What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-28 · 49 added, 59 removed, 298 unchanged (27% of the section changed)

26 unchanged sentences

Material decreases in trading volume would have a material adverse effect on our financial condition and operating results.

Please see "Item 1A - Risk Factors - Risks Relating To Our Business" beginning on page 20 for additional information.

Please see "Item 1A - Risk Factors - Risks Relating To Our Business" beginning o n page 20 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, fines or other consequences to our regulated status.

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

and European Union.

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 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.

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

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

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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 status.

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

Our broker-dealer and MTF 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.

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A failure of BrokerTec Americas to maintain its membership with FICC could adversely impact the willingness of such participants to continue trading on our platform.

As part of maintaining its FICC membership, BrokerTec Americas is required to timely and fully meet all margin calls and other obligations established by FICC, and as such must maintain ready access to sufficient liquidity to satisfy those obligations.

those obligations.

BrokerTec Americas maintains access to liquidity resources it believes will satisfy these obligations in normal and stressed circumstances, but there can be no guarantee it will never experience a shortfall.

Please see "Item 1 - Business - Regulatory Matters" beginning on page 12 for additional information on our areas of regulatory focus.

Some of CME Clearing's largest clearing firms have indicated their belief that clearing facilities should not be owned or controlled by exchanges and should be operated as utilities and not for profit.

Some of our clearing house's largest clearing firms have indicated their belief that clearing facilities should not be owned or controlled by exchanges and should be operated as utilities and not for profit.

These clearing firms have sought, and may seek in the future, legislative or regulatory changes that would, if adopted, enable them to use alternative clearing services for positions established on our exchanges or to freely move open positions among clearing houses in order to take advantage of our liquidity.

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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.

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

We face competition from other futures, securities and securities option exchanges;

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• develop and expand their network infrastructure and service offerings more efficiently;

• utilize better, more user-friendly or more reliable technology;

• utilize better, more user-friendly or more reliable technology, including artificial intelligence;

• take greater advantage of acquisitions, alliances and other opportunities that provide a competitive advantage;

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A decline in our fees or loss of customers could lower our revenues, which would adversely affect our profitability.

Please see "Item 1 - Business - Competition" beginning on page 10 for additional information on the competitive environment and its potential impact on our business.

Please see "Item 1 - Business - Competition" beginn ing on page 10 f or additional information on the competitive environment and its potential impact on our business.

Our trading volume, and consequently our revenues and profits, would be adversely affected if we are unable to retain our current customers at substantially similar trading levels or attract new customers.

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We cannot provide assurances that we will be able to continue to expand our products and services, that we will be able to retain our current customers or attract new customers or that we will not be required to modify our pricing structure to compete effectively.

Changes in our pricing structure may result in a decrease in our profit margin.

Changes in our pricing structure may result in a decrease to our profit margin.

Our clearing firm clients must meet certain capital requirements and must deposit collateral to meet performance bond and guaranty fund requirements.

There is no guarantee the collateral deposited will continue to maintain its value.

To the extent a clearing firm were to experience a decrease in capital and be unable to meet requirements, it may be required to decrease its trading activity.

To the extent a clearing member were to experience a decrease in capital and be unable to meet requirements, it may be required to decrease its trading activity.

Additionally, from time to time, certain customers may represent a significant portion of the open interest in our individual product lines or contracts, and a substantial decrease in their trading activity could have a negative impact on the liquidity of the particular product line or contract.

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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.

operations, which could cause us to lose customers and trading volume and result in substantial liabilities.

Our technology, our customers, our people and our third-party service providers are vulnerable to cyber-security threats, which could result in wrongful use of our data or our customers’ data or cause interruptions in our operations, our customers' operations, or our third-party service providers' operations, which could 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 customers, our people and our third-party service providers may be vulnerable to targeted attacks, such as "phishing" attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, "ransomware" attacks, attacks created through artificial intelligence, firewall or encryption failures or other security or operational risks.

