What changed in this filing

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Item 1A. Risk Factors

2023-02-27 compared with 2022-02-25 · 63 added, 67 removed, 339 unchanged (28% of the section changed)

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The trading volumes in our markets are directly affected by domestic and international factors that are beyond our control, including:

• economic, political and geopolitical market conditions;

• economic, political and geopolitical market conditions, including the instability caused by the war between Russia and Ukraine;

• legislative and regulatory changes, including any direct or indirect restrictions on or increased costs associated with trading in our markets or our clearing services;

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The shifts in market trading patterns we experienced as a result of the financial crisis of 2008 may or may not recur in the future, and our business will be affected by future economic uncertainties, which may result in decreased trading volume and a more challenging business environment for us.

We believe that our interest rate product line could continue to be negatively impacted by a return to a zero interest rate policy.

A reduction in overall trading volume or in certain products could render our markets less attractive to market participants as a source of liquidity, which could result in further loss of trading volume and associated transaction-based revenue.

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Please see "Item 1A - Risk Factors - Risks Relating To Our Business" beginning on page 19 for additional information.

We operate in a heavily regulated environment that imposes significant costs and competitive burdens on our business, and our failure to maintain compliance with regulations, our status as a regulated entity, or BrokerTec Americas' status as a member in good standing at FICC, could result in the loss of customers.

We are primarily subject to the jurisdiction of the regulatory agencies in the U.S., U.K.

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As a result of our global operations, we are also subject to the rules and regulations of other local jurisdictions in which we conduct business and offer our products and services, as appropriate.

Our businesses and those of many of our clients have been and continue to be subject to extensive legislation and regulatory scrutiny, and we face the risk of changes to our regulatory environment and business in the future and have incurred and expect to continue to incur significant costs to comply.

Our businesses and those of many of our clients have been and continue to be subject to extensive legislation and regulatory scrutiny, and we face the risk of continued increasing oversight and changes to our regulatory environment and business in the future and have incurred and expect to continue to incur significant costs to comply.

Additional new laws or regulations or changes in enforcement practices applicable to our businesses or those of our clients could be imposed in the U.S.

or other jurisdictions, which could change, or require us to change, our business practices or the structure of our business, including its current governance or regulatory structure, or impose significant costs on us by, for example, requiring more of our funds to be set aside for the guaranty fund.

or other jurisdictions, which could change, or require us to change, our business practices or the structure of our business, including its current governance, risk oversight or regulatory structure, or impose significant costs on us by, for example, requiring more of our funds to be set aside for the guaranty fund or to meet other compliance requirements.

This could adversely affect our ability to compete effectively with other institutions that are not affected in the same way or impact our clients' overall trading volume and demand for our market data and other services.

Additionally, regulations imposed on financial institutions or market participants generally may adversely impact their trading activity in our markets.

To the extent the legislative and regulatory environment is less beneficial for us or our customers, our business, financial condition and operating results could be negatively affected.

To the extent the legislative and regulatory environment becomes more onerous for us to comply or less beneficial for us or our customers, our business, financial condition and operating results could be negatively affected.

Legislation may be proposed, both domestically and internationally, that could add a transaction tax on our products or change the way our market participants are taxed on the products they trade on our markets.

If such proposals were to become law, they could have a negative impact on our industry and on us by making transactions more costly to market participants, which may reduce trading and could make our markets less competitive, with a resulting negative impact on our business, financial condition and operating results.

If we fail to comply with applicable laws, rules or regulations, we may be subject to censure, fines, cease-and-desist orders, suspension of our business, removal of personnel or other sanctions, including revocation of our designations as a contract market, derivatives clearing organization, swap execution facility, swap data repository, broker-dealer, multilateral trading facility or other regulatory penalties.

Our broker-dealer and multilateral trading facility businesses, BrokerTec and EBS, are also extensively regulated in various jurisdictions.

These regulatory obligations generally include proper licensing and qualification of the firms and individuals, substantive conduct standards, communication and disclosure rules, monitoring and surveillance, training, capital requirements, supervisory obligations, maintenance of anti-money laundering programs, suspicious activity reporting, risk management standards, trade reporting, and ongoing examinations and reviews.

The risks from failing to comply with these regulatory obligations include potential liability, disciplinary action against the firm and individuals, monetary penalties and restrictions on future activities.

The risks from failing to comply with these regulatory obligations include potential liability and/or disciplinary action against the firm and individuals, monetary penalties and restrictions on future activities.

