What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-28 · 110 added, 107 removed, 501 unchanged (30% of the section changed)

30 unchanged sentences

Customers include both members of the exchange and non-members.

We offer our customers the opportunity to trade futures contracts and options contracts on a range of products, including those based on interest rates, equity indexes, foreign exchange, agricultural commodities, energy and metals.

Through our cash markets business, we offer fixed income trading through BrokerTec and foreign currency trading through EBS.

4 unchanged sentences

In addition, trades can be executed through privately negotiated transactions that are cleared and settled through our clearing house.

Prior to September 2021, we provided optimization services that delivered transaction lifecycle management and information services to help our customers optimize their capital, mitigate their risk and reduce operational costs.

Optimization services included Traiana, TriOptima and Reset.

In September 2021, we contributed the net assets of our optimization business to OSTTRA, our joint venture with IHS Markit (later acquired by S&P Global).

Our clearing house clears, settles and guarantees futures and options contracts traded through our exchanges, in addition to cleared swaps products.

8 unchanged sentences

Our customers continue to use our markets as an effective and transparent means to manage risk and meet their investment needs.

Trading activity in our centralized markets has fluctuated due to the ongoing uncertainty in the financial markets, fluctuations in the availability of credit, variations in the amount of assets under management as well as the Federal Reserve Bank’s interest rate policy.

Federal Reserve Bank’s interest rate policy.

We continue to maintain high quality and diverse products as well as various clearing and market data services, which support our customers in any economic environment.

1 unchanged sentence

Our industry is competitive and we continue to encounter competition in all aspects of our business.

We expect competition to continue to intensify, especially in light of ongoing regulatory reform in the financial services industry.

We expect competition to continue to intensify, especially in light of ongoing regulatory development in the financial services industry.

Competition is influenced by our brand and reputation;

the efficiency and security of our clearing.

settlement and support services;

the efficiency and security of our clearing, settlement and support services;

depth and liquidity of our markets;

capital and margin efficiencies;

diversity of product offerings, including frequency and quality of new product development and innovative services;

9 unchanged sentences

As markets continue to evolve, we will continue to adapt our trading technology and clearing services to meet the needs of our customers.

The competitive environment to which we are subject is discussed in "Item 1 - Business" beginning on page 10 .

The competitive environment to which we are subject is discussed in "Item 1 - Business" beginning o n page 10 .

Regulatory Environment.

1 unchanged sentence

Developments in the regulatory environment have the potential to significantly impact our business.

Compliance with regulations may require us and our customers to dedicate significant financial and operational resources, which could adversely affect our profitability.

Compliance with regulations may require us and our customers to dedicate significant financial and operational resources, which could advers ely affect our profitability.

The regulatory environment to which we are subject is discussed in "Item 1 - Business" beginning on page 12 .

2 unchanged sentences

This strategy allows us to continue to develop into a more broadly diversified financial exchange that provides trading and clearing solutions across a wide range of products and asset classes.

Our strategic initiatives are discussed in "Item 1 - Business" beginning on page 7 .

Our strategic initiatives are discussed in "Item 1 - Business" beginning o n page 7 .

Clearing and transaction fees.

14 unchanged sentences

Our exchange and platforms are an international marketplace that brings together buyers and sellers mainly through our electronic trading as well as through open outcry trading and privately negotiated transactions.

Any customer who is

guaranteed by a clearing firm and who agrees to be bound by our exchange rules is able to obtain direct access to our electronic platforms.

Open outcry trading is conducted exclusively by our members, who may execute trades on behalf of customers or for themselves.

Any customer who is guaranteed by a clearing firm and who agrees to be bound by our exchange rules is able to obtain direct access to our electronic platforms.

Open outcry trading is conducted exclusively by our members, who may execute trades on behalf of

customers or for themselves.

Beginning in July 2023, open outcry trading is now limited to Secured Overnight Financing Rate (SOFR) options products following the permanent closure of most of our open outcry pits.

