What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-25 compared with 2021-02-26 · 149 added, 205 removed, 1049 unchanged (25% of the section changed)

21 unchanged sentences

Accounts payable $ 48.8 $ 69.3

Short-term debt 749.4 —

Other current liabilities 1,650.6 1,346.8

7 unchanged sentences

Preferred stock, $0.01 par value, 10,000 shares authorized as of December 31, 2021 and 2020;

none issued — —

4,584 and none issued and outstanding as of December 31, 2021 and 2020, respectively — —

Class A common stock, $0.01 par value, 1,000,000 shares authorized as of December 31, 2021 and 2020, 358,599 and 358,110 shares issued and outstanding as of December 31, 2021 and 2020, respectively 3.6 3.6

39 unchanged sentences

Net Income Attributable to CME Group 2,636.4 2,105.2 2,116.5

Earnings per Common Share Attributable to CME Group:

Net Income Attributable to Common Shareholders of CME Group $ 2,617.1 $ 2,105.2 $ 2,116.5

Earnings per Share Attributable to Common Shareholders of CME Group:

Basic $ 7.30 $ 5.88 $ 5.93

14 unchanged sentences

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

Reclassification of gains (losses) on sale included in investment income 0.3 — —

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

34 unchanged sentences

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 ( 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

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

20 unchanged sentences

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 6.9 — 6.9 6.9

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

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

shares in thousands)

Preferred Stock (Shares) Class A

(Shares) Class B

(Shares) Common

(Shares) Preferred Stock, Common

Capital Retained

5 unchanged sentences

Other comprehensive income ( 81.4 ) ( 81.4 ) ( 81.4 )

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

Impact of adoption of

accounting standards

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

Dividends of $6.85 per common share and $4.15 per preferred share ( 2,480.4 ) ( 2,480.4 ) ( 2,480.4 )

Issuance of preferred stock 4,584 965.0 965.0 965.0

Purchase of non-controlling interest ( 20.5 ) ( 20.5 ) ( 32.1 ) ( 52.6 )

Exercise of stock options 101 5.5 5.5 5.5

18 unchanged sentences

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

Gain on sale of building ( 30.4 ) — —

Gain on joint venture ( 400.7 ) — —

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

17 unchanged sentences

Proceeds from sale of business ventures 101.4 26.3 89.6

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

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

Payment for acquisition of subsidiary's interests from the non-controlling interest ( 52.9 ) — —

Proceeds from the sale of building property 39.3 — —

Net cash proceeds from OSTTRA joint venture transaction 100.7 — —

Net Cash Provided by (Used in) Investing Activities 58.4 ( 175.5 ) ( 152.6 )

See accompanying notes to consolidated financial statements.

7 unchanged sentences

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

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

Repayment of other borrowings — — ( 569.2 )

Proceeds from preferred stock offering 965.0 — —

Cash dividends ( 2,189.3 ) ( 2,110.0 ) ( 1,695.9 )

Proceeds from settlement of (premium payment for) derivative contract — 16.0 ( 30.0 )

Change in performance bond and guaranty fund contributions 71,167.8 49,704.8 ( 2,378.5 )

Proceeds from settlement of derivative contract — — 16.0

Employee taxes paid on restricted stock vesting ( 31.7 ) ( 41.4 ) ( 36.8 )

Other ( 3.1 ) ( 2.2 ) 37.6

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

Net change in cash, cash equivalents and restricted cash 81.9 179.4 ( 528.8 )

Cash, cash equivalents and restricted cash, beginning of period 1,556.6 1,377.2 1,906.0

Cash, Cash Equivalents and Restricted Cash, End of Period $ 1,638.5 $ 1,556.6 $ 1,377.2

Reconciliation of cash, cash equivalents and restricted cash:

Net Cash Provided by (Used in) Financing Activities 69,908.7 47,246.6 ( 4,719.3 )

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents 72,369.5 49,786.7 ( 2,199.1 )

