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cme-20230331

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

- OR -


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-31553

CME GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware

36-4459170

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

20 South Wacker Drive

Chicago

Illinois

60606

(Address of principal executive offices)

(Zip Code)

(312) 930-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Class A Common Stock	CME	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares outstanding of each of the registrant’s classes of common stock as of April 12, 2023 was as follows: 359,714,515 shares of Class A common stock, $0.01 par value; 625 shares of Class B-1 common stock, $0.01 par value; 813 shares of Class B-2 common stock, $0.01 par value; 1,287 shares of Class B-3 common stock, $0.01 par value; and 413 shares of Class B-4 common stock, $0.01 par value.

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CME GROUP INC.

FORM 10-Q

INDEX



		Page

PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements	5

	Consolidated Balance Sheets at March 31 , 202 3 and December 31, 202 2	5

	Consolidated Statements of Income for the Quarters Ended March 31 , 202 3 and 202 2	6

	Consolidated Statements of Comprehensive Income for the Quarters Ended March 31 , 202 3 and 202 2	7

	Consolidated Statements of Equity for the Quarters Ended March 31 , 202 3 and 202 2	8

	Consolidated Statements of Cash Flows for the Quarters Ended March 31 , 202 3 and 202 2	10

	Notes to Unaudited Consolidated Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION		30

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 6.	Exhibits	31

SIGNATURES		32

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PART I. FINANCIAL INFORMATION

Certain Terms

All references to “options” or “options contracts” in the text of this document refer to options on futures contracts.

Further information about CME Group and its products can be found at http://www.cmegroup.com. Information made available on our website does not constitute a part of this Quarterly Report on Form 10-Q.

Information about Contract Volume and Average Rate per Contract

All amounts regarding contract volume and average rate per contract are for CME Group's listed futures and options on futures contracts unless otherwise noted.

Trademark Information

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. NEX, BrokerTec and EBS are trademarks of various entities of NEX Group Limited (NEX). Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc. ("CME"). All other trademarks are the property of their respective owners.

Forward-Looking Statements

From time to time, in this Quarterly Report on Form 10-Q as well as in other written reports and verbal statements, we discuss our expectations regarding future performance. These forward-looking statements are identified by their use of terms and phrases such as "believe," "anticipate," "could," "estimate," "intend," "may," "plan," "expect" and similar expressions, including references to assumptions. These forward-looking statements are based on currently available competitive, financial and economic data, current expectations, estimates, forecasts and projections about the industries in which we operate and management's beliefs and assumptions. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. We want to caution you not to place undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that might affect our performance are:

•increasing competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities;

•our ability to keep pace with rapid technological developments, including our ability to complete the development, implementation and maintenance of the enhanced functionality required by our customers while maintaining reliability and ensuring that such technology is not vulnerable to security risks;

•our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services;

•our ability to adjust our fixed costs and expenses if our revenues decline;

•our ability to maintain existing customers at substantially similar trading levels, develop strategic relationships and attract new customers;

•our ability to expand and globally offer our products and services;

•changes in regulations, including the impact of any changes in laws or government policies with respect to our products or services or our industry, such as any changes to regulations and policies that require increased financial and operational resources from us or our customers;

•the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others;

•decreases in revenue from our market data as a result of decreased demand or changes to regulations in various jurisdictions;

•changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure;

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•the ability of our credit and liquidity risk management practices to adequately protect us from the credit risks of clearing members and other counterparties, and to satisfy the margin and liquidity requirements associated with the BrokerTec matched principal business;

•the ability of our compliance and risk management programs to effectively monitor and manage our risks, including our ability to prevent errors and misconduct and protect our infrastructure against security breaches and misappropriation of our intellectual property assets;

•our dependence on third-party providers and exposure to risk through third parties, including risks related to the performance, reliability and security of technology used by our third-party providers and third-party providers that our clients rely on;

•volatility in commodity, equity and fixed income prices, and price volatility of financial benchmarks and instruments such as interest rates, credit spreads, equity indices, fixed income instruments and foreign exchange rates;

•economic, social, political and market conditions, including the volatility of the capital and credit markets and the impact of economic conditions on the trading activity of our current and potential customers;

•the impact of the COVID-19 pandemic and response by governments and other third parties;

•our ability to accommodate increases in contract volume and order transaction traffic and to implement enhancements without failure or degradation of the performance of our trading and clearing systems;

