What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-27 compared with 2022-02-25 · 111 added, 135 removed, 1063 unchanged (19% of the section changed)

31 unchanged sentences

Preferred stock, $0.01 par value, 10,000 shares authorized as of December 31, 2022 and 2021;

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

4,584 issued and outstanding as of December 31, 2022 and 2021, respectively — —

Class A common stock, $0.01 par value, 1,000,000 shares authorized as of December 31, 2022 and 2021, 358,929 and 358,599 shares issued and outstanding as of December 31, 2022 and 2021, respectively 3.6 3.6

4 unchanged sentences

Total CME Group shareholders’ equity 26,878.7 27,399.3

Non-controlling interests — 31.6

Total Equity 27,399.3 26,351.5

Total Liabilities and Equity $ 174,175.7 $ 196,780.3

58 unchanged sentences

Derivative investments:

Net unrealized holding gains (losses) arising during the period — — 0.6

Amortization of effective portion of net (gains) losses on cash flow hedges included in interest expense ( 1.9 ) ( 1.2 ) ( 2.7 )

25 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 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

16 unchanged sentences

Comprehensive

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

Income (Loss) Total CME Group Shareholders' Equity

Balance at December 31, 2021 4,584 358,599 3 $ 22,193.9 $ 5,151.9 $ 53.5 $ 27,399.3

1 unchanged sentence

Other comprehensive income ( 186.8 ) ( 186.8 )

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 )

Dividends of $8.50 per common share and preferred share ( 3,096.1 ) ( 3,096.1 )

Exercise of stock options 1 0.1 0.1

22 unchanged sentences

Net realized and unrealized (gains)/losses on investments ( 4.8 ) ( 117.0 ) 5.5

Undistributed earnings, net of losses, of unconsolidated subsidiaries ( 24.4 ) ( 7.7 ) ( 43.6 )

Deferred income taxes ( 23.2 ) 34.8 ( 41.6 )

17 unchanged sentences

Net cash proceeds from OSTTRA joint venture transaction — 100.7 —

Investment in S&P Dow Jones Indices LLC ( 410.0 ) — —

Net Cash Provided by (Used in) Investing Activities ( 489.8 ) 58.4 ( 175.5 )

8 unchanged sentences

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

Repayment of other borrowings — — ( 569.2 )

Proceeds from debt, net of issuance costs 741.0 — —

Repayment of other borrowings, including call premiums ( 756.2 ) — —

Proceeds from preferred stock offering — 965.0 —

1 unchanged sentence

Change in performance bond and guaranty fund contributions ( 22,700.3 ) 71,167.8 49,704.8

Proceeds from settlement of derivative contract — — 16.0

Employee taxes paid on restricted stock vesting ( 24.8 ) ( 31.7 ) ( 41.4 )

22 unchanged sentences

(CME Group) exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange (FX), agricultural, energy and metal commodities.

We offer futures and options trading across asset classes through the CME Globex platform, cash and repo fixed income trading via BrokerTec, and cash and OTC FX trading via EBS.

We offer futures and options across asset classes as well as cash, repo fixed income and OTC FX trading through the CME Globex platform.

In addition, it operates one of the world’s leading central counterparty clearing houses.

5 unchanged sentences

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

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.

In September 2021, the company and IHS Markit launched a new joint venture, OSTTRA, to combine their post-trade services.

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 company contributed the net assets of its optimization business, which included Traiana, TriOptima and Reset, to the 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.

5 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.

5 unchanged sentences

Financial Investments.

The company maintains short-term and long-term investments, classified as equity method investments, equity securities, available-for-sale debt securities, and trading securities.

The company maintains short-term and long-term investments, classified as equity method investments, available-for-sale debt securities, equity investments in privately-held entities, and trading securities.

Available-for-sale debt securities are carried at fair value, with unrealized gains and losses, net of deferred income taxes, reported as a component of accumulated other comprehensive income.

Trading securities held in connection with non-qualified deferred compensation plans and equity securities are recorded at fair value, with net realized and unrealized gains and losses and dividend income reported as investment income.

Trading securities held in connection with non-qualified deferred compensation plans are recorded at fair value, with net realized and unrealized gains and losses and dividend income reported as investment income.

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.

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.

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) and other comprehensive 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 an 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.