27 unchanged sentences

Access fee revenue varies depending on the type of connection provided to customers.

Prior to the contribution of the net assets of our optimization business to OSTTRA, other revenues included revenues from our optimization services, which included fees for risk management and information services for the OTC markets, including portfolio reconciliation and post-trade processing.

Revenue earned from these services was typically generated through subscriptions or transaction fees.

Other revenues also include fees for collateral management, equity subscription fees and fees for trade order routing through agreements from various strategic relationships as well as other services to members and clearing firms.

7 unchanged sentences

The bonus component of our compensation and benefits expense is based on our financial performance.

Under the performance criteria of our annual incentive plans, the bonus funded under the plans is based on achieving certain financial performance

targets established by the compensation committee of our board of directors.

Under the performance criteria of our annual incentive plans, the bonus funded under the plans is based on achieving certain financial performance targets established by the compensation committee of our board of directors.

The compensation committee has discretion to make equitable adjustments to the cash earnings performance calculation to reflect effects of unplanned operating results or capital expenditures to meet intermediate- to long-term growth opportunities.

1 unchanged sentence

Stock-based compensation varies depending on the quantity and fair value of awards granted.

The fair value of restricted stock awards and other performance share grants is based on either the share price on the date of the grant or a model of expected future stock prices.

The fair value of restricted stock awards

and other performance share grants is based on either the share price on the date of the grant or a model of expected future stock prices.

Professional fees and outside services.

11 unchanged sentences

Other expenses.

We incur additional ongoing expenses for communications, technology support services and various other activities necessary to support our operations.

We incur additional ongoing expenses for technology, licensing and other fee agreements and various other activities necessary to support our operations.

• Technology expense consists of costs related to maintenance of the hardware and software required to support our technology.

20 unchanged sentences

• Equity in net earnings (losses) of unconsolidated subsidiaries includes income and losses from our investments in S&P Dow Jones Indices LLC, OSTTRA, Shanghai CFETS-NEX International Money Broking Co., Ltd.

and Dubai Mercantile Exchange.

and Gulf Mercantile Exchange.

• Other income (expense) includes expenses related to the distribution of a portion of interest earned on performance bond collateral reinvestment to the clearing firms, gains and losses on derivative contracts and other various income and expenses outside our core operations.

1 unchanged sentence

The notes to our consolidated financial statements include disclosure of our significant accounting policies.

In establishing these policies within the framework of accounting principles generally accepted in the U.S., management must make certain assessments, estimates and choices that will result in the application of these principles in a manner that appropriately reflects our financial condition and results of operations.

In establishing these policies within the framework of accounting principles generally accepted in the United States (U.S.), management must make certain assessments, estimates and choices that will result in the application of these principles in a manner that appropriately reflects our financial condition and results of operations.

Critical accounting policies are those policies that we believe present the most complex or subjective measurements and have the most potential to affect our financial position and operating results.

39 unchanged sentences

A significant portion of our revenue is derived from the clearing and transaction fees we assess on each contract executed through our trading venues and cleared through our clearing house.

Clearing and transaction fees are recognized as revenue when a buy and sell order are matched, novated and when the trade is cleared.

Clearing and transaction fees are

recognized as revenue when a buy and sell order are matched, novated and when the trade is cleared.

On occasion, the customer's exchange trading privileges may not be properly entered by the clearing firm and incorrect fees are charged for the transactions in the affected accounts.

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

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

This reserve has historically been immaterial.

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

We also earn revenue from the dissemination of market data to subscribers, distributors, and other third-party licensees of market data.

Market data and information services fee revenue is generally recognized on a monthly basis as the customers receive and consume the benefit of the market data services.

Income taxes.

3 unchanged sentences

The calculation of our tax provision involves uncertainty in the application of complex tax regulations and we occasionally may consult with relevant tax authorities or engage third-party expertise where appropriate.