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 88,420.3 38,633.6 40,832.7

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period $ 160,789.8 $ 88,420.3 $ 38,633.6

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents:

Cash and cash equivalents $ 2,834.9 $ 1,633.2 $ 1,551.4

Short-term restricted cash 4.7 4.3 1.5

Long-term restricted cash 0.6 0.9 1.2

Short-term restricted cash (within other current assets) 4.8 4.7 4.3

Long-term restricted cash (within other assets) 0.5 0.6 0.9

Restricted cash and restricted cash equivalents (performance bonds and guaranty fund contributions) 157,949.6 86,781.8 37,077.0

Total $ 160,789.8 $ 88,420.3 $ 38,633.6

3 unchanged sentences

Non-cash financing activities:

Common stock issued for the acquisition of NEX — — 3,105.8

Declaration of annual variable dividend, payable in January 2021, January 2020 and January 2019 1,183.8 895.2 893.7

14 unchanged sentences

(COMEX), wholly-owned subsidiaries of CME Group, are designated contract markets for the trading of futures and options contracts.

Effective November 2, 2018, CME Group completed its acquisition of NEX Group plc (NEX).

NEX offers electronic trade execution platforms for the foreign exchange and fixed income over-the-counter markets as well as other services across the transaction lifecycle, including trade and portfolio management and portfolio compression.

The financial statements and accompanying notes presented in this report include the financial results of NEX and its subsidiaries beginning on November 3, 2018.

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

The joint venture, OSTTRA, was launched in September 2021.

OSTTRA performs trade processing and risk mitigation services.

The company contributed the net assets of its optimization business, which included Traiana, TriOptima and Reset, to the new joint venture and deconsolidated the net assets of the optimization business.

The financial statements and accompanying notes presented in this report exclude the assets, liabilities, revenues and expenses from the optimization business and include an investment in the joint venture and equity in net earnings from the joint venture after September 2021.

CME Group and its subsidiaries are referred to collectively as "the company" in the notes to the consolidated financial statements.

4 unchanged sentences

All intercompany transactions and balances have been eliminated.

During the fourth quarter of 2021, the company revised the presentation of the consolidated statements of cash flows to include cash performance bonds and guaranty fund contributions as restricted cash and restricted cash equivalents within the beginning and ending balances of the reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents.

Total cash flows from financing activities were revised to include the changes associated with the cash performance bonds and guaranty fund contribution liability.

Performance Bonds and Guaranty Fund Contributions for additional information on cash performance bonds and guaranty fund contributions.

The prior period amounts have been revised to conform to the current period presentation.

The revision in presentation is considered immaterial to the company's overall financial statements and has had no impact on the consolidated balance sheets, consolidated statements of income, consolidated statements of comprehensive income or consolidated statements of equity, including all previously filed financial statements.

These cash performance bonds and guaranty fund contributions cannot be used for the company's operations or to satisfy any operational liabilities.

The following table presents the effects of the changes on the presentation of these cash flows to the previously reported consolidated statements of cash flows:

(in millions) As Previously Reported Adjustments Revised As Previously Reported Adjustments Revised

Net cash provided by (used in) financing activities $ ( 2,458.2 ) $ 49,704.8 $ 47,246.6 $ ( 2,340.8 ) $ ( 2,378.5 ) $ (4,719.3)

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents 81.9 49,704.8 49,786.7 179.4 ( 2,378.5 ) ( 2,199.1 )

Use of Estimates.

9 unchanged sentences

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 its share of net income (loss) in the investee as an adjustment to the carrying amount of the investment each reporting period.

Additionally, 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.

Declines in the fair value of available-for-sale debt securities that are deemed to represent indicators of impairment are charged to earnings as a realized loss.

Fair Value of Financial Instruments.

5 unchanged sentences

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

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.

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 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.

