our regulated businesses are also required to maintain minimum capital requirements set by their applicable regulators.
Our dependence on the trading and clearing activities of our exchange members, combined with the CME members' rights to elect six directors, may enable them to exert substantial influence over the operation of our business. Ten of our directors own, or are officers or directors of firms that own trading rights on our exchanges.
Our dependence on the trading and clearing activities of our exchange members, combined with the CME members' rights to elect six directors, may enable them to exert influence over the operation of our business. Ten of our directors own, or are officers or directors of firms that own trading rights on our exchanges.
If our products, markets and services are not competitive or are viewed as less competitive, our business, financial condition and operating results could be adversely affected. A decline in our fees or loss of customers could lower our revenues, which would adversely affect our profitability.
If our products, markets and clearing services are not competitive or are viewed as less competitive, our business, financial condition and operating results could be adversely affected. A decline in our fees or loss of customers could lower our revenues, which would adversely affect our profitability.
To the extent the legislative and regulatory environment becomes more onerous for us to comply or less beneficial for us or our customers, our business, financial condition and operating results could be negatively affected.
To the extent the legislative and regulatory environment becomes more onerous for us or less beneficial for us or our customers, our business, financial condition and operating results could be negatively affected.
These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including risks from customer disputes, system failures or intrusions, failures to meet our regulatory obligations, failures of a clearing firm or other counterparty, issues relating to our third-party suppliers, alleged or actual fraud or misconduct or manipulative activity, or ineffective risk management.
These issues may include, but are not limited to, any of the risks discussed in this Item 1A, including risks from customer disputes, system failures or intrusions, cybersecurity attacks, failures to meet our regulatory obligations, failures of a clearing firm or other counterparty, issues relating to our third-party suppliers, alleged or actual fraud or misconduct or manipulative activity, or ineffective risk management.
In the case of alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages, which could be significant. Any of these outcomes may adversely affect our reputation, financial condition and operating results.
In the case of alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages, which could be significant. Any of these outcomes may adversely affect our reputation, regulatory standing, financial condition and operating results.
We may be at greater risk from terrorism, which poses physical security risks and cyber-security risks, than other companies. Given our role in the global financial services industry, we may be more likely than other companies to be a direct target of, or an indirect casualty of, attacks by terrorists or terrorist organizations.
We may be at greater risk from terrorism, which poses physical security risks and cybersecurity risks, than other companies. Given our role in the global financial services industry, we may be more likely than other companies to be a direct target of, or an indirect casualty of, attacks by terrorists or terrorist organizations.
Some of our risk management processes depend upon evaluation of information regarding markets, customers, employees or other matters or potential threats that are publicly available or otherwise accessible by us. That information may not in all cases be accurate, complete, up-to-date or properly evaluated.
Some of our risk management processes depend upon evaluation of information regarding markets, customers, employees, third parties or other matters or potential threats that are publicly available or otherwise accessible by us. That information may not in all cases be accurate, complete, up-to-date or properly evaluated.
Our regulators have broad enforcement and supervisory powers, including the power to censure, fine, issue cease-and-desist orders, prohibit us from engaging in some of our businesses or suspend or revoke our regulatory designations or the registration of our officers or employees who violate applicable laws or regulations.
Our regulators have broad enforcement and supervisory powers, including, for example, the power to censure, fine, issue cease-and-desist orders, prohibit us from engaging in some of our businesses or suspend or revoke our regulatory designations or the registration of our officers or employees who violate applicable laws or regulations.
Additional new laws or regulations or changes in enforcement practices applicable to our businesses or those of our clients could be imposed in the U.S. or other jurisdictions, which could change, or require us to change, our business practices or the structure of our business, including its current governance, risk oversight or regulatory structure, or impose significant costs on us by, for example, requiring more of our funds to be set aside for the guaranty fund or to meet other compliance requirements.
Additional new laws or regulations or 16 Table of Contents changes in enforcement practices applicable to our businesses or those of our clients could be imposed in the U.S. or other jurisdictions, which could change, or require us to change, our business practices or the structure of our business, including its current governance, risk oversight or regulatory structure, or impose significant costs on us by, for example, requiring more of our funds to be set aside for the guaranty fund or to meet other compliance requirements.
Although many of our systems are designed to accommodate additional volume and products and services without redesign or replacement, we will need to continue to make significant investments in additional hardware and software to accommodate the increases in volume of transactions and order transaction traffic and to provide processing services to third parties.
Although many of our systems are designed to accommodate additional volume and products and services without redesign or replacement, we will need to continue to make significant investments to accommodate the increases in volume of transactions and order transaction traffic and to provide processing services to third parties.
These risks include, among others, potential liability from disputes over terms of a trade, the claim that a system failure or delay caused monetary losses to a customer, that we entered into an unauthorized transaction, that we provided materially false or misleading statements in connection with a transaction or 18 Table of Contents that we failed to effectively fulfill our regulatory oversight responsibilities.
These risks include, among others, potential liability from disputes over terms of a trade, the claim that a system failure or delay caused monetary losses to a customer, that we entered into an unauthorized transaction, that we provided materially false or misleading statements in connection with a transaction or that we failed to effectively fulfill our regulatory oversight responsibilities.
BrokerTec Americas maintains access to liquidity resources it believes will satisfy these obligations in normal and stressed circumstances, but there can be no guarantee it will never experience a shortfall. 16 Table of Contents Please see "Item 1 - Business - Regulatory Matters" beginning on page 11 for additional information on our areas of regulatory focus.
BrokerTec Americas maintains access to liquidity resources it believes will satisfy these obligations in normal and stressed circumstances, but there can be no guarantee it will never experience a shortfall. Please see "Item 1 - Business - Regulatory Matters" beginning on page 11 for additional information on our areas of regulatory focus.
Our systems, or those of our third-party providers, including cloud providers, may fail or be shut down or, due to capacity constraints, may operate slowly, causing one or more of the following to occur: 20 Table of Contents • unanticipated disruptions in service to our customers; • slower response times and delays in our customers' trade execution and processing; • failed settlement of trades; • incomplete or inaccurate accounting, recording, or processing of trades; • financial losses; • security breaches; • litigation or other customer claims; • loss of customers; or • regulatory sanctions.
Our systems, or those of our third-party providers, including cloud providers, may fail or be shut down or, due to capacity constraints, may operate slowly, causing one or more of the following to occur: • unanticipated disruptions in service to our customers; • slower response times and delays in our customers' trade execution and processing; • failed settlement of trades; • incomplete or inaccurate accounting, recording, or processing of trades; 20 Table of Contents • financial losses; • cybersecurity attacks; • litigation or other customer claims; • loss of customers; or • regulatory sanctions.
Factors that may affect our performance and demand for our data include, but are not limited to: • Our ability to maintain existing customers utilizing our data and to attract new customers with our products and services; • A decrease in overall trading volume, which may lead to a decreased demand for our market data; • A challenging business environment for our customers, which may require them to reduce their usage of our market data; • The impacts of new regulations, laws, rules or other government policies; • Our ability to ensure that customers are appropriately licensed and are paying fees for the data used; • The protection of our intellectual property rights and identification of misappropriation and/or misuses of CME Group market data; and • Our ability to keep pace with technological developments and client preferences.
Factors that may affect our performance and demand for our data include, but are not limited to: • Our ability to maintain existing customers utilizing our data and to attract new customers with our products and services; • A decrease in overall trading volume, which may lead to a decreased demand for our market data; • A challenging business environment for our customers, which may require them to reduce their usage of our market data; • The impacts of new regulations, laws, rules or other government policies; • Our ability to ensure that customers are appropriately licensed and are paying fees for the data used; • The protection of our intellectual property rights and identification of misappropriation and/or misuses of CME Group market data, including through the use of artificial intelligence; and • Our ability to keep pace with technological developments and client preferences.
Legislation may be proposed, both domestically and internationally, that could add a transaction tax on our products or change the way our market participants are taxed on the products they trade on our markets.
Legislation may be proposed, both domestically and internationally, that could, for example, add a transaction tax on our products or change the way our market participants are taxed on the products they trade on our markets.
Our success also depends on our ability to offer competitive prices and services in an increasingly price-sensitive business. For example, some of our competitors have engaged in aggressive pricing strategies in the 17 Table of Contents past, such as lowering the fees they charge for taking liquidity and increasing liquidity payments or rebates.
Our success also depends on our ability to offer competitive prices and services in an increasingly price-sensitive business. For example, some of our competitors have engaged in aggressive pricing strategies in the past, such as lowering the fees they charge for taking liquidity and increasing liquidity payments or rebates.
To the extent any of our service providers or the organizations that provide services to our customers in connection with their trading activities cease to provide these services or provide these services in an efficient, cost-effective manner, or fail to adequately expand their services to meet our needs and the needs of our customers, we could experience decreased trading volume, lower revenues, and higher costs.
To the extent any of our service providers or the organizations that provide services to our customers in connection with their trading activities cease to provide these services or cease to provide these services in an efficient, cost-effective manner, or fail to adequately expand their services to meet our needs and the needs of our customers, we could experience decreased trading 21 Table of Contents volume, lower revenues and higher costs.
We may have difficulty executing our growth strategy and maintaining our growth effectively. We continue to execute on strategic initiatives to grow our business, including efforts to serve the OTC markets and to distribute our products and services on a global basis. There is no guarantee that our efforts will be successful.
We may have difficulty executing our growth strategy and maintaining our growth effectively. We continue to execute on strategic initiatives to grow our business, including efforts to serve the OTC markets and to distribute our products and services on a global basis, and other initiatives to enter new markets. There is no guarantee that our efforts will be successful.
In addition, our members and participants in our various incentive programs generally are charged lower fees than our non-member customers. Variation in each of these factors is difficult to predict and will have an impact on our average rate per contract in the particular period.
In addition, our members and participants in our various incentive programs generally are charged lower fees than our non-member customers. Variation in each of these factors is difficult to predict and will have an impact on our average rate per contract in 25 Table of Contents the particular period.
Any such litigation, whether successful or unsuccessful, could result in substantial costs to us and diversions of our resources, either of which could adversely affect our business. Patents of third parties may have an important bearing on our ability to offer certain products and services.
Any such litigation, whether successful or unsuccessful, could result in substantial costs to us and diversions of our resources, either of which could adversely affect our business. 24 Table of Contents Patents of third parties may have an important bearing on our ability to offer certain products and services.
We encounter competition in all aspects of our business, including from entities having substantially greater capital and resources, offering a wide range of products and services and in some cases operating under a different and possibly less stringent regulatory regime.
We encounter competition in all aspects of our business, including from entities having substantially greater capital and resources, offering a wide range of products and 17 Table of Contents services and in some cases operating under a different and possibly less stringent regulatory regime.