7 unchanged sentences

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

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

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

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

For those derivatives that meet the criteria for hedge accounting and are classified as effective cash flow hedges, changes in the fair value of derivative financial instruments are initially recorded in other comprehensive income and subsequently reclassified into earnings when the hedged item affects income.

The company assesses, both at the inception of each hedge and on an ongoing basis, whether the derivative financial instruments that are designated as cash flow hedging transactions are highly effective in offsetting changes in cash flows of the hedged items.

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

There were no outstanding derivative instruments at December 31, 2022.

26 unchanged sentences

Land is reported at cost.

Internal and external costs incurred in developing or obtaining computer software for internal use which meet the requirements for capitalization are amortized on a straight-line basis over the estimated useful life of the software, generally two to four years, but up to eight years for certain trading and clearing applications, depending upon expected useful lives.

Internal and external costs incurred in developing, obtaining, or implementing computer software for internal use which meet the requirements for capitalization are amortized on a straight-line basis over the estimated useful life of the software, generally two to four years, but up to eight years for certain trading and clearing applications, depending upon expected useful lives.

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

Landlord allowances are recorded as a direct reduction to the capitalized lease asset, which is reported in other assets and amortized to rent expense over the term of the lease.

The associated lease liability represents the present value of lease payments remaining in the lease term and is recorded within current and other liabilities depending upon the balance sheet classification of the payment obligations as short-term or long-term.

Both lease and direct non-lease costs are accounted for as a single lease component for purposes of capitalization on the consolidated balance sheets.The associated lease liability represents the present value of lease payments remaining in the lease term and is recorded within current and other liabilities depending upon the balance sheet classification of the payment obligations as short-term or long-term.

For sale leaseback transactions, the company evaluates the sale and the lease arrangement based on the company's conclusion as to whether control of the underlying asset has been transferred and recognizes the sale leaseback as either a sale transaction or under the financing method, which requires the asset to remain on the consolidated balance sheets throughout the term of the lease and the proceeds to be recognized as a financing obligation.

2 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 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 the carrying value 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.

Estimating the fair value of a reporting unit involves significant judgments inherent in the analysis, including estimating the amount and timing of future cash flows and the selection of appropriate discount rates and long-term growth rate assumptions.

Estimating the fair value of a

reporting unit involves significant judgments inherent in the analysis, including estimating the amount and timing of future cash flows and the selection of appropriate discount rates and long-term growth rate assumptions.

Changes in these estimates and assumptions could materially affect the determination of fair value for the reporting unit.

20 unchanged sentences

Foreign Currency Translation .

Foreign currency denominated assets and liabilities are re-measured into the functional currency using period-end exchange rates.

Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency using period-end exchange rates.

Gains and losses from foreign currency transactions are included in other expense on the accompanying consolidated statements of income.

8 unchanged sentences

Fees are charged at various rates based on the product traded, the method of trade, the exchange trading privileges of the customer making the trade and the type of contract.

The majority of our clearing and transaction fees are recognized as revenue when a buy and sell order are matched.

The majority of our clearing and transaction fees are recognized as revenue upon successful execution of the trade.

Therefore, unfilled or canceled buy and sell orders have no impact on revenue.

2 unchanged sentences

A reserve is established for estimated fee adjustments to reflect corrections to customer exchange trading privileges.

The reserve is based on the historical pattern of adjustments processed as well as specific adjustment requests.

The company believes the allowances are adequate to cover estimated adjustments.

The reserve is based on the historical pattern of adjustments processed as well as management's estimate of future adjustment activity.

The company believes the reserve is adequate to cover estimated adjustments as of December 31, 2022 and 2021.

Market Data and Information Services.

8 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 at least approximately 10 % of the company's clearing and transaction fee revenue in 2022, 2021 and 2020.

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.

20 unchanged sentences

Newly Adopted Accounting Policies.

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.

The company adopted the following accounting policies during 2022:

In August 2020, FASB issued an accounting update that simplifies the accounting for convertible instruments and amends certain guidance on the computation of EPS for convertible instruments.

This guidance reduces the number of accounting models used for the allocation of proceeds attributable to the issuance of a convertible instrument, thereby eliminating the beneficial conversion feature model.

It is also noted that this guidance revises and eliminates certain criteria for achieving equity classification on the balance sheet.

This accounting update requires entities to provide expanded disclosures about the terms and features of convertible instruments, including information about events, conditions and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments.