13 unchanged sentences

government agency securities and certain foreign government securities acquired through and held by a bank or broker-dealer subsidiary of a bank, a cash account at the Federal Reserve Bank of Chicago, reverse repurchase agreements secured with highly rated government securities, money market funds or through CME's Interest Earning Facility (IEF) program.

Any interest earned on CME investments accrues to CME and is included in investment income on the consolidated statements of income.

Any interest earned on these investments accrues to CME and is included in investment income on the consolidated statements of income.

CME may distribute any interest earned on its investments to the clearing firms at its discretion.

Because CME has control of the cash collateral and the benefits and market risks of ownership accrue to CME, cash performance bonds and guaranty fund contributions are reflected on the consolidated balance sheets.

The cash performance bonds and guaranty fund contributions are considered restricted cash as the cash deposits cannot be used for the company's operations or to satisfy any operational liabilities.

Securities and other non-cash deposits may include U.S.

5 unchanged sentences

Property is stated at cost, less accumulated depreciation and amortization.

Depreciation and amortization are calculated using the straight-line method, generally over two to thirty-nine years.

Depreciation and amortization are calculated using the straight-line method, generally over two to twenty years.

Property and equipment are depreciated over their estimated useful lives.

9 unchanged sentences

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination.

The company reviews goodwill and indefinite-lived intangible assets for impairment at least quarterly and whenever events or circumstances indicate that their carrying values may not be recoverable.

The company reviews goodwill for impairment at least quarterly and whenever events or circumstances indicate that their carrying values may not be recoverable.

The company may test goodwill quantitatively for impairment by comparing the carrying value of a reporting unit to its estimated fair value.

4 unchanged sentences

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.

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.

43 unchanged sentences

Concentration of Revenue.

One clearing firm represented 10 % of the company's clearing and transaction fee revenue in 2021.

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.

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.

15 unchanged sentences

The company accounts for uncertainty in income taxes recognized in its consolidated financial statements by using a more-likely-than-not recognition threshold based on the technical merits of the tax position taken or expected to be taken.

The company classifies interest and penalties related to uncertain tax positions in income tax expense.

The company recognizes interest and penalties related to uncertain tax positions in income tax expense.

Segment Reporting.

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 company reports the results of its operations as one operating segment primarily comprised of the businesses of CME, CBOT, NYMEX, COMEX and our cash markets business.

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

Newly Adopted Accounting Policies.

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.

The standard requires an entity to estimate its lifetime expected credit loss and record an allowance, that when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset.

This forward-looking expected loss model generally will result in the earlier recognition of allowances for losses.

The standard also amends the impairment model for available for sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available for sale debt security is a credit loss.

Severity and duration of the unrealized loss are no longer permissible factors in concluding whether a credit loss exists.

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 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.

The guidance clarifies certain existing disclosures and expands the requirements for others.

Disclosures that are not considered cost beneficial are removed by the update.

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 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.

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

Specifically, it eliminates the need for an entity to analyze whether the following exceptions apply in a given period:

incremental approach for intraperiod tax allocation, accounting basis differences when there are ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses.

The update also simplifies the accounting for the following:

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

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

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

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, 2020 and 2019 were as follows:

(in millions) Amortized

Value Amortized

Corporate debt securities (1)

$ 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

_______________

(1) The corporate debt securities are maintained for a non-qualified retirement and benefit plan under the COMEX Members' Recognition and Retention Plan (MRRP) (note 11).

Net unrealized gains (losses) on marketable debt securities classified as available-for-sale are reported as a component of other comprehensive income (loss) and included on the accompanying consolidated statements of comprehensive income and consolidated statements of equity.

Changes in the fair value of equity securities are recognized within investment income on the consolidated statements of income.

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 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) Amortized

Maturity of one year or less $ 0.7 $ 0.7

Maturity between one and five years 6.2 6.7

Maturity between five and ten years 2.8 3.0

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).

These securities are classified as trading securities.