The amount of profit that members derive from their trading, brokering and clearing activities and the value of their trading rights 26 Table of Contents are, in part, dependent on the fees they are charged to trade, broker, clear and access our markets, and the rules and structure of our markets.
The amount of profit that members derive from their trading, brokering and clearing activities and the value of their trading rights are, in part, dependent on the fees they are charged to trade, broker, clear and access our markets, and the rules and structure of our markets.
A failure of BrokerTec Americas to maintain its membership could adversely impact the willingness of such participants to continue trading on our platform.
A failure of BrokerTec Americas to maintain its membership with FICC could adversely impact the willingness of such participants to continue trading on our platform.
The regulatory environment related to information security, privacy, data collection and data usage is increasingly rigorous and complex, and any failure to comply may carry significant penalties and reputational damage. We have designed our cyber defense program to mitigate such attacks and security risks through administrative, physical and technical safeguards.
The regulatory environment related to information security, privacy, data collection, data usage and use of artificial intelligence is increasingly rigorous and complex, and any failure to comply may carry significant penalties and reputational damage. We have designed our cyber defense program to mitigate such attacks and security risks through administrative, physical and technical safeguards.
Our ability to manage our risks and comply with applicable laws and regulations in the jurisdictions where we operate is largely dependent on our establishment and maintenance of effective risk management, compliance and monitoring programs.
Our ability to manage our risks and comply with applicable laws and regulations in the jurisdictions where we operate is largely dependent on our establishment and maintenance of effective risk management, 23 Table of Contents compliance and monitoring programs.
Additionally, we rely on our customers' ability to have the necessary back office functionality to support our new products and our trading and clearing functionality. To the extent our customers are not prepared and/or lack the resources or infrastructure, the success of our new initiatives may be compromised.
Additionally, we rely on our customers' ability to have the necessary back office functionality to support our new products and our trading and clearing functionality. To the extent our customers and/or their third party providers are not prepared and/or lack the resources or infrastructure, the success of our new initiatives may be compromised.
Please see "Item 1A - Risk Factors - Risks Relating To Our Business" beginning on page 19 for additional information.
Please see "Item 1A - Risk Factors - Risks Relating To Our Business" beginning on page 20 for additional information.
Our technology, our customers, our people and those of our third-party service providers may be vulnerable to targeted attacks, such as "phishing" attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, "ransomware" attacks, firewall or encryption failures or other security or operational risks.
Our technology, our customers, our people and our third-party service providers may be vulnerable to targeted attacks, such as "phishing" attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, "ransomware" attacks, attacks created through artificial intelligence, firewall or encryption failures or other security or operational risks.
While these service providers have undertaken to keep current and certify as to our enhancements and changes to their software to our 21 Table of Contents interfaces and functionality, we cannot guarantee that they will continue to make the necessary monetary, resource and time investments to keep up with our enhancements and changes.
While these service providers have undertaken to keep current and certify as to our enhancements and make corresponding changes to their software to our interfaces and functionality, we cannot guarantee that they will continue to make the necessary monetary, resource and time investments to keep up with our enhancements and changes.
However, as evidenced by our past performance, in the period after a material market disturbance, there may persist extreme uncertainties, which may lead to decreased volume due to factors such as reduced risk exposure, lower interest rates, central bank asset purchase programs and lack of available capital.
However, in the period after a material market disturbance, there may persist extreme uncertainties, which may lead to decreased volume due to factors such as reduced risk exposure, fluctuating interest rates, central bank asset purchase programs and lack of available capital.
The trading volumes in our markets are directly affected by domestic and international factors that are beyond our control, including: • economic, political and geopolitical market conditions, including the instability caused by the war between Russia and Ukraine; • legislative and regulatory changes, including any direct or indirect restrictions on or increased costs associated with trading in our markets or our clearing services; • broad trends in the industry and financial markets; • changes in price levels, trading volumes and volatility in the derivatives, cash and over-the-counter (OTC) markets and in their underlying markets; • shifts in demand or supply in commodities underlying our products; • competition; • changes in government monetary policies, including central bank decisions related to quantitative easing and the U.S.
The trading volumes in our markets are directly affected by domestic and international factors that are beyond our control, including: • economic, political and geopolitical market conditions, including the instability caused by wars; • legislative and regulatory changes, including any direct or indirect restrictions on or increased costs associated with trading in our markets or our clearing services; • broad trends in the industry and financial markets; • changes in price levels, trading volumes and volatility in the derivatives, cash and OTC markets and in their underlying markets; • shifts in demand or supply in commodities underlying our products; • competition; • changes in government monetary policies and the U.S.
We are dependent on the revenues from the trading and clearing activities of our exchange members. In 2022, 83% of our derivatives contract volume was derived from our members. This dependence may give them substantial influence over how we operate our business.
We are dependent on the revenues from the trading and clearing activities of our exchange members. In 2023, 84% o f our derivatives contract volume was derived from our members. This dependence may give them influence over how we operate our business.
Our technology, our customers and our people and those of our third-party service providers may be vulnerable to cyber-security threats, which could result in wrongful use of our data or our customers’ data or cause interruptions in our operations that cause us to lose customers and trading volume and result in substantial liabilities.
Our technology, our customers, our people and our third-party service providers are vulnerable to cyber-security threats, which could result in wrongful use of our data or our customers’ data or cause interruptions in our 18 Table of Contents operations, which could cause us to lose customers and trading volume and result in substantial liabilities.
Criminal groups, political activist groups and nation-state actors have targeted the financial services industry in general, including as a result of the Russian and Ukraine war, and our role in the global marketplace places us at greater risk than other public companies for a cyber attack and other information security threats.
Criminal groups, political activist groups and nation-state actors have targeted the financial services industry in general, including as a result of wars, and our role in the global marketplace places us at significant risk for a cyber attack and other information security threats.
Federal Reserve and other international banks' forecasted interest rates; • availability of capital to our market participants and their appetite for risk-taking; • levels of assets under our customers' management; • volatile weather patterns, droughts, natural disasters and other catastrophes; • pandemics affecting our customer base or our ability to operate our markets; and • consolidation or expansion in our customer base and within our industry. 15 Table of Contents Any one or more of these factors may contribute to reduced activity in our markets.
Federal Reserve and other international banks' forecasted interest rates; • availability of capital to our market participants and their appetite for risk-taking; • levels of assets under our customers' management; • volatile weather patterns, droughts, natural disasters and other catastrophes; • pandemics affecting our customer base or our ability to operate our markets; and • consolidation or expansion in our customer base and within our industry.
In light of the difficulties in the financial services industry and the financial markets over the last few years, including in connection with the global pandemic and rising interest rates, there can be no assurance that we will maintain our current ratings. In the past, we have experienced ratings downgrades.
In light of the difficulties in the financial services industry and the financial markets over the last few years, there can be no assurance that we will maintain our current ratings. In the past, we have experienced ratings downgrades.
In addition, we have established a fund (currently $98.0 million) to provide payments, up to certain maximum levels, to qualified family farmers, ranchers and other agricultural industry participants who use our products and who suffer losses to their segregated account balances if their clearing firm becomes insolvent. Our Three-Month Eurodollar futures and options contracts are based on the three-month U.S.
In addition, we have established a fund (currently $98.0 million) to provide payments, up to certain maximum levels, to qualified family farmers, ranchers and other agricultural industry participants who use our products and who suffer losses to their segregated account balances if their clearing firm becomes insolvent.
We intend to continue to explore and pursue acquisitions and other strategic opportunities to strengthen our business and grow our company. We may make acquisitions or investments or enter into strategic partnerships, joint ventures and other alliances. The market for such transactions is highly competitive, especially in light of historical merger and acquisition activity in our industry.
We may make acquisitions or investments or enter into strategic partnerships, joint ventures and other alliances. The market for such transactions is highly competitive, especially in light of historical merger and acquisition activity in our industry.
Misconduct by our employees and agents could include 24 Table of Contents hiding unauthorized activities from us, improper or unauthorized activities on behalf of customers or the company, improper securities trading activities, circumvention of controls and procedures, improper use or unauthorized disclosure of assets, data or confidential information of the company or its customers, among other potential misconduct.
Misconduct by our employees and agents could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of customers or the company, improper securities trading activities, circumvention of controls and procedures, improper use of assets, improper use and unauthorized disclosure of data or confidential information of the company or its customers, improper use of artificial intelligence or failure to provide effective oversight over artificial intelligence, among other potential misconduct.
OSTTRA, our joint venture with IHS Markit (now a part of S&P Global), is subject to many of these risks, including the potential we may not achieve the expected cost savings, synergies and other strategic benefits from the transaction within the anticipated time frames, that the joint venture may be more costly than expected, or that we may experience customer attrition. 23 Table of Contents The expansion of our global operations is complex and subjects us to increased business and economic risks that could adversely affect our financial results.
OSTTRA, our joint venture with IHS Markit (now a part of S&P Global), is subject to many of these risks, including the potential we may not achieve the expected cost savings, synergies and other strategic benefits from the transaction within the anticipated time frames, that the joint venture may be more costly than expected, or that we may experience customer attrition.
Though we have insurance against certain cyber and privacy risks and attacks, we may be subject to litigation and financial losses that exceed our policy limits or are not covered under any of our current insurance policies. As a financial services provider, we are subject to significant litigation risk and regulatory liability and penalties.
We may be subject to litigation and financial losses that exceed our insurance policy limits or are not covered under any of our current policies. As a financial services provider, we are subject to significant litigation risk and regulatory liability and penalties. Many aspects of our business present substantial litigation risks.
Historically, periods of heightened uncertainty have tended to increase our trading volume due to increased hedging activity and the increased need to manage the risks associated with, or speculate on, volatility.
Any one or more of these factors may contribute to reduced activity in our markets. Historically, periods of heightened uncertainty have tended to increase our trading volume due to increased hedging activity and the increased need to manage the risks associated with, or speculate on, volatility.
The success of our business depends in large part on our ability to create interactive electronic marketplaces for a wide range of products that have the required functionality, performance, availability and resilience, capacity, security and speed to attract and retain customers. In 2022, 93% of our overall contract volume was generated through electronic trading on our CME Globex electronic platform.
The success of our business depends in large part on our ability to create interactive electronic marketplaces for a wide range of products that have the required functionality, performance, availability and resilience, capacity, security and speed to attract and retain customer s.
We might still be able to incur more debt, intensifying these risks. As of December 31, 2022, we had approximately $3.4 billion of total indebtedness and we had excess borrowing capacity for general corporate purposes under our existing facilities of approximately $2.3 billion. Our indebtedness could have important consequences.
As of December 31, 2023, we had approximately $3.4 billion of total indebtedness and we had excess borrowing capacity for general corporate purposes under our existing facilities of approximately $2.3 billion. Our indebtedness could have important consequences.
We must continue to enhance our electronic trading platforms and other technology offerings to remain competitive. As a result, we will continue to be subject to risks, expenses and uncertainties encountered in the rapidly evolving market for electronic transaction services.