The company adopted this guidance on January 1, 2022.

Adoption of this guidance did not have an impact on the consolidated financial statements.

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

REVENUE RECOGNITION

19 unchanged sentences

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

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

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

Fees for these services are generally billed monthly and the associated fee revenue is recognized as billed.

2 unchanged sentences

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

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

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

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

1 unchanged sentence

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

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

There are fee arrangements which 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.

7 unchanged sentences

Metals 196.9 198.8 248.0

Interest rate swap and credit default swap 62.6 65.4 66.8

Cash markets business 396.2 447.4 483.0

BrokerTec fixed income 164.7 172.0 173.3

EBS foreign exchange 154.1 164.3 179.3

Optimization — 59.9 94.8

Interest rate swap 65.4 62.6 65.4

Total clearing and transaction fees 4,142.7 3,765.1 3,897.4

10 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.

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

Changes in the contract liability balances during 2022 were not materially impacted by any other factors.

Contract liabilities are presented within other current liabilities.

The balance of contract liabilities was $ 12.7 million and $ 15.2 million as of December 31, 2022 and 2021, respectively.

6 unchanged sentences

Each clearing firm is required to deposit and maintain balances in the form of cash, U.S.

government securities, certain foreign government securities, bank letters of credit or other approved collateral investments to satisfy performance bond and guaranty fund requirements.

government securities, certain foreign government securities, bank letters of credit or other approved collateral to satisfy performance bond and guaranty fund requirements.

All non-cash deposits and certain cash deposits with foreign currency exposure are marked-to-market and haircut on a daily basis.

Securities deposited by the clearing firms are not reflected on the consolidated financial statements and the clearing house does not earn any interest on these deposits.

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

These balances may fluctuate significantly over time due to 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 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.

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.

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.

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.

13 unchanged sentences

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

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

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

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

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

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

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

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

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

Clearing firms maintain separate performance bond deposits with each clearing house, but depending on the net offsetting positions between CME and FICC, each clearing house may reduce that firm's performance bond requirements.

In the event of a firm default, the total liquidation net gain or loss on the firm's offsetting open positions and the proceeds from the liquidation of the performance bond collateral held by each clearing house's supporting offsetting positions would be divided evenly between CME and FICC.

Additionally, if, after liquidation of all the positions and collateral of the defaulting firm at each respective clearing organization, and taking into account any cross-margining loss sharing payments, any of the participating clearing organizations has a remaining liquidating surplus, and any other participating clearing organization has a remaining liquidating deficit, any additional surplus from the liquidation would be shared with the other clearing house to the extent that it has a remaining liquidating deficit.

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

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

Clearing firms

maintain separate performance bond deposits with each clearing house, but based on the net offsetting positions between CME and FICC, each clearing house may reduce that firm's performance bond requirements.

If a participating firm defaults, the gain or loss on the liquidation of the firm’s open positions and the proceeds from the liquidation of the cross margin account would be allocated between CME and FICC pursuant to a publicly-available cross-margining agreement.

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

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

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

2 unchanged sentences

Treasury securities (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.

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

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

8 unchanged sentences

The line of credit provides for borrowings of up to $ 7.0 billion.

At December 31, 2021, guaranty fund contributions available for clearing firms were $ 9.7 billion.

At December 31, 2022, guaranty fund contributions available to collateralize the facility were $ 6.9 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.

1 unchanged sentence

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

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

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

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

24 unchanged sentences

(in millions) 2022 2021 Estimated Useful Life

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

Building and building improvements $ 132.2 $ 132.3 1 - 10 years

5 unchanged sentences

Property, net $ 455.5 $ 505.3

_______________

(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 Deconsolidation (2)

Value Assigned Value Accumulated

Amortization Net Book

Value Assigned Value Accumulated

Amortization Deconsolidation (2)

Amortizable Intangible Assets:

45 unchanged sentences

DME Holdings Limited.

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

The company's investment in DME Holdings was $ 13.7 million at December 31, 2021.

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

The carrying amount of the company's investment in DME Holdings was $ 13.3 million at December 31, 2022.

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

1 unchanged sentence

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

OSTTRA will perform trade processing and risk mitigation services.

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 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 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.

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

S&P/DJI Indices LLC.

The company owns a 27 % interest in S&P/Dow Jones Indices LLC (S&P/DJI) and accounts for its investment in S&P/DJI using the equity method of accounting.