BrokerTec Americas' matched principal platform facilitates anonymous trading in significant volumes from wholesale market participants, many of which are FICC members and understand that BrokerTec Americas is also a FICC member, such that their trades are expected to be novated promptly to FICC, which will be their ultimate counterparty.

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If we are not able to successfully compete, our business, financial condition and operating results will be materially harmed.

The industry in which we operate is highly competitive and we expect competition to continue to intensify.

Our industry is highly competitive, and we expect competition to continue to intensify.

We encounter competition in all aspects of our business, including from entities having substantially greater capital and resources, offering a wide range of products and services and in some cases operating under a different and possibly less stringent regulatory regime.

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alternative trade execution facilities;

technology firms, including market data distributors and electronic trading system developers, and others.

technology firms, including market data distributors and electronic trading system developers;

Our competitors and potential competitors may have greater financial, marketing, technological and personnel resources than we do.

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Our role in the global marketplace places us at greater risk than other public companies for a cyber attack and other cyber-security risks.

Our technology, our people and those of our third-party service providers, and our customers may be vulnerable to cyber-security threats, which could result in wrongful use of our data or our customers’ data or cause interruptions in our operations that cause us to lose customers and trading volume and result in substantial liabilities.

We also could be required to incur significant expense to protect our systems and/or investigate any alleged attack.

Our technology, our customers and our people and those of our third-party service providers may be vulnerable to cyber-security threats, which could result in wrongful use of our data or our customers’ data or cause interruptions in our operations that cause us to lose customers and trading volume and result in substantial liabilities.

We also could be required to incur significant expense to protect or remediate damage to our systems and/or investigate any alleged attack.

We regard the secure storage and transmission of data and the ability to continuously transact and clear on our electronic trading platforms as critical elements of our operations and our operational resiliency.

Our technology, our people and those of our third-party service providers and our customers may be vulnerable to targeted attacks, such as "phishing" attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, "ransom" attacks, firewall or encryption failures or other security or operational risks.

Criminal groups, political activist groups and nation-state actors have targeted the financial services industry in general, and our role in the global marketplace places us at greater risk than other public companies for a cyber attack and other information security threats.

Our technology, our customers, our people and those of our third-party service providers may be vulnerable to targeted attacks, such as "phishing" attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, "ransomware" attacks, firewall or encryption failures or other security or operational risks.

Criminal groups, political activist groups and nation-state actors have targeted the financial services industry in general, including as a result of the Russian and Ukraine war, and our role in the global marketplace places us at greater risk than other public companies for a cyber attack and other information security threats.

While we have not experienced cyber incidents that are individually, or in the aggregate, material, we have experienced cyber attacks of varying degrees in the past.

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Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the services we provide that could potentially have an adverse effect on our business, while resulting in regulatory penalties or the imposition of additional obligations by regulators or others.

As the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous and complex, any failure to comply may carry significant penalties and reputational damage.

The regulatory environment related to information security, privacy, data collection and data usage is increasingly rigorous and complex, and any failure to comply may carry significant penalties and reputational damage.

We have designed our cyber defense program to mitigate such attacks and security risks through administrative, physical and technical safeguards.

As part of our global information security and privacy programs, we employ resources to prevent, detect and respond to cyber-attacks and security risks that could impact our people, processes and technology infrastructure, including the rapid response to zero-day vulnerabilities.

However, our security measures or those of our third-party providers, including any cloud-based technologies, such as those pursuant to our partnership with Google Cloud, may prove insufficient depending upon the attack or threat posed.

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Many aspects of our business present substantial litigation risks.

These risks include, among others, potential liability from disputes over terms of a trade, the claim that a system failure or delay caused monetary losses to a customer, that we entered into an unauthorized transaction, that we provided materially false or misleading statements in connection with a transaction or that we failed to effectively fulfill our regulatory oversight responsibilities.

that we failed to effectively fulfill our regulatory oversight responsibilities.

We may be subject to disputes regarding the quality of trade execution, the settlement of trades or other matters relating to our services.

We may become subject to these claims as a

result of failures or malfunctions of our systems and services we provide.

We may become subject to these claims as a result of failures or malfunctions of our systems and services we provide.

We could incur significant legal expenses defending claims, even those without merit.

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The ultimate impact from COVID-19, including duration, is unknown and could have an adverse effect on our business, financial condition and results of operations.

The ongoing COVID-19 pandemic has caused significant disruption in the international and U.S.

