What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-26 compared with 2020-02-28 · 313 added, 296 removed, 941 unchanged (39% of the section changed)

15 unchanged sentences

Intangible assets—other, net 4,865.3 5,117.7

Goodwill 10,798.8 10,742.5

Other assets (includes $0.6 and $0.9 in restricted cash) 1,957.1 2,068.0

Total Assets $ 124,659.6 $ 75,215.3

Liabilities and Equity

1 unchanged sentence

Accounts payable $ 69.3 $ 61.9

Short-term debt

Other current liabilities 1,346.8 1,384.8

7 unchanged sentences

Preferred stock, $0.01 par value, 10,000 shares authorized as of December 31, 2020 and 2019;

none issued — —

Class A common stock, $0.01 par value, 1,000,000 shares authorized as of December 31, 2020 and 2019, 358,110 and 357,469 shares issued and outstanding as of December 31, 2020 and 2019, respectively 3.6 3.6

5 unchanged sentences

Non-controlling interests 31.6 30.4

Total Equity 26,351.5 26,159.3

Total Liabilities and Equity $ 124,659.6 $ 75,215.3

6 unchanged sentences

Year Ended December 31,

2020 2019 2018

Clearing and transaction fees $ 3,897.4 $ 3,946.1 $ 3,667.0

Market data and information services 545.4 518.5 449.6

Other 440.8 403.4 192.8

Total Revenues 4,883.6 4,868.0 4,309.4

Compensation and benefits 856.5 898.7 672.2

Technology 198.5 201.5 117.2

Professional fees and outside services 191.3 174.1 166.1

2 unchanged sentences

Licensing and other fee agreements 244.9 172.2 170.6

Other 290.6 360.4 327.0

Total Expenses 2,246.2 2,280.2 1,701.8

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Income before Income Taxes 2,722.1 2,689.6 2,777.8

Income tax provision (benefit)

Income tax provision 615.7 573.8 814.1

Net Income 2,106.4 2,115.8 1,963.7

net (income) loss attributable to non-controlling interests ( 1.2 ) 0.7 ( 1.5 )

1 unchanged sentence

Earnings per Common Share Attributable to CME Group:

Basic $ 5.88 $ 5.93 $ 5.73

Diluted 5.87 5.91 5.71

Weighted Average Number of Common Shares:

Basic 357,764 357,155 342,344

Diluted 358,524 358,239 343,737

See accompanying notes to consolidated financial statements.

4 unchanged sentences

Year Ended December 31,

2020 2019 2018

Net income $ 2,106.4 $ 2,115.8 $ 1,963.7

Other comprehensive income, net of tax:

1 unchanged sentence

Net unrealized holding gains (losses) arising during the period 1.1 1.0 ( 0.8 )

Reclassification of gains (losses) on sale included in investment income

Income tax benefit (expense) ( 0.3 ) ( 0.3 ) 0.2

12 unchanged sentences

Foreign currency translation adjustments 134.3 ( 0.6 ) ( 2.5 )

Income tax benefit (expense)

Reclassification adjustment for loss included in other expense 0.4 — —

Foreign currency translation, net 134.7 ( 0.6 ) ( 2.5 )

9 unchanged sentences

shares in thousands)

(Shares) Class B

(Shares) Common

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Income (Loss) Total CME Group Shareholders' Equity Non-controlling Interest Total Equity

Balance at December 31, 2017 339,235 3 $ 17,900.3 $ 4,497.2 $ 14.3 $ 22,411.8 $ — $ 22,411.8

Net income 1,962.2 1,962.2 1.5 1,963.7

Other comprehensive income ( 12.8 ) ( 12.8 ) ( 12.8 )

Dividends on common stock of $4.55 per share ( 1,591.6 ) ( 1,591.6 ) ( 1,591.6 )

Impact of adoption of standards update on employee share-based payments, net of tax

Impact of adoption of standards update on tax effects related to accumulated other comprehensive income and revenue recognition ( 12.5 ) 3.8 ( 8.7 ) ( 8.7 )

Common stock issued to complete the acquisition of NEX 16,927 3,105.8 3,105.8 3,105.8

Non-controlling interest resulting from the acquisition of NEX — 45.3 45.3

Exercise of stock options 175 11.5 11.5 11.5

10 unchanged sentences

shares in thousands)

(Shares) Class B

(Shares) Common

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Total CME Group Shareholders' Equity

Non-controlling Interest

Income (Loss) Total CME Group Shareholders' Equity Non-controlling Interest Total Equity

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

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

Other comprehensive income ( 1.9 ) ( 1.9 ) ( 1.9 )

Dividends on common stock of $5.50 per share ( 1,970.0 ) ( 1,970.0 ) ( 1,970.0 )

Impact of adoption of standards update on tax effects related to accumulated other comprehensive income and revenue recognition

Common stock issued to complete the acquisition of NEX

Non-controlling interest resulting from the acquisition of NEX

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

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

Exercise of stock options 204 14.2 14.2 14.2

10 unchanged sentences

shares in thousands)

(Shares) Class B

(Shares) Common

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Total CME Group Shareholders' Equity

Non-controlling Interest

Income (Loss) Total CME Group Shareholders' Equity Non-controlling Interest Total Equity

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

Net income 2,105.2 2,105.2 1.2 2,106.4

Other comprehensive income 131.5 131.5 131.5

Dividends on common stock of $5.90 per share ( 2,117.7 ) ( 2,117.7 ) ( 2,117.7 )

Impact of adoption of standards updates on leasing

Changes in non-controlling interest due to measurement period adjustments

Impact of adoption of

accounting standards

updates on credit losses ( 0.3 ) ( 0.3 ) ( 0.3 )

Exercise of stock options 123 6.9 6.9 6.9

10 unchanged sentences

Year Ended December 31,

2020 2019 2018

Cash Flows from Operating Activities

Net income $ 2,106.4 $ 2,115.8 $ 1,963.7

Adjustments to reconcile net income to net cash provided by operating activities:

3 unchanged sentences

Net losses on assets held for sale and impaired 26.3 61.1 —

Income tax expense reclassified from accumulated other comprehensive income upon final sale of BM&FBOVESPA shares

Loss on derivative contracts

Net realized and unrealized gains on investments

(Gain)/Loss on derivative contracts ( 1.5 ) 17.7 62.3

Net realized and unrealized (gains)/losses on investments 5.5 1.8 ( 97.4 )

Undistributed earnings, net of losses, of unconsolidated subsidiaries ( 7.7 ) ( 43.6 ) ( 8.3 )

2 unchanged sentences

Other current assets 30.4 110.2 ( 84.9 )

Other assets 71.6 29.2 29.7

Accounts payable 7.4 ( 54.1 ) 32.3

2 unchanged sentences

Other liabilities ( 28.8 ) ( 52.8 ) ( 20.5 )

Other 8.6 11.9 11.3

Net Cash Provided by Operating Activities 2,715.6 2,672.8 2,440.8

6 unchanged sentences

Cash paid to acquire NEX, net of cash received — — ( 1,795.4 )

Net Cash (Used in) Provided by Investing Activities

Net Cash Used in Investing Activities ( 175.5 ) ( 152.6 ) ( 1,889.6 )

See accompanying notes to consolidated financial statements.

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Year Ended December 31,

2020 2019 2018

Cash Flows from Financing Activities

Issuance of commercial paper, net of maturities

(Repayment) issuance of commercial paper, net $ ( 304.6 ) $ ( 92.5 ) $ 386.9

Proceeds from other borrowings, net of issuance costs — — 1,185.0

3 unchanged sentences

Employee taxes paid on restricted stock vesting ( 41.4 ) ( 36.8 ) ( 35.0 )

Other ( 2.2 ) 37.6 15.5

Net Cash Used in Financing Activities ( 2,458.2 ) ( 2,340.8 ) ( 1,080.0 )

6 unchanged sentences

Long-term restricted cash 0.6 0.9 1.2

Total $ 1,638.5 $ 1,556.6 $ 1,377.2

Supplemental Disclosure of Cash Flow Information

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Basis of Presentation.

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and include the accounts of the company and its subsidiaries.

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S.

and include the accounts of the company and its subsidiaries.

All intercompany transactions and balances have been eliminated.