•our ability to execute our growth strategy and maintain our growth effectively;

•our ability to manage the risks, control the costs and achieve the synergies associated with our strategy for acquisitions, investments and alliances, including those associated with the performance of our joint ventures with S&P Dow Jones (S&P Dow Jones Indices LLC) in index services and in trade processing/post trade services OSTTRA), our primary data distribution partners’ actions and our partnership with Google Cloud;

•variances in earnings on cash accounts and collateral that our clearing house holds for its clients;

•impact of CME Group pricing and incentive changes;

•impact of aggregation services and internalization on trade flow and volumes;

•any negative financial impacts from changes to the terms of intellectual property and index rights;

•uncertainty related to the adoption and growth of SOFR and its impact on our business;

•our ability to continue to generate funds and/or manage our indebtedness to allow us to continue to invest in our business;

•industry, channel partner and customer consolidation;

•decreases in trading and clearing activity;

•the imposition of a transaction tax or user fee on futures and options transactions and/or repeal of the 60/40 tax treatment of such transactions;

•our ability to maintain our brand and reputation; and

•the unfavorable resolution of material legal proceedings.

For a detailed discussion of these and other factors that might affect our performance, see Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 27, 2023 and Item 1A. in Part II of this Quarterly Report on Form 10-Q.

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ITEM 1.			FINANCIAL STATEMENTS

CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions, except par value data; shares in thousands)


	March 31, 2023		December 31, 2022
	(unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	1,565.2	$	2,720.1
Marketable securities	105.0		96.0
Accounts receivable, net of allowance of $8.8 and $8.1	723.6		483.2
Other current assets (includes $5.1 and $4.9 in restricted cash)	547.2		529.8
Performance bonds and guaranty fund contributions	128,090.7		135,249.2
Total current assets	131,031.7		139,078.3
Property, net of accumulated depreciation and amortization of $1,175.4 and $1,145.2	440.3		455.5
Intangible assets—trading products	17,175.3		17,175.3
Intangible assets—other, net	3,217.4		3,269.7
Goodwill	10,490.5		10,482.5
Other assets (includes $0.0 and $0.1 in restricted cash)	3,684.0		3,714.4
Total Assets	$	166,039.2	$	174,175.7

Liabilities and Equity
Current Liabilities:
Accounts payable	$	97.2	$	121.4
Short-term debt	16.3		16.0
Other current liabilities	839.7		2,300.9
Performance bonds and guaranty fund contributions	128,090.7		135,249.2
Total current liabilities	129,043.9		137,687.5
Long-term debt	3,423.1		3,422.4
Deferred income tax liabilities, net	5,356.8		5,361.1
Other liabilities	831.0		826.0
Total Liabilities	138,654.8		147,297.0



Shareholders’ Equity:
Preferred stock, $0.01 par value, 10,000 shares authorized as of March 31, 2023 and December 31, 2022; 4,584 issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Class A common stock, $0.01 par value, 1,000,000 shares authorized at March 31, 2023 and December 31, 2022; 358,931 and 358,929 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	3.6		3.6
Class B common stock, $0.01 par value, 3 shares authorized, issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Additional paid-in capital	22,281.5		22,261.6
Retained earnings	5,229.9		4,746.8
Accumulated other comprehensive income (loss)	(130.6)		(133.3)
Total CME Group Shareholders’ Equity	27,384.4		26,878.7


Total Liabilities and Equity	$	166,039.2	$	174,175.7

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in millions, except per share data; shares in thousands)

(unaudited)


	Quarter Ended
	March 31,
		2023		2022
Revenues
Clearing and transaction fees		$	1,200.2	$	1,138.1
Market data and information services		165.8		151.7
Other		75.6		56.8
Total Revenues		1,441.6		1,346.6
Expenses
Compensation and benefits		204.5		185.2
Technology		51.3		45.9
Professional fees and outside services		38.3		31.8
Amortization of purchased intangibles		56.8		58.4
Depreciation and amortization		31.9		33.5
Licensing and other fee agreements		84.7		80.9
Other		60.4		51.8
Total Expenses		527.9		487.5
Operating Income		913.7		859.1

Non-Operating Income (Expense)
Investment income		1,357.7		73.1
Interest and other borrowing costs		(39.9)		(42.5)
Equity in net earnings of unconsolidated subsidiaries		78.2		73.3
Other non-operating income (expense)		(1,152.8)		(46.7)
Total Non-Operating Income (Expense)		243.2		57.2
Income before Income Taxes		1,156.9		916.3
Income tax provision		273.1		205.3