Our technology, our customers, our people and our third-party service providers may be vulnerable to targeted attacks, such as "phishing" attacks, unauthorized access, fraud, business email compromise, computer viruses, denial of service attacks, terrorism, "ransomware" attacks, attacks created through artificial intelligence, 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 wars, and our role in the global marketplace places us at significant risk for a cyber attack and other information security threats.

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Our security defenses may also be impacted or breached due to employee error, malfeasance, system errors or vulnerabilities.

Additionally, outside parties may attempt to fraudulently induce employees, users, customers or our third party providers to disclose sensitive information in order to gain access to our technology systems and data, or our customers’ data.

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.

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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 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.

Any security attack or breach could result in system failures and delays, malfunctions in our operations, loss of customers or lower trading volume, loss of competitive position, damage to our reputation, disruption of our business, legal liability or regulatory fines and significant costs, which in turn may cause our revenues and earnings to decline.

However, our security measures or those of our third-party providers, including any cloud-based technologies, may prove insufficient depending upon the attack or threat posed.

costs, which in turn may cause our revenues and earnings to decline and could have a material impact on our financial condition or results of operations.

We may be subject to litigation and financial losses that exceed our insurance policy limits or are not covered under any of our current policies.

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Given our role in the global financial services industry, we may be more likely than other companies to be a direct target of, or an indirect casualty of, attacks by terrorists or terrorist organizations.

It is impossible to accurately predict the likelihood or impact of any terrorist attack on our industry generally or on our business.

It is impossible to accurately predict the likelihood or impact of any terrorist attack against us or our third party service providers, or on our industry generally.

While we have implemented significant physical security protection measures, business continuity plans, and established backup sites to provide operational resiliency, in the event of an attack or a threat of an attack, these security measures and contingency plans may be inadequate to prevent significant disruptions in our business, technology or access to the infrastructure necessary to maintain our business.

Such an attack may result in harm to our personnel or the closure of our facilities or render our backup data and recovery systems inoperable.

Such an attack may result in harm to our personnel or the closure of our facilities or render our backup data and recovery systems inoperable, or have similar consequences for our third party service providers.

Damage to our facilities due to terrorist attacks may be significantly in excess of any amount of insurance coverage available, or we may not be able to insure against such damage at a reasonable price or at all.

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• maintain the competitiveness of our fee structure;

• attract independent software vendors to write front-end software that will effectively access our electronic trading systems and automated order routing system;

• attract ISVs to write software that will allow our customers to effectively access our systems;

• respond to technological developments or service offerings by competitors;

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

If we do not continue to enhance our electronic trading systems and technology offerings, including the development and migration of our markets and supporting operational and business functions to the CME Google Cloud platform and the private Google Cloud region, 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, which could have a material impact on our financial condition or results of operations.

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

To the extent our customers and/or their third party providers are not prepared and/or lack the resources or infrastructure, the success of our new initiatives may be compromised.

If we experience systems failures or capacity constraints, our ability to conduct our operations and execute our business strategy could be materially harmed, and we could be subjected to significant costs and liabilities.

Our business is highly dependent on our ability to process, execute and monitor, in an efficient and uninterrupted manner, a large number of transactions, which occur at high volumes and frequencies across multiple systems and our ability to access key business data, financial information, order processing and invoicing.

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• regulatory sanctions.

We cannot assure that we will not experience system failures from power or telecommunications failures, acts of God, war or terrorism, human error on our part or on the part of our third-party providers or partners, natural disasters, fire, sabotage, hardware or software malfunctions or defects, computer viruses, cyber attacks, acts of vandalism or similar occurrences.

We cannot assure that we will not experience system failures from power or telecommunications failures, acts of God, war or terrorism, human error on our part or on the part of our third-party providers or partners, natural disasters, fire, rising temperatures, sabotage, hardware or software malfunctions or defects, computer viruses, cyber attacks, acts of vandalism or similar occurrences.

If any of our systems or the systems of our third-party providers do not operate properly, are compromised or are disabled, including as a result of system failure, employee or customer error or misuse of our systems, we could suffer financial loss, liability to customers, regulatory intervention or reputational damage that could affect demand by current and potential users of our market.

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

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

volume, lower revenues and higher costs.