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

Also, the company maintains long-term investments accounted for under the equity method, which requires that the company recognize our share of net income (loss) in the investee as an adjustment to the carrying amount of the investment each reporting period.

The company reviews its investment portfolio to determine whether a decline in fair value below the carrying value is other-than-temporary.

If events and circumstances indicate that a decline in the value of one or more assets has occurred and is deemed to be other-than-temporary, the carrying value of the investment is reduced to its fair value and a corresponding impairment expense is charged to earnings.

Also, the company maintains long-term investments accounted for under the equity method, which requires that the company recognize its share of net income (loss) in the investee as an adjustment to the carrying amount of the investment each reporting period.

The company reviews its investment portfolio at least quarterly as well as whenever facts or circumstances exist which indicate that the carrying value of the investment is greater than its fair value.

For investments not carried at fair value, the carrying value of the investment is reduced to its fair value and a corresponding impairment expense is charged to earnings, if events and circumstances indicate that a markdown to fair value is warranted.

Declines in the fair value of available-for-sale securities that are deemed to be other-than-temporary are charged to earnings as a realized loss.

Fair Value of Financial Instruments.

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Derivative Investments.

The company uses derivative instruments to limit exposure to changes in interest rates and foreign currency exchange rates.

The company occasionally uses derivative instruments to limit exposure to changes in interest rates and foreign currency exchange rates.

Derivatives are recorded at fair value on the consolidated balance sheets.

For those derivatives that meet the criteria for hedge accounting and are classified as effective cash flow hedges, changes in the fair value of the hedges is

deferred in accumulated other comprehensive income.

derivatives that meet the criteria for hedge accounting and are classified as effective cash flow hedges, changes in the fair value of the hedges are deferred in accumulated other comprehensive income.

Any realized gains and losses from effective hedges are classified within the same financial statement line item on the consolidated statements of income as the hedge risk.

For any hedges no longer deemed effective or for which hedge accounting is not applied, changes in fair value of the derivative instruments are recognized in earnings immediately within other non-operating income (expense).

There were no outstanding derivative instruments at December 31, 2020.

Accounts Receivable.

Accounts receivable are comprised of trade receivables and unbilled revenue.

All accounts receivable are stated at cost.

All accounts receivable are stated at net realizable value.

Exposure to losses on receivables for clearing and transaction fees and other amounts owed by clearing and trading firms is dependent on each firm's financial condition.

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The company retains the right to liquidate exchange memberships to satisfy an outstanding receivable.

The allowance for doubtful accounts is calculated based on historical losses and management's assessment of probable future collections.

The allowance for doubtful accounts is calculated based on management's assessment of future expected losses over the life of the receivable, historical trends and the current economic environment within which we operate.

Performance Bonds and Guaranty Fund Contributions.

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Land is reported at cost.

Internal and external costs incurred in developing or obtaining computer software for internal use which meet the requirements for capitalization are amortized on a straight-line basis over the estimated useful life of the software, generally two to four years.

The company accounts for our leases of office space as operating leases.

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In certain circumstances, goodwill may be reviewed qualitatively for indications of impairment without utilizing valuation techniques to estimate fair value.

The company evaluates the recoverability of indefinite-lived intangible assets at least quarterly by comparing the estimated fair value of the intangible asset to its carrying value.

If the indefinite-lived intangible asset carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

The company performs an impairment assessment of indefinite-lived intangible assets at least quarterly or whenever events or circumstances indicate that their carrying values may not be recoverable.

If the indefinite-lived intangible asset carrying value

exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Estimating the fair value of indefinite-lived intangible assets involves the use of valuation techniques that rely on significant estimates and assumptions including forecasted revenue growth rates, forecasted allocations of expense and risk-adjusted discount rates.

Changes in these estimates and assumptions could materially affect the determination of fair value for indefinite-lived intangible assets.

In certain circumstances, indefinite-lived

intangible assets may be reviewed qualitatively for indications of impairment without utilizing valuation techniques to estimate fair value.

In certain circumstances, indefinite-lived intangible assets may be reviewed qualitatively for indications of impairment without utilizing valuation techniques to estimate fair value.

Intangible assets subject to amortization are also assessed for impairment at least quarterly or when indicated by a change in economic or operational circumstances.

The impairment assessment of these assets requires management to first compare the book value of the amortizing asset to undiscounted cash flows.

If the book value exceeds the undiscounted 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 and annually challenge the useful lives.

The impairment assessment of these assets requires management to first compare the carrying value of the amortizing asset to undiscounted net cash flows.

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.

In connection with this impairment assessment, management also challenges the useful lives of our amortizing intangible assets.

Business Combinations.

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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.

When this information is corrected within the time period allowed by the the company, a fee adjustment is provided to the clearing firm.

When this information is corrected within the time period allowed by the company, 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.

8 unchanged sentences

Other Revenues.

Other revenues include access and communication fees, fees for collateral management and fees for trade order routing through agreements from various strategic relationships as well as other services to customers.

Other revenues include access and communication fees, fees for collateral management, equity membership subscription fees and fees for trade order routing through agreements from various strategic relationships as well as other services to customers.

Revenue is recognized as services are provided.

Concentration of Revenue.

One clearing firm represented at least 10 % of the company's clearing and transaction fee revenue in 2020.

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

One clearing firm represented 10 % of the company's clearing and transaction fee revenue in 2018.

One clearing firm represented 13 % and another clearing firm represented 12 % of clearing and transaction fees revenue in 2017.

Should a clearing firm withdraw from the company, management believes that the customer portion of that firm's trading activity would likely transfer to another clearing firm.

7 unchanged sentences

As a result, the expense associated with each vesting date within a stock grant is recognized over the period of time that each portion of that grant vests.

Forfeitures are recognized in the period in which they occur.

Marketing Costs.

8 unchanged sentences

The company reports the results of its operations as one operating segment primarily comprised of the businesses of CME, CBOT, NYMEX, COMEX and NEX.

The remaining operations do not meet the thresholds for reporting separate segment information.

The individual operations of the company do not meet the thresholds for reporting separate segment information.

Newly Adopted Accounting Policies.

In February 2016, the FASB issued a standards update that requires lessees to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases.

The guidance for lessors is largely unchanged from current accounting rules.

Under the new guidance, a lessee is required to recognize assets and liabilities for leases with terms of more than 12 months.

Consistent with current accounting standards, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

The company implemented this standard on January 1, 2019 using the modified retrospective approach with a cumulative effect of initially applying the guidance recognized on the date of initial adoption.

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

Recently Issued Accounting Pronouncements.

The company adopted the following accounting policies during 2020:

Credit Losses.

In June 2016, the FASB issued guidance that changes how credit losses are measured for most financial assets measured at amortized cost and certain other instruments.

4 unchanged sentences

Entities will recognize improvements to estimated credit losses on available for sale debt securities immediately in earnings rather than as interest income over time.

The standard is effective for reporting periods beginning after December 15, 2019.

The standard’s provisions must be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

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

The company implemented this standard on January 1, 2020 by recognizing an immaterial cumulative-effect adjustment to the beginning balance of retained earnings.

The company has not experienced significant levels of underpayment or nonpayment by customers and does not expect changes to this trend over the payment terms of our receivables.

Exposure to losses on receivables for clearing and transaction fees and other amounts owed by clearing and trading firms is dependent on each firm's financial condition.

With respect to clearing firms, the company's credit loss exposure is mitigated by the memberships that collateralize fees owed to the company.

The allowance for credit losses on accounts receivable is calculated by evaluating the aging of the company's billings by revenue stream:

clearing and transaction, market data, and other.

This aging assessment, as well as contemplation of current and anticipated economic factors, including the interest rate environment and pricing levels are the primary considerations that most significantly impact the collectability of accounts receivable.

The allowance for accounts receivable is $ 5.4 million at December 31, 2020.

Defined Pension and Other Postretirement Plans.

In August 2018, the FASB issued a standards update that modifies the disclosure requirements for employers that sponsor defined pension or other postretirement plans.

2 unchanged sentences

Also, there is a new disclosure requirement to include an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.

This guidance is effective for reporting periods beginning in 2021.

Early adoption is permitted.

The company plans to update the disclosures for these changes upon adoption of the guidance in 2021.

This guidance is effective for reporting periods ending after December 15, 2020.

Adoption of this guidance in December 2020 did not have a material financial statement impact as the changes are disclosure-related only.