The fair value of these securities was $ 82.6 million and $ 66.1 million at December 31, 2020 and 2019, respectively.

The company did not adopt new accounting policies in 2021.

The company also does not currently expect any pending accounting pronouncements to have a material impact on the consolidated financial statements.

REVENUE RECOGNITION

28 unchanged sentences

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

There are fee arrangements which provide for monthly as well as quarterly payments in arrears.

There are fee arrangements that provide for monthly as well as quarterly payments in arrears.

Revenue is recognized monthly for strategic relationship arrangements as the customers receive and consume the benefits of the services.

21 unchanged sentences

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.

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

Changes in the contract liability balances during 2021 were not materially impacted by any other factors.

4 unchanged sentences

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

In the U.S., clearing firm funds 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.

5 unchanged sentences

These balances may fluctuate significantly over time due to collateral investment choices available to clearing firms and changes in the amount of contributions required.

The clearing house marks-to-market open positions at least once a day (twice a day for futures and options contracts), and requires payment from clearing firms whose positions have lost value and make payments to clearing firms whose positions have gained value.

The clearing house marks-to-market open positions at least once a day (twice a day for futures and options contracts), and requires payment from clearing firms whose positions have lost value and makes payments to clearing firms whose positions have gained value.

The clearing house has the capability to mark-to-market more frequently as market conditions warrant.

Under the extremely unlikely scenario of simultaneous default by every clearing firm who has open positions with unrealized losses, the maximum exposure at the time of default related to positions other than interest rate swap contracts would be one half day of changes in fair value of all open positions, before considering the clearing house's ability to access defaulting clearing firms' collateral deposits.

half day of changes in fair value of all open positions, before considering the clearing house's ability to access defaulting clearing firms' collateral deposits.

For cleared interest rate swap contracts, the maximum exposure at the time of default related to the clearing house's guarantee would be one full day of changes in fair value of all open positions, before considering the clearing house's ability to access defaulting clearing firms' collateral.

7 unchanged sentences

Based on the assessment performed, management estimates the guarantee liability to be nominal and therefore has not recorded any liability at December 31, 2021.

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.

government agency securities are purchased by the clearing house, at its discretion, using cash collateral.

The benefits, including interest earned, and risks of ownership accrue to the clearing house.

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

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, 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 is authorized to maintain cash accounts at the Federal Reserve Bank of Chicago.

22 unchanged sentences

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.

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 (cleared interest rate swaps contract guaranty fund).

9 unchanged sentences

At December 31, 2021, guaranty fund contributions available for clearing firms were $ 9.7 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 $ 2.3 billion multi-currency revolving senior credit facility to provide liquidity for the clearing house in the unlikely event of default.

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(1) Estimated useful life applies only to land improvements.

In November 2021, the company sold a building and land in Chicago for $ 39.3 million and recognized a gain of $ 30.4 million.

The gain was recognized in other non-operating income in the consolidated statements of income.

INTANGIBLE ASSETS AND GOODWILL

1 unchanged sentence

(in millions) Assigned Value Accumulated

Amortization Net Book

Amortization Deconsolidation (2)

Value Assigned Value Accumulated

16 unchanged sentences

Product authorizations from the CFTC have no term limits.

(2) The activity from deconsolidation includes intangible assets as part of the contribution of the net assets of the optimization business to OSTTRA.

The originally assigned useful lives for the amortizable intangible assets as of December 31, 2021 are as follows:

7 unchanged sentences

Goodwill activity consisted of the following for the years ended December 31, 2021 and 2020 :

(in millions) Balance at December 31, 2019 Other

(in millions) Balance at December 31, 2020 Deconsolidation (1)

Balance at December 31, 2021

4 unchanged sentences

Total Goodwill $ 10,798.8 $ ( 246.2 ) $ ( 24.6 ) $ 10,528.0

(in millions) Balance at December 31, 2018 Other

(in millions) Balance at December 31, 2019 Deconsolidation (1)

Balance at December 31, 2020

5 unchanged sentences

_______________

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.