We recognize potential liabilities for anticipated tax audit issues in the United States and other applicable foreign tax jurisdictions using a more-likely-than-not recognition threshold based on the technical merits of the tax position taken or expected to be taken.

We recognize potential liabilities for anticipated tax audit issues in the U.S.

and other applicable foreign tax jurisdictions using a more-likely-than-not recognition threshold based on the technical merits of the tax position taken or expected to be taken.

If the actual obligation of these amounts varies from our estimate, our income tax provision would be reduced or increased at the time that determination is made.

45 unchanged sentences

Increase due to change in total contract volume $ 405.7

Increase due to change in average rate per contract 287.6

Decrease due to change in average rate per contract (3.2)

Net increase in clearing and transaction fees $ 402.5

21 unchanged sentences

Market volatility within certain financial markets remained high throughout 2024.

Interest rate volatility was higher as a result of higher inflation levels and market uncertainty following the collapse of two U.S.

regional banks as well as uncertainty surrounding the Federal Reserve ’s interest rate policy decision.

The Federal Open Markets Committee (FOMC) has raised the federal funds rate multiple times throughout 2023 and there was uncertainty regarding additional rate changes in the future.

In addition, the agricultural commodities and energy markets saw an increase in volatility as a result of more weather uncertainty in 2023 compared to 2022.

However, overall equity index volatility leveled off following higher volatility in early 2022 caused by tensions and geopolitical uncertainty between Russia and Ukraine.

Interest rate volatility was higher as a result of mixed inflation levels and market uncertainty surrounding the Federal Reserve’s interest rate policy decisions.

The Federal Open Markets Committee (FOMC) cut the federal funds rate multiple times throughout 2024 and issued cautious guidance for the future.

In addition, the energy markets saw an increase in volatility as a result of continued geopolitical tensions in the Middle East and Eastern Europe as well as more weather uncertainty in 2024 compared to 2023.

We also expanded our ongoing sales efforts across many of the product lines to increase our sales growth across the globe.

We believe these factors contributed to the increase in total volume in 2024 compared with 2023.

10 unchanged sentences

Futures expiring within two years 2,654 2,545 4

Futures expiring beyond two years 850 282 n.m.

Options 1,726 440 n.m.

Futures expiring beyond two years 957 850 13

Options 1,580 1,726 (8)

Treasury futures and options:

2 unchanged sentences

Treasury Bond

Ultra T-Bond 415 312 33

Federal Funds futures and options 414 442 (6)

not meaningful

In 2023 compared with 2022, overall interest rate contract volume increased as a result of higher overall volatility.

We believe this was a result of fluctuating U.S.

Treasury yields following interest rate hikes by the FOMC.

We also believe the increase in interest rate volatility was due to market uncertainty regarding future FOMC rate changes in 2024 following improved market conditions the second half of 2023.

In addition, market uncertainty following the collapse of two U.S.

regional banks in the first half of 2023 also led to higher interest rate volatility.

The increases in Secured Overnight Financing Rate contract (SOFR) volumes and the corresponding decreases in Eurodollar volumes were due to market participants transitioning to the new reference rate and away from Eurodollar contracts, which are based on LIBOR.

The publication of the LIBOR rate concluded in the second quarter of 2023.

In 2024 compared with 2023, overall interest rate contract volume increased as a result of general market uncertainty.

We believe this was a result of mixed inflation results that occurred throughout the year, as well as the U.S.

presidential and congressional elections in November.

We also believe there was uncertainty regarding the Federal Reserve's interest policy decisions.

The Federal Reserve cut interest rates three times in 2024 and issued cautious guidance for 2025.

The increase in overall interest rate contract volume was also due to our ongoing sales efforts to increase global participation.

Equity Index Products

6 unchanged sentences

E-mini Russell 2000 futures and options 308 316 (2)

Equity index contract volume decreased due to lower overall volatility in 2023 when compared with 2022.