The COVID-19 pandemic continues to cause disruptions in the international and U.S.

economies and financial markets.

The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, employee attrition, supply chain interruptions and overall economic and financial market instability in the U.S.

Similar impacts also have been experienced throughout the world, including in every country in which we do business.

Similar impacts also had been experienced throughout the world, including in every country in which we do business.

Given the unique and unpredictable nature of this event, future impacts to our business are unknown and could be material.

Those impacts may include, among others, the following:

• Continued disruption to our business and operations;

• Disruption to our business and operations;

• Key members of senior management or a significant number of our employees being unable to work as a result of contracting COVID-19 or related illnesses;

• Reduced productivity and operating effectiveness as a result of our employees working remotely and impacts on our clients encountering similar circumstances;

• Impacts on our third-party suppliers and their ability to fulfill their obligations to us;

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• Reduced economic activity generally, which could cause businesses to have less need to hedge in our markets;

• Delays in our expansion, investment, strategic initiatives and system integrations;

• Impacts to our ability to expand our client base, grow our business and generate new revenue due to the inability to hold in-person meetings, events and conferences, and other impacts from social distancing;

• Impacts on our brand and reputation due to negative investor sentiment in the overall financial markets;

• Increased financial and operational stress experienced by our clearing firm members due to unprecedented volatility or downturn, including significant losses that may result in a reduction of business or a default.

• Market access or trading limitations imposed by governmental authorities;

• Increased technology and cyber-security risks, social engineering and phishing campaigns.

These potential impacts may exist for a significant period of time and may adversely affect our business, financial condition, and results of operations even after the COVID-19 pandemic has subsided.

The spread of COVID-19 has caused us to modify our business practices, including restricting employee travel and continuing work-from-home protocols, and we may take further actions as may be required by government authorities or as we determine

to be in the best interests of our employees and clients.

There is no certainty that such measures will be sufficient to mitigate the risks posed by the pandemic or will otherwise be satisfactory to government authorities.

The extent to which the COVID-19 pandemic further impacts our business, results of operations or financial condition will depend on future developments, which are highly uncertain and difficult to predict, but may include, among others, the duration and spread of the pandemic, including through new variant strains, its severity, the actions taken by governments and other third parties to contain the virus or treat its impact, such as vaccination, and the effect of such actions on our business practices (including ending work-from-home protocols or transitioning to more hybrid work models), the impact of existing and any future federal stimulus measures, and the pace at which, and the extent to which, normal economic and operating conditions resume, or even if they resume, whether such economic and operating conditions can be sustained.

In addition, many of the other risk factors described herein could be heightened by the effects of the COVID-19 pandemic and related economic conditions, which could result in a material impact on our results of operations, financial condition and liquidity.

These potential impacts may exist for a significant period of time and may adversely affect our business, financial condition, and results of operations even if the COVID-19 pandemic becomes endemic.

Moreover, since implementing broad work-from-home measures during the pandemic, we have an increased dependency on remote equipment and connectivity infrastructure to access critical business systems that may be subject to failure or disruption of availability, which could negatively impact our business operations.

Further, we have been subject to increased phishing and other social engineering attempts by malicious actors to manipulate individuals into divulging confidential or personal information or access to our networks.

If our cybersecurity diligence and efforts to offset the increased risks associated with this greater reliance on mobile, collaborative and remote technologies are not effective or successful, we will be at increased risk for cyber security or data privacy incidents.

The extent to which COVID-19 further impacts our business, results of operations or financial condition will depend on future developments, which are highly uncertain and difficult to predict, but may include, among others, the duration and spread of the

virus, including through new variant strains, its severity, the actions taken by governments and other third parties to contain the virus or treat its impact, such as vaccination, and the effect of such actions on our business practices, the impact of any future federal stimulus measures, and the pace at which, and the extent to which, normal economic and operating conditions resume.

In addition, many of the other risk factors described herein could be heightened by the effects of COVID-19 and related economic conditions, which could result in a material impact on our results of operations, financial condition and liquidity.

Damage to our reputation or brand could harm our business.

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The success of our business depends in large part on our ability to create interactive electronic marketplaces for a wide range of products that have the required functionality, performance, availability and resilience, capacity, security and speed to attract and retain customers.

In 2021, 93% of our overall contract volume was generated through electronic trading on our CME Globex electronic platform, and we generated $336.3 million in revenue attributable to the BrokerTec and EBS trading platforms.