1) The activity from deconsolidation includes goodwill as part of the contribution of the net assets of the optimization business to OSTTRA.

2) Other activity includes currency translation adjustments.

LONG-TERM INVESTMENTS

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The company and DME Holdings maintain an agreement for Dubai Mercantile Exchange futures contracts to be exclusively traded on the CME Globex platform.

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

The joint venture, OSTTRA, was launched in September 2021.

OSTTRA will perform trade processing and risk mitigation services.

The company contributed the net assets of its optimization business, which included Traiana, TriOptima and Reset, to the new joint venture in exchange for $ 112.5 million in cash and a 50 % equity interest in OSTTRA.

In September 2021, the company deconsolidated its optimization business.

The company recognized a net gain of $ 400.7 million on the transaction in other non-operating income on the consolidated statements of net income during 2021, which included a

$ 343.5 million gain on the deconsolidation in the third quarter and a $ 57.2 million gain on the final settlement of the transaction in the fourth quarter.

The deconsolidation primarily included $ 1.1 billion of intangible assets, $ 0.2 billion of goodwill and $ 0.2 billion of deferred tax liabilities.

The company's investment in OSTTRA was $ 1.4 billion at December 31, 2021.

The company accounts for its investment using the equity method of accounting.

S&P/DJI Indices LLC.

6 unchanged sentences

The company's investment in CFETS was $ 38.8 million at December 31, 2021.

Short-term debt consisted of the following at December 31, 2021 and 2020:

(in millions) 2021 2020

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

Total short-term debt $ 749.4 $ —

_______________

(1) The company 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 beca me fixed at a rate of 3.32%.

Long-term debt outstanding consisted of the following at December 31, 2021 and 2020 (in U.S.

2 unchanged sentences

$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%

3 unchanged sentences

$700.0 million fixed rate notes due June 2048, stated rate of 4.15%

Commercial paper (4)

Total long-term debt $ 2,695.7 $ 3,443.8

3 unchanged sentences

(3) The company 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 4.73 % .

(4) The commercial paper is backed by the five-year multi-currency revolving credit facility .

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 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.

Short term and long-term debt maturities, at par value (in U.S.

dollar equivalents), were as follows as of December 31, 2021:

23 unchanged sentences

State taxes, net of federal benefit 4.0 4.0 4.1

Gain on formation of OSTTRA ( 2.5 ) — —

Statutory rate change 1.1 — —

Impact of revised state and local apportionment estimates 0.3 ( 1.0 ) 0.8

Impact of 2017 Tax Act — — ( 0.2 )

Foreign-derived intangible income deduction

3 unchanged sentences

In 2021, 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).

The increase to the effective tax rate for the state taxes and the impact of the statutory rate change in the United Kingdom was partially offset by the non-taxable gain on the formation of OSTTRA and the foreign-derived intangible income (FDII) deduction.

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 FDII deduction.

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

2 unchanged sentences

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

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, 2021 and 2020, deferred income tax assets (liabilities) consisted of the following:

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Net operating losses $ 21.0 $ 36.8

Accrued expenses, compensation and other 59.1 46.2

Accrued expenses, compensation, leases and other 163.1 165.2

Subtotal 184.1 202.0

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Purchased intangible assets ( 5,405.8 ) ( 5,614.9 )

Other ( 123.4 ) ( 106.1 )

Property ( 40.5 ) ( 45.7 )

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At December 31, 2021 and 2020, the company had domestic and foreign income tax loss carry forwards of $ 88.6 million and $ 190.2 million, respectively.

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, 2021 and 2020, the company determined that it was not more-likely-than-not that certain foreign deferred income tax assets will be fully realized.