Equity index v olatility was high in 2022 as a result higher than expected inflation, as well as rising tensions and geopolitical uncertainty with Russia and Ukraine.

We believe these factors led to lower overall equity contract volume in 2023 when compared with 2022.

Equity index contract volume increased slightly in 2024 compared with 2023.

We believe the increase in Nasdaq-100 contract volume was due to higher volatility within the technology sector as a result of market speculation about artificial intelligence initiatives.

The increase in volume was partially offset by lower overall equity volatility within the S&P 500, which is more diversified than the tech heavy Nasdaq-100.

We also believe the increase in volume is due our additional client outreach efforts throughout the year.

Foreign Exchange Products

6 unchanged sentences

Australian dollar 114 106 8

Overall foreign exchange contract volume decreased in 2023 when compared with 2022, which we believe is due to lower overall market volatility.

Market volatility was higher in 2022 due to the global central banks' interest rate policy decisions as a result of higher than expected inflation.

Overall foreign exchange contract volume increased in 2024 when compared with 2023, which we believe is due to uncertainty surrounding the Federal Reserve and other global central banks' interest rate policy decisions.

The Federal Reserve cut interest rates three times in 2024, but issued cautious guidance moving forward as a result of continued uncertainty surrounding inflation.

We believe these factors led to higher overall foreign exchange contract volume in 2024 compared with 2023.

Agricultural Commodity Products

7 unchanged sentences

We believe this is a result of continued weather uncertainty due to a drier than average 2024 growing season.

In addition, the first half of 2022 saw lower overall volatility within the commodities markets due to risk aversion by market participants following price increases and global trade uncertainty resulting from the conflict between Russia and Ukraine.

We believe these factors contributed to higher overall commodity volume in 2023.

In addition, poor weather conditions throughout the Black Sea region led to increased uncertainty surrounding soybean and wheat yields.

We also believe the increase in volume is due to our initiatives to increase cross selling among key customers and optimization of our incentive programs to promote volume growth of new and existing products.

Energy Products

6 unchanged sentences

Overall energy contract volume increased in 2024 when compared with 2023.

We believe this is due to the uncertainty in the global energy markets caused by the continuing war between Russia and Ukraine and unrest in the Middle East.

In addition, uncertain weather conditions led to an increase in overall natural gas volume.

We believe these factors contributed to higher overall energy volume in 2023.

We believe the increase in volume is due to uncertainty in the global energy markets caused by multiple geopolitical conflicts in the Middle East and Eastern Europe.

In addition, uncertain weather conditions throughout the year led to an increase in overall natural gas volume.

We also believe the increase in volume is due our additional client outreach efforts throughout the year.

Metal Products

5 unchanged sentences

Silver 123 93 33

Overall metal contract volume increased in 2023 when compared with 2022, which we believe was attributable to higher overall market volatility within the gold and silver markets.

Market uncertainty following the collapse of two U.S.

regional banks and the Federal Reserve's interest rate policy decisions led to an overall increase in demand for gold and other precious metals as safe-haven investments.

In addition, copper contract volume increased largely due to an increase in demand for copper in China following the lifting of restrictions from the COVID pandemic.

We believe these factors led to the overall increase in metal contract volume.

Overall metal contract volume increased in 2024 when compared with 2023, which we believe was attributable to higher overall market volatility.

Market uncertainty surrounding Federal Reserve's interest rate policy decisions as well as uncertainty surrounding the U.S.

presidential and congressional elections led to an overall increase in demand for gold and other precious metals as safe-haven investments.

In addition, copper contract volume increased largely due to an increase in demand for artificial intelligence data centers and renewable infrastructure.

We also believe the increase in volume was due to increased sales efforts, specifically with retail clients and our international sales efforts for copper products.

Average Rate per Contract

The average rate per contract was higher in 2023 when compared with 2022.