In 2022, 93% of our overall contract volume was generated through electronic trading on our CME Globex electronic platform.

We must continue to enhance our electronic trading platforms and other technology offerings to remain competitive.

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• generate sufficient revenue to justify the substantial capital investment we have made and will continue to make to enhance our electronic trading platforms and other technology offerings.

If we do not successfully enhance our electronic trading systems and technology offerings, if we are unable to develop them to include other products and markets, or if they do not have the required functionality, performance, availability and resilience, capacity, security and speed desired by our customers, our ability to successfully compete and our revenues and profits will be adversely affected.

Although we are focused on the technology and customer experience as part of the anticipated migration of the EBS platform to CME Globex in the first half of 2022, we cannot guarantee that we will not experience any client attrition, and to the extent any such client attrition is significant, it could have a negative impact on our revenues.

The success of our markets depends on our ability to complete development of, successfully implement and maintain the electronic trading and clearing systems that have the functionality, performance, availability and resilience, capacity, security and speed required by our customers.

If we do not successfully enhance our electronic trading systems and technology offerings, including the development and migration of our marketplace and supporting operational and business functions to the Cloud, if we are unable to develop our trading systems and technology offerings to include other products and markets, or if they do not have the required functionality, performance, availability and resilience, capacity, security and speed desired by our customers, our ability to successfully compete and our revenues and profits will be adversely affected.

Additionally, we rely on our customers' ability to have the necessary back office functionality to support our new products and our trading and clearing functionality.

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An interruption or cessation of an important supply or service by any third party could have a material adverse effect on our business, including revenues derived from our customers' trading activity.

elements of our trading, clearing, and other systems, as well as communications and networking equipment, computer hardware and software and related support and maintenance.

We depend on a number of suppliers, such as banking, clearing and settlement organizations, telephone companies, internet service providers, data processors, cloud hosting providers, data center providers, and software and hardware vendors, for elements of our trading, clearing, and other systems, as well as communications and networking equipment, computer hardware and software and related support and maintenance.

Although we conduct due diligence and monitor important suppliers and service providers (including their resiliency), we cannot provide assurances of their performance and any interruption or cessation of their supplies or services could negatively impact our operations or those of our customers, as well as affect our reputation, financial or regulatory posture.

Many of our customers rely on third parties, such as independent software vendors, to provide them with front-end systems to access our trading platforms and other back office systems for their trade processing and risk management needs.

While these service providers have undertaken to keep current and certify as to our enhancements and changes to their software to our interfaces and functionality, we cannot guarantee that they will continue to make the necessary monetary and time investments to keep up with our enhancements and changes.

While these service providers have undertaken to keep current and certify as to our enhancements and changes to their software to our

interfaces and functionality, we cannot guarantee that they will continue to make the necessary monetary, resource and time investments to keep up with our enhancements and changes.

To the extent any of our service providers or the organizations that provide services to our customers in connection with their trading activities cease to provide these services or provide these services in an efficient, cost-effective manner, or fail to adequately expand their services to meet our needs and the needs of our customers, we could experience decreased trading volume, lower revenues, and higher costs.

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Our Three-Month Eurodollar futures and options contracts are based on the three-month U.S.

Dollar London Interbank Offered Rate (LIBOR) underlying rate.

To the extent trading in Eurodollar contracts decreases or is discontinued and our alternative contracts are not successful, our revenues would be negatively impacted.

Dollar London Interbank Offered Rate (LIBOR) underlying rate and will be transitioned to the three-month Secured Overnight Financing Rate (SOFR) futures and options in the first half of 2023.

To the extent trading in Eurodollar contracts decreases ahead of this transition or our alternative contracts are not successful, our revenues would be negatively impacted.

Certain of our other businesses could also be negatively affected by changes to LIBOR.

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Dollar ICE LIBOR underlying rate.

In 2021, average trading volume in our Eurodollar contracts was 3.5 million contracts and open interest was 40.8 million contracts.

FCA, which regulates LIBOR, announced its intention to phase out the use of LIBOR with the cessation of one-week and two-month USD LIBOR, as well as non-USD LIBOR tenors, after December 31, 2021, and the cessation of publication of three-month, six-month and one-year USD LIBOR after June 30, 2023.

Financial institutions that currently report information used to set USD LIBOR are expected to stop doing so during 2023, and in 2021, the U.S.