4 unchanged sentences

Unrecognized tax benefits, net of tax impacts in other jurisdictions 293.1 302.4 359.6

Unrecognized interest and penalties related to uncertain tax positions 43.6 53.3 63.5

Interest and penalties related to uncertain tax positions 42.8 43.6 53.3

Interest and penalties recognized on the consolidated statements of income 5.3 7.7 ( 1.5 )

4 unchanged sentences

Additions based on tax positions related to the current year 10.2 20.2 30.3

Unrecognized tax benefits acquired at date of acquisition — — 58.4

Additions for tax positions of prior years 9.6 3.2 4.7

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federal income tax as well as income taxes in Illinois and multiple other state, local and foreign jurisdictions.

As of December 31, 2020, substantially all federal and state income tax matters had been concluded through 2007 and 2006, respectively.

As of December 31, 2021, substantially all federal and state income tax matters had been concluded through 2007 and 2006, respectively, and through 2013 for the United Kingdom.

EMPLOYEE BENEFIT PLANS

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Balance at December 31 $ 386.0 $ 380.3

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 $ 358.7 million and $ 350.3 million at December 31, 2021 and 2020, respectively.

18 unchanged sentences

Year-end 2021 assumptions have been used to project the assets and liabilities from December 31, 2021 to December 31, 2022.

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.

The company anticipates based on this projection that no additional contribution in 2022 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 2022 and the December 31, 2022 discount rate.

36 unchanged sentences

Foreign equity 20.3 21.8

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

For 2022, management expects the fixed income asset class to be approximately 50 % of the portfolio.

The target allocation for the U.S.

18 unchanged sentences

In addition to the plan for U.S.

employees, the company maintains defined contribution savings plans for employees in international locations, including employees for NEX beginning on November 3, 2018.

employees, the company maintains defined contribution savings plans for employees in international locations.

Aggregate expense for all of the defined contribution savings plans amounted to $ 24.7 million , $ 27.7 million and $ 23.6 million in 2021, 2020 and 2019, respectively.

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The balances in this plan are subject to the claims of general creditors of COMEX.

LEASES AND OTHER COMMITMENTS

The company has operating leases for datacenters and corporate offices.

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The sale leaseback transaction was recognized under the financing method and not as a sale leaseback arrangement.

In November 2021, the company sold a building in Chicago and subsequently entered into a leaseback arrangement for this property.

This lease is classified as an operating lease.

The right-of-use lease asset is recorded within other assets, and the present value of the lease liability is recorded within other liabilities (segregated between short-term and long-term) on the consolidated balance sheets.

46 unchanged sentences

Present value of lease liability $ 83.8

Other Commitments.

Commitments include material contractual purchase obligations that are non-cancellable.

Purchase obligations relate to advertising, licensing, hardware, software and maintenance as well as telecommunication services.

At December 31, 2020, future minimum payments due under purchase obligations were payable as follows (in millions):

CONTINGENCIES

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However, the company is unable to predict the outcome or the timing of the ultimate resolution of these matters, or the potential fines, penalties or injunctive or other equitable relief, if any, that may result from these matters.

A putative class action complaint was filed January 15, 2014 in the Circuit Court of Cook County, Chancery Division, against CME Group Inc.

and the Board of Trade of the City of Chicago, Inc.

The plaintiffs, certain Class B shareholders of CME Group and Class B members of CBOT, allege breach of contract and breach of the implied covenant of good faith and fair dealing for violations of their core rights granted in the defendants’ respective Certificates of Incorporation.

On December 2, 2021, the court granted the plaintiffs’ motion for certification of a damages-only class.

No trial date has been set.

Given the uncertainty of factors that may potentially impact the resolution of the matter, at this time the company is unable to estimate the

reasonably possible loss or range of reasonably possible losses in the unlikely event it were found to be liable at trial in the matter.

Based on its investigation to date, the company believes that it has strong factual and legal defenses to the claims.

In addition, the company is a defendant in, and has potential for, various other legal proceedings arising from its regular business activities.

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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 zero and therefore has not recorded any liability at December 31, 2020.