The increase in the average rate per contract was primarily due an increase in our fee structure that went into effect on February 1, 2023.

The average rate per contract remained consistent in 2024 when compared with 2023.

The average rate per contract was impacted by an increase in our fee structure, which went into effect on February 1, 2024.

The overall increase due to the rise in fees was offset by a decrease resulting from higher member trading as a percentage of total volume as well as our tiered volume pricing structure.

Cash Markets Business

Total clearing and transaction fees revenue in 2024 included $276.7 million of transaction fees attributable to the cash markets business, compared with $284.7 million in 2023.

This revenue primarily includes BrokerTecs's fixed income volume and EBS foreign exchange volume.

This revenue primarily includes transaction fees from BrokerTecs's fixed income volume and EBS foreign exchange volume.

Year-over-Year Change

5 unchanged sentences

(amounts in billions) 2024 2023 2024-2023

Repos $ 328.4 $ 293.6 12 %

European Repo (in euros) 290.1 326.5 (11)

1 unchanged sentence

Spot FX 59.5 56.7 5

Overall average daily notional values and transactions revenues for the cash markets business and spot FX business were lower in 2023 when compared with 2022.

We believe the decrease in U.S.

Treasury average daily notional value was due to a

reduction in treasury issuances during the year.

The decline in the spot FX average daily notional values was due to overall lower volatility in 2023 when compared with 2022.

Volatility within the European Repo and spot FX markets were higher in 2022 as a result of the conflict between Russia and Ukraine and uncertainty surrounding the Federal Reserve's interest rate policy.

Overall average daily notional values and transactions revenues for the cash markets business were slightly lower in 2024 when compared with 2023.

Concentration of Revenue

1 unchanged sentence

The majority of clearing and transaction fees received from clearing firms represent charges for trades executed and cleared on behalf of their customers.

No clearing firms represented at least 10% of our clearing and transaction fees in 2023.

One clearing firm represented at lea st 10% of our clearing and transaction fees in 2024.

Should a clearing firm withdraw, we believe that the customer portion of the firm's trad ing activity would likely transfer to another clearing firm of the exchange.

3 unchanged sentences

In 2024 when compared with 2023, the increase in market data and information services revenue was largely attributable to price increases for certain products as well as an increase in usage for certain products.

The two largest resellers of our market data represented, in aggregate, approximately 32% of our market data and information services revenue in 2023.

Approximately 30% of our market data and information services revenue in 2024 was earned from the two largest resellers of our market data.

Despite this concentration, we consider exposure to significant risk of revenue loss to be minimal.

20 unchanged sentences

2023 Expenses

Non-qualified deferred compensation $ 33.2 2 %

Technology support services $ 37.0 2 %

License fees 32.7 2

Salaries, benefits and employer taxes 27.2 2

Currency fluctuation 26.1 1

Legal Fees 13.5 1

Occupancy and building operations (11.5) (1)

Professional fees and outside services (11.7) (1)

Employee separation and restructuring (12.5) (1)

2 unchanged sentences

Overall operating expenses increased in 2024 when compared with 2023 due to the following reasons:

• An increase in our non-qualified deferred compensation liability during 2023, the impact of which does not affect net income because of an equal and offsetting change in investment income, contributed to increases in compensation and benefits expenses.

• The increases in expenses related to technology support services were primarily driven by higher software license fees and third party services to support the ongoing Google Cloud transformation project.

• Salaries, benefits and employer taxes expenses were higher during 2023 than 2022 due to increases in headcount during the year, which were primarily attributable to additional headcount in the company's international locations.

• In 2023, we recognized a net loss of $12.9 million, compared to a net gain of $13.2 million in 2022, as a result of currency exchange fluctuations and realized foreign currency translation from entity liquidations done to simplify the corporate structure.