Although we conduct due diligence and monitor important suppliers and service providers (including the resiliency of their operations), 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 ISVs, 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 make corresponding changes to their software for 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.

In addition, while we may be entitled to recovery for breaches of, or liabilities otherwise incurred in connection with, our agreements with third-party suppliers and service providers, such recovery is limited by the terms of these agreements and may not compensate us in full.

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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 represent ed 12% o f our total revenues during the years ended December 31, 2023 and December 31, 2022.

Revenues from our market data and information services represe nted 12% of our total revenues during the years ended December 31, 2024 and December 31, 2023.

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

• Our ability to maintain existing customers utilizing our data and to attract new customers with our products and services;

• A decrease in overall trading volume, which may lead to a decreased demand for our market data;

• A challenging business environment for our customers, which may require them to reduce their usage of our market data;

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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 as part of strategic partnerships with third parties, as was the case in connection with our transaction with Google Cloud.

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

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

The issuance of additional debt could increase our leverage substantially.

The process of integration also may produce unforeseen regulatory and operating difficulties and expenditures and may divert the attention of management from the ongoing operation of our business.

To the extent we acquire a new business, the process of integration also may produce unforeseen regulatory and operating difficulties and expenditures and may divert the attention of management from the ongoing operation of our business.

To the extent we enter into joint ventures and alliances, we may experience difficulties in the development and expansion of the business of any newly formed ventures, in the exercise of influence over the activities of any ventures in which we do not have a controlling interest, as well as encounter potential conflicts with our joint venture or alliance partners.

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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.

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, including sanctions and anti-bribery laws;

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

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

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dollar against the other currencies may affect our operating income and the value of balance sheet items denominated in foreign currencies.

The E.U.-U.K.

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

As a result of Brexit, we have established a CME Group business in the Netherlands, a member of the European Union, which allows BrokerTec and EBS to continue trading in regulated financial instruments to customers in the European Economic Area;

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

Our risk management, compliance and monitoring programs might not be effective and may result in outcomes that could adversely affect our reputation, financial condition and operating results.

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Our regulators have broad enforcement and supervisory powers, including, for example, the power to censure, fine, issue cease-and-desist orders, prohibit us from engaging in some of our businesses or suspend or revoke our regulatory designations or the registration of our officers or employees who violate applicable laws or regulations.

Our ability to manage our risks and comply with applicable laws and regulations in the jurisdictions where we operate is largely dependent on our establishment and maintenance of effective risk management,

compliance and monitoring programs.

In the case of alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages, which could be significant.

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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, 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, third parties or other matters or potential threats that are publicly available or otherwise accessible by us.

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Management of operational, financial, legal and compliance, regulatory, reputational and strategic risk requires, among other things, policies and procedures to record properly and verify a large number of transactions and events.

We cannot guarantee that our policies and procedures will always be effective or that we will always be successful in monitoring or evaluating the risks to which we are or may be exposed.

We cannot guarantee that our policies and procedures will always be effective or that we will always be successful in evaluating, monitoring or managing the risks to which we are or may be exposed.

We could be harmed by misconduct or errors that are difficult to detect and deter.

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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, circumvention of controls and procedures, improper use of assets, improper use and unauthorized disclosure of data or confidential information of the company or its customers, improper use of artificial intelligence or failure to provide effective oversight over artificial intelligence, among other potential misconduct.

Misconduct by our employees and agents could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of customers or the company, improper securities trading activities, circumvention of controls and procedures, improper use of assets, improper use and unauthorized disclosure of data or confidential information of the company or its customers or third parties, improper use of artificial intelligence or failure to provide effective oversight over artificial intelligence, 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.

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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.

Further, allegations by regulatory or criminal authorities of improper trading activities in our markets could affect our brand and reputation and reduce the number of participants trading in our markets.

Further, allegations by regulatory or criminal authorities of improper

trading activities in our markets could affect our brand and reputation and reduce the number of participants trading in our markets.

If that should occur, we could face a corresponding decline in trading volume and revenue.

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Material changes in the intellectual property landscape or regulatory framework pertaining to such benchmarks could have a negative impact on our ability to offer such products.