Net Income		883.8		711.0
Net Income Attributable to Common Shareholders of CME Group		$	872.7	$	702.0

Earnings per Share Attributable to Common Shareholders of CME Group:
Basic		$	2.43	$	1.96
Diluted		2.43		1.95
Weighted Average Number of Common Shares:
Basic		358,933		358,609
Diluted		359,313		359,180

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(unaudited)


	Quarter Ended
	March 31,
		2023		2022
Net income		$	883.8	$	711.0
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized holding gains (losses) arising during the period		0.4		(1.3)

Income tax benefit (expense)		(0.1)		0.3
Investment securities, net		0.3		(1.0)
Defined benefit plans:
Net change in defined benefit plans arising during the period		(3.5)		(3.7)
Amortization of net actuarial (gains) losses included in compensation and benefits expense		—		0.3
Income tax benefit (expense)		0.9		0.9
Defined benefit plans, net		(2.6)		(2.5)
Derivative investments:


Reclassification of net unrealized (gains) losses to interest expense and other non-operating income (expense)		(1.2)		0.8
Income tax benefit (expense)		0.3		(0.2)
Derivative investments, net		(0.9)		0.6
Foreign currency translation:
Foreign currency translation adjustments		5.9		(22.6)


Foreign currency translation, net		5.9		(22.6)
Other comprehensive income (loss), net of tax		2.7		(25.5)
Comprehensive income		$	886.5	$	685.5

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(dollars in millions, except per share data; shares in thousands)

(unaudited)



	Preferred Stock (Shares)	Class A Common Stock (Shares)	Class B Common Stock (Shares)	Preferred Stock, Common Stock and Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total CME Group Shareholders' Equity
Balance at December 31, 2022	4,584	358,929	3	$	22,265.2	$	4,746.8	$	(133.3)	$	26,878.7
Net income						883.8				883.8
Other comprehensive income (loss)								2.7		2.7
Dividends on common and preferred stock of $1.10 per share						(400.7)				(400.7)




Vesting of issued restricted Class A common stock		2		(0.3)						(0.3)


Stock-based compensation				20.2						20.2
Balance at March 31, 2023	4,584	358,931	3	$	22,285.1	$	5,229.9	$	(130.6)	$	27,384.4

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(dollars in millions, except per share data; shares in thousands)

(unaudited)



	Preferred Stock (Shares)	Class A Common Stock (Shares)	Class B Common Stock (Shares)	Common Stock and Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive 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
Net income						711.0				711.0
Other comprehensive income (loss)								(25.5)		(25.5)
Dividends on common stock of $1.00 per share						(364.0)				(364.0)



Vesting of issued restricted Class A common stock		31		(4.3)						(4.3)
Shares issued to Board of Directors		1		0.3						0.3

Stock-based compensation				20.0						20.0
Balance at March 31, 2022	4,584	358,631	3	$	22,209.9	$	5,498.9	$	28.0	$	27,736.8

See accompanying notes to unaudited consolidated financial statements.

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Quarter Ended March 31,
	2023		2022
Cash Flows from Operating Activities
Net income	$	883.8	$	711.0
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	20.2		20.0
Amortization of purchased intangibles	56.8		58.4
Depreciation and amortization	31.9		33.5

Net realized and unrealized (gains) losses on investments	(74.8)		(3.5)

Deferred income taxes	(8.7)		(5.1)
Change in:
Accounts receivable	(241.2)		(174.0)
Other current assets	54.7		(69.7)
Other assets	19.4		19.0
Accounts payable	(24.2)		32.0
Income taxes payable	282.5		165.9
Other current liabilities	(106.7)		6.3
Other liabilities	(7.2)		(14.7)
Other	15.9		20.0
Net Cash Provided by Operating Activities	902.4		799.1

Cash Flows from Investing Activities
Proceeds from maturities of available-for-sale marketable securities	0.7		2.7
Purchases of available-for-sale marketable securities	(0.3)		(2.2)
Purchases of property, net	(15.2)		(23.4)


Investments in privately-held equity investments	(2.4)		—


Net Cash Used in Investing Activities	(17.2)		(22.9)