Gains and losses from exchange rate fluctuations are recognized in the consolidated statements of net income when subsidiaries with a U.S.

dollar functional currency hold certain monetary assets and liabilities denominated in foreign currencies.

• There was an increase in legal fees during 2023 related to our business activities and product offerings compared to 2022.

• Employee separation and restructuring costs increased year over year largely due to a reduction in force of 3% of employees during 2023.

• The increase in expenses related to technology support services was primarily driven by higher software license fees and third party services to support the ongoing Google Cloud transformation project.

• License fees expense was higher primarily due to an increase in volume for certain equity products and improved revenue performance related to certain other incentive arrangements.

• Salaries, benefits and employer taxes was higher due to an increase in headcount during the year, which was primarily attributable to additional headcount in the company's international locations.

Decreases in operating expenses in 2024 when compared with 2023 were due to the following reasons:

• Occupancy and building operations expense decreased due to lower rent expenses and real estate taxes driven by reduced office space.

• The decrease in professional fees and outside services were largely due to a decrease in consulting costs associated with the Google Cloud Migration, which began in late 2021, as well as lower legal fees during 2024.

• Employee separation and restructuring costs decreased year over year largely due to a reduction in force of 3% of employees during 2023.

Non-Operating Income (Expense)

6 unchanged sentences

Total Non-Operating $ 609.9 $ 717.9 (15)

not meaningful

Investment income .

In 2023 when compared with 2022, there was an increase in earnings from reinvested cash performance bond and guaranty fund contributions due to a higher rate of interest earned in the cash accounts at the Federal Reserve Bank of Chicago following interest rate hikes in 2022 and 2023.

In 2023 and 2022, earnings from cash performance bond and guaranty fund contributions were $5,073.9 million and $2,169.5 million, respectively.

In addition, there was an increase in net realized and unrealized gains on investments as well as an increase in earnings on our deferred compensation plan, the impact of which does not affect net income because of an equal and offsetting change in compensation and benefits expense.

In 2024 when compared with 2023, there was a decrease in earnings from reinvested cash performance bond and guaranty fund contributions due to lower average reinvestment balances.

In 2024 and 2023, earnings from cash performance bond and guaranty fund contributions we re $3,943.8 million and $5,073.9 million, respectively.

In addition, there was a decrease in net realized and unrealized gains on investments.

Equity in net earnings (losses) of unconsolidated subsidiaries.

Higher income generated from our S&P/DJI and OSTTRA business ventures contributed to an increase in equity in net earnings of unconsolidated subsidiaries in 2024 when compared with 2023.

Other income (expense).

In 2023 when compared with 2022, we recognized higher expense related to the distribution of interest earned on performance bond collateral reinvestments to the clearing firms in conjunction with higher interest income earned on our reinvestment during the period due to a higher interest rates in 2023.

In 2023 and 2022, expenses related to the distribution of interest earned on collateral reinvestments were $4,717.5 million and $1,889.7 million, respectively.

In 2024 when compared with 2023, we recognized lower expense related to the distribution of interest earned on performance bond collateral reinvestments to the clearing firms in conjunction with lower interest income earned on our reinvestment during the period due to lower average reinvestment balances in 2024.

In 2024 and 2023, expenses related to the distribution of interest earned on collateral reinvestments were $3,669.4 million a nd $4,717.5 million, respectively.

Income Tax Provision

2 unchanged sentences

Year ended December 31 22.4 % 22.3 % 0.1 %

The effective tax rate decreased slightly in 2023 when compared with 2022.

The decrease was largely due to a higher deferred income tax benefit recognized in 2023 resulting from a change in our state and local apportionment factors.

The overall effective tax rate remained relatively consistent in 2024 when compared with the same period in 2023.

LIQUIDITY AND CAPITAL RESOURCES

16 unchanged sentences

Each year, capital expenditures are incurred for improvements to and modification of our offices, remote data centers, telecommunications network and other operating equipment.