In 2023, 92% of o ur overall contract volume was generated through electronic trading on our CME Globex electronic platform. We must continue to enhance our electronic trading platforms and other technology offerings to remain competitive. As a result, we will continue to be subject to risks, expenses and uncertainties encountered in the rapidly evolving market for electronic transaction services.
Revenues from our market data and information services represented 12% of our total revenues during the years ended December 31, 2022 and December 31, 2021.
Revenues from our market data and information services represent ed 12% o f our total revenues during the years ended December 31, 2023 and December 31, 2022.
We intend to continue to explore acquisitions, other investments and strategic alliances. We may not be successful in identifying opportunities or in integrating the acquired businesses. Any such transaction may not produce the results we anticipate, which could adversely affect our business and our stock price.
We intend to continue to explore acquisitions, other investments and strategic alliances. We may not be successful in identifying opportunities or in integrating the acquired businesses.
If we were unable to obtain such licenses, we may not be able to redesign our products or services at a reasonable cost to avoid infringement, which could materially adversely affect our business, financial condition and operating results. 25 Table of Contents RISKS RELATING TO AN INVESTMENT IN OUR CLASS A COMMON STOCK Our indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our debt service obligations.
If we were unable to obtain such licenses, we may not be able to redesign our products or services at a reasonable cost to avoid infringement, which could materially adversely affect our business, financial condition and operating results.
Our security defenses may also be impacted or breached due to employee error, malfeasance, system errors or vulnerabilities. Additionally, outside parties may attempt to fraudulently induce employees, users, or customers to disclose sensitive information in order to gain access to our technology systems and data, or our customers’ data.
Additionally, outside parties may attempt to fraudulently induce employees, users, customers or our third party providers to disclose sensitive information in order to gain access to our technology systems and data, or our customers’ data.
As a result of Brexit, we have established a CME Group business in Amsterdam, an E.U. jurisdiction, which allows this business to continue offering products and services to customers in the E.U.; however, this has resulted in, and may continue to result in, increased legal, compliance and operational costs.
As a result of Brexit, we have established a CME Group business in the Netherlands, a member of the European Union, which allows BrokerTec and EBS to continue trading in regulated financial instruments to customers in the European Economic Area; however, this has resulted in, and may continue to result in, increased legal, compliance and operational costs.
Any of these events could have a material adverse effect on our business, financial condition, and operating results. RISKS RELATING TO OUR BUSINESS The COVID-19 pandemic has negatively affected the global economy, including the U.S. economy and the global financial markets, and has disrupted our business and our clients’ businesses.
Any of these events could have a material adverse effect on our business, financial condition, and operating results. 19 Table of Contents RISKS RELATING TO OUR BUSINESS Damage to our reputation or brand could harm our business.
In connection with our expanded global operations, we face certain risks inherent in doing business internationally.
The expansion of our global operations is complex and subjects us to increased business and economic risks that could adversely affect our financial results. In connection with our expanded global operations, we face certain risks inherent in doing business internationally.
Removed
Many aspects of our business present substantial litigation risks.
Added
Our usage of mobile, web, and cloud technologies, such as those pursuant to our partnership with Google Cloud, may increase our risk of a cyber attack. Our security defenses may also be impacted or breached due to employee error, malfeasance, system errors or vulnerabilities.
Removed
The ultimate impact from COVID-19, including duration, is unknown and could have an adverse effect on our business, financial condition and results of operations. The COVID-19 pandemic continues to cause disruptions in the international and U.S. economies and financial markets.
Added
Any such transaction may not produce the results we anticipate, which could adversely affect our business and our stock price. 22 Table of Contents We intend to continue to explore and pursue acquisitions and other strategic opportunities to strengthen our business and grow our company.
Removed
The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, employee attrition, supply chain interruptions and overall economic and financial market instability in the U.S. Similar impacts also had been experienced throughout the world, including in every country in which we do business.
Added
The use of certain artificial intelligence technology can give rise to intellectual property risks, including compromises to proprietary intellectual property and intellectual property infringement.
Removed
Given the unique and unpredictable nature of this event, future impacts to our business are unknown and could be material.
Added
RISKS RELATING TO AN INVESTMENT IN OUR CLASS A COMMON STOCK Our indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our debt service obligations. We might still be able to incur more debt, intensifying these risks.
Removed
Those impacts may include, among others, the following: • Disruption to our business and operations; • Key members of senior management or a significant number of our employees being unable to work as a result of contracting COVID-19 or related illnesses; • Impacts on our third-party suppliers and their ability to fulfill their obligations to us; • Decreased trading volume and unprecedented market stresses in global financial markets; • Changes in demand for our products and services, based upon fiscal, monetary, and trade policies adopted in response to the economic impact of the pandemic; • Reduced economic activity generally, which could cause businesses to have less need to hedge in our markets; and • Increased financial and operational stress experienced by our clearing firm members due to unprecedented volatility or downturn, including significant losses that may result in a reduction of business or a default.
Removed
These potential impacts may exist for a significant period of time and may adversely affect our business, financial condition, and results of operations even if the COVID-19 pandemic becomes endemic.
Removed
Moreover, since implementing broad work-from-home measures during the pandemic, we have an increased dependency on remote equipment and connectivity infrastructure to access critical business systems that may be subject to failure or disruption of availability, which could negatively impact our business operations.
Removed
Further, we have been subject to increased phishing and other social engineering attempts by malicious actors to manipulate individuals into divulging confidential or personal information or access to our networks.
Removed
If our cybersecurity diligence and efforts to offset the increased risks associated with this greater reliance on mobile, collaborative and remote technologies are not effective or successful, we will be at increased risk for cyber security or data privacy incidents.
Removed
The extent to which COVID-19 further impacts our business, results of operations or financial condition will depend on future developments, which are highly uncertain and difficult to predict, but may include, among others, the duration and spread of the 19 Table of Contents virus, including through new variant strains, its severity, the actions taken by governments and other third parties to contain the virus or treat its impact, such as vaccination, and the effect of such actions on our business practices, the impact of any future federal stimulus measures, and the pace at which, and the extent to which, normal economic and operating conditions resume.
Removed
In addition, many of the other risk factors described herein could be heightened by the effects of COVID-19 and related economic conditions, which could result in a material impact on our results of operations, financial condition and liquidity. Damage to our reputation or brand could harm our business.
Removed
The success of our markets depends on our ability to complete development of, successfully implement and maintain the electronic trading and clearing systems that have the functionality, performance, availability and resilience, capacity, security and speed required by our customers.
Removed
Dollar London Interbank Offered Rate (LIBOR) underlying rate and will be transitioned to the three-month Secured Overnight Financing Rate (SOFR) futures and options in the first half of 2023. To the extent trading in Eurodollar contracts decreases ahead of this transition or our alternative contracts are not successful, our revenues would be negatively impacted.
Removed
Certain of our other businesses could also be negatively affected by changes to LIBOR. Our Eurodollar futures and options contracts are based on the three-month U.S. Dollar ICE LIBOR underlying rate.
Removed
In 2022, average trading volume in our Eurodollar contracts was 2.4 million contracts and open interest was 17 million contracts and our average trading volume in our SOFR contracts was 2.2 million contracts and open interest was 29.3 million contracts. The U.K.
Removed
FCA, which regulates LIBOR, announced its intention to phase out the use of LIBOR with the cessation of one-week and two-month USD LIBOR, as well as non-USD LIBOR tenors, after December 31, 2021, and the cessation of publication of the remaining USD LIBOR settings in a "representative" form (including three-month USD LIBOR) after June 30, 2023. In 2021, the U.S.
Removed
Federal Reserve Board and other regulatory bodies issued guidance encouraging banks and other financial market participants to cease entering into new contracts that use USD LIBOR as a reference rate no later than December 31, 2021, and in March 2022, the Adjustable Interest Rate (LIBOR) Act was signed into law, establishing a framework for the replacement of LIBOR as a benchmark interest rate in U.S. contracts that do not provide for the use of a clearly defined and practicable benchmark replacement rate following the cessation of publication or publication in a "representative" form.
Removed
In light of these developments, financial institutions that currently report information used to set USD LIBOR are expected to stop doing so during 2023, and we expect banks and other financial market participants to continue to cease entering into new contracts based on USD LIBOR.
Removed
There is no guarantee that these market participants will adopt reference rates associated with our alternative products. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has recommended replacing USD LIBOR with SOFR.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters are located at 20 South Wacker Drive, Chicago, IL, where we lease approximately 575,000 square feet of general office space. This lease expires in 2032. Our European headquarters are located at the London Fruit & Wool Exchange at 1 Duval Square, London, where we lease approximately 120,000 square feet of general office space.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters are located at 20 South Wacker Drive, Chicago, IL, where we lease approximately 545,000 square feet of general office space. This lease expires in 2032. Our European headquarters are located at the London Fruit & Wool Exchange at 1 Duval Square, London, where we lease approximately 120,000 square feet of general office space.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities Period in 2022 Total Number of Shares (or Units) Purchased (1) Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in millions) October 1 to October 31 — $ — — $ — November 1 to November 30 5 174.25 — — December 1 to December 31 20,531 168.16 — — Total 20,536 — _______________ (1) Shares purchased consist of an aggregate of 20,536 shares of Class A common stock surrendered to satisfy employee tax obligations upon the vesting of restricted stock.
Biggest changeThe stock price performance included in this graph is not necessarily indicative of future stock price performance. 2019 2020 2021 2022 2023 CME Group Inc. $ 109.67 $ 102.73 $ 133.02 $ 102.56 $ 134.67 S&P 500 131.49 155.68 200.37 164.08 207.21 Peer Group 131.21 154.03 184.43 160.15 195.00 Unregistered Sales of Equity Securities Not applicable. 29 Table of Contents Issuer Purchases of Equity Securities Period in 2023 Total Number of Shares (or Units) Purchased (1) Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in millions) October 1 to October 31 389 $ 214.25 — $ — November 1 to November 30 — — — — December 1 to December 31 14,268 210.09 — — Total 14,657 — _______________ (1) Shares purchased consist of an aggregate o f 14,657 shares of Class A common stock surrendered to satisfy employee tax obligations upon the vesting of restricted stock.
Class B Common Stock Our Class B common stock is not listed on a national securities exchange or traded in an organized over-the-counter (OTC) market. Each class of our Class B common stock is associated with a membership in a specific division of our CME exchange.
Class B Common Stock Our Class B common stock is not listed on a national securities exchange or traded in an organized OTC market. Each class of our Class B common stock is associated with a membership in a specific division of our CME exchange.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock, in the peer group and the S&P 500 index on December 29, 2017 and its relative performance is tracked through December 31, 2022.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock, in the peer group and the S&P 500 index on December 31, 2018 and its relative performance is tracked through December 31, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Class A Common Stock Our Class A common stock is currently listed on Nasdaq under the ticker symbol "CME." As of February 8, 2023, there were approximately 4,365 holders of record of our Class A common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Class A Common Stock Our Class A common stock is currently listed on Nasdaq under the ticker symbol "CME." As of February 7, 2024, there were approximately 4,100 holders of record of our Class A common stock.