The company has amended its employee benefit plan disclosures to incorporate the new guidance in footnote 11 of this report.

Income Taxes.

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

3 unchanged sentences

The update also simplifies the accounting for the following:

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

franchise taxes that are partially based on income, transactions with a government

that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods.

This update is effective for reporting periods beginning after December 15, 2020.

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

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

BUSINESS COMBINATIONS

On November 2, 2018, the company completed its acquisition of NEX and its subsidiaries in a transaction valued at £ 11.28 per share ( $ 14.63 per share based on the CME Group share price of $ 183.75 and the exchange rate of US $ 1.30 :£1 on November 2, 2018), consisting of £ 5.00 per share in cash and 0.0444 CME Group shares.

The total equity value of the transaction was approximately £ 4.3 billion ( $ 5.6 billion ), including the issuance of 16.9 million CME Group class A shares and $ 2.5 billion of cash consideration.

As part of the acquisition, the company also assumed $ 1.0 billion of existing debt of NEX.

The cash consideration was funded with $ 1.2 billion of net proceeds received from a debt offering of fixed rate notes in June 2018, borrowings from commercial paper and cash on hand.

The company entered into this acquisition primarily as a means to expand its product base, further leverage its existing operating model, extend its presence in the over-the-counter market and better position itself to compete on a global scale.

Purchase Price Allocation.

The purchase price has been allocated to NEX's net tangible and identifiable intangible assets based on their estimated fair values as of November 2, 2018.

The identifiable intangible assets include customer relationships, technology-related intellectual property and trade names.

The goodwill generated from the acquisition was primarily attributable to synergies expected to arise after the acquisition.

The company finalized its purchase price allocation in the fourth quarter of 2019.

The finalized purchase price allocation was as follows:

(in millions)

Identifiable intangible assets

Deferred tax liability on identifiable intangible assets

Other assets and liabilities

Non-controlling interest

Total Purchase Price

NEX maintains a 86.7 % ownership interest in Traiana Inc and its subsidiaries, resulting in nonredeemable non-controlling interests included in the company's consolidated statements of equity beginning on November 3, 2018.

Pro-forma financial information.

For the two-month period ended December 31, 2018, NEX revenues and net losses, which include transaction-related costs, were $ 133.6 million and $( 42.5 ) million respectively.

The following table presents pro-forma information as if the acquisition of NEX had occurred on January 1, 2017.

This pro-forma information combines the historical condensed consolidated results of operations of CME Group and NEX after giving effect to certain adjustments, including purchase accounting fair value adjustments, amortization of intangibles, stock-based compensation expense and acquisition costs, as well as the related income tax effects of those adjustments.

The pro-forma information does not necessarily reflect the results of operations that would have occurred had the company acquired NEX on January 1, 2017.

Furthermore, cost savings and other business synergies related to the acquisition are not reflected in the pro-forma amounts.

(in millions)

Total revenues

The company early adopted this standard on January 1, 2020.

The impact of adoption of this standard was immaterial to the consolidated financial statements.

MARKETABLE SECURITIES

The company has equity securities, available-for-sale debt securities and mutual funds classified as marketable securities on our consolidated balance sheets.

The amortized cost and fair value of equity securities and available-for-sale debt securities at December 31 were as follows:

(in millions)

The amortized cost and fair value of equity securities and available-for-sale debt securities at December 31, 2020 and 2019 were as follows:

(in millions) Amortized

Value Amortized

Corporate debt securities (1)

Municipal debt securities

$ 15.9 $ 17.9 $ 15.8 $ 16.7

Asset-backed security 0.5 0.3 0.5 0.3

Equity securities — 0.1 — 0.1

Total $ 16.4 $ 18.3 $ 16.3 $ 17.1

_______________

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The fair value and gross unrealized losses of our asset-backed security was $ 0.3 million and $ 0.2 million, respectively, at December 31, 2020.

The asset-backed security was in an unrealized loss position for more than 12 months at December 31, 2019 and was deemed not to be other-than-temporarily impaired.

The asset-backed security was in an unrealized loss position at December 31, 2020 and was deemed not to be other-than-temporarily impaired.

The company does not intend to sell and is not required to sell these securities prior to maturity.

The amortized cost and fair value of the corporate debt securities and asset-backed security at December 31, 2020, by contractual maturity, were as follows:

(in millions)

(in millions) Amortized

Maturity of one year or less $ 0.7 $ 0.7

2 unchanged sentences

Maturity greater than ten years 6.7 7.8

Total $ 16.4 $ 18.2

The company maintains additional investments in a diverse portfolio of mutual funds related to its non-qualified deferred compensation plans (note 11).

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The company includes fee discounts and incentives in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee reduction.

These estimates

are based on historical experience, anticipated performance, and best judgment at the time.

These estimates are based on historical experience, anticipated performance, and best judgment at the time.

Because of the company's certainty in estimating these amounts, they are included in the transaction price of contracts.

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The fees for annual licenses are initially recorded as a contract liability and recognized as revenue monthly over the term of the annual period.

Other revenues include certain access and communication fees, fees for collateral management, fees for trade order routing through agreements from various strategic relationships, as well as other post-trade services to customers and clearing firms.

Other revenues include certain access and communication fees, fees for collateral management, equity membership subscription fees, and fees for trade order routing through agreements from various strategic relationships.

Access and communication fees are charges to customers that utilize various telecommunications networks and communications services.

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This fee revenue is recognized monthly as billed as the customers receive and consume the benefits of the services.

We also have an equity membership program which provides equity members the option to substitute a monthly subscription fee for their existing requirement to hold CME Group Class A common stock.

Choosing to pay this fee in lieu of holding Class A shares is entirely voluntary and the client's choice.

Fee revenue under this program is earned monthly as billed over the contractual term.

Pricing for strategic relationships may be driven by customer levels and activity.

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Agricultural commodities 462.2 452.4 470.0

Energy 699.3 683.5 744.2

Metals 248.0 239.3 223.9

Interest rate swap and credit default swap 65.4 66.8 61.9

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Market data and information services 545.4 518.5 449.6

Other 440.8 403.4 192.8

Total revenues $ 4,883.6 $ 4,868.0 $ 4,309.4

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Certain fees for transactions, annual licenses, and other revenue arrangements are billed upfront before revenue is recognized, which results in the recognition of contract liabilities.

These liabilities are recognized on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.

For annual licenses and upfront fee arrangements, the company generally bills customers upon contract execution.

These payments are recognized as revenue over time as the obligations under the contracts are satisfied.

These liabilities are recognized on the consolidated balance sheets on a contract-by-contract basis upon commencement of services under the customer contract.

Upfront customer payments are recognized as revenue over time as the obligations under

the contracts are satisfied.

Changes in the contract liability balances during 2020 were not materially impacted by any other factors.

Contract liabilities are presented within other current liabilities.

The balance of contract liabilities was $ 37.3 million and $ 42.6 million as of December 31, 2020 and 2019, respectively.

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In its guarantor role, the clearing house has precisely equal and offsetting claims to and from clearing firms on opposite sides of each contract, standing as an intermediary on every contract cleared.

In the United States, clearing firm positions are held according to Commodity and Futures Trading Commission (CFTC) regulatory account segregation standards.

In the U.S., clearing firm positions are held according to Commodity and Futures Trading Commission (CFTC) regulatory account segregation standards.

To the extent that funds are not otherwise available to satisfy an obligation under the applicable contract, the clearing house bears counterparty credit risk in the event that future market movements create conditions that could lead to clearing firms failing to meet their obligations to the clearing house.

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During 2020, the clearing house transferred an average of approximately $ 4.7 billion a day through the clearing system for settlement from clearing firms whose positions had lost value to clearing firms whose positions had gained value.

The clearing house reduces its exposure through initial and maintenance performance bond requirements and mandatory guaranty fund contributions.

The company believes that the guarantee liability is immaterial and therefore has not recorded any liability at December 31, 2019 .

At December 31, 2019, performance bond and guaranty fund contribution assets on the consolidated balance sheets include cash as well as U.S.

The clearing house reduces its exposure through maintenance performance bond requirements and guaranty fund contributions.

For futures and options products, the clearing firms' collateral requirements are sized to cover at least one day of anticipated price movements.