Cash Flows from Financing Activities

Proceeds from debt, net of issuance costs	—		742.7
Repayment of debt, including call premium	—		(756.1)
Cash dividends	(2,035.6)		(1,543.5)


Change in performance bond and guaranty fund contributions	(7,158.5)		9,787.1
Employee taxes paid on restricted stock vesting	(0.3)		(4.3)
Other	(4.1)		(4.3)
Net Cash (Used in) Provided by Financing Activities	(9,198.5)		8,221.6

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CME GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in millions)

(unaudited)


	Quarter Ended March 31,
	2023		2022
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	$	(8,313.3)	$	8,997.8
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	137,974.3		160,789.9
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period	$	129,661.0	$	169,787.7

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents:
Cash and cash equivalents	$	1,565.2	$	2,045.7
Short-term restricted cash	5.1		4.8
Long-term restricted cash	—		0.5
Restricted cash and restricted cash equivalents (performance bonds and guaranty fund contributions)	128,090.7		167,736.7
Total	$	129,661.0	$	169,787.7

Supplemental Disclosure of Cash Flow Information
Income taxes paid	$	30.9	$	44.6
Interest paid	41.1		43.4
Non-cash investing activities:
Accrued proceeds from sale of investments	97.9		—

See accompanying notes to unaudited consolidated financial statements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements consist of CME Group Inc. (CME Group) and its subsidiaries (collectively, the company), including Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX), Commodity Exchange, Inc. (COMEX) and NEX Group Limited (NEX). The clearing house is operated by CME.

The accompanying interim consolidated financial statements have been prepared by CME Group without audit. Certain notes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. In the opinion of management, the accompanying consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial position of the company at March 31, 2023 and December 31, 2022 and the results of operations and cash flows for the periods indicated. Quarterly results are not necessarily indicative of results for any subsequent period.

The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in CME Group’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (SEC) on February 27, 2023.

2. Revenue Recognition

The company generates revenue from customers from the following sources:

Clearing and transaction fees. Clearing and transaction fees include electronic trading fees and brokerage commissions, surcharges for privately-negotiated transactions, portfolio reconciliation and compression services, risk mitigation and other volume-related charges for trade contracts. Clearing and transaction fees are assessed upfront at the time of trade execution. As such, the company recognizes the majority of the fee revenue upon successful execution of the trade. The minimal remaining portion of the fee revenue related to settlement activities performed after trade execution is recognized over the short-term period that the contract is outstanding, based on management’s estimates of the average contract lifecycle. These estimates are based on various assumptions to approximate the amount of fee revenue to be attributed to services performed through contract settlement, expiration, or termination. For cleared trades, these assumptions include the average number of days that a contract remains in open interest, contract turnover, average revenue per day, and revenue remaining in open interest at the end of each period.

The nature of contracts gives rise to several types of variable consideration, including volume-based pricing tiers, customer incentives associated with market maker programs and other fee discounts. The company includes fee discounts and incentives in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee reduction. These estimates are based on historical experience, anticipated performance, and best judgment at the time. Because of the company's certainty in estimating these amounts, they are included in the transaction price of contracts.

Market data and information services. Market data and information services represent revenue from the dissemination of market data to subscribers, distributors, and other third-party licensees of market data. Pricing for market data is primarily based on the number of reportable devices used as well as the number of subscribers enrolled under the arrangement. Fees for these services are generally billed monthly. Market data services are satisfied over time and revenue is recognized on a monthly basis as the customers receive and consume the benefit of the market data services. However, the company also maintains certain annual license arrangements with one-time upfront fees. The fees for annual licenses are initially recorded as a contract liability and recognized as revenue monthly over the term of the annual period.

Other. 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 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. Collateral management fees are charged to clearing firms that have collateral on deposit with the clearing house to meet their minimum performance bond and guaranty fund obligations on the exchange. These fees are calculated based on daily collateral balances and are billed monthly. This fee revenue is recognized monthly as billed as the customers receive and consume the benefits of the services. 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. Fee revenue under this program is earned monthly as billed over the contractual term. Pricing for strategic relationships may be driven by customer levels and activity. There are fee arrangements which provide for monthly as well as quarterly payments in arrears. Revenue is recognized monthly for strategic relationship arrangements as the customers receive and consume the benefits of the services.