Series G Non-Voting Convertible Preferred Stock has the same equitable interest in our earnings and the same dividend payments per share as our Class A shares on an as converted basis. As of February 8, 2023, there was one holder of record of our Series G Non-Voting Convertible Preferred Stock.
Series G Non-Voting Convertible Preferred Stock has the same equitable interest in our 28 Table of Contents earnings and the same dividend payments per share as our Class A shares on an as converted basis. As of February 7, 2024, there was one holder of record of our Series G Non-Voting Convertible Preferred Stock.
As of February 8, 2023, there were approximately 1,535 holders of record of our Class B common stock. 27 Table of Contents Preferred Stock In 2021, we issued and sold in a private placement approximately 4.6 million shares of Series G Non-Voting Convertible Preferred Stock.
As of February 7, 2024, there were approximately 1,530 holders of record of our Class B common stock. Preferred Stock In 2021, we issued and sold in a private placement approximately 4.6 million shares of Series G Non-Voting Convertible Preferred Stock.
Removed
The stock price performance included in this graph is not necessarily indicative of future stock price performance. 2018 2019 2020 2021 2022 CME Group Inc. $ 132.12 $ 144.90 $ 135.72 $ 175.75 $ 135.51 S&P 500 95.62 125.72 148.85 191.58 156.89 Peer Group 106.56 139.51 162.48 186.96 161.77 28 Table of Contents Unregistered Sales of Equity Securities Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

72 edited+19 added−16 removed100 unchanged
Biggest changeThe following table shows the estimated impact of key factors resulting in the net decrease in operating expenses. 40 Table of Contents (dollars in millions) Year- over-Year Change Change as a Percentage of 2021 Expenses Salaries, benefits and employer taxes $ (63.9) (3) % Non-qualified deferred compensation (28.7) (1) Employee separation and retention costs (25.0) (1) Professional fees and outside services (14.3) (1) Currency fluctuation (12.8) (1) Bonus 21.6 1 Licensing and other fee agreements 83.1 4 Other expenses, net (1.0) — Total $ (41.0) (2) % Overall operating expenses decreased in 2022 when compared with 2021 due to the following reasons: • Salaries, benefits and employer taxes were lower during 2022 when compared with 2021 due to a net decrease in average headcount, including the contribution of employees from CME Group's optimization businesses to the joint venture with IHS Markit in September 2021. • A decrease in our non-qualified deferred compensation liability during 2022, the impact of which does not affect net income because of an equal and offsetting change in investment income, contributed to a decrease in compensation and benefits expense. • Employee separation and retention costs were lower in 2022 compared with 2021 due to a lower reduction in workforce. • Professional fees and outside services expense decreased due to one-time legal and other professional fees incurred in 2021 related to our joint venture with IHS Markit.
Biggest change(dollars in millions) Year- over-Year Change Change as a Percentage of 2022 Expenses Non-qualified deferred compensation $ 33.2 2 % Technology support services 29.7 1 Salaries, benefits and employer taxes 28.7 1 Currency fluctuation 26.1 1 Legal Fees 13.5 1 Employee separation and restructuring 10.3 1 Other expenses, net (1.8) — Total $ 139.7 7 % 41 Table of Contents Overall operating expenses increased in 2023 when compared with 2022 due to the following reasons: • An increase in our non-qualified deferred compensation liability during 2023, the impact of which does not affect net income because of an equal and offsetting change in investment income, contributed to increases in compensation and benefits expenses. • The increases in expenses related to technology support services were primarily driven by higher software license fees and third party services to support the ongoing Google Cloud transformation project. • Salaries, benefits and employer taxes expenses were higher during 2023 than 2022 due to increases in headcount during the year, which were primarily attributable to additional headcount in the company's international locations. • In 2023, we recognized a net loss of $12.9 million, compared to a net gain of $13.2 million in 2022, as a result of currency exchange fluctuations and realized foreign currency translation from entity liquidations done to simplify the corporate structure.
Competition is influenced by our brand and reputation; the efficiency and security of our settlement, clearing and support services; depth and liquidity of our markets; diversity of product offerings, including frequency and quality of new product development and innovative services; our ability to position and expand upon existing products to address changing market needs; efficient and seamless customer experience; transparency, reliability, anonymity and security of transaction processing; the regulatory environment; connectivity, accessibility, flexibility in execution methods and distribution; and technology capability and innovation, as well as overall transaction costs.
Competition is influenced by our brand and reputation; the efficiency and security of our clearing. settlement and support services; depth and liquidity of our markets; diversity of product offerings, including frequency and quality of new product development and innovative services; our ability to position and expand upon existing products to address changing market needs; efficient and seamless customer experience; transparency, reliability, anonymity and security of transaction processing; the regulatory environment; connectivity, accessibility, flexibility in execution methods, and distribution; and technology capability and innovation, as well as overall transaction costs.
Investment income is influenced by market interest rates, changes in the levels of cash performance bonds deposited by clearing firms, the amount of dividends distributed by our strategic investments and the availability of funds generated by operations. • Interest and other borrowing costs expense includes charges associated with various short-term and long-term funding facilities, including commitment fees on lines of credit agreements. 33 Table of Contents • Equity in net earnings (losses) of unconsolidated subsidiaries includes income and losses from our investments in S&P Dow Jones Indices LLC, OSTTRA, Shanghai CFETS-NEX International Money Broking Co., Ltd. and Dubai Mercantile Exchange. • Other income (expense) includes expenses related to the distribution of a portion of interest earned on performance bond collateral reinvestment to the clearing firms, gains and losses on derivative contracts and other various income and expenses outside our core operations.
Investment income is influenced by market interest rates, changes in the levels of cash performance bonds deposited by clearing firms, the amount of dividends distributed by our strategic investments and the availability of funds generated by operations. • Interest and other borrowing costs expense includes charges associated with various short-term and long-term funding facilities, including commitment fees on lines of credit agreements. • Equity in net earnings (losses) of unconsolidated subsidiaries includes income and losses from our investments in S&P Dow Jones Indices LLC, OSTTRA, Shanghai CFETS-NEX International Money Broking Co., Ltd. and Dubai Mercantile Exchange. 34 Table of Contents • Other income (expense) includes expenses related to the distribution of a portion of interest earned on performance bond collateral reinvestment to the clearing firms, gains and losses on derivative contracts and other various income and expenses outside our core operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION Management’s Discussion and Analysis of Financial Condition and Results of Operations is organized as follows: • Executive Summary : Includes an overview of our business; current economic, competitive and regulatory trends relevant to our business; our current business strategy; and our primary sources of operating and non-operating revenues and expenses. • Critical Accounting Policies : Provides an explanation of accounting policies that may have a significant impact on our financial results and the estimates, assumptions and risks associated with those policies. • Results of Operations : Includes an analysis of our 2022 financial results and a discussion of any known events or trends that are likely to impact future results. • Liquidity and Capital Resources : Includes a discussion of our future cash requirements, capital resources, significant planned expenditures and financing arrangements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION Management’s Discussion and Analysis of Financial Condition and Results of Operations is organized as follows: • Executive Summary : Includes an overview of our business; current economic, competitive and regulatory trends relevant to our business; our current business strategy; and our primary sources of operating and non-operating revenues and expenses. • Critical Accounting Policies : Provides an explanation of accounting policies that may have a significant impact on our financial results and the estimates, assumptions and risks associated with those policies. • Results of Operations : Includes an analysis of our 2023 financial results and a discussion of any known events or trends that are likely to impact future results. • Liquidity and Capital Resources : Includes a discussion of our future cash requirements, capital resources, significant planned expenditures and financing arrangements.
Debt Instruments The following table summarizes our debt outstanding as of December 31, 2022: (in millions) Par Value Fixed rate notes due May 2023, stated rate of 4.30% € 15.0 Fixed rate notes due March 2025, stated rate of 3.00% (1) $ 750.0 Fixed rate notes due June 2028, stated rate of 3.75% $ 500.0 Fixed rate notes due March 2032, stated rate of 2.65% $ 750.0 Fixed rate notes due September 2043, stated rate of 5.30% (2) $ 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 3.11%.
Debt Instruments The following table summarizes our debt outstanding as of December 31, 2023: (in millions) Par Value Fixed rate notes due March 2025, stated rate of 3.00% (1) $ 750.0 Fixed rate notes due June 2028, stated rate of 3.75% $ 500.0 Fixed rate notes due March 2032, stated rate of 2.65% $ 750.0 Fixed rate notes due September 2043, stated rate of 5.30% (2) $ 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 3.11%.
It is also possible that we may need to raise additional funds to finance our activities through future public debt offerings or by direct borrowings from financial institutions through our committed revolving credit facilities. Cash will also be required for non-cancellable purchase obligations as at December 31, 2022. Commitments include material contractual purchase obligations that are non-cancellable.
It is also possible that we may need to raise additional funds to finance our activities through future public debt offerings or by direct borrowings from financial institutions through our committed revolving credit facilities. Cash will also be required for non-cancellable purchase obligations as at December 31, 2023. Commitments include material contractual purchase obligations that are non-cancellable.
The following table summarizes our credit ratings as of December 31, 2022: Rating Agency Short-Term Debt Rating Long-Term Debt Rating Outlook Standard & Poor’s A1+ AA- Stable Moody’s Investors Service 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.
The following table summarizes our credit ratings as of December 31, 2023: Rating Agency Short-Term Debt Rating Long-Term Debt Rating Outlook Standard & Poor’s A1+ AA- Stable Moody’s Investors Service 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.
At December 31, 2022, we were in compliance with the various 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 that it uses to pay dividends to its shareholders.
At December 31, 2023, we were in compliance with the various 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 that it uses to pay dividends to its shareholders.
Any customer who is guaranteed by a clearing firm and who agrees to be bound by our exchange rules is able to obtain direct access to our 31 Table of Contents electronic platforms. Open outcry trading is conducted exclusively by our members, who may execute trades on behalf of customers or for themselves.
Any customer who is 32 Table of Contents guaranteed by a clearing firm and who agrees to be bound by our exchange rules is able to obtain direct access to our electronic platforms. Open outcry trading is conducted exclusively by our members, who may execute trades on behalf of customers or for themselves.
In 2022 when compared with 2021, there was an increase in earnings from reinvested cash performance bond and guaranty fund contributions due to a higher rate of interest earned in the cash accounts at the Federal Reserve Bank of Chicago following interest rate hikes in 2022.