For cleared swap products, the clearing firms' collateral requirements are sized to cover at least five days of anticipated price movements.

Management has assessed the fair value of the company's settlement guarantee liability by taking the following factors into consideration:

the design and operations of the clearing risk management process, the financial safeguard packages in place, historical evidence of default by a clearing member and the estimated probability of potential payouts by the clearing house.

Based on the assessment performed, management estimates the guarantee liability to be nominal and therefore has not recorded any liability at December 31, 2020.

At December 31, 2020 and 2019, performance bond and guaranty fund contribution assets on the consolidated balance sheets included cash as well as U.S.

government agency securities with maturity dates of 90 days or less.

2 unchanged sentences

Interest earned is included in investment income on the consolidated statements of income.

government agency securities held at December 31, 2019 will mature during the first quarter of 2020.

government agency securities held at December 31, 2019 matured during the first quarter of 2020.

These securities are marked to fair value on the consolidated balance sheets.

The amortized cost and fair value of these securities at December 31, 2019 were as follows.

There were no outstanding balances at December 31, 2018.

(in millions)

Amortized Cost

The amortized cost and fair value of these securities at December 31, 2020 and 2019 were as follows.

(in millions) Amortized Cost Fair Value Amortized Cost Fair Value

government agency securities $ — $ — $ 898.2 $ 898.2

CME has been designated as a systemically important financial market utility by the Financial Stability Oversight Council and maintains cash accounts at the Federal Reserve Bank of Chicago.

CME has been designated as a systemically important financial market utility by the Financial Stability Oversight Council and is authorized to maintain cash accounts at the Federal Reserve Bank of Chicago.

At December 31, 2020 and 2019, the clearing house maintained $ 76.3 billion and $ 22.9 billion, respectively, within the cash accounts at the Federal Reserve Bank of Chicago.

The cash deposited at the Federal Reserve Bank of Chicago is included within performance bonds and guaranty fund contributions on the consolidated balance sheets.

Clearing firms, at their option, may instruct the clearing house to deposit the cash or securities held by the clearing house into one of the IEF programs.

The total principal in the IEF programs was $ 4.1 billion at December 31, 2019 and $ 3.1 billion at December 31, 2018 .

This balance is not included in the company's consolidated balance sheets.

CME and The Options Clearing Corporation (OCC) have a perpetual cross-margin arrangement, whereby a clearing firm may maintain a cross-margin account in which a clearing firm's positions in certain equity index futures and options are combined with certain positions cleared by OCC for purposes of calculating performance bond requirements.

The performance bond deposits are held jointly by CME and OCC.

Cross-margin cash, securities and letters of credit jointly held with OCC under the

cross-margin agreement are reflected at 50 % of the total, or CME's proportionate share per that agreement.

Cross-margin cash, securities and letters of credit jointly held with OCC under the cross-margin agreement are reflected at 50 % of the total, or CME's proportionate share per that agreement.

If a participating firm defaults, the gain or loss on the liquidation of the firm's open position and the proceeds from the liquidation of the cross-margin account would be allocated 50 % each to CME and OCC.

The company believes that the guarantee liability is immaterial and therefore has not recorded any liability at December 31, 2019 .

In the event of a remaining loss, CME would first apply assets of the defaulting clearing firm to satisfy its payment obligation.

These assets include the defaulting firm's guaranty fund contributions, performance bonds and any other available assets, such as assets required for clearing membership and any associated trading rights.

In addition, the clearing house would make a demand for payment pursuant to any applicable guarantee, if any, provided to it by the parent company of the clearing firm.

Thereafter, if the payment default remains unsatisfied, the clearing house would use its corporate contributions designated for the respective financial safeguard package.

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

In addition, CME has perpetual cross-margin agreements with Fixed Income Clearing Corporation (FICC) whereby the clearing firms' offsetting positions with CME and FICC are subject to reduced performance bond requirements.

3 unchanged sentences

Any remaining surplus funds would be passed to the bankruptcy trustee.

The company believes that the guarantee liability is immaterial and therefore has not recorded any liability at December 31, 2019 .

In the event of a remaining loss, CME would first apply assets of the defaulting clearing firm to satisfy its payment obligation.

In addition, the clearing house would make a demand for payment pursuant to any applicable guarantee, if any, provided to it by the parent company of the clearing firm.

Thereafter, if the payment default remains unsatisfied, the clearing house would use its corporate contributions designated for the respective financial safeguard package.

Each clearing firm for futures and options is required to deposit and maintain specified guaranty fund contributions in the form of cash or U.S.

Treasury securities.

Treasury securities (base guaranty fund).

In the event that performance bonds, guaranty fund contributions and other assets required to support clearing membership of a defaulting clearing firm are inadequate to fulfill that clearing firm's outstanding financial obligation, the base guaranty fund for contracts other than interest rate swaps is available to cover potential losses after first utilizing $ 100.0 million of corporate contributions designated by CME to be used in the event of a default of a clearing firm for the base guaranty fund.

The clearing house maintains a separate guaranty fund to support the clearing firms that clear interest rate swap products.

The clearing house maintains a separate guaranty fund to support the clearing firms that clear interest rate swap products (cleared interest rate swaps contract guaranty fund).

The funds for interest rate swaps are independent of the base guaranty fund and are isolated to clearing firms for products in the respective asset class.

8 unchanged sentences

At December 31, 2020, guaranty fund contributions available for clearing firms were $ 8.0 billion.

CME has the option to request an increase in the line from $ 7.0 billion to $ 10.0 billion , subject to the approval of participating banks.

CME has the option to request an increase in the line from $ 7.0 billion to $ 10.0 billion, subject to the approval of

participating banks.

In addition to the 364 -day fully secured, committed multi-currency line of credit, the company also has the option to use the $ 2.4 billion multi-currency revolving senior credit facility to provide liquidity for the clearing house in the unlikely event of default.

The clearing house is required under the Commodity Exchange Act in the United States to segregate cash and securities deposited by clearing firms from its customers.

The clearing house is required under the Commodity Exchange Act in the U.S.

to segregate cash and securities deposited by clearing firms from its customers.

In addition, the clearing house requires segregation of all funds deposited by its clearing firms from operating funds.

Cash and non-cash deposits held as performance bonds and guaranty fund contributions at fair value at December 31 were as follows:

(in millions)

Cash and non-cash deposits held as performance bonds and guaranty fund contributions at fair value at December 31, 2020 and 2019 were as follows:

(in millions) Cash Non-Cash

IEF Funds (1)

Cash Non-Cash

IEF Funds (1)

3 unchanged sentences

Performance bond collateral for delivery 0.2 2.1 9.6 2.1

Total $ 86,781.8 $ 130,599.6 $ 37,077.0 $ 124,156.6

_______________

5 unchanged sentences

In addition to cash, securities and other non-cash deposits, irrevocable letters of credit may be used as performance bond deposits for clearing firms.

At December 31, these letters of credit, which are not included in the accompanying consolidated balance sheets, were as follows:

At December 31, 2020 and 2019 these letters of credit, which are not included in the accompanying consolidated balance sheets, were as follows:

(in millions) 2020 2019

3 unchanged sentences

All cash, securities and letters of credit posted as performance bonds are only available to meet the financial obligations of that clearing firm to the clearing house.

A summary of the property accounts at December 31 is presented below:

(in millions)

Estimated Useful Life

Land and land improvements

10 - 20 years (1)

Building and building improvements

Leasehold improvements

Furniture, fixtures and equipment

Software and software development costs

A summary of the property accounts at December 31, 2020 and 2019 is presented below:

(in millions) 2020 2019 Estimated Useful Life

Land and land improvements $ 7.7 $ 7.8 10 - 20 years (1)

Building and building improvements 167.1 173.9 3 - 39 years

Leasehold improvements 225.5 219.0 3 - 19 years

Furniture, fixtures and equipment 492.9 433.0 2 - 7 years

Software and software development costs 647.2 577.8 2 - 4 years

Total property 1,540.4 1,411.5

4 unchanged sentences

INTANGIBLE ASSETS AND GOODWILL

Intangible assets consisted of the following at December 31:

(in millions)

Assigned Value

Intangible assets consisted of the following at December 31, 2020 and 2019:

(in millions) Assigned Value Accumulated

Amortization Net Book

Value Assigned Value Accumulated

Amortization Net Book

Amortizable Intangible Assets:

1 unchanged sentence

Technology-related intellectual property 178.4 ( 68.2 ) 110.2 174.3 ( 46.6 ) 127.7

Other 106.9 ( 27.3 ) 79.6 103.8 ( 14.9 ) 88.9

Total Amortizable Intangible Assets $ 6,143.3 $ ( 1,728.0 ) 4,415.3 $ 6,075.2 $ ( 1,407.5 ) 4,667.7

Indefinite-Lived Intangible Assets:

Trade names 450.0 450.0

Total Intangible Assets—Other, Net $ 4,865.3 $ 5,117.7

1 unchanged sentence

$ 17,175.3 $ 17,175.3

_______________

(1) Trading products represent futures and options products acquired in our business combinations with CBOT Holdings, Inc., NYMEX Holdings, Inc.