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The following table represents a disaggregation of revenue from contracts with customers by product line for the quarter ended March 31, 2023 and 2022:


	Quarter Ended March 31,
(in millions)		2023		2022
Interest rates		$	444.8	$	374.8
Equity indexes		269.2		259.1
Foreign exchange		47.5		44.8
Agricultural commodities		115.3		126.0
Energy		167.9		175.2
Metals		60.9		54.4
BrokerTec fixed income		39.2		44.4
EBS foreign exchange		35.8		42.3
Interest rate swap		19.6		17.1
Total clearing and transaction fees		1,200.2		1,138.1
Market data and information services		165.8		151.7
Other		75.6		56.8
Total revenues		$	1,441.6	$	1,346.6

Timing of Revenue Recognition
Services transferred at a point in time		$	1,177.5	$	1,077.3
Services transferred over time		259.5		264.7
One-time charges and miscellaneous revenues		4.6		4.6
Total revenues		$	1,441.6	$	1,346.6

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, and customer advances and deposits (contract liabilities) on the consolidated balance sheets. Certain fees for transactions, annual licenses, and other revenue arrangements are billed upfront before revenue is recognized, which results in the recognition of contract liabilities. These liabilities are recognized on the consolidated balance sheets on a contract-by-contract basis upon commencement of services under the customer contract. 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 the three months ended March 31, 2023 were not materially impacted by any other factors. The balance of contract liabilities was $50.8 million and $12.7 million as of March 31, 2023 and December 31, 2022, respectively.

3. Performance Bonds and Guaranty Fund Contributions

Performance Bonds and Guaranty Fund Contribution Reinvestment. CME reinvests cash performance bonds and guaranty fund contributions and distributes a portion of the interest earned back to the clearing firms. The reinvestment of cash can include certain commercial and central bank deposits, government securities, reverse repurchase agreements, and money market funds. CME has been designated as a systemically important financial market utility by the Financial Stability Oversight Council and is authorized to maintain cash accounts at the Federal Reserve Bank of Chicago. At March 31, 2023, CME maintained $117.5 billion within the cash account at the Federal Reserve Bank of Chicago. The cash deposit at the Federal Reserve Bank of Chicago is included within performance bonds and guaranty fund contributions on the consolidated balance sheets.

In the first quarter of 2023 and 2022, earnings from cash performance bond and guaranty fund contributions were $1,256.3 million and $73.6 million, respectively. In the first quarter of 2023 and 2022, expense related to the distribution of interest earned on collateral reinvestments was $1,163.5 million and $48.4 million, respectively. The earnings from cash performance bonds and guaranty fund contributions are included in investment income and the expense related to the distribution of interest earned is included in other non-operating income (expense) on the consolidated statements of income.

Clearing House Contract Settlement. The clearing house marks-to-market open positions at least once a day (twice a day for all futures and options contracts). Based on values derived from the mark-to-market process, the clearing house requires payments from clearing firms whose positions have lost value and makes payments to clearing firms whose positions have gained value. Under the extremely unlikely scenario of simultaneous default by every clearing firm who has open positions with unrealized losses, the maximum exposure related to positions other than cleared-only interest rate swap contracts would be one half day of

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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.

During the first quarter of 2023, the clearing house transferred an average of approximately $5.7 billion a day through its clearing systems for settlement from clearing firms whose positions had lost value to clearing firms whose positions had gained value. The clearing house reduces its guarantee exposure through initial and maintenance performance bond requirements and mandatory guaranty fund contributions. Management has assessed the fair value of the company's settlement guarantee liability by taking the following factors into consideration: the design and operations of the clearing risk management process, the financial safeguard packages in place, historical evidence of default by a clearing member and the estimated probability of potential payouts by the clearing house. Based on the assessment performed, management estimates the guarantee liability to be nominal and therefore has not recorded any liability at March 31, 2023 and December 31, 2022. The company does not have a history of significant losses recognized on performance bond collateral as posted by our clearing members, and management currently does not anticipate any future credit losses on its performance bond assets. Accordingly, the company has not provided an allowance for credit losses on these performance bond deposits, nor has it recorded any liabilities to reflect an allowance for credit losses related to our off-balance sheet credit exposures and guarantees.