In 2023 when compared with 2022, there was an increase in earnings from reinvested cash performance bond and guaranty fund contributions due to a higher rate of interest earned in the cash accounts at the Federal Reserve Bank of Chicago following interest rate hikes in 2022 and 2023.
Certain BrokerTec contracts are cleared at third-party clearing houses. 30 Table of Contents Business Trends Economic Environment. Our customers continue to use our markets as an effective and transparent means to manage risk and meet their investment needs.
Certain BrokerTec contracts are cleared at third-party clearing houses. 31 Table of Contents Business Trends Economic Environment. Our customers continue to use our markets as an effective and transparent means to manage risk and meet their investment needs.
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, 2021, giving effect to share repurchases made and special dividends paid 43 Table of Contents during the term of the agreements (and in no event greater than $2.0 billion in aggregate), multiplied by 0.65.
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, 2021, 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.
Market volatility increased in 2022 due to the global central banks' interest rate policy decisions as a result of higher than expected inflation. Agricultural Commodity Products The following table summarizes average daily volume for our key agricultural commodity products.
Market volatility was higher in 2022 due to the global central banks' interest rate policy decisions as a result of higher than expected inflation. Agricultural Commodity Products The following table summarizes average daily volume for our key agricultural commodity products.
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. 36 Table of Contents Contract Volume The following table summarizes average daily contract volume.
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. 37 Table of Contents Contract Volume The following table summarizes average daily contract volume.
Other Sources of Revenue Market data and information services. In 2022 when compared with 2021, the increase in market data and information services revenue was largely attributable to price increases for certain products as well as an increase in usage for certain products.
Other Sources of Revenue Market data and information services. In 2023 when compared with 2022, the increase in market data and information services revenue was largely attributable to price increases for certain products as well as an increase in usage for certain products.
Trading activity in our centralized markets has fluctuated due to the ongoing uncertainty in the financial markets, fluctuations in the availability of credit, variations in the amount of assets under management as well as the Federal Reserve Bank’s interest rate policy and quantitative easing.
Trading activity in our centralized markets has fluctuated due to the ongoing uncertainty in the financial markets, fluctuations in the availability of credit, variations in the amount of assets under management as well as the Federal Reserve Bank’s interest rate policy.
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.
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. 45 Table of Contents
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 December 31, 2022, we have excess borrowing capacity for general corporate purposes of approximately $2.3 billion under our multi-currency revolving senior credit facility.
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. 44 Table of Contents At December 31, 2023, we have excess borrowing capacity for general corporate purposes of approximately $2.3 billion under our multi-currency revolving senior credit facility.
Liquidity and Cash Management Cash and cash equivalents, excluding restricted cash, totaled $2.7 billion and $2.8 billion at December 31, 2022 and December 31, 2021, 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.
Liquidity and Cash Management Cash and cash equivalents, excluding restricted cash, totaled $2.9 billion and $2.7 billion at December 31, 2023 and December 31, 2022, 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.
For a comparison of our results of operations for the fiscal years ended December 31, 2021 to December 31, 2020, see "Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022.
For a comparison of our results of operations for the fiscal years ended December 31, 2022 to December 31, 2021, see "Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023.
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 December 31, 2022, guaranty fund contributions available to collateralize the facility totaled $ 6.9 billion .
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 December 31, 2023, guaranty fund contributions available to collateralize the facility totaled $ 8.6 billion .
To satisfy our performance bond obligation with Singapore Exchange Limited, we may pledge irrevocable standby letters of credit. At December 31, 2022, the letters of credit totaled $330.0 million. We also maintain a $350.0 million line of credit to meet our obligations under this agreement.
To satisfy our performance bond obligation with Singapore Exchange Limited, we may pledge irrevocable standby letters of credit. At December 31, 2023, the letters of credit totaled $285.0 million. We also maintain a $350.0 million line of credit to meet our obligations under this agreement.
Each year, capital expenditures are incurred for improvements to and modification of our offices, remote data centers, telecommunications network and other operating equipment. In 2023, we expect capital expenditures to total approximately $100.0 million, net of any leasehold improvement allowances. We continue to monitor our capital needs and may revise our forecasted expenditures as necessary in the future.
Each year, capital expenditures are incurred for improvements to and modification of our offices, remote data centers, telecommunications network and other operating equipment. In 2024, we expect capital expenditures to total approximately $85 million, net of any leasehold improvement allowances. We continue to monitor our capital needs and may revise our forecasted expenditures as necessary in the future.
Under the performance criteria of our annual incentive plans, the bonus funded under the plans is based on achieving certain financial performance targets established by the compensation committee of our board of directors.
Under the performance criteria of our annual incentive plans, the bonus funded under the plans is based on achieving certain financial performance 33 Table of Contents targets established by the compensation committee of our board of directors.
Our practice is to have our pension plan 100% funded at each year end on a projected benefit obligation basis, while also satisfying any minimum required contribution and obtaining the maximum tax deduction. Based on our actuarial projections, we estimate that no additional contribution will be necessary in 2023 to meet our funding goal.
Our practice is to have our pension plan 100% funded at each year end on a projected benefit obligation basis, while also satisfying any minimum required contribution and obtaining the maximum tax deduction. Based on our actuarial projections, we estimate that a $16.9 million additional contribution will be necessary in 2024 to meet our funding goal.
Beginning in May 2021, open outcry trading is now limited to Eurodollar options and Secured Overnight Financing Rate (SOFR) options products following the permanent closure of most of our open outcry pits. Typically, customers submitting trades through our electronic platforms are charged fees for using the platforms in addition to the fees assessed on all transactions executed on our exchange.
Beginning in July 2023, open outcry trading is now limited to Secured Overnight Financing Rate (SOFR) options products following the permanent closure of most of our open outcry pits. Typically, customers submitting trades through our electronic platforms are charged fees for using the platforms in addition to the fees assessed on all transactions executed on our exchange.
The two largest resellers of our market data represented, in aggregate, approximately 33% of our market data and information services revenue in 2022. Despite this concentration, we consider exposure to significant risk of revenue loss to be minimal.
The two largest resellers of our market data represented, in aggregate, approximately 32% of our market data and information services revenue in 2023. Despite this concentration, we consider exposure to significant risk of revenue loss to be minimal.
However, the amount of the actual contribution is contingent on various factors, including the actual rate of return on our plan assets during 2023 and the December 31, 2023 discount rate. 44 Table of Contents Regulatory Requirements CME is regulated by the CFTC as a Derivatives Clearing Organization (DCO).
However, the amount of the actual contribution is contingent on various factors, including the actual rate of return on our plan assets during 2024 and the December 31, 2024 discount rate. Regulatory Requirements CME is regulated by the CFTC as a derivatives clearing organization (DCO).
Cash Markets Business Total clearing and transaction fees revenue in 2022 included $318.8 million of transaction fees attributable to the cash markets business, compared with $396.2 million in 2021. This revenue primarily includes BrokerTecs's fixed income volume and EBS foreign exchange volume.
Cash Markets Business Total clearing and transaction fees revenue in 2023 included $284.7 million of transaction fees attributable to the cash markets business, compared with $318.8 million in 2022. This revenue primarily includes BrokerTecs's fixed income volume and EBS foreign exchange volume.
We are also required to comply with restrictions contained in the general corporation laws of our state of incorporation, which could limit our ability to declare and pay dividends. On February 2, 2023, the company declared a regular quarterly dividend of $1.10 per share for all outstanding 42 Table of Contents common and preferred shares.
We are also required to comply with restrictions contained in the general corporation laws of our state of incorporation, which could limit our ability to declare and pay dividends. On February 8, 2024, the company declared a regular quarterly dividend of $1.15 per share for all outstanding common and preferred shares.
In 2022 and 2021, earnings from cash performance bond and guaranty fund contributions were $2,169.5 million and $173.9 million, respectively.
In 2023 and 2022, earnings from cash performance bond and guaranty fund contributions were $5,073.9 million and $2,169.5 million, respectively.
In 2022 when compared with 2021, we recognized higher expenses related to the distribution of interest earned on performance bond collateral reinvestments to the clearing firms in conjunction with higher interest income earned on our reinvestment during the period due to a higher Federal Funds rate in 2022.
In 2023 when compared with 2022, we recognized higher expense related to the distribution of interest earned on performance bond collateral reinvestments to the clearing firms in conjunction with higher interest income earned on our reinvestment during the period due to a higher interest rates in 2023.
Year-over-Year Change (in millions) 2022-2021 Increase due to change in total contract volume $ 580.7 Decrease due to change in average rate per contract (128.5) Net increase in clearing and transaction fees $ 452.2 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.
Year-over-Year Change (in millions) 2023-2022 Increase due to change in total contract volume $ 174.7 Increase due to change in average rate per contract 287.6 Net increase in clearing and transaction fees $ 462.3 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.
At December 31, 2022, future minimum payments due under purchase obligations were payable as follows (in millions): Year 2023 $ 92.6 2024-2025 184.0 2026-2027 215.1 Thereafter 733.0 Total $ 1,224.7 Future capital expenditures for technology are anticipated as we continue to support our growth through increased system capacity, performance improvements, integration of acquired platforms and improvements to some of our office spaces.
At December 31, 2023, future minimum payments due under purchase obligations were payable as follows (in millions): Year 2024 $ 118.2 2025-2026 265.4 2027-2028 216.7 Thereafter 625.0 Total $ 1,225.3 Future capital expenditures for technology are anticipated as we continue to support our growth through increased system capacity, performance improvements, integration of acquired platforms and improvements to some of our office spaces.
Sources and Uses of Cash The following is a summary of cash flows from operating, investing and financing activities. Year-over-Year Change (dollars in millions) 2022 2021 2022-2021 Net cash provided by operating activities $ 3,056.0 $ 2,402.4 27 % Net cash provided by (used in) investing activities (489.8) 58.4 n.m.
Sources and Uses of Cash The following is a summary of cash flows from operating, investing and financing activities. Year-over-Year Change (dollars in millions) 2023 2022 2023-2022 Net cash provided by operating activities $ 3,453.8 $ 3,056.0 13 % Net cash provided by (used in) investing activities 20.9 (489.8) n.m.
In addition, this expense is affected by the composition of our workforce. The expense associated with our bonus and stock-based compensation plans can also have a significant impact on this expense category. 32 Table of Contents The bonus component of our compensation and benefits expense is based on our financial performance.
The expense associated with our bonus and stock-based compensation plans can also have a significant impact on this expense category. The bonus component of our compensation and benefits expense is based on our financial performance.
The board of directors also declared an additional, annual variable dividend of $4.50 per share on December 8, 2022 paid on January 18, 2023 to the shareholders of record on December 28, 2022.
The board of directors also declared an additional, annual variable dividend of $5.25 per share on December 7, 2023 paid on January 18, 2024 to the shareholders of record on December 28, 2023.