4 unchanged sentences

The originally assigned useful lives for the amortizable intangible assets as of December 31, 2020 are as follows:

Clearing firm, market data and other customer relationships

Technology-related intellectual property

3 - 24.5 years

Clearing firm, market data and other customer relationships 5 - 30 years

Technology-related intellectual property 5 - 9 years

Other 3 - 24.5 years

Total amortization expense for intangible assets was $ 311.2 million, $ 314.7 million and $ 130.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

1 unchanged sentence

(in millions)

Thereafter 2,851.5

Goodwill activity consisted of the following for the years ended December 31, 2020 and 2019 :

(in millions)

Balance at December 31, 2018

(in millions) Balance at December 31, 2019 Other

Balance at December 31, 2020

1 unchanged sentence

NYMEX Holdings 2,462.2 — 2,462.2

NEX 3,173.5 56.3 3,229.8

Other 40.4 — 40.4

Total Goodwill $ 10,742.5 $ 56.3 $ 10,798.8

(in millions)

Balance at December 31, 2017

(in millions) Balance at December 31, 2018 Other

Balance at December 31, 2019

1 unchanged sentence

NYMEX Holdings 2,462.2 — 2,462.2

NEX 3,236.3 ( 62.8 ) 3,173.5

Other 40.4 — 40.4

Total Goodwill $ 10,805.3 $ ( 62.8 ) $ 10,742.5

_______________

1) Other activity includes measurement period adjustments, including adjustments to intangible assets, fixed assets, other assets and accrued liabilities, as well as goodwill associated with assets sold and held for sale.

The company finalized its purchase price allocation of net tangible and intangible assets in the fourth quarter of 2019.

1) Other activity includes currency translation adjustments and measurement period adjustments, including adjustments to intangible assets, fixed assets, other assets and accrued liabilities, as well as goodwill associated with assets sold and held for sale.

The company finalized its purchase price allocation of net tangible and intangible assets associated with NEX in the fourth quarter of 2019.

LONG-TERM INVESTMENTS

1 unchanged sentence

The investments are recorded in other assets on the consolidated balance sheets.

Bursa Malaysia Derivatives Berhad.

In December 2019, the company sold its 25 % interest in Bursa Malaysia Derivatives Berhad (Bursa Malaysia) and recognized a gain of $ 11.1 million .

The company and Bursa Malaysia have entered into several agreements including agreements to provide licensing and trade matching services.

DME Holdings Limited.

The company owns an approximate 50 % interest in DME Holdings Limited (DME Holdings), and accounts for its investment in DME Holdings using the equity method of accounting.

The company owns an approximately 50 % interest in DME Holdings Limited (DME Holdings), and accounts for its investment in DME Holdings using the equity method of accounting.

The company's investment in DME Holdings was $ 14.6 million at December 31, 2020.

4 unchanged sentences

The company has long-term exclusive licensing agreements with S&P/DJI to list products based on the Standard & Poor's Indices and Dow Jones Indices.

In March 2019, the company repaid both the € 350.0 million fixed rates notes and the ¥ 19.1 billion term loan.

Short-term debt outstanding consisted of the following at December 31 (in U.S.

dollar equivalent):

(in millions)

€350.0 million fixed rate notes due March 2019, stated rate of 3.13% (1)

¥19.1 billion term loan due March 2019, stated rate of 0.81% (2)

Total short-term debt

Long-term debt outstanding consisted of the following at December 31 (in U.S.

dollar equivalent):

Shanghai CFETS-NEX International Money Broking Co., Ltd.

The company owns a 33 % interest in Shanghai CFETS-NEX International Money Broking Co., Ltd.

(CFETS) and accounts for its investment in CFETS using the equity method of accounting.

The company's investment in CFETS was $ 35.7 million at December 31, 2020.

Long-term debt outstanding consisted of the following at December 31, 2020 and 2019 (in U.S.

dollar equivalents):

(in millions) 2020 2019

$750.0 million fixed rate notes due September 2022, stated rate of 3.00% (1)

$ 748.6 $ 747.7

€15.0 million fixed rate notes due May 2023, stated rate of 4.30%

11 unchanged sentences

Commercial paper with an aggregate par value of $ 1.3 billion and maturities ranging from 1 to 18 days was issued during 2020.

The weighted average discount rate of commercial paper outstanding at December 31, 2019 was 1.80 % .

The weighted average balance of commercial paper outstanding during the year was $ 46.5 million.

There was no outstanding commercial paper balance as of December 31, 2020.

Long-term debt maturities, at par value (in U.S.

dollar equivalent), were as follows as of December 31, 2019 :

(in millions)

Commercial paper is considered to mature in 2022 because it is backed by the five-year multi-currency revolving credit facility, which expires in 2022.

dollar equivalents), were as follows as of December 31, 2020:

(in millions) Par Value

Thereafter 1,950.0

The company is subject to regulation under a wide variety of U.S., federal, state and foreign tax laws and regulations.

Income before income taxes and the income tax provision consisted of the following for the years ended December 31:

Income before income taxes and the income tax provision consisted of the following for the years ended December 31, 2020, 2019 and 2018:

(in millions) 2020 2019 2018

Income before income taxes:

Domestic $ 2,640.7 $ 2,650.2 $ 2,716.8

Foreign 81.4 39.4 61.0

Total $ 2,722.1 $ 2,689.6 $ 2,777.8

Income tax provision:

Total Income Tax Provision (Benefit)

Federal $ 488.4 $ 419.5 $ 524.8

State 140.1 139.2 154.2

Foreign 28.8 18.8 20.8

Total 657.3 577.5 699.8

Federal 2.3 ( 6.7 ) ( 9.3 )

State ( 36.8 ) 28.0 127.8

Foreign ( 7.1 ) ( 25.0 ) ( 4.2 )

Total ( 41.6 ) ( 3.7 ) 114.3

Total Income Tax Provision $ 615.7 $ 573.8 $ 814.1

Reconciliation of the U.S.

federal income tax rate (statutory tax rate) to the effective tax rate is as follows:

2020 2019 2018

Statutory tax rate 21.0 % 21.0 % 21.0 %

State taxes, net of federal benefit 4.0 4.1 4.5

Domestic production activities deduction

Increase (decrease) in domestic valuation allowance

Impact of revised state and local apportionment estimates ( 1.0 ) 0.8 3.5

Reclassification of accumulated other comprehensive income

Impact of 2017 Tax Act — — ( 0.2 )

Foreign-derived intangible income deduction

( 2.0 ) ( 3.8 ) —

Other, net 0.6 ( 0.8 ) 0.5

Effective Tax Expense (Benefit) Rate 22.6 % 21.3 % 29.3 %

In 2019, the effective rate was slightly higher than the statutory tax rate.

The increase to the effective tax rate for the state taxes was offset by the foreign-derived intangible income deduction (FDII) in Sec.

250(a) introduced during the Tax Cut and Jobs Act tax reform.

In 2020, the effective tax rate was higher than the statutory tax rate.

The increase to the effective tax rate for the state taxes was partially offset by the foreign-derived intangible income deduction (FDII).

In 2019, the effective tax rate was slightly higher than the statutory tax rate.

The increase to the effective tax rate for the state taxes was partially offset by the FDII deduction.

Proposed FDII deduction regulations were released in 2019 and as a result, management revised the income tax calculations to reflect the proposed guidance.

The benefit recognized in 2019 includes estimates for the deduction for 2018 and 2019.