In 2024, we expect capital expenditures to total approximately $85 million, net of any leasehold improvement allowances.

In 2025, we expect capital expenditures to total approximately $90.0 million, n et of any leasehold improvement allowances.

We continue to monitor our capital needs and may revise our forecasted expenditures as necessary in the future.

In December 2024, the board of directors approved a share repurchase program, which authorizes us to repurchase up to $3.0 billion of CME Group Class A common stock at prevailing market prices.

As of December 31, 2024, there have been no shares repurchased under this program.

We intend to continue to pay a regular quarterly dividend to our shareholders, with a target of between 50% to 60% of the prior year's cash earnings.

1 unchanged sentence

We are also required to comply with restrictions contained in the general corporation laws of our state of incorporation, which could limit our ability to declare and pay dividends.

On February 8, 2024, the company declared a regular quarterly dividend of $1.15 per share for all outstanding common and preferred shares.

On February 6, 2025, the company declared a regular quarterly dividend of $1.25 per sh are for all outstanding common and preferred shares.

The dividend will be payable on March 26, 2025 to shareholders of record on March 7, 2025.

1 unchanged sentence

The board of directors also declared an additional, annual variable dividend of $5.80 per share on December 5, 2024 paid on January 16, 2025 to the shareholders of record on December 27, 2024.

In general, the amount of the annual variable dividend will be determined by the end of each year, and the level will increase or decrease from year to year based on operating results, capital expenditures, potential merger and acquisition activity and other forms of capital return, including regular dividends and share buybacks during the prior year.

In general, the amount of the annual variable dividend will be determined at the end of each year, and the level will increase or decrease from year to year based on operating results, capital expenditures, potential merger and acquisition activity and other forms of capital return, including regular dividends and share buybacks during the prior year.

Sources and Uses of Cash

3 unchanged sentences

Net cash provided by operating activities $ 3,690.5 $ 3,453.8 7 %

Net cash provided by (used in) investing activities 20.9 (489.8) n.m.

Net cash used in financing activities (48,339.3) (25,381.7) 90

Net cash (used in) provided by investing activities (82.6) 20.9 n.m.

Net cash provided by (used in) financing activities 5,076.5 (48,339.3) (111)

not meaningful

Operating activities

Net cash provided by operating activities was higher in 2023 compared with 2022, largely due to an increase in revenue resulting from fee increases and an increase in investment income on collateral reinvestment net of expense related to the distribution of interest earned.

This was partially offset by income tax payments which were higher in 2023 compared with 2022.

Net cash provided by operating activities was higher in 2024 compared with 2023, largely due to an increase in revenue resulting from fee increases and an increase in overall volumes.

Investing activities

The increase in cash provided by investing activities in 2023 compared with 2022 was due to higher proceeds on sales of investments in 2023.

Also contributing to the increase was the additional investment in S&P Dow Jones Indices LLC of $410.0 million in 2022.

The increase in cash used in investing activities in 2024 compared with 2023 was due to lower overall proceeds on sales of investments in 2024 compared to 2023.

In addition, the increase in cash used was also due to higher additions in property, plant and equipment.

Financing activities

Cash used in financing activities was higher in 2023 when compared with 2022 mainly due to a decrease in cash performance bonds and guaranty fund contributions.

In addition, there was an increase in dividends paid in 2023.

Cash provided by financing activities was higher in 2024 when compared with 2023 mainly due to an increase in cash performance bonds and guaranty fund contributions.

This was partially offset by an increase in dividends paid in 2024.

Debt Instruments

17 unchanged sentences

The facility provides for borrowings of up to $7.0 billion.

We may use the proceeds to provide temporary liquidity in the unlikely event a clearing firm fails to promptly discharge an obligation to CME Clearing, in the event of a liquidity constraint or default by a depositary (custodian for our collateral), in the event of a temporary disruption with the domestic payments system that would delay payment of settlement variation between us and our clearing firms, or in other cases as provided by the CME rulebook.