We are significantly dependent on the contract volume of products that are based on intellectual property rights of indexes derived from third-party price reporting agencies.

To comply with CFTC core principles, we must be able to demonstrate that our products may not be readily susceptible to manipulation.

Our inability to offer products based on these indexes could have a negative impact on our contract volume and revenues.

A significant percentage of our contract volume and revenue is based on indexes derived from third-party price reporting agencies.

If such third parties take actions that result in the loss of protection for those intellectual property rights or changes in intellectual property laws yield that result, it could have a negative impact on our contract volume and revenues.

A failure to protect our intellectual property rights, or allegations that we have infringed the intellectual property rights of others, could adversely affect our business.

Our business is dependent on proprietary technology and other intellectual property that we own or license from third parties.

Our business is dependent on proprietary technology and intellectual property that we own or license from third parties.

We own the rights to a large number of trademarks, service marks, domain names and trade names in the U.S., Europe, and other parts of the world.

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Our patents cover match engine, trader user interface, trading floor support, market data, general technology and clearing house functionalities.

We attempt to protect our proprietary technology and intellectual property rights by relying on trademarks, copyright, database rights, trade secrets, restrictions on disclosure, and other methods.

We attempt to protect our proprietary technology and intellectual property rights by relying on patents, trademarks, copyright, database rights, trade secrets, restrictions on disclosure, and other methods.

Notwithstanding the precautions we take to protect our proprietary technology and intellectual property rights, it is possible that employees or third parties may copy, misappropriate, or otherwise obtain and use our proprietary technology without authorization or otherwise infringe on our rights.

The use of certain artificial intelligence technology can give rise to intellectual property risks, including compromises to proprietary intellectual property and intellectual property infringement.

In addition, in the future, we may have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the validity and scope of the proprietary rights of others or defend against claims of infringement or invalidity.

The use of certain artificial intelligence technology can give rise to intellectual property risks, including claims that the data used to train, or in connection with certain models infringes the intellectual property rights of the owner of such data.

In addition, in the future, we may have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, challenge the validity and scope of the proprietary rights of others or defend against claims of infringement or invalidity.

Any such litigation, whether successful or unsuccessful, could result in substantial costs to us and diversions of our resources, either of which could adversely affect our business.

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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, there can be no assurance that we will maintain our current ratings.

As a result, there can be no assurance that we will maintain our current ratings.

In the past, we have experienced ratings downgrades.

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In addition, our members and participants in our various incentive programs generally are charged lower fees than our non-member customers.

Variation in each of these factors is difficult to predict and will have an impact on our average rate per contract in

the particular period.

Variation in each of these factors is difficult to predict and will have an impact on our average rate per contract in the particular period.

Because of this fluctuation, we cannot assure that our average rate per contract in any particular period serves as an indication of our future average rate per contract.

If we fail to meet securities analysts' expectations regarding our operating results, the price of our Class A common stock could decline substantially.

Ten of our board members own trading rights, or are officers or directors of firms that own trading rights, on our derivatives exchanges.

Nine of our board members own trading rights, or are officers or directors of firms that own trading rights, on our derivatives exchanges.

As members, these individuals may have interests that differ from or conflict with those of shareholders who are not also members.

Our dependence on the trading and clearing activities of our exchange members, combined with the CME members' rights to elect six directors, may enable them to exert influence over the operation of our business.

Ten of our directors own, or are officers or directors of firms that own trading rights on our exchanges.

Nine of our directors own, or are officers or directors of firms that own trading rights on our exchanges.

We are dependent on the revenues from the trading and clearing activities of our exchange members.

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We have limited ability to eliminate these election rights, and prior attempts to do so did not receive the necessary shareholder approvals.

In connection with these rights, our ability to take certain actions that we may deem to be in the best interests of the company and its shareholders, including actions relating to certain pricing decisions, may be limited by the rights of our members.

In connection with these rights, our ability to take

certain actions that we may deem to be in the best interests of the company and its shareholders, including actions relating to certain pricing decisions, may be limited by the rights of our members.

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