The company's investment in S&P/DJI was $ 986.5 million at December 31, 2021.

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

The carrying amount of the company's investment in OSTTRA was $ 1.3 billion at December 31, 2022.

S&P Dow Jones Indices LLC.

In June 2022, the company invested $ 410.0 million in S&P Dow Jones Indices LLC, which S&P Dow Jones Indices LLC used as part of the consideration for its acquisition of the IHS Markit index business.

The company continues to own a 27 % interest in S&P Dow Jones Indices LLC and accounts for its investment in S&P Dow Jones Indices LLC using the equity method of accounting.

The carrying amount of the company's investment in S&P Dow Jones Indices LLC was $ 1.4 billion at December 31, 2022.

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

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

1 unchanged sentence

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

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:

The carrying amount of the company's investment in CFETS was $ 45.0 million at December 31, 2022.

Short-term debt consisted of the following at December 31, 2022 and 2021 (in U.S.

dollar equivalents):

(in millions) 2022 2021

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

€15.0 million fixed rate notes due May 2023, stated rate of 4.30% 16.0 —

Total short-term debt $ 16.0 $ 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, 2022 and 2021 (in U.S.

1 unchanged sentence

(in millions) 2022 2021

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

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

1 unchanged sentence

$500.0 million fixed rate notes due June 2028, stated rate of 3.75%

$750.0 million fixed rate notes due March 2032, stated rate of 2.65% 741.7 —

$750.0 million fixed rate notes due September 2043, stated rate of 5.30% (2)

4 unchanged sentences

(2) 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 % .

(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 % .

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

26 unchanged sentences

Statutory rate change — 1.1 —

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

Foreign-derived intangible income deduction

3 unchanged sentences

In 2022, the effective tax rate was higher than the statutory tax rate.

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.

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

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 FDII deduction.

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

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.

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

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

At December 31, 2022 and 2021, deferred income tax assets (liabilities) consisted of the following:

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At December 31, 2022 and 2021, the company had domestic and foreign income tax loss carry forwards of $ 17.6 million and $ 88.6 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.

These amounts primarily related to losses from the acquisition of NEX Group plc, the acquisition of Pivot, Inc., and losses incurred in the operation of various foreign entities.

At December 31, 2022 and 2021, the company determined that it was not more-likely-than-not that certain foreign deferred income tax assets will be fully realized.

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

As of December 31, 2022, substantially all federal, state and United Kingdom income tax matters had been concluded through 2013.

EMPLOYEE BENEFIT PLANS

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The balances in these plans are subject to the claims of general creditors of the company and totaled $ 84.5 million and $ 98.6 million at December 31, 2022 and 2021, respectively.

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

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

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

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The operating leases have remaining lease terms of up to 15 years, some of which include options to extend or renew the leases for up to an additional five years, and some of which include options to early terminate the leases in less than 12 months.

Management evaluates the exercisability of these options at least quarterly in order to determine whether the contract term must be reassessed.

Management evaluates the exercisability of

these options at least quarterly in order to determine whether the contract term must be reassessed.

For a small number of the leases, primarily the international locations, management's approach is to enter into short-term leases for a lease term of 12 months or less in order to provide for greater flexibility in the local environment.

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These matters could result in censures, fines, penalties or other sanctions.

Management believes the outcome of any resulting actions will not have a material impact on its consolidated financial position or results of operations.

Management believes the outcome of any resulting actions will not have a material impact on the company's consolidated financial position or results of operations.

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.

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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.

Given the uncertainty of factors that may potentially affect 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.

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

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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.

CME Group has approximately 4.6 million shares of Series G Non-Voting Convertible Preferred Stock (Series G preferred stock) outstanding.

The Series G preferred stock is non-voting and is convertible into Class A common stock at a specified conversion 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 therefore participates in the earnings and losses of CME Group on the same basis as Class A common stock.

Associated Trading Rights.

Members of CME, CBOT, NYMEX and COMEX own or lease trading rights which entitle them to access open outcry trading, discounts on trading fees and the right to vote on certain matters as provided for by the rules of the particular exchange and CME Group's or the subsidiary's organizational documents.

Members of CME, CBOT, NYMEX and COMEX own or lease trading rights which entitle them access to open outcry trading, discounts on trading fees and the right to vote on certain matters as provided for by the rules of the particular exchange and CME Group's or the subsidiary's organizational documents.