Clearing firm guaranty fund contributions received in the form of cash or U.S.

We may use the proceeds to provide temporary liquidity in the unlikely event a clearing firm fails to promptly discharge an obligation to the clearing house, in the event of a liquidity constraint or default by a depositary (custodian for our collateral), in the event of a temporary disruption with the domestic payments system that would delay payment of settlement variation between us and our clearing firms, or in other cases as provided by the CME rulebook.

Clearing firm guaranty fund contributions received in the

form of cash or U.S.

Treasury securities as well as the performance bond assets (pursuant to the CME rulebook) can be used to collateralize the facility.

5 unchanged sentences

These documents, however, do contain other customary financial and operating covenants that place restrictions on the operations of the company that could indirectly affect the ability to pay dividends.

At December 31, 2023, we have excess borrowing capacity for general corporate purposes of approximately $2.3 billion under our multi-currency revolving senior credit facility.

At December 31, 2024, we have excess borrowing capacity for general corporate purposes of approximatel y $2.3 billion under our multi-currency revolving senior credit facility.

We maintain committed repurchase facility agreements amounting to a total of $1.0 billion.

The committed repurchase facilities provide access to cash, secured by non-cash collateral, in the event that one or more of our clearing firms fails to promptly discharge an obligation to the clearing house.

The facilities are subject to annual renewal.

We currently do not have any borrowings outstanding under these facilities.

We maintain a committed facility of up to $750.0 million for foreign currency conversions.

The committed foreign currency facility allows the clearing house to convert cash to another currency within generally accepted local market timeframes in the event that one or more of our clearing firms fails to promptly discharge an obligation to the clearing house.

The facility is subject to annual renewal.

We currently do not have any foreign currency trades outstanding under this facility.

At December 31, 2024, we were in compliance with the various covenant requirements of all our debt facilities.

14 unchanged sentences

Liquidity and Cash Management

Cash and cash equivalents, excluding restricted cash, totaled $2.9 billion and $2.7 billion at December 31, 2023 and December 31, 2022, respectively.

Cash and cash equivalents, excluding restricted cash, totaled $2.9 billion at both December 31, 2024 and December 31, 2023.

The balance retained in cash and cash equivalents is a function of anticipated or possible short-term cash needs, prevailing interest rates, our corporate investment policy and alternative investment choices.

5 unchanged sentences

Cash that is not available for general corporate purposes because of regulatory requirements or other restrictions is classified as restricted cash and is included in other current assets or other assets in the consolidated balance sheets.

Our practice is to have our pension plan 100% funded at each year end on a projected benefit obligation basis, while also satisfying any minimum required contribution and obtaining the maximum tax deduction.

Based on our actuarial projections, we estimate that a $16.9 million additional contribution will be necessary in 2024 to meet our funding goal.

Cash performance bonds and guarantee fund contribution assets are deemed to be restricted cash.

Base d on our actuarial projections, we estimate that a $12.2 million additional contribution will be necessary in 2025 to meet our funding goal.

However, the amount of the actual contribution is contingent on various factors, including the actual rate of return on our plan assets during 2025 and the December 31, 2025 discount rate.

8 unchanged sentences

Our DCMs are in compliance with all DCM financial requirements.

BrokerTec Americas LLC is required to maintain sufficient net capital under Securities Exchange Act of 1934, as amended (Exchange Act), Rule 15c3-1 (the Net Capital Rule).

BrokerTec Americas LLC is required to maintain sufficient net capital under the Securities Exchange Act of 1934, as amended (Exchange Act), Rule 15c3-1 (the Net Capital Rule).

The Net Capital Rule focuses on liquidity and is designed to protect securities customers, counterparties, and creditors by requiring that broker-dealers have sufficient liquid resources on hand at all times to satisfy claims promptly.

4 unchanged sentences

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 7. Management’s Discussion and Analysis