The dividend will be payable on March 27, 2023 to shareholders of record on March 10, 2023. Assuming no changes in the number of shares outstanding, the first quarter dividend payment will total approximately $400.0 million.
The dividend will be payable on March 26, 2024 to shareholders of record on March 8, 2024. Assuming no changes in the number of shares outstanding, the first quarter dividend payment will total approximately $420 million.
Year-over-Year Change 2022 2021 2022-2021 Total contract volume (in millions) 5,846.0 4,942.7 18 % Clearing and transaction fees (in millions) $ 3,758.5 $ 3,306.3 14 Average rate per contract 0.643 0.669 (4) We estimate the following net increase in clearing and transaction fees based on a change in total contract volume and a change in average rate per contract during 2022 compared with 2021.
Year-over-Year Change 2023 2022 2023-2022 Total contract volume (in millions) 6,098.5 5,846.0 4 % Clearing and transaction fees (in millions) $ 4,220.8 $ 3,758.5 12 Average rate per contract 0.692 0.643 8 We estimate the following net increase in clearing and transaction fees based on a change in total contract volume and a change in average rate per contract during 2023 compared with 2022.
Compensation and benefits expense is our most significant expense and includes employee wages, bonuses, stock-based compensation, benefits and employer taxes. Changes in this expense are driven by fluctuations in the number of employees, increases in wages as a result of labor market conditions, changes in rates for employer taxes and other cost increases affecting benefit plans.
Changes in this expense are driven by fluctuations in the number of employees, increases in wages as a result of labor market conditions, changes in rates for employer taxes and other cost increases affecting benefit plans. In addition, this expense is affected by the composition of our workforce.
Year-over-Year Change (amounts in thousands) 2022 2021 2022-2021 Gold 318 330 (4) % Copper 93 101 (8) Silver 83 95 (12) In 2022 when compared with 2021, overall metal contract volume decreased, which we believe was attributable to lower overall market volatility within the gold and silver markets.
Year-over-Year Change (amounts in thousands) 2023 2022 2023-2022 Gold 356 318 12 % Copper 114 93 23 Silver 93 83 12 Overall metal contract volume increased in 2023 when compared with 2022, which we believe was attributable to higher overall market volatility within the gold and silver markets.
Year-over-Year Change (dollars in millions, except per share data) 2022 2021 2022-2021 Total revenues $ 5,019.4 $ 4,689.7 7 % Total expenses 2,003.5 2,044.5 (2) Operating margin 60.1 % 56.4 % Non-operating income (expense) $ 474.4 $ 728.4 (35) Effective tax expense rate 22.9 % 21.8 % Net income attributable to CME Group $ 2,691.0 $ 2,636.4 2 Diluted earnings per common share attributable to CME Group 7.40 7.29 2 Cash flows from operating activities 3,056.0 2,402.4 27 35 Table of Contents Revenues Year-over-Year Change (dollars in millions) 2022 2021 2022-2021 Clearing and transaction fees $ 4,142.7 $ 3,765.1 10 % Market data and information services 610.9 576.9 6 Other 265.8 347.7 (24) Total Revenues $ 5,019.4 $ 4,689.7 7 Clearing and Transaction Fees Futures and Options The following table summarizes our total contract volume, revenue and average rate per contract for futures and options.
Year-over-Year Change (dollars in millions, except per share data) 2023 2022 2023-2022 Total revenues $ 5,578.9 $ 5,019.4 11 % Total expenses 2,143.2 2,003.5 7 Operating margin 61.6 % 60.1 % Non-operating income (expense) $ 717.9 $ 474.4 51 Effective tax expense rate 22.3 % 22.9 % Net income attributable to CME Group $ 3,226.2 $ 2,691.0 20 Diluted earnings per common share attributable to CME Group 8.86 7.40 20 Cash flows from operating activities 3,453.8 3,056.0 13 36 Table of Contents Revenues Year-over-Year Change (dollars in millions) 2023 2022 2023-2022 Clearing and transaction fees $ 4,588.5 $ 4,142.7 11 % Market data and information services 663.7 610.9 9 Other 326.7 265.8 23 Total Revenues $ 5,578.9 $ 5,019.4 11 Clearing and Transaction Fees Futures and Options The following table summarizes our total contract volume, revenue and average rate per contract for futures and options.
Income Tax Provision The following table summarizes the effective tax rate for the periods presented: 2022 2021 Year-over-Year Change 2022-2021 Year ended December 31 22.9 % 21.8 % 1.1 % The effective tax rate increased in 2022 when compared with 2021.
Income Tax Provision The following table summarizes the effective tax rate for the periods presented: 2023 2022 Year-over-Year Change 2023-2022 Year ended December 31 22.3 % 22.9 % (0.6) % The effective tax rate decreased slightly in 2023 when compared with 2022.
The increase in income was partially offset by a decrease in net realized and unrealized gains on investments as well as a decrease in earnings on our deferred compensation plan, the impact of which does not affect net income because of an equal and offsetting change in compensation and benefits expense. 41 Table of Contents Equity in net earnings (losses) of unconsolidated subsidiaries .
In addition, there was an increase in net realized and unrealized gains on investments as well as an increase in earnings on our deferred compensation plan, the impact of which does not affect net income because of an equal and offsetting change in compensation and benefits expense. Other income (expense).
Expenses Year-over-Year Change (dollars in millions) 2022 2021 2022-2021 Compensation and benefits $ 753.1 $ 837.0 (10) % Technology 188.6 192.6 (2) Professional fees and outside services 137.4 151.7 (9) Amortization of purchased intangibles 227.7 237.6 (4) Depreciation and amortization 134.9 147.8 (9) Licensing and other fee agreements 320.0 236.9 35 Other 241.8 240.9 — Total Expenses $ 2,003.5 $ 2,044.5 (2) 2022 Compared With 2021 Operating expenses decreased by $41.0 million in 2022 when compared with 2021.
Expenses Year-over-Year Change (dollars in millions) 2023 2022 2023-2022 Compensation and benefits $ 828.6 $ 753.1 10 % Technology 218.7 188.6 16 Professional fees and outside services 144.4 137.4 5 Amortization of purchased intangibles 226.6 227.7 — Depreciation and amortization 126.0 134.9 (7) Licensing and other fee agreements 322.8 320.0 1 Other 276.1 241.8 14 Total Expenses $ 2,143.2 $ 2,003.5 7 2023 Compared With 2022 Operating expenses increased by $139.7 million in 2023 when compared with 2022.
Concentration of Revenue We bill a significant portion of our clearing and transaction fees 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 clearing firm represented at least approximately 10% of our clearing and transaction fees in 2022.
The majority of clearing and transaction fees received from clearing firms represent charges for trades executed and cleared on behalf of their customers. No clearing firms represented at least 10% of our clearing and transaction fees in 2023.
Non-Operating Income (Expense) Year-over-Year Change (dollars in millions) 2022 2021 2022-2021 Investment income $ 2,198.4 $ 306.9 n.m. Interest and other borrowing costs (162.7) (166.9) (2) Equity in net earnings (losses) of unconsolidated subsidiaries 301.1 245.8 22 Other income (expense) (1,862.4) 342.6 n.m. Total Non-Operating $ 474.4 $ 728.4 (35) _________ n.m. not meaningful Investment income .
Non-Operating Income (Expense) Year-over-Year Change (dollars in millions) 2023 2022 2023-2022 Investment income $ 5,275.3 $ 2,198.4 140 % Interest and other borrowing costs (159.4) (162.7) (2) Equity in net earnings (losses) of unconsolidated subsidiaries 296.9 301.1 (1) Other income (expense) (4,694.9) (1,862.4) 152 Total Non-Operating $ 717.9 $ 474.4 51 _________ n.m. not meaningful Investment income .
Year-over-Year Change (amounts in millions) 2022 2021 2022-2021 BrokerTec fixed income transaction fees $ 164.7 $ 172.0 (4) % EBS foreign exchange transaction fees 154.1 164.3 (6) % Optimization transaction fees — 59.9 n.m. _________ n.m. not meaningful 39 Table of Contents The related average daily notional value for the years ended 2022 and 2021 for key cash markets products were as follows: Year-over-Year Change (amounts in billions) 2022 2021 2022-2021 European Repo (in euros) $ 345.2 $ 292.3 18 % U.S.
Year-over-Year Change (amounts in millions) 2023 2022 2023-2022 BrokerTec fixed income transaction fees $ 152.1 $ 164.7 (8) % EBS foreign exchange transaction fees 132.6 154.1 (14) % The related average daily notional value for the years ended 2023 and 2022 for key cash markets products were as follows: Year-over-Year Change (amounts in billions) 2023 2022 2023-2022 European Repo (in euros) $ 326.5 $ 345.2 (5) % U.S.
Treasury futures and options: 10-Year 2,497 2,495 — 5-Year 1,543 1,278 21 2-Year 682 459 48 Treasury Bond 503 580 (13) Federal Funds futures and options 335 112 n.m. _________ n.m. not meaningful 37 Table of Contents In 2022 compared with 2021, overall interest rate contract volume increased as a result of higher overall volatility.
Treasury futures and options: 10-Year 2,701 2,497 8 5-Year 1,834 1,543 19 2-Year 838 682 23 Treasury Bond 587 503 17 Federal Funds futures and options 442 335 32 _________ n.m. not meaningful 38 Table of Contents In 2023 compared with 2022, overall interest rate contract volume increased as a result of higher overall volatility.
Year-over-Year Change (amounts in thousands) 2022 2021 2022-2021 Euro 263 210 25 % Japanese yen 167 114 46 British pound 129 101 28 Australian dollar 106 102 3 Overall foreign exchange contract volume increased in 2022 when compared with 2021, which we believe is due to higher overall market volatility.
Year-over-Year Change (amounts in thousands) 2023 2022 2023-2022 Euro 252 263 (4) % Japanese yen 185 167 11 British pound 111 129 (14) Australian dollar 106 106 — Overall foreign exchange contract volume decreased in 2023 when compared with 2022, which we believe is due to lower overall market volatility.
Financing activities Cash used in financing activities was higher in 2022 when compared with 2021 mainly due to a decrease in cash performance bonds and guaranty fund contributions. In addition, there was an increase in dividends paid in 2022.
Also contributing to the increase was the additional investment in S&P Dow Jones Indices LLC of $410.0 million in 2022. Financing activities Cash used in financing activities was higher in 2023 when compared with 2022 mainly due to a decrease in cash performance bonds and guaranty fund contributions. In addition, there was an increase in dividends paid in 2023.
If the carrying value 34 Table of Contents exceeds the undiscounted net cash flows, management is then required to estimate the fair value of the assets and record an impairment loss for the excess of the carrying value over the fair value. In connection with this impairment assessment, management also challenges the useful lives of our definite-lived intangible assets.
If the carrying value exceeds the undiscounted net cash flows, management is then required to estimate the fair value of the assets and record an impairment loss for the excess of the carrying value over the fair value.