Each class of CME Group Class B common stock is associated with a membership in a specific division for trading at CME.

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A total of 40.2 million Class A common stock shares have been reserved for awards under the plan.

Awards totaling 25.1 million shares have been granted and are outstanding or have been exercised under this plan at December 31, 2021 (note 15).

Awards totaling 25.4 million shares have been granted and are outstanding or have been exercised under this plan at December 31, 2022 (See note 15 for further discussion).

Director Stock Plan.

CME Group has adopted a Director Stock Plan under which awards are made to non-executive directors as part of their annual compensation.

A total of 625,000 Class A shares have been reserved under this plan, and approximately 431,000 shares have been awarded through December 31, 2021.

Effective May 4, 2022, the number of Class A available shares reserved under the plan was increased from 625,000 to 725,000 , and approximately 449,000 shares have been awarded through December 31, 2022.

Employee Stock Purchase Plan.

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

A total of 500,000 Class A shares have been reserved under this plan, of which approximately 390,000 shares have been purchased through December 31, 2021 (note 15).

Effective May 4, 2022, the number of Class A shares reserved under the plan was increased from 500,000 to 800,000 , of which approximately 432,000 shares have been purchased through December 31, 2022 (See note 15 for further discussion).

STOCK-BASED PAYMENTS

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

Total compensation expense for stock-based payments and total income tax benefit recognized on the consolidated statements of income for stock-based awards at December 31, 2021, 2020 and 2019 were as follows:

Total compensation expense for all stock-related awards (including ESPP) and total income tax benefit recognized on the consolidated statements of income for these awards at December 31, 2022, 2021 and 2020 were as follows:

(in millions) 2022 2021 2020

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The total intrinsic value of options exercised during 2022, 2021 and 2020 was $ 0.1 million, $ 15.0 million and $ 16.7 million, respectively.

In 2021, the company granted 349,279 shares of restricted Class A common stock and 11,384 shares of restricted stock units.

In 2022, the company granted 388,423 shares of restricted Class A common stock and restricted stock units with respect to 11,920 shares of Class A common stock.

Restricted common stock and restricted stock units generally have a vesting period of two to four years.

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These shares are subject to a six-month holding period.

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.

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

Annual expense of $ 0.8 million for the purchase discount was recognized in 2022, 2021 and 2020.

Non-executive directors receive an annual award of Class A common stock with a value equal to $ 145,000 .

Non-executive directors could also elect to receive some or all of the cash portion of their annual stipend, up to $ 95,000 , 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.

As a result, 18,836 shares, 13,769 shares and 17,322 shares of Class A

common stock were issued to non-executive directors during 2022, 2021 and 2020, respectively.

These shares are not subject to any vesting restrictions.

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

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

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

Recurring Fair Value Measurements.

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Equity securities 0.2 — — 0.2

Asset-backed securities — 0.3 — 0.3

Total Marketable Securities 115.0 — — 115.0

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Non-Recurring Fair Value Measurements.

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.

During 2022, t he company recognized net unrealized losses on certain investments of $ 8.5 million.

The combined fair values of these investments were estimated to be $ 51.9 million at December 31, 2022.

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.

These fair value assessments were based on quantitative factors, including observable price changes.

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

These investments are included within other assets on the consolidated balance sheets.

Fair Values of Debt Notes.

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(in millions) Fair Value Level

$750.0 million fixed rate notes due September 2022 763.4 Level 2

€15.0 million fixed rate notes due May 2023 16.1 Level 2

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$500.0 million fixed rate notes due June 2028 490.9 Level 2

$750.0 million fixed rates notes due September 2043 1,035.2 Level 2

$750.0 million fixed rate notes due March 2032 633.2 Level 2

$750.0 million fixed rate notes due September 2043 786.6 Level 2

$700.0 million fixed rate notes due June 2048 633.0 Level 2

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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.

Series G 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.

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Preferred stock dividends ( 38.9 ) ( 19.0 ) —

Undistributed earnings allocated to preferred stock ( 0.3 ) — —

(Undistributed earnings) overdistributed earnings allocated to preferred stock 5.1 ( 0.3 ) —

Net Income Attributable to Common Shareholders of CME Group $ 2,657.2 $ 2,617.1 $ 2,105.2

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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 8. Financial Statements and Supplementary Data