4. Intangible Assets and Goodwill

Intangible assets consisted of the following at March 31, 2023 and December 31, 2022:


	March 31, 2023				December 31, 2022
(in millions)	Assigned Value		Accumulated Amortization		Net Book Value		Assigned Value		Accumulated Amortization		Net Book Value
Amortizable Intangible Assets:
Clearing firm, market data and other customer relationships	$	4,691.3	$	(1,964.2)	$	2,727.1	$	4,685.8	$	(1,909.7)	$	2,776.1

Technology-related intellectual property	62.5		(57.7)		4.8		62.5		(55.8)		6.7
Other	70.4		(34.9)		35.5		69.5		(32.6)		36.9
Total amortizable intangible assets	$	4,824.2	$	(2,056.8)	$	2,767.4	$	4,817.8	$	(1,998.1)	$	2,819.7

Indefinite-Lived Intangible Assets:
Trade names					450.0						450.0
Total intangible assets – other, net					$	3,217.4					$	3,269.7
Trading products (1)					$	17,175.3					$	17,175.3

(1)Trading products represent futures and options products acquired in our business combinations with CBOT Holdings, Inc., NYMEX Holdings, Inc. and The Board of Trade of Kansas City, Missouri, Inc. Clearing and transaction fees are generated through the trading of these products. These trading products, most of which have traded for decades, require authorization from the Commodity Futures Trading Commission (CFTC). Product authorizations from the CFTC have no term limits.

Total amortization expense for intangible assets was $56.8 million and $58.4 million for the quarters ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the future estimated amortization expense related to amortizable intangible assets is expected to be as follows:


(in millions)	Amortization Expense
Remainder of 2023	$	171.1
2024	221.8
2025	221.8
2026	221.8
2027	220.5
2028	214.2
Thereafter	1,496.2

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Goodwill activity consisted of the following for the periods ended March 31, 2023 and December 31, 2022:


(in millions)	Balance at December 31, 2022		Other Activity (1)		Balance at March 31, 2023
CBOT Holdings	$	5,066.4	$	—	$	5,066.4
NYMEX Holdings	2,462.2		—		2,462.2
NEX	2,913.5		8.0		2,921.5
Other	40.4		—		40.4
Total Goodwill	$	10,482.5	$	8.0	$	10,490.5
(in millions)	Balance at December 31, 2021		Other Activity (1)		Balance at December 31, 2022
CBOT Holdings	$	5,066.4	$	—	$	5,066.4
NYMEX Holdings	2,462.2		—		2,462.2
NEX	2,959.0		(45.5)		2,913.5
Other	40.4		—		40.4
Total Goodwill	$	10,528.0	$	(45.5)	$	10,482.5

__________

(1) Other activity includes currency translation adjustments.

5. Debt

Short-term debt consisted of the following at March 31, 2023 and December 31, 2022:


(in millions)	March 31, 2023		December 31, 2022
€15.0 million fixed rate notes due May 2023, stated rate of 4.30%	$	16.3	$	16.0
Total short-term debt	$	16.3	$	16.0

Long-term debt consisted of the following at March 31, 2023 and December 31, 2022:


(in millions)	March 31, 2023		December 31, 2022
$750.0 million fixed rate notes due March 2025, stated rate of 3.00% (1)	$	748.6	$	748.4
$500.0 million fixed rate notes due June 2028, stated rate of 3.75%	497.8		497.7
$750.0 million fixed rate notes due March 2032, stated rate of 2.65%	742.0		741.7
$750.0 million fixed rate notes due September 2043, stated rate of 5.30% (2)	743.7		743.7
$700.0 million fixed rate notes due June 2048, stated rate of 4.15%	691.0		690.9
Total long-term debt	$	3,423.1	$	3,422.4

(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 became fixed at a rate of 3.11%.

(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%.

Long-term debt maturities, at par value (in U.S. dollar equivalent), were as follows at March 31, 2023:


(in millions)	Par Value
2024	$	—
2025	750.0
2026	—
2027	—
2028	—
Thereafter	2,700.0

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6. Contingencies

Legal and Regulatory Matters. In the normal course of business, the company discusses matters with its regulators raised during regulatory examinations or otherwise subject to their inquiry and oversight. 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 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.

A putative class action complaint was filed January 15, 2014 in the Circuit Court of Cook County, Chancery Division, against CME Group Inc. and the Board of Trade of the City of Chicago, Inc. The plaintiffs, certain Class B shareholders of CME Group and Class B members of CBOT, allege breach of contract and breach of the implied covenant of good faith and fair dealing for violations of their core rights granted in the defendants’ respective Certificates of Incorporation. On December 2, 2021, the court granted the plaintiffs’ motion for certification of a damages-only class. No trial date has been set. Given the uncertainty of factors that may potentially 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.