In light of regulatory guidance, we expect banks and other financial market participants to cease entering into new contracts based on USD LIBOR and there is no guarantee that they will reference rates associated with our alternative products.

In 2022, average trading volume in our Eurodollar contracts was 2.4 million contracts and open interest was 17 million contracts and our average trading volume in our SOFR contracts was 2.2 million contracts and open interest was 29.3 million contracts.

FCA, which regulates LIBOR, announced its intention to phase out the use of LIBOR with the cessation of one-week and two-month USD LIBOR, as well as non-USD LIBOR tenors, after December 31, 2021, and the cessation of publication of the remaining USD LIBOR settings in a "representative" form (including three-month USD LIBOR) after June 30, 2023.

In 2021, the U.S.

Federal Reserve Board and other regulatory bodies issued guidance encouraging banks and other financial market participants to cease entering into new contracts that use USD LIBOR as a reference rate no later than December 31, 2021, and in March 2022, the Adjustable Interest Rate (LIBOR) Act was signed into law, establishing a framework for the replacement of LIBOR as a benchmark interest rate in U.S.

contracts that do not provide for the use of a clearly defined and practicable benchmark replacement rate following the cessation of publication or publication in a "representative" form.

In light of these developments, financial institutions that currently report information used to set USD LIBOR are expected to stop doing so during 2023, and we expect banks and other financial market participants to continue to cease entering into new contracts based on USD LIBOR.

There is no guarantee that these market participants will adopt reference rates associated with our alternative products.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, has recommended replacing USD LIBOR with other benchmark alternatives, such as Secured Overnight Financing Rate (SOFR).

However, it is unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR.

Any transition away from LIBOR to alternative reference rates is complex and could have a material adverse effect on our business, financial condition and results of operations.

We have closely engaged with the industry, regulators and market participants to launch products using alternative reference rates, including our SOFR and Sterling Overnight Index Average

(SONIA) futures contracts.

While these actions have resulted in an increase in market acceptance of SOFR, there is no guarantee that this transition will be successful, maintain current market structure, or replace the revenue we derive from our Eurodollar contracts if trading volume were to decline or discontinue altogether.

financial institutions, has recommended replacing USD LIBOR with SOFR.

However, it is unknown whether SOFR will attain the same level of market acceptance as a replacement for LIBOR.

The transition away from LIBOR to alternative reference rates is complex and could have a material adverse effect on our business, financial condition and results of operations.

We have closely engaged with the industry, regulators and market participants to launch products using alternative reference rates, including our SOFR and Sterling Overnight Index Average (SONIA) futures contracts, and we have announced that our Eurodollar futures and options contracts will be transitioned to SOFR futures and options in the first half of 2023.

While these actions have resulted in an increase in market acceptance of

SOFR, there is no guarantee that this transition will be successful, maintain current market structure, or replace the revenue we derive from our Eurodollar contracts if trading volume were to decline or discontinue altogether.

Our market data revenues may be reduced by decreased demand, poor overall economic conditions, regulatory changes or a significant change in how market participants trade and use market data.

We offer a wide range of data services designed to support the trading, risk management, investment and business needs of our customers.

Revenues from our market data and information services represented 12% and 11% of our total revenues during the years ended December 31, 2021 and December 31, 2020, respectively.

Revenues from our market data and information services represented 12% of our total revenues during the years ended December 31, 2022 and December 31, 2021.

Factors that may affect our performance and demand for our data include, but are not limited to:

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For example, if we encounter limited resources, we may be required to increase our expenses to obtain the necessary resources, defer existing initiatives or not pursue certain opportunities.

We may not be successful in implementing all of the processes that are necessary to support our growth organically or, as described below, through acquisitions, other investments or strategic alliances.

Our growth strategy also may subject us to increased legal, compliance and regulatory obligations.

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As a result, we may be unable to identify strategic opportunities or we may be unable to negotiate or finance future transactions on terms favorable to us, which could impact our ability to identify growth opportunities.

We may issue additional equity and/or debt in connection with strategic partnerships.

We may issue additional equity and/or debt or, as was the case in connection with our transaction with Google Cloud, issue additional equity as part of strategic partnerships with third parties.

The issuance of additional equity in connection with any future transaction could be substantially dilutive to our existing shareholders.

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We also may be required to take an impairment charge in our financial statements relating to our acquisitions and/or investments, which could negatively affect our stock price.