In 2018, the effective rate was higher than the statutory tax rate primarily due to the NEX acquisition impact on state tax expense.

In 2017, the effective rate was lower than the statutory tax rate due to the remeasurement of the deferred tax liabilities as a result of the 2017 Tax Act.

This decrease was partially offset by an increase in the state apportionment impact of the Illinois income tax rate change on deferred tax liabilities as well as the reclassification of income tax expense from accumulated other comprehensive income related to the disposal of BM&FBOVESPA shares.

At December 31, deferred income tax assets (liabilities) consisted of the following:

In 2018, the effective tax rate was higher than the statutory tax rate primarily due to the NEX acquisition impact on state tax expense.

At December 31, 2020 and 2019, deferred income tax assets (liabilities) consisted of the following:

(in millions) 2020 2019

2 unchanged sentences

Accrued expenses, compensation and other 59.1 46.2

Subtotal 95.9 82.1

Valuation allowance ( 11.3 ) ( 10.0 )

2 unchanged sentences

Purchased intangible assets ( 5,614.9 ) ( 5,654.4 )

Property ( 45.7 ) ( 23.3 )

Total deferred income tax liabilities ( 5,660.6 ) ( 5,677.7 )

7 unchanged sentences

These amounts primarily related to losses from the acquisition of NEX Group plc, the acquisitions of Swapstream Limited and its affiliates, the acquisition of Pivot, Inc., losses incurred in the operation of various foreign entities and capital losses from the sales of securities.

At December 31, 2019 and 2018, the company determined that it was not more-likely-than-not that deferred income tax assets related to the acquisition of Swapstream Limited and its affiliates and other deferred income tax assets created from the start-up of various foreign operations will be fully realized.

At December 31, 2020 and 2019, the company determined that it was not more-likely-than-not that certain foreign deferred income tax assets will be fully realized.

As a result, valuation allowances of $ 11.3 million and $ 10.0 million were recorded at December 31, 2020 and 2019, respectively.

The following is a summary of the company’s unrecognized tax benefits:

The following is a summary of the company’s unrecognized tax benefits at December 31, 2020, 2019 and 2018:

(in millions) 2020 2019 2018

4 unchanged sentences

The company does not believe it is reasonably possible that within the next twelve months, unrecognized tax benefits will change by a significant amount.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows:

(in millions) 2020 2019 2018

22 unchanged sentences

Balance at January 1 $ 324.2 $ 265.1

Service cost 26.7 19.0

Interest cost 11.7 12.3

2 unchanged sentences

Balance at December 31 $ 380.3 $ 324.2

The actuarial losses recognized as of December 31, 2020 and 2019 are the result of a reduction in the discount rate used to determine the projected benefit obligation as of each year end.

The aggregate accumulated benefit obligation was $ 350.3 million and $ 293.1 million at December 31, 2020 and 2019, respectively.

3 unchanged sentences

Actual return on plan assets 38.8 49.2 ( 17.3 )

Employer contributions

Benefits paid ( 7.5 ) ( 8.1 ) ( 14.9 )

2 unchanged sentences

Valuation techniques for level 2 assets use significant observable inputs such as quoted prices for similar assets, quoted market prices in inactive markets and other inputs that are observable or can be supported by observable market data.

The fair value of each major category of plan assets as of December 31 is indicated below:

The fair value of each major category of plan assets as of December 31, 2020 and 2019 is indicated below:

(in millions) 2020 2019

1 unchanged sentence

Mutual funds:

Fixed income 140.2 155.0

equity 149.4 121.1

Foreign equity 84.5 71.2

Total $ 388.2 $ 356.9

At December 31, 2020 and 2019, the fair value of pension plan assets exceeded the projected benefit obligation by $ 7.9 million and $ 32.7 million, respectively, and the excess was recorded as a non-current pension asset in other assets.

1 unchanged sentence

Year-end 2020 assumptions have been used to project the assets and liabilities from December 31, 2020 to December 31, 2021.

The result of this projection is that estimated liabilities would not exceed the fair value of the plan assets at December 31, 2020 .

Accordingly, the company anticipates based on this projection that no additional contribution in 2020 will be necessary for it to meet its funding goal.

The company anticipates based on this projection that an additional contribution of $ 6.0 million in 2021 will be necessary for it to meet its funding goal.

However, the amount of the actual contribution is contingent on various factors, including the actual rate of return on the plan assets during 2021 and the December 31, 2021 discount rate.

The components of net pension expense and the assumptions used to determine the end-of-year projected benefit obligation and net pension expense in aggregate are indicated below:

The components of net pension expense and the assumptions used to determine the end-of-year projected benefit obligation and net pension expense in aggregate at December 31, 2020, 2019 and 2018 are indicated below:

(in millions) 2020 2019 2018

Components of Net Pension Expense:

Service cost $ 26.7 $ 19.0 $ 19.1

Interest cost 11.7 12.3 10.5

26 unchanged sentences

Such diversification is accomplished, in part, through the selection of asset mix and investment management.

The asset allocation for the plan, by asset category, at December 31 was as follows:

The asset allocation for the plan, by asset category, at December 31, 2020 and 2019 was as follows:

Fixed income 36.1 % 43.5 %

Money market funds 3.6 2.7

equity 38.5 33.9

Foreign equity 21.8 19.9

The range of target allocation percentages for 2020 is as follows:

large-cap equity

mid-cap equity

small-cap equity

Foreign developed equity

Foreign small-cap equity

Emerging markets equity

For 2021, management expects the fixed income asset class to remain at approximately 50 % of the portfolio.

The target allocation for the U.S.

equity asset class is expected to range from 15 % to 45 % of the portfolio and the target allocation for the foreign equity asset class is expected to range from approximately 10 % to 30 % of the portfolio.

At times, the company may determine that it is necessary to place some assets in cash equivalent investments in order to pay expected plan liabilities.

3 unchanged sentences

The pre-tax balance and activity of actuarial losses for the pension plan, which are included in other comprehensive income (loss), for 2020 are as follows:

(in millions)

(in millions) Actuarial

Balance at January 1 $ 75.2

2 unchanged sentences

Balance at December 31 $ 77.7

The company expects to amortize $ 4.4 million of actuarial loss and prior service costs from accumulated other comprehensive income (loss) into net periodic benefit costs in 2020 .

At December 31, 2020, anticipated benefit payments from the plan in future years are as follows:

(in millions)

2026-2030 154.5

Savings Plans.

9 unchanged sentences

The balances in these plans are subject to the claims of general creditors of the company and totaled $ 82.6 million and $ 66.1 million at December 31, 2020 and 2019 respectively.

Although the value of the plans is recorded as an asset in marketable securities on the consolidated balance sheets, there is an equal and offsetting liability.

Although the value of the plans is recorded as an asset in marketable securities on the consolidated balance sheets, there is an equal and offsetting

The investment results of these plans have no impact on net income as the investment results are recorded in equal amounts to both investment income and compensation and benefits expense.

6 unchanged sentences

COMEX Members' Retirement Plan and Benefits.

COMEX maintains a non-qualified retirement and benefit plan under the COMEX MRRP.

COMEX maintains a non-qualified retirement and benefit plan under the COMEX Members' Retirement Plan and Benefits plan (MRRP).

This plan provides benefits to certain members of the COMEX division based on long-term membership, and participation is limited to individuals who were COMEX division members prior to NYMEX's acquisition of COMEX in 1994.

1 unchanged sentence

All benefits to be paid under the MRRP are based on reasonable actuarial assumptions which are based upon the amounts that are available and are expected to be available to pay benefits.

There were no contributions to the plan in 2019, 2018 and 2017.

At December 31, 2019 and 2018 , the obligation for the MRRP totaled $ 16.5 million .

There w ere no co ntributions to the plan in 2020, 2019 and 2018.

At December 31, 2020 and 2019, the obligation for the MRRP totaled $ 15.7 million and $ 16.5 million, respectively .

Assets with a fair value of $ 19.0 million and $ 19.3 million have been allocated to this plan at December 31, 2020 and 2019, respectively, and are included in marketable securities and cash and cash equivalents on the consolidated balance sheets.

1 unchanged sentence

LEASES AND OTHER COMMITMENTS

The company adopted the new leasing standard on January 1, 2019, using the modified retrospective approach.

The standard requires lessees to recognize on the balance sheet the assets and liabilities associated with the rights and obligations created by those leases.