In addition, the company is a defendant in, and may be subject to, various other legal proceedings arising from its regular business activities. While the ultimate results of such proceedings against the company cannot be predicted with certainty, the company believes that the resolution of any of these matters on an individual or aggregate basis will not have a material impact on its consolidated financial position or results of operations.

No accrual was required for contingent legal and regulatory matters as none were probable and estimable as of March 31, 2023 and December 31, 2022.

Intellectual Property Indemnifications. Certain agreements with customers and other third parties related to accessing the CME Group platforms, utilizing market data services and licensing CME SPAN software may contain indemnifications from intellectual property claims that may be made against them as a result of their use of the applicable products and/or services. The potential future claims relating to these indemnifications cannot be estimated and therefore no liability has been recorded.

7. Leases

The company has operating leases for corporate offices. 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 whether these options are exercisable 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. For certain office spaces, the company has entered into arrangements to sublease excess space to third parties, while the original lease contract remains in effect with the landlord.

The company also has one finance lease, which is related to the sale of our data center in March 2016. In connection with the sale, the company leased back a portion of the property. The sale leaseback transaction was recognized under the financing method and not as a sale leaseback arrangement.

The right-of-use lease asset is recorded within other assets, and the present value of the lease liability is recorded within other liabilities (segregated between short term and long term) on the consolidated balance sheets. The discount rate applied to the lease payments represents the company's incremental borrowing rate.

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The components of lease costs were as follows:


	Quarter Ended March 31,
(in millions)		2023		2022
Operating lease expense:
Operating lease cost		$	14.0	$	14.7
Short-term lease cost		0.1		0.1
Total operating lease expense included in other expense		$	14.1	$	14.8

Finance lease expense:
Interest expense		$	0.7	$	0.7
Depreciation expense		2.2		2.2
Total finance lease expense		$	2.9	$	2.9

Sublease revenue included in other revenue		$	2.4	$	2.7

Supplemental cash flow information related to leases was as follows:


	Quarter Ended March 31,
(in millions)		2023		2022
Cash outflows for operating leases		$	17.0	$	16.9
Cash outflows for finance leases		4.3		4.3

Supplemental balance sheet information related to leases was as follows:

Operating leases


(in millions)	March 31, 2023			December 31, 2022
Operating lease right-of-use assets	$	301.1		$	310.6

Operating lease liabilities:
Other current liabilities	$	49.1		$	49.9
Other liabilities	375.2			383.5
Total operating lease liabilities	$	424.3		$	433.4



Weighted average remaining lease term (in months)	121			121
Weighted average discount rate	3.8		%	3.8		%

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Finance leases


(in millions)	March 31, 2023			December 31, 2022
Finance lease right-of-use assets	$	69.3		$	71.5

Finance lease liabilities:
Other current liabilities	$	8.2		$	8.2
Other liabilities	65.7			67.8
Total finance lease liabilities	$	73.9		$	76.0

Weighted average remaining lease term (in months)	96			99
Weighted average discount rate	3.5		%	3.5		%

Future minimum lease payments were as follows as of March 31, 2023 for operating and finance leases:


(in millions)	Operating Leases
Remainder of 2023	$	50.0
2024	60.9
2025	57.7
2026	53.1
2027	50.8
2028	50.1
Thereafter	197.0
Total lease payments	519.6
Less: imputed interest	(95.3)
Present value of lease liability	$	424.3


(in millions)	Finance Leases
Remainder of 2023	$	12.9
2024	17.4
2025	17.5
2026	17.6
2027	17.8
2028	17.9
Thereafter	41.0
Total lease payments	142.1
Less: imputed interest	(68.2)
Present value of lease liability	$	73.9

8. Guarantees

Mutual Offset Agreement. CME and Singapore Exchange Limited (SGX) maintain a mutual offset agreement with a current term through May 2023. This agreement enables market participants to open a futures position on one exchange and liquidate it on the other. The term of the agreement will automatically renew for a one-year period after May 2023 unless either party provides advance notice of their intent to terminate. CME can maintain collateral in the form of irrevocable, standby letters of credit. At March 31, 2023, CME was contingently liable to SGX on letters of credit totaling $360.0 million. CME also maintains a $350.0 million line of credit to meet its obligations under this agreement. Regardless of the collateral, CME guarantees all cleared transactions submitted through SGX and would initiate procedures designed to satisfy these financial obligations in the event of a default, such as the use of performance bonds and guaranty fund contributions of the defaulting clearing firm. Management has assessed the fair value of the company's guarantee liability under this mutual offset agreement by taking the following factors into consideration: the design and operations of the clearing risk management process, the financial safeguard packages in place, historical evidence of default by a clearing member and the estimated probability of

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potential payouts by the clearing house. Based on the assessment performed, management estimates the guarantee liability to be nominal and therefore has not recorded any liability at March 31, 2023 and December 31, 2022.

