Cboe Global Markets (CBOE) risk factors, FY2024 10-K

Risks Relating to Our Business

1. 01Loss of our right to exclusively list and trade certain index options and futures could have a material adverse effect on our financial performance
2. 02General economic conditions and other factors beyond our control could significantly reduce demand for our products and services and harm our business
3. 03Our business may be adversely affected by price competition
4. 04To attract market share, we may offer “inverted” pricing specials or non-transaction fee trading from time to time, per various fee schedules across our equities exchanges. These forms of promotions, along with other supplemental liquidity programs, may adversely affect our profitability
5. 05A significant portion of our operating revenues is generated by our transaction and clearing-based businesses. If the amount of trading volume on our markets or clearing volume decreases, or the product mix shifts to lower revenue products, our revenues from transaction and clearing fees will most likely decrease
6. 06Revenues from our market data fees and access and capacity fees may be reduced due to declines in our market share, trading volumes or regulatory changes
7. 07The technology upon which we rely, including that of our service providers, may be susceptible to security vulnerabilities or breaches that could harm our business and our role in the global marketplace puts us at heightened risk relative to other public companies
8. 08If we fail to attract or retain highly skilled management and other employees our business may be harmed
9. 09Intense competition could materially adversely affect our market share and financial performance
10. 10We depend on third-party service providers for certain services that are important to our business. An interruption, significant increase in fees or cessation or impairment of such service by any third party could have a material adverse effect on our business, financial condition, and operating results
11. 11We may not effectively manage our growth, which could materially harm our business, financial condition, and operating results
12. 12Our global operations are complex and subject us to increased business and economic risks that could adversely affect our financial results
13. 13We and our licensors may not be able to protect our respective intellectual property rights
14. 14Our clearinghouse operations expose us to associated risks, including credit, liquidity, market and other risks related to the defaults of clearing participants and other counterparties, and risks related to investing of collateral
15. 15Computer and communications systems failures and capacity constraints could harm our reputation and our business
16. 16As a consequence of any of these events, our business, financial condition and results of operations could suffer materially
17. 17Our use of open source software code may subject our software to general release or require us to re-engineer our software, which could harm our business
18. 18Damage to our reputation could have a material adverse effect on our business, financial condition, and operating results
19. 19A limited number of customers comprise a material portion of our revenues, and the loss of key customers or a significant reduction in trading or clearing volumes by key customers could adversely affect our operating results
20. 20Financial or other problems experienced by third parties could have an adverse effect on our business
21. 21With respect to U.S. listed equity and exchange traded product options, Cboe Trading is subject to counterparty credit risk exposure with respect to rebates earned from routing brokers until completion of the routing brokers’ next invoice cycle following the execution
22. 22We may be required to assume ownership of a position in securities in connection with our order routing service, which could subject us to trading losses when our broker-dealer disposes of that position
23. 23May 2024, we halted trading on the Cboe Digital spot market, our spot digital asset trading platform, in-line with our plans to wind down the spot digital asset trading market and refocus the digital asset business to leverage Cboe’s core strengths in derivatives, technology and product innovation
24. 24Our decision to wind down the Cboe Digital spot crypto market may negatively impact our digital asset business
25. 25Cboe Digital’s clearinghouse operations are exposed to risks, including credit, liquidity, market and other risks related to the potential defaults of clearing members and other counterparties

Risks Relating to Legal and Regulatory Matters

1. 26We operate in a highly regulated industry and may be subject to censures, fines and other legal proceedings if we fail to comply with legal and regulatory obligations
2. 27Legislative or regulatory changes affecting our markets could have a material adverse effect on our business, financial condition, and operating results
3. 28Any infringement by us on intellectual property rights of others could result in litigation and could have a material adverse effect on our operations
4. 29Misconduct by our TPHs, members, participants or others could harm us
5. 30Managing our business interests and our regulatory responsibilities may adversely affect our business
6. 31If our risk management and compliance methods are not effective, we may suffer adverse consequences, such as investigations and enforcement actions from regulators, our business, financial condition, and operating results may be adversely affected
7. 32Our ability to implement or amend rules could be limited or delayed by required regulatory review processes, which could negatively affect our ability to implement needed changes
8. 33Changes in the tax laws and regulations affecting us, our offerings and our market participants could have a material adverse effect on our business
9. 34We are subject to litigation risks and other liabilities

Risks Related to Our Common Stock and Indebtedness

1. 35We have outstanding indebtedness and commitments, which may decrease our business flexibility and adversely affect our business, financial condition, and operating results
2. 36Deterioration in our credit profile may increase our costs of borrowing money
3. 37If our goodwill, long-lived assets, investments in non-consolidated subsidiaries and intangible assets become impaired, the resulting charge to earnings may be significant
4. 38Any decision to pay dividends on our common stock is at the discretion of our Board of Directors and depends upon the earnings and cash flow of our operating subsidiaries. Accordingly, there can be no guarantee that we will pay dividends to our stockholders
5. 39Certain provisions in our organizational documents and governing law could prevent or delay a change of control
6. 40for a period of three years following the date that the stockholder became an interested stockholder except in limited circumstances, including by approval of the corporation’s Board of Directors