The company believes that its guarantee liability is nominal and therefore has not recorded any liability at December 31, 2021.

CAPITAL STOCK

2 unchanged sentences

(in thousands) 2021 2020

Preferred stock authorized 10,000 10,000

Preferred stock issued and outstanding 4,584 —

Class A common stock authorized 1,000,000 1,000,000

4 unchanged sentences

Class B-4 common stock authorized, issued and outstanding 0.4 0.4

CME Group has no shares of preferred stock issued and outstanding.

Preferred Stock.

In November 2021, CME Group issued and sold in a private placement to Google LLC 4.6 million shares of Series G Non-Voting Convertible Preferred Stock (Series G preferred stock) for an aggregate purchase price of approximately $ 1.0 billion in cash.

The Series G preferred stock is non-voting and is convertible into Class A common stock at a specified conversation rate, which is initially 1:1.

The Series G preferred stock ranks on a parity basis with the Class A common stock

with respect to dividend and liquidation rights and will therefore participate in the earnings and losses of CME Group on the same basis as Class A common stock.

Associated Trading Rights.

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In these votes, each holder of shares of Class A or Class B common stock of CME Group has one vote per share.

The holder of Series G preferred stock does not have any voting rights.

Transfer Restrictions.

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The remaining directors are elected by the Class A and Class B shareholders voting as a single class.

Holders of Class A and Class B common stock of CME Group are entitled to receive proportionately such dividends, if any, as may be declared by the CME Group board of directors.

Holders of Class A and Class B common stock and Series G preferred stock of CME Group are entitled to receive proportionately such dividends, if any, as may be declared by the CME Group board of directors.

CME Group Omnibus Stock Plan.

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Annual expense of $ 0.8 million for the purchase discount was recognized in 2021, $ 0.8 million was recognized in 2020 and $ 0.5 million was recognized in 2019.

Non-executive directors receive an annual award of Class A common stock with a value equal to $ 120,000 .

Non-executive directors may also elect to receive some or all of the cash portion of their annual stipend, up to $ 80,000 , in shares of stock based on the closing price at the date of distribution.

As a result, 17,322 shares, 16,328 shares and 16,640 shares of Class A common stock were issued to non-executive directors during 2020, 2019 and 2018, respectively.

In 2021, non-executive directors received an annual award of Class A common stock with a value equal to $ 120,000 .

Non-executive directors could also elect to receive some or all of the cash portion of their annual stipend, up to $ 80,000 , in shares of stock based on the closing price at the date of distribution.

In 2022, non-execute directors will receive an annual award of Class A common stock with a value equal to $ 145,000 and a cash stipend of $ 95,000 .

As a result, 13,769 shares, 17,322 shares and

16,328 shares of Class A common stock were issued to non-executive directors during 2021, 2020 and 2019, respectively.

These shares are not subject to any vesting restrictions.

22 unchanged sentences

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 0.1 ( 8.2 ) 11.9 — 3.8

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

4 unchanged sentences

• Level 3 inputs consist of unobservable inputs, which are derived and cannot be corroborated by market data or other entity-specific inputs.

Level 1 assets generally include investments in publicly traded mutual funds, equity securities, U.S.

government securities and corporate debt securities with quoted market prices.

Level 1 assets generally include investments in publicly traded mutual funds, equity securities and corporate debt securities with quoted market prices.

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 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.

Level 2 liabilities generally consist of long-term debt notes.

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, intangible assets and certain investments that were impaired.

Level 3 assets include certain fixed assets and investments that were adjusted to fair value.

Recurring Fair Value Measurements.

Financial assets and liabilities recorded at fair value on the consolidated balance sheets as of December 31, 2020 and 2019 were classified in their entirety based on the lowest level of input that was significant to each asset or liability's fair value measurement.

Financial assets recorded at fair value on the consolidated balance sheets as of December 31, 2021 and 2020 were classified in their entirety based on the lowest level of input that was significant to each asset's fair value measurement.