Upon implementation of the standard, the company utilized the package of practical expedients which did not require reassessment of the following:

(a) whether any expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) any initial direct costs for existing leases.

In addition, the company has elected not to separately account for lease and non-lease components, resulting in a greater amount of capitalized lease costs on the balance sheet.

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

The company has operating leases for datacenters and corporate offices.

8 unchanged sentences

The discount rate applied to the lease payments represents the company's incremental borrowing rate.

The company has elected to utilize the short term lease

exception for purposes of adopting this standard, such that the company has not capitalized on the balance sheet a lease asset or lease liability associated with leases with terms of 12 months or less from the commencement date.

The components of lease costs were as follows:

The company has elected to utilize the short-term lease exception as prescribed in the leasing standard, such that the company has not capitalized on the balance sheet a lease asset or lease liability associated with leases with terms of 12 months or less from the commencement date.

The components of lease costs were as follows for the years ended December 31, 2020 and 2019:

(in millions) 2020 2019

December 31, 2019

Operating lease expense:

7 unchanged sentences

Sublease revenue included in other revenue $ 13.3 $ 10.2

Supplemental cash flow information related to leases was as follows:

Supplemental cash flow information related to leases was as follows for years ended December 31, 2020 and 2019:

(in millions) 2020 2019

December 31, 2019

Cash outflows for operating leases $ 64.3 $ 66.5

Cash outflows for finance leases 16.9 19.0

Supplemental balance sheet information related to leases was as follows:

Supplemental balance sheet information related to leases was as follows as of December 31, 2020 and 2019:

Operating leases

(in millions) 2020 2019

December 31, 2019

Operating lease right-of-use assets $ 390.3 $ 417.1

7 unchanged sentences

(in millions) 2020 2019

December 31, 2019

Finance lease right-of-use assets $ 88.8 $ 97.5

6 unchanged sentences

Future minimum lease payments were as follows as of December 31, 2020 for operating and finance leases:

(in millions)

Operating Leases

(in millions) Operating Leases

Thereafter 346.0

Total lease payments 658.5

1 unchanged sentence

Present value of lease liability $ 536.7

(in millions)

Finance Lease

(in millions) Finance Lease

Thereafter 94.3

Total lease payments 180.5

7 unchanged sentences

Legal and Regulatory Matters.

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

The case is set for trial in October 2020.

Based on its investigation to date and advice from legal counsel, the company believes that it has strong factual and legal defenses to the claim.

In 2003, the U.S.

Futures Exchange, L.L.C.

(Eurex U.S.) and U.S.

Exchange Holdings, Inc.

filed suit in federal court alleging that CBOT and CME violated the antitrust laws and tortuously interfered with the business relationship and contract between Eurex U.S.

and The Clearing Corporation.

On October 31, 2018, the Court granted CBOT's and CME's motion for summary judgment and dismissed the case in its entirety.

Eurex has appealed this decision.

In the normal course of business, the company discusses matters with its regulators raised during regulatory examinations or otherwise subject to their inquiry and oversight.

4 unchanged sentences

While the ultimate results of such proceedings against the company cannot be predicted with certainty, the company believes that the resolution of any of these matters on an individual or aggregate basis will not have a material impact on its consolidated financial position or results of operations.

No accrual was required for legal and regulatory matters as none were probable and estimable as of December 31, 2019 and 2018.

Intellectual Property Indemnifications.

No accrual was required for contingent legal and regulatory matters as none were probable and estimable as of December 31, 2020 and 2019.

Intellect ual Property Indemnifications.

Certain agreements with customers and other third parties related to accessing the CME Group platforms, utilizing market data services and licensing CME SPAN software may contain indemnifications from intellectual property claims that may be made against them as a result of their use of the applicable products and/or services.

1 unchanged sentence

Mutual Offset Agreement.

CME and Singapore Exchange Limited (SGX) maintain a mutual offset agreement with a current term through October 2020.

CME and Singapore Exchange Limited (SGX) maintain a mutual offset agreement with a current term through May 2023.

This agreement enables market participants to open a futures position on one exchange and liquidate it on the other.

The term of the agreement will automatically renew for a one-year period unless either party provides advance notice of its intent to terminate.

CME can maintain collateral in the form of U.S.

Treasury securities or irrevocable, standby letters of credit.

The term of the agreement will automatically renew for a one-year period after May 2023 unless either party provides advance notice of its intent to terminate.

CME can maintain collateral in the form of irrevocable, standby letters of credit.

At December 31, 2020, CME was contingently liable to SGX on irrevocable letters of credit totaling $ 310.0 million .

CME also maintains a $ 350.0 million line of credit to meet its obligations under this agreement.

Regardless of the collateral, CME guarantees all cleared transactions submitted through SGX and would initiate procedures designed to satisfy these financial obligations in the event of a default, such as the use of performance bonds and guaranty fund contributions of the defaulting clearing firm.

The company believes that its guarantee liability is immaterial and therefore has not recorded any liability at December 31, 2019 .

Management has assessed the fair value of the company's guarantee liability under this mutual offset agreement by taking the following factors into consideration:

Based on the assessment performed, management estimates the guarantee liability to be nominal and therefore has not recorded any liability at December 31, 2020.

Family Farmer and Rancher Protection Fund.

7 unchanged sentences

Clearing members and customers must register in advance with the company and provide certain documentation in order to substantiate their eligibility .

The company believes that its guarantee liability is immaterial and therefore has not recorded any liability at December 31, 2019 .

The company believes that its guarantee liability is zero and therefore has not recorded any liability at December 31, 2020.

CAPITAL STOCK

46 unchanged sentences

CME Group has adopted an Employee Stock Purchase Plan (ESPP) under which employees may purchase Class A shares at 90 % of the market value of the shares using after-tax payroll deductions.

A total of 500,000

Class A shares have been reserved under this plan, of which approximately 309,000 shares have been purchased through December 31, 2019 (note 17).

A total of 500,000 Class A shares have been reserved under this plan, of which approximately 353,000 shares have been purchased through December 31, 2020 (note 16).

STOCK-BASED PAYMENTS

3 unchanged sentences

Awards granted generally vest over a four-year period, with 25 % vesting one year after the grant date and on that same date in each of the following three years.

Total compensation expense for stock-based payments and total income tax benefit recognized on the consolidated statements of income for stock-based awards were as follows:

Total compensation expense for stock-based payments and total income tax benefit recognized on the consolidated statements of income for stock-based awards at December 31, 2020, 2019 and 2018 were as follows:

(in millions) 2020 2019 2018

1 unchanged sentence

Income tax benefit recognized 23.6 27.3 27.5

The compensation expense above includes expense of $ 5.0 million related to restricted share awards held by NEX employees that vested within 6 months following the acquisition.

The employees received cash consideration equivalent to the cash and share consideration received by NEX shareholders upon vesting in 2019.

At December 31, 2020, there was $ 142.9 million of total unrecognized compensation expense related to employee stock-based compensation arrangements that had not yet vested.

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Aggregate intrinsic value is in millions.

Number of Shares

Weighted Average Remaining Contractual Life (in years)

Aggregate Intrinsic Value

Number of Shares Weighted

Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value

Outstanding at December 31, 2019 227,084 $ 54 1.4 $ 33.2

Exercised ( 123,561 ) 54

Cancelled ( 700 ) 54

Outstanding at December 31, 2020 102,823 54 0.7 13.1

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The fair value related to these grants was $ 37.2 million, which is recognized as compensation expense on a straight-lined basis over the vesting period.

The vesting of these shares is contingent on meeting stated performance or market conditions.

The vesting of these shares is contingent on meeting stated performance or market conditions, generally measured over a three year period.