Our joint venture, OSTTRA, with IHS Markit is subject to many of these risks, including the potential we may not achieve the expected cost savings, synergies and other strategic benefits from the transaction

within the anticipated time frames, that the joint venture may be more costly than expected, or that we may experience customer attrition.

OSTTRA, our joint venture with IHS Markit (now a part of S&P Global), is subject to many of these risks, including the potential we may not achieve the expected cost savings, synergies and other strategic benefits from the transaction within the anticipated time frames, that the joint venture may be more costly than expected, or that we may experience customer attrition.

The expansion of our global operations is complex and subjects us to increased business and economic risks that could adversely affect our financial results.

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• fluctuations in currency exchange rates;

• complying with extensive and complex compliance requirements, regulations and oversight by regulators other than our primary functional regulators;

• complying with extensive and complex compliance requirements, regulations and oversight by regulators other than our primary functional regulators, including sanctions and anti-bribery laws;

• difficulties in staffing and associated costs in managing multiple international locations;

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Trade and Cooperation Agreement was effective on January 1, 2021.

As a result of Brexit, we have established certain CME Group businesses in Amsterdam, an E.U.

jurisdiction, which allows these businesses to continue offering products and services to customers in the E.U.;

As a result of Brexit, we have established a CME Group business in Amsterdam, an E.U.

jurisdiction, which allows this business to continue offering products and services to customers in the E.U.;

however, this has resulted in, and may continue to result in, increased legal, compliance and operational costs.

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In extreme cases, these outcomes could adversely affect our ability to conduct our business.

We maintain risk management, compliance and monitoring policies, procedures and programs that are designed to prevent, detect, deter, monitor and manage our risks, including enterprise risk and internal audit programs, but such policies, procedures and programs may not be fully effective.

We maintain risk management, compliance and monitoring policies, procedures and programs that are designed to prevent, detect, deter, monitor and manage our risks, including enterprise risk, compliance and internal audit programs, but such policies, procedures and programs may not be fully effective in their operation.

Some of our risk management processes depend upon evaluation of information regarding markets, customers, employees or other matters or potential threats that are publicly available or otherwise accessible by us.

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Improper trading activity on our platforms by participants could include activities such as spoofing, layering, wash trading and manipulation.

Misconduct by our employees and agents could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of customers or the company, improper securities trading activities, improper use or unauthorized disclosure of data or confidential information of the company or its customers, among other potential misconduct.

Misconduct by our employees and agents could include

hiding unauthorized activities from us, improper or unauthorized activities on behalf of customers or the company, improper securities trading activities, circumvention of controls and procedures, improper use or unauthorized disclosure of assets, data or confidential information of the company or its customers, among other potential misconduct.

It is not always possible to deter misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.

If we were found to have not met our regulatory oversight and compliance obligations, we could be subject to regulatory sanctions, enforcement actions, financial penalties, restrictions on our activities for failure to properly identify, monitor and respond to potentially problematic activity, and such outcomes could seriously harm our reputation.

If we were found to have not met our regulatory oversight and compliance obligations, we could be subject to regulatory sanctions, enforcement actions, financial penalties and restrictions on our activities for failure to properly identify, monitor and respond to potentially problematic activity, and such outcomes could seriously harm our reputation.

Our employees and agents also may commit errors that could subject us to financial claims for negligence, as well as regulatory actions, or result in our voluntary assumption of financial liability.

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The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our debt service obligations.

In addition, the agreements governing our outstanding indebtedness do not significantly limit our ability to incur additional indebtedness, which could increase the risks described above to the extent that we incur additional debt.

In addition, the agreements governing our outstanding indebtedness do not significantly limit our ability to incur additional indebtedness, which, particularly given the recent changes in interest rates could increase the risks described above to the extent that we incur additional debt.

Our regulated businesses are also required to maintain minimum capital requirements set by their applicable regulators.

Please see "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Requirements" beginning on page 45 for additional information capital requirements.

Any reduction in our credit rating could increase the cost of our funding from the capital markets.

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Their ratings of our long-term debt are based on a number of factors, including our financial strength, as well as factors not entirely within our control, such as conditions affecting the financial services industry generally.

In light of the difficulties in the financial services industry and the financial markets over the last few years, including in connection with the global pandemic, there can be no assurance that we will maintain our current ratings.

In light of the difficulties in the financial services industry and the financial markets over the last few years, including in connection with the global pandemic and rising interest rates, there can be no assurance that we will maintain our current ratings.

In the past, we have experienced ratings downgrades.

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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 1A. Risk Factors