Year-over-Year Change (amounts in thousands) 2022 2021 2022-2021 Eurodollar futures and options: Futures expiring within two years 1,100 1,291 (15) % Options 833 1,059 (21) Futures expiring beyond two years 440 1,085 (59) SOFR futures and options: Futures expiring within two years 1,479 145 n.m. Futures expiring beyond two years 282 13 n.m. Options 440 36 n.m. U.S.
Year-over-Year Change (amounts in thousands) 2023 2022 2023-2022 Eurodollar futures and options: Futures expiring within two years 87 1,100 (92) % Options 41 833 (95) Futures expiring beyond two years 21 440 (95) SOFR futures and options: Futures expiring within two years 2,545 1,479 72 Futures expiring beyond two years 850 282 n.m. Options 1,726 440 n.m. U.S.
While our cost structure is generally fixed in the short term, our sources of operating cash are largely dependent on contract trading volume levels. In addition to using our existing cash, cash equivalents, marketable securities and cash generated from operations, we may continue to utilize our commercial paper program to meet our working capital needs, capital expenditures and other commitments.
In addition to using our existing cash, cash equivalents, marketable securities and cash generated from operations, we may continue to utilize our commercial paper program to meet our working capital needs, capital expenditures and other commitments.
On occasion, the customer's exchange trading privileges may not be properly entered by the clearing firm and incorrect fees are charged for the transactions in the affected accounts. When this information is corrected within the time period allowed by the exchange, a fee adjustment is provided to the clearing firm.
Clearing and transaction fees are recognized as revenue when a buy and sell order are matched, novated and when the trade is cleared. On occasion, the customer's exchange trading privileges may not be properly entered by the clearing firm and incorrect fees are charged for the transactions in the affected accounts.
Calculation of the income tax provision includes an estimate of the income taxes that will be paid for the current year, as well as an estimate of income tax liabilities or benefits deferred into future years. Deferred tax assets are reviewed to determine if they will be realized in future periods.
The reserve is based on the historical pattern of adjustments processed as well as management's estimate of future adjustment activity. Income taxes. Calculation of the income tax provision includes an estimate of the income taxes that will be paid for the current year, as well as an estimate of income tax liabilities or benefits deferred into future years.
To the extent it is determined that some deferred tax assets may not be fully realized, the assets are reduced to their realizable value by a valuation allowance. The calculation of our tax provision involves uncertainty in the application of complex tax regulations and we occasionally may consult with relevant tax authorities or engage third-party expertise where appropriate.
The calculation of our tax provision involves uncertainty in the application of complex tax regulations and we occasionally may consult with relevant tax authorities or engage third-party expertise where appropriate.
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.
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. • There was an increase in legal fees during 2023 related to our business activities and product offerings compared to 2022. • Employee separation and restructuring costs increased year over year largely due to a reduction in force of 3% of employees during 2023.
Treasury 126.1 115.0 10 % Spot FX 65.7 61.2 7 % Overall average daily notional value for the cash markets business increased in 2022 when compared with 2021. The increases in European Repo and U.S.
Treasury 106.1 126.1 (16) % Spot FX 56.7 65.7 (14) % Overall average daily notional values and transactions revenues for the cash markets business and spot FX business were lower in 2023 when compared with 2022. We believe the decrease in U.S.
In 2022 and 2021, expenses related to the distribution of interest earned on collateral reinvestments were $1,889.7 million and $119.6 million, respectively. In 2021, we also recognized a net gain of $400.7 million on the deconsolidation and contribution of our optimization business to OSTTRA.
In 2023 and 2022, expenses related to the distribution of interest earned on collateral reinvestments were $4,717.5 million and $1,889.7 million, respectively.
Year-over-Year Change (amounts in thousands) 2022 2021 2022-2021 Average Daily Volume by Product Line: Interest rates 10,818 9,200 18 % Equity indexes 7,650 5,517 39 Foreign exchange 987 799 24 Agricultural commodities 1,289 1,362 (5) Energy 2,026 2,188 (7) Metals 521 548 (5) Aggregate average daily volume 23,291 19,614 19 Average Daily Volume by Venue: CME Globex 21,712 18,318 19 Open outcry 800 679 18 Privately negotiated 779 617 26 Aggregate average daily volume 23,291 19,614 19 Electronic Volume as a Percentage of Total Volume 93 % 93 % Interest rate, equity, and foreign exchange volatility were higher in 2022 when compared with 2021 as result of a change in market expectations and uncertainty regarding the Federal Reserve's interest rate policy amid higher than expected inflation levels.
Year-over-Year Change (amounts in thousands) 2023 2022 2023-2022 Average Daily Volume by Product Line: Interest rates 12,517 10,818 16 % Equity indexes 6,698 7,650 (12) Foreign exchange 954 987 (3) Agricultural commodities 1,508 1,289 17 Energy 2,118 2,026 5 Metals 599 521 15 Aggregate average daily volume 24,394 23,291 5 Average Daily Volume by Venue: CME Globex 22,353 21,712 3 Open outcry 1,145 800 43 Privately negotiated 896 779 15 Aggregate average daily volume 24,394 23,291 5 Electronic Volume as a Percentage of Total Volume 92 % 93 % Market volatility within certain financial markets remained high throughout 2023.
However, licensing and other fee agreements can vary directly with certain equity, energy and swap volumes, and the majority of our employee bonuses vary indirectly with overall contract volume, as bonuses are primarily based on our financial performance. Compensation and benefits.
However, licensing and other fee agreements can vary directly with certain equity, energy and swap volumes. Compensation and benefits. Compensation and benefits expense is our most significant expense and includes employee wages, bonuses, stock-based compensation, benefits and employer taxes.
Revenue recognition. A significant portion of our revenue is derived from the clearing and transaction fees we assess on each contract executed through our trading venues and cleared through our clearing house. Clearing and transaction fees are recognized as revenue when a buy and sell order are matched, novated and when the trade is cleared.
In connection with this impairment assessment, management also challenges the useful lives of our definite-lived intangible assets. 35 Table of Contents Revenue recognition. A significant portion of our revenue is derived from the clearing and transaction fees we assess on each contract executed through our trading venues and cleared through our clearing house.
A reserve is established for estimated fee adjustments to reflect corrections to customer exchange trading privileges. This reserve has historically been immaterial. The reserve is based on the historical pattern of adjustments processed as well as management's estimate of future adjustment activity. Income taxes.
When this information is corrected within the time period allowed by the exchange, a fee adjustment is provided to the clearing firm. A reserve is established for estimated fee adjustments to reflect corrections to customer exchange trading privileges. This reserve has historically been immaterial.
Year-over-Year Change (amounts in thousands) 2022 2021 2022-2021 WTI crude oil 1,108 1,181 (6) % Natural gas 492 530 (7) Refined products 328 351 (6) Overall energy contract volume decreased in 2022 when compared with 2021. Participant trading activity slowed down largely due to concerns regarding high inflation and an economic downturn.
Year-over-Year Change (amounts in thousands) 2023 2022 2023-2022 WTI crude oil 1,087 1,108 (2) % Natural gas 601 492 22 Refined products 336 328 2 Overall energy contract volume increased in 2023 when compared with 2022.
Net cash provided by financing activities (25,381.7) 69,908.7 n.m. _________ n.m. not meaningful Operating activities Net cash provided by operating activities was higher in 2022 compared with 2021, largely due to an increase in clearing and transaction fee revenue. This was partially offset by income tax payments which were higher in 2022 compared with 2021.
Net cash used in financing activities (48,339.3) (25,381.7) 90 _________ n.m. not meaningful 43 Table of Contents Operating activities Net cash provided by operating activities was higher in 2023 compared with 2022, largely due to an increase in revenue resulting from fee increases and an increase in investment income on collateral reinvestment net of expense related to the distribution of interest earned.
In addition, the sustained conflict between Russia and Ukraine continued to cause disruptions to the global energy markets. We believe these factors led to the overall decrease in energy contract volume. Metal Products The following table summarizes average daily volume for our key metal products.
We believe these factors contributed to higher overall commodity volume in 2023. 39 Table of Contents Energy Products The following table summarizes average daily volume for our key energy products.
V olatility within the equity indexes increased as a result of higher than expected inflation levels as well as the Federal Reserve's actions to increase the Federal Funds rate and quantitative tightening in 2022. We believe these factors led to the overall increases in equity contract volumes.
Equity index v olatility was high in 2022 as a result higher than expected inflation, as well as rising tensions and geopolitical uncertainty with Russia and Ukraine. We believe these factors led to lower overall equity contract volume in 2023 when compared with 2022.
Interest Rate Products The following table summarizes average daily contract volume for our key interest rate products. Eurodollar front 8 contracts include contracts expiring within two years. Eurodollar back 32 contracts include contracts expiring within three to ten years.
Equity Index Products The following table summarizes average daily contract volume for our key equity index products.
Year-over-Year Change (amounts in thousands) 2022 2021 2022-2021 E-mini S&P 500 futures and options (1) 4,535 3,179 43 % E-mini Nasdaq 100 futures and options (1) 2,208 1,536 44 E-mini Russell 2000 futures and options (1) 378 368 3 _______________ (1) Futures and options now include respective weekly Micro E-mini options that were previously separated under a unique product category.
Year-over-Year Change (amounts in thousands) 2023 2022 2023-2022 E-mini S&P 500 futures and options 4,154 4,535 (8) % E-mini Nasdaq 100 futures and options 1,829 2,208 (17) E-mini Russell 2000 futures and options 316 378 (16) Equity index contract volume decreased due to lower overall volatility in 2023 when compared with 2022.
LIQUIDITY AND CAPITAL RESOURCES Cash Requirements We have historically met our funding requirements with cash generated by our ongoing operations. However, we have used our commercial paper program from time to time to fund large short-term funding needs.
However, we have used our commercial paper program from time to time to fund large short-term funding needs. While our cost structure is generally fixed in the short term, our sources of operating cash are largely dependent on contract trading volume levels.
However, the geopolitical uncertainty between Russia and Ukraine led to risk aversion and reduced trading by market participants within the agricultural commodity and energy markets due to global commodity trade uncertainty. We believe these factors led to the changes in contract volume during 2022, when compared with 2021.
In addition, the first half of 2022 saw lower overall volatility within the commodities markets due to risk aversion by market participants following price increases and global trade uncertainty resulting from the conflict between Russia and Ukraine.
Removed
The Federal Open Market Committee raised the Federal Funds rate by a total of 425 percentage points in 2022 and has indicated that it intends to further raise interest rates in the near future. The Federal Reserve also began quantitative tightening in the second half of 2022 by reducing its holdings of U.S. Treasury securities.
Added
Deferred tax assets are reviewed to determine if they will be realized in future periods. To the extent it is determined that some deferred tax assets may not be fully realized, the assets are reduced to their realizable value by a valuation allowance.