Financial Instruments Measured at Fair Value on a Recurring Basis:

6 unchanged sentences

Equity securities 0.2 — — 0.2

Asset-backed securities — 0.3 — 0.3

Total Marketable Securities 115.0 — — 115.0

9 unchanged sentences

Total Marketable Securities 100.6 0.3 — 100.9

Performance bonds and guaranty fund contributions (1) :

government agencies securities 898.2 — — 898.2

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

_______________

(1) Performance bonds and guaranty fund contributions on the consolidated balance sheet at December 31, 2019 include U.S.

government agency securities purchased with cash collateral.

Non-Recurring Fair Value Measurements.

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

During 2021, the company recognized impairment charg es of $ 0.9 million related to certain fixed assets.

The combined fair values of the assets were estimated to be zero at December 31, 2021.

The company also recognized net unrealized gains on certain investments of $ 14.5 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.

The fair value measurements of the investments, fixed assets and assets held for sale are considered level 3 and non-recurring.

The combined fair values of these investments were estimated to be $ 41.4 million at December 31, 2021.

These assessments were based on qualitative indications of impairment.

The fair value measurements of the investments and fixed assets are considered level 3 and non-recurring.

Fair Values of Debt Notes.

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EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares of all classes of common stock outstanding for each reporting period.

Diluted earnings per share reflects the increase in shares using the treasury stock method to reflect the impact of an equivalent number of shares of common stock if stock options were exercised and restricted stock awards were converted into common stock.

The company uses the two-class method to calculate basic and diluted earnings per common share because its Series G preferred stock are participating securities.

Under the two-class method, undistributed earnings are allocated to common stock and participating securities according to their respective rights in undistributed earnings, as if all of the earnings for the period had been distributed.

Basic earnings per common share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding during the period.

Net income attributable to common shareholders is reduced for preferred stock dividends earned during the period.

Preferred stock also receives a proportionate allocation of undistributed or overdistributed earnings for the period because Series G preferred stock has a contractual obligation to share in profits and losses of the company.

Diluted earnings per share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding plus potentially dilutive common shares.

Anti-dilutive stock awards were as follows for the years presented:

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Net Income Attributable to CME Group (in millions) $ 2,636.4 $ 2,105.2 $ 2,116.5

Preferred stock dividends ( 19.0 ) — —

Undistributed earnings allocated to preferred stock ( 0.3 ) — —

Net Income Attributable to Common Shareholders of CME Group $ 2,617.1 $ 2,105.2 $ 2,116.5

Weighted Average Common Shares Outstanding (in thousands):

2 unchanged sentences

Diluted 358,929 358,524 358,239

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) First

Quarter Second

Quarter Third

Quarter Fourth

Quarter Year to Date

Year Ended December 31, 2020

Total revenues $ 1,522.1 $ 1,182.3 $ 1,080.7 $ 1,098.5 $ 4,883.6

Operating income 959.9 637.5 525.0 515.0 2,637.4

Non-operating income (expense) 29.4 23.8 11.5 20.0 84.7

Income before income taxes 989.3 661.3 536.5 535.0 2,722.1

Net income attributable to CME Group 766.2 503.3 411.7 424.0 2,105.2

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

Total revenues $ 1,179.6 $ 1,272.7 $ 1,277.3 $ 1,138.4 $ 4,868.0

Operating income 631.0 698.6 685.2 573.0 2,587.8

Non-operating income (expense) 9.2 3.5 38.0 51.1 101.8

Income before income taxes 640.2 702.1 723.2 624.1 2,689.6

Net income attributable to CME Group 496.9 513.8 636.3 469.5 2,116.5

Earnings per common share attributable to CME Group:

Earnings per Common Share Attributable to Common Shareholders of CME Group:

Basic $ 7.30 $ 5.88 $ 5.93

2 unchanged sentences

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, 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.

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

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