Family Farmer and Rancher Protection Fund. In 2012, the company established the Family Farmer and Rancher Protection Fund (the Fund). The Fund is designed to provide payments, up to certain maximum levels, to family farmers, ranchers and other agricultural industry participants who use the company's agricultural commodity products and who suffer losses to their segregated account balances due to their CME clearing member becoming insolvent. Under the terms of the Fund, farmers and ranchers are eligible for up to $25,000 per participant. Farming and ranching cooperatives are eligible for up to $100,000 per cooperative. The Fund was established with a maximum of $100.0 million available for distribution to participants. Since its establishment, the Fund has made payments of approximately $2.0 million, which leaves $98.0 million available for future claims. If, at any time, payments due to participants were to exceed the amount remaining in the Fund, payments would be pro-rated. Clearing members and customers must register with the company in advance and provide certain documentation in order to substantiate their eligibility. The company believes that its guarantee liability is nominal and therefore has not recorded any liability at March 31, 2023 and December 31, 2022.

9. Accumulated Other Comprehensive Income (Loss)

The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss):


(in millions)	Investment Securities		Defined Benefit Plans		Derivative Investments		Foreign Currency Translation		Total
Balance at December 31, 2022	$	(0.9)	$	(22.8)	$	64.7	$	(174.3)	$	(133.3)
Other comprehensive income (loss) before reclassifications and income tax benefit (expense)	0.4		(3.5)		—		5.9		2.8
Amounts reclassified from accumulated other comprehensive income (loss)	—		—		(1.2)		—		(1.2)
Income tax benefit (expense)	(0.1)		0.9		0.3		—		1.1
Net current period other comprehensive income (loss)	0.3		(2.6)		(0.9)		5.9		2.7
Balance at March 31, 2023	$	(0.6)	$	(25.4)	$	63.8	$	(168.4)	$	(130.6)


(in millions)	Investment Securities		Defined Benefit Plans		Derivative Investments		Foreign Currency Translation		Total
Balance at December 31, 2021	$	1.1	$	(34.8)	$	66.1	$	21.1	$	53.5
Other comprehensive income (loss) before reclassifications and income tax benefit (expense)	(1.3)		(3.7)		—		(22.6)		(27.6)
Amounts reclassified from accumulated other comprehensive income (loss)	—		0.3		0.8		—		1.1
Income tax benefit (expense)	0.3		0.9		(0.2)		—		1.0
Net current period other comprehensive income (loss)	(1.0)		(2.5)		0.6		(22.6)		(25.5)

Balance at March 31, 2022	$	0.1	$	(37.3)	$	66.7	$	(1.5)	$	28.0

10. Fair Value Measurements

The company uses a three-level classification hierarchy of fair value measurements for disclosure purposes:

•Level 1 inputs, which are considered the most reliable evidence of fair value, consist of quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2 inputs consist of observable market data, such as quoted prices for similar assets and liabilities in active markets, or inputs other than quoted prices that are directly observable.

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

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The company's level 1 assets generally include investments in publicly traded mutual funds, equity securities and corporate debt securities with quoted market prices. In general, the company uses quoted prices in active markets for identical assets to determine the fair value of marketable securities.

The company's level 2 assets and liabilities generally consist of long-term debt notes. The fair values of the long-term debt notes were based on quoted market prices in an inactive market.

The company's level 3 assets and liabilities include certain investments that were adjusted to fair value.

Recurring Fair Value Measurements. Financial assets and liabilities recorded at fair value on the consolidated balance sheet as of March 31, 2023 were classified in their entirety based on the lowest level of input that was significant to each asset and liability's fair value measurement. The following table presents financial instruments measured at fair value on a recurring basis:

March 31, 2023

(in millions)

Level 1

Level 2

Level 3

Total

Assets at Fair Value:

Marketable securities:

Corporate debt securities

11.5

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