Removed
We believe this was due to higher than expected inflation levels, the Federal Open Market Committee's decision to increase the Federal Funds rate multiple times in 2022 as well as the Federal Reserve's quantitative tightening in the second half of 2022.
Added
Interest rate volatility was higher as a result of higher inflation levels and market uncertainty following the collapse of two U.S. regional banks as well as uncertainty surrounding the Federal Reserve ’s interest rate policy decision.
Removed
The increase in overall SOFR volume was also due to more market participants transitioning to the new reference rate away from LIBOR as well as incentive programs designed to encourage market participation in SOFR options trading. Equity Index Products The following table summarizes average daily contract volume for our key equity index products.
Added
The Federal Open Markets Committee (FOMC) has raised the federal funds rate multiple times throughout 2023 and there was uncertainty regarding additional rate changes in the future. In addition, the agricultural commodities and energy markets saw an increase in volatility as a result of more weather uncertainty in 2023 compared to 2022.
Removed
Prior period amounts have been revised to conform to the current period presentation. Equity index contract volume increased due to higher overall volatility in 2022 when compared with 2021.
Added
However, overall equity index volatility leveled off following higher volatility in early 2022 caused by tensions and geopolitical uncertainty between Russia and Ukraine. We believe these factors contributed to the increase in total volume in 2023 compared with 2022. Interest Rate Products The following table summarizes average daily contract volume for our key interest rate products.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAssessment powers are calculated to reflect the potential obligation that each clearing member could be called for in the event clearing member defaults exhaust the guaranty fund; however, the total amount available would be reduced by the defaulted clearing members' assessment obligations since they would no longer be able to satisfy their obligations. 46 Table of Contents The following shows the available assets for the interest rate swap financial safeguard package at December 31, 2022 in the event of a payment default by a clearing firm that clears interest rate swap contracts, after first utilizing the defaulting firm's available assets: (in millions) Clearing House Available Assets Designated corporate contributions for interest rate swap contracts (1) $ 150.0 Guaranty fund contributions (2) 2,508.2 Assessment powers (3) 528.8 _______________ (1) Our clearing house designates $150.0 million of corporate contributions to satisfy a clearing firm default in the event that the defaulting clearing firm's guaranty contributions and performance bonds do not satisfy the deficit.
Biggest changeThe following shows the available assets for the interest rate swap financial safeguard package at December 31, 2023 in the event of a payment default by a clearing firm that clears interest rate swap contracts, after first utilizing the defaulting firm's available assets: (in millions) Clearing House Available Assets Designated corporate contributions for interest rate swap contracts (1) $ 150.0 Guaranty fund contributions (2) 1,969.2 Assessment powers (3) 705.2 _______________ (1) Our clearing house designates $150.0 million of corporate contributions to satisfy a clearing firm default in the event that the defaulting clearing firm's guaranty contributions and performance bonds do not satisfy the deficit.
(2) Guaranty fund contributions of clearing firms include guaranty fund contributions required of clearing firms, but do not include any excess deposits held by us at the direction of clearing firms.
(2) Guaranty fund contributions of clearing firms include guaranty fund contributions required of clearing firms, but do not include any excess deposits held by us at the direction of clearing firms.
Credit Risk CME Clearing House Our clearing house acts as the counterparty to all trades consummated on our exchanges as well as through third-party exchanges and swaps markets for which we provide clearing services. As a result, we are exposed to significant credit risk of third parties, including clearing firms.
Credit Risk CME Clearing House Our clearing house acts as the counterparty to all trades consummated on our exchange as well as through third-party exchanges and swaps markets for which we provide clearing services. As a result, we are exposed to significant credit risk of third parties, including clearing firms.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are subject to various market risks, including those caused by changes in interest rates, credit and foreign currency exchange rates. Interest Rate Risk Debt outstanding at December 31, 2022 consisted of fixed-rate borrowings of $3.4 billion (in U.S. dollar equivalent).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are subject to various market risks, including those caused by changes in interest rates, credit and foreign currency exchange rates. Interest Rate Risk Debt outstanding at December 31, 2023 consisted of fixed-rate borrowings of $3.4 billion (in U.S. dollar equivalent).
Changes in interest rates impact the fair values of fixed-rate debt, but do not impact earnings or cash flows. We did not have any variable-rate borrowings at December 31, 2022.
Changes in interest rates impact the fair values of fixed-rate debt, but do not impact earnings or cash flows. We did not have any variable-rate borrowings at December 31, 2023.
For transactions with counterparties that are not members of the third-party clearing house, settlement typically occurs on the day following execution and, prior to settlement, BrokerTec Americas is exposed to the risk of loss in the event a counterparty fails to meet its obligations.
For transactions with counterparties that are not members of the third-party clearing house, settlement typically occurs on the day following execution and, prior to settlement, BrokerTec Americas is exposed to the risk of loss in the event a 47 Table of Contents counterparty fails to meet its obligations.
Gains and losses on foreign currency transactions result primarily from cash, debt and other monetary assets, liabilities, revenues and expenses denominated in British pounds, euros and Japanese yen. Aggregate transaction gains (losses) for 2022, 2021 and 2020 were $13.2 million, $0.4 million and $(9.3) million, respectively.
Gains and losses on foreign currency transactions result primarily from cash, debt and other monetary assets, liabilities, revenues and expenses denominated in British pounds, euros and Japanese yen. Aggregate transaction gains (losses) for 2023, 2022 and 2021 were $(12.9) million, $13.2 million and $0.4 million, respectively.
The following shows the available assets at December 31, 2022 in the event of a payment default by a clearing firm for the base financial safeguard package after first utilizing the defaulting firm's available assets: (in millions) Clearing House Available Assets Designated corporate contributions for futures and options (1) $ 100.0 Guaranty fund contributions (2) 4,404.5 Assessment powers (3) 12,112.2 _______________ (1) Our clearing house designates $100.0 million of corporate contributions to satisfy a clearing firm default in the event that the defaulting clearing firm's guaranty contributions and performance bonds do not satisfy the deficit.
The following shows the available assets at December 31, 2023 in the event of a payment default by a clearing firm for the base financial safeguard package after first utilizing the defaulting firm's available assets: (in millions) Clearing House Available Assets Designated corporate contributions for futures and options (1) $ 100.0 Guaranty fund contributions (2) 6,653.4 Assessment powers (3) 18,297.0 _______________ (1) Our clearing house designates $100.0 million of corporate contributions to satisfy a clearing firm default in the event that the defaulting clearing firm's guaranty contributions and performance bonds do not satisfy the deficit.
At December 31, 2022, the balance of the collateral at FICC was $100.0 million, which was included in other current assets on the consolidated balance sheet.
At December 31, 2023, the balance of the collateral at FICC was $175.0 million , which was included in other current assets on the consolidated balance sheet.
If that were to occur, BrokerTec Americas would have the right to cover or liquidate the open position but could incur a loss as a result of market movements.
If that were to occur, BrokerTec Americas would have the right to cover or liquidate the open position but could incur a loss as a result of market movements. At December 31, 2023, we had a receivable from counterparties and payable to counterparties of $714.9 million and $708.9 million, respectively.
Gains and losses resulting from this translation are recognized as a foreign currency translation adjustment within accumulated other comprehensive income, which is a component of shareholders' equity and comprehensive income.
Gains and losses resulting from this translation are recognized as a foreign currency translation adjustment within accumulated other comprehensive income, which is a component of shareholders' equity and comprehensive income. Aggregate translation gains (losses), net of tax, for 2023, 2022 and 2021 were $70.8 million , $(195.4) million and $(62.0) million, respectively.
We mark-to-market all deposits daily and require payment from clearing firms whose collateral has lost value due to changes in foreign currency rates and price. Therefore, our exposure to foreign currency risk related to performance bond deposits is considered minimal and is not expected to be material to our financial condition or operating results. 48 Table of Contents
Therefore, our exposure to foreign currency risk related to performance bond deposits is considered minimal and is not expected to be material to our financial condition or operating results. 48 Table of Contents
Despite our safeguards, we cannot guarantee that these measures will be sufficient to protect us from a default or that we will not be materially and adversely affected in the event of a significant default. 45 Table of Contents We maintain two separate financial safeguard packages: • a financial safeguard package for all futures, options and over-the-counter swap contracts other than cleared interest rate swap contracts (base package); and • a financial safeguard package for cleared interest rate swap contracts.
Despite our safeguards, we cannot guarantee that these measures will be sufficient to protect us from a default or that we will not be materially and adversely affected in the event of a significant default.
Performance bond collateral of a defaulting clearing firm may also be used to secure a draw on the line. In addition to the 364-day multi-currency line of credit, we also have the option to use our $2.3 billion multi-currency revolving senior credit facility to provide liquidity for our clearing house in the unlikely event of default.
In addition to the 364-day multi-currency line of credit, we also have the option to use our $2.3 billion multi-currency revolving senior credit facility to provide liquidity for our clearing house in the unlikely event of default. 46 Table of Contents At December 31, 2023, aggregate performance bond deposits for clearing firms for both financial safeguard packages was $272.1 billion , including cash performance bond deposits, non-cash deposits, Interest Earnings Facility funds and letters of credit.
At December 31, 2022, aggregate performance bond deposits for clearing firms for both financial safeguard packages was $ 231.5 billion, including cash performance bond deposits, non-cash deposits, Interest Earnings Facility funds and letters of credit. A defaulting firm's performance bond deposits can be used in the event of default of that clearing firm.
A defaulting firm's performance bond deposits can be used in the event of default of that clearing firm.
Removed
Aggregate translation gains (losses), net of tax, for 2022, 2021 and 2020 were $(195.4) million, $(62.0) million and $134.3 million, respectively. 47 Table of Contents Foreign Currency Exchange Risk Related to Customer Collateral A portion of performance bond deposits is denominated in various foreign currencies.
Added
We maintain two separate financial safeguard packages: • a financial safeguard package for all futures, options and OTC swap contracts other than cleared interest rate swap contracts (base package); and • a financial safeguard package for cleared interest rate swap contracts.
Added
Performance bond collateral of a defaulting clearing firm may also be used to secure a draw on the line.
Added
Assessment powers are calculated to reflect the potential obligation that each clearing member could be called for in the event clearing member defaults exhaust the guaranty fund; however, the total amount available would be reduced by the defaulted clearing members' assessment obligations since they would no longer be able to satisfy their obligations.
Added
These receivables and payables were settled within two business days following December 31, 2023. The counterparty receivables and payables are recognized within other current assets and other current liabilities, respectively.
Added
Foreign Currency Exchange Risk Related to Customer Collateral A portion of performance bond deposits is denominated in various foreign currencies. We mark-to-market all deposits daily and require payment from clearing firms whose collateral has lost value due to changes in foreign currency rates and price.

Other CME 10-K year-over-year comparisons