The following table summarizes restricted stock, restricted stock units, and performance shares activity for 2020:

Number of Shares

Number of Shares Weighted

Outstanding at December 31, 2019 1,324,378 $ 177

Granted 667,340 171

Vested ( 456,295 ) 148

Cancelled ( 271,136 ) 153

Outstanding at December 31, 2020 1,264,287 190

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The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income and reclassifications out of accumulated other comprehensive income (loss):

(in millions)

Investment Securities

Defined Benefit Plans

Derivative Investments

Foreign Currency Translation

(in millions) Investment Securities Defined Benefit Plans Derivative Investments Foreign Currency Translation Total

Balance at December 31, 2019 $ 0.8 $ ( 55.1 ) $ 69.0 $ ( 11.3 ) $ 3.4

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Balance at December 31, 2020 $ 1.6 $ ( 57.1 ) $ 67.0 $ 123.4 $ 134.9

(in millions)

Investment Securities

Defined Benefit Plans

Derivative Investments

Foreign Currency Translation

(in millions) Investment Securities Defined Benefit Plans Derivative Investments Foreign Currency Translation Total

Balance at December 31, 2018 $ 0.1 $ ( 53.8 ) $ 69.7 $ ( 10.7 ) $ 5.3

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Net current period other comprehensive income 0.7 ( 1.3 ) ( 0.7 ) ( 0.6 ) ( 1.9 )

Impact of adoption of standards update on tax effects related to accumulated other comprehensive income

Balance at December 31, 2019 $ 0.8 $ ( 55.1 ) $ 69.0 $ ( 11.3 ) $ 3.4

(in millions)

Investment Securities

Defined Benefit Plans

Derivative Investments

Foreign Currency Translation

(in millions) Investment Securities Defined Benefit Plans Derivative Investments Foreign Currency Translation Total

Balance at December 31, 2017 $ 0.6 $ ( 36.1 ) $ 58.0 $ ( 8.2 ) $ 14.3

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Net current period other comprehensive income ( 0.6 ) ( 9.5 ) ( 0.2 ) ( 2.5 ) ( 12.8 )

Impact of adoption of standards update on tax effects related to accumulated other comprehensive income 0.1 ( 8.2 ) 11.9 — 3.8

Balance at December 31, 2018 $ 0.1 $ ( 53.8 ) $ 69.7 $ ( 10.7 ) $ 5.3

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In general, the company uses quoted prices in active markets for identical assets to determine the fair value of marketable securities.

Level 2 assets and liabilities generally consist of asset-backed securities, derivatives and long-term debt notes.

Level 2 assets and liabilities generally consist of asset-backed securities and long-term debt notes.

Asset-backed securities were measured at fair value based on matrix pricing using prices of similar securities with similar inputs such as maturity dates, interest rates and credit ratings.

The derivative contracts were measured at fair value using standard valuation models with market-based observable inputs.

The fair values of the long-term debt notes were based on quoted market prices in an inactive market.

Level 3 assets include fixed assets, assets held for sale, certain investments that were impaired and contingent consideration.

Level 3 assets include fixed assets, intangible assets and certain investments that were impaired.

Recurring Fair Value Measurements.

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December 31, 2020

(in millions)

(in millions) Level 1 Level 2 Level 3 Total

Assets at Fair Value:

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Corporate debt securities $ 17.9 $ — $ — $ 17.9

Mutual funds 82.6 — — 82.6

Equity securities 0.1 — — 0.1

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Total Marketable Securities 100.6 0.3 — 100.9

Performance bonds and guaranty fund contributions (1) :

government agencies securities

Total Assets at Fair Value $ 100.6 $ 0.3 $ — $ 100.9

December 31, 2019

(in millions)

(in millions) Level 1 Level 2 Level 3 Total

Assets at Fair Value:

1 unchanged sentence

Corporate debt securities $ 16.7 $ — $ — $ 16.7

Municipal bonds

Mutual funds 66.1 — — 66.1

Equity securities 0.1 — — 0.1

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Total Marketable Securities 82.9 0.3 — 83.2

Derivative Contracts

Performance bonds and guaranty fund contributions (1) :

government agencies securities 898.2 — — 898.2

Total Assets at Fair Value $ 981.1 $ 0.3 $ — $ 981.4

Liabilities at Fair Value:

Derivative contracts

Contingent consideration

Total Liabilities at Fair Value

_______________

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government agency securities purchased with cash collateral.

The following is a reconciliation of the level 3 liability valued at fair value on a recurring basis during 2018 and 2019.

As of December 31, 2019, the remaining contingent consideration liability has expired.

(in millions)

Contingent Consideration

Fair value of Liability at December 31, 2017

Liability acquired through business combination

Fair value of Liability at December 31, 2018

Unrealized gains (losses) included in operating expense

Goodwill measurement period adjustment

Fair Value of Liability at December 31, 2019

Non-Recurring Fair Value Measurements.

During 2019, the company recognized impairment charges of $ 13.0 million related to some of its investments.

The combined fair values of these investments were estimated to be $ 57.2 million at December 31, 2019.

The company also recognized unrealized losses of $ 61.1 million related to assets held for sale and $ 20.9 million related to certain fixed assets.

The fair value of the fixed assets was estimated to be zero at the impairment date.

The fair value of the net assets held for sale were estimated to be $ 3.6 million and $ 7.7 million at the respective assessment dates.

During 2020, the company recognized impairment charg es of $ 31.4 million related to certain intangible assets and fixed assets.

The combined fair values of the assets were estimated to be zero at December 31, 2020.

The company also recognized net unrealized gains on certain investments of $ 0.9 million.

The combined fair values of these investments were estimated to be $ 35.2 million.

These assessments were based on quantitative and qualitative indications of impairment.

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The fair values below that are classified as level 2 under the fair value hierarchy were estimated using quoted market prices in inactive markets.

The fair value of the debt facility that was classified as level 3 under the fair value hierarchy was estimated based on assumptions made by management regarding expectations of future settlement of the debt.

At December 31, 2020, the fair values (in U.S.

dollar equivalents) were as follows:

(in millions)

$750.0 million fixed rate notes due September 2022

€15.0 million fixed rate notes due May 2023

$750.0 million fixed rate notes due March 2025

$500.0 million fixed rate notes due June 2028

$750.0 million fixed rates notes due September 2043

$700.0 million fixed rate notes due June 2048

Commercial paper

(in millions) Fair Value Level

$750.0 million fixed rate notes due September 2022 785.1 Level 2

€15.0 million fixed rate notes due May 2023 20.3 Level 2

$750.0 million fixed rate notes due March 2025 822.4 Level 2

$500.0 million fixed rate notes due June 2028 594.4 Level 2

$750.0 million fixed rates notes due September 2043 1,113.9 Level 2

$700.0 million fixed rate notes due June 2048 941.6 Level 2

EARNINGS PER SHARE

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(in thousands) 2020 2019 2018

Stock awards 87 519 79

Total 87 519 79

The following table presents the earnings per share calculation for the years presented:

2020 2019 2018

Net Income Attributable to CME Group (in millions) $ 2,105.2 $ 2,116.5 $ 1,962.2

Weighted Average Common Shares Outstanding (in thousands):

Basic 357,764 357,155 342,344

Effect of stock options and stock awards 760 1,084 1,393

Diluted 358,524 358,239 343,737

Earnings per Common Share Attributable to CME Group:

Basic $ 5.88 $ 5.93 $ 5.73

Diluted 5.87 5.91 5.71

QUARTERLY INFORMATION (UNAUDITED)

(in millions, except per share data)

(in millions, except per share data) First

Quarter Second

Quarter Third

Quarter Fourth

Quarter Year to Date

Year Ended December 31, 2020

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Earnings per common share attributable to CME Group:

Basic $ 2.14 $ 1.41 $ 1.15 $ 1.18 $ 5.88

Diluted 2.14 1.40 1.15 1.18 5.87

Year Ended December 31, 2019

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Earnings per common share attributable to CME Group:

Basic $ 1.39 $ 1.44 $ 1.78 $ 1.31 $ 5.93

Diluted 1.39 1.43 1.78 1.31 5.91

SUBSEQUENT EVENTS

The company has evaluated subsequent events through the date the financial statements were issued.

The company has determined that there were no subsequent events that require disclosure.

The company has determined that there were no subsequent events that require disclosure, except the following:

On January 12, 2021, the company announced that it has agreed with IHS Markit to combine their post-trade services into a new joint venture.

The new company will include trade processing and risk mitigation operations.

It will include CME Group's optimization business, which includes Traiana, TriOptima and Reset.

The transaction is expected to close in mid-2021, subject to customary antitrust and regulatory approvals and other customary closing conditions.

In January 2021, the net assets that will be contributed to the joint venture were classified as held for sale following approval of the transaction by the company's Board of Directors.

The company is still evaluating the full financial statement impact of the transaction.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data