What the changes say
- Tariffs now threaten technology, cloud, communications, computer and networking costs.
- Cboe Clear U.S. adds explicit risk of member defaults exceeding collateral.
- System capacity planning now includes supply-chain disruption and power-supply constraints.
- Cboe Digital spot-market and clearing risks were removed as that business winds down.
What changed since the prior 10-K
New
- NewRisks Relating to Our Business
Global trade policies, including the assessment of tariffs and other impositions on imported goods, may have a material adverse impact on our business
Tariffs could raise Cboe’s technology, communications, cloud, computer and networking costs if the company cannot mitigate increases.
- NewRisks Relating to Our Business
Additionally, Cboe Clear U.S. could experience losses in excess of the collateral it holds, which may have an adverse effect on our business, if a clearing member defaults on its obligations to Cboe Clear U.S., and its margin and its guaranty fund deposits are insufficient to meet its obligations
A Cboe Clear U.S. clearing-member default could cause losses exceeding the member’s margin and guaranty-fund collateral.
- NewRisks Relating to Our Business
estimates of future trading or clearing volume will be accurate or that our systems will always be able to accommodate actual trading or clearing volume without failure or degradation of performance
Unexpected trading or clearing volumes, supply-chain disruptions or inadequate power could prevent Cboe’s systems from scaling without performance failures.
Dropped
- DroppedRisks Relating to Our Business
With 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
- DroppedRisks Relating to Our Business
May 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
- DroppedRisks Relating to Our Business
Our decision to wind down the Cboe Digital spot crypto market may negatively impact our digital asset business
- DroppedRisks Relating to Our Business
Cboe 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
- DroppedRisks Related to Our Common Stock and Indebtedness
for 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
Reworded
- 87% rewrittenRisks Relating to Legal and Regulatory Matters
Managing our business interests and our regulatory responsibilities may adversely affect our business
No substantive change; the risk still concerns conflicts between commercial interests and disciplining TPHs and members.
- 79% rewrittenRisks Relating to Our Business
As a consequence of any of these events, our business, financial condition, and results of operations could suffer materially
The visible text is truncated, but the prior-year capacity risk now appears separated from the new supply-chain and power concerns in 18.
- 48% rewrittenRisks Relating to Our Business
Financial or other problems experienced by third parties could have an adverse effect on our business
The example now refers to orders routed on behalf of Cboe’s Exchanges rather than customers, with minor punctuation changes.
- 42% rewrittenRisks Relating to Our Business
Our clearinghouse operations expose us to associated risks, including credit, liquidity, market and other risks related to the defaults of clearing members and other counterparties, and risks related to investing of collateral
Cboe Clear U.S. is now described as clearing financially settled and continuous Bitcoin and Ether futures, with possible future third-party-exchange clearing.
Was: Our 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
- 35% rewrittenRisks Relating to Our Business
We 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
No substantive change; the risk remains that Cboe Trading may have to take securities positions after routing-market system failures.
- 31% rewrittenRisks Relating to Our Business
General economic conditions and other factors beyond our control could significantly reduce demand for our products and services and harm our business
The wording shifts from economic conditions to macroeconomic conditions and removes Japan from the listed capital markets.
- 30% rewrittenRisks Relating to Our Business
Our business and operations are dependent upon a number of third parties. An interruption, significant increase in fees or cessation or impairment of the services provided by or activities performed by any such third-party could have a material adverse effect on our business, financial condition, and operating results
The third-party list updates DTCC and identifies Cboe Clear Europe and Cboe Clear U.S. as wholly owned subsidiaries.
Was: We 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
- 25% rewrittenRisks Relating to Legal and Regulatory Matters
We 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
The risk now adds Cboe Fixed Income as an SEC-regulated broker-dealer and identifies Cboe Digital Exchange and Cboe Clear U.S. as CFTC-regulated entities.
- 24% rewrittenRisks Relating to Legal and Regulatory Matters
Legislative or regulatory changes affecting our markets could have a material adverse effect on our business, financial condition, and operating results
- 23% rewrittenRisks Relating to Our Business
A 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
- 23% rewrittenRisks Related to Our Common Stock and Indebtedness
Deterioration in our credit profile may increase our costs of borrowing money
All 38 risk factors
Headings as the filing states them, in filing order.
Risks Relating to Our Business
- 01Loss of our right to exclusively list and trade certain index options and futures could have a material adverse effect on our financial performance
- 02General economic conditions and other factors beyond our control could significantly reduce demand for our products and services and harm our business31% rewritten
- 03Our business may be adversely affected by price competition
- 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
- 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 decrease23% rewritten
- 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
- 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
- 08If we fail to attract or retain highly skilled management and other employees our business may be harmed
- 09Intense competition could materially adversely affect our market share and financial performance
- 10Our business and operations are dependent upon a number of third parties. An interruption, significant increase in fees or cessation or impairment of the services provided by or activities performed by any such third-party could have a material adverse effect on our business, financial condition, and operating results30% rewritten
- 11We may not effectively manage our growth, which could materially harm our business, financial condition, and operating results
- 12Our global operations are complex and subject us to increased business and economic risks that could adversely affect our financial results
- 13Global trade policies, including the assessment of tariffs and other impositions on imported goods, may have a material adverse impact on our businessNew
- 14We and our licensors may not be able to protect our respective intellectual property rights
- 15Our clearinghouse operations expose us to associated risks, including credit, liquidity, market and other risks related to the defaults of clearing members and other counterparties, and risks related to investing of collateral42% rewritten
- 16Additionally, Cboe Clear U.S. could experience losses in excess of the collateral it holds, which may have an adverse effect on our business, if a clearing member defaults on its obligations to Cboe Clear U.S., and its margin and its guaranty fund deposits are insufficient to meet its obligationsNew
- 17Computer and communications systems failures and capacity constraints could harm our reputation and our business
- 18As a consequence of any of these events, our business, financial condition, and results of operations could suffer materially79% rewritten
- 19estimates of future trading or clearing volume will be accurate or that our systems will always be able to accommodate actual trading or clearing volume without failure or degradation of performanceNew
- 20Our 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
- 21Damage to our reputation could have a material adverse effect on our business, financial condition, and operating results
- 22A 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
- 23Financial or other problems experienced by third parties could have an adverse effect on our business48% rewritten
- 24We 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 position35% rewritten
Risks Relating to Legal and Regulatory Matters
- 25We 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 obligations25% rewritten
- 26Legislative or regulatory changes affecting our markets could have a material adverse effect on our business, financial condition, and operating results24% rewritten
- 27Any infringement by us on intellectual property rights of others could result in litigation and could have a material adverse effect on our operations
- 28Misconduct by our TPHs, members, participants or others could harm us
- 29Managing our business interests and our regulatory responsibilities may adversely affect our business87% rewritten
- 30If 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
- 31Our 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
- 32Changes in the tax laws and regulations affecting us, our offerings and our market participants could have a material adverse effect on our business
- 33We are subject to litigation risks and other liabilities
Risks Related to Our Common Stock and Indebtedness
- 34If our goodwill, long-lived assets, investments in non-consolidated subsidiaries, and intangible assets become impaired, the resulting charge to earnings may be significant
- 35We have outstanding indebtedness and commitments, which may decrease our business flexibility and adversely affect our business, financial condition, and operating results
- 36Deterioration in our credit profile may increase our costs of borrowing money23% rewritten
- 37Any 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
- 38Certain provisions in our organizational documents and governing law could prevent or delay a change of control
Other Cboe Global Markets 10-Ks
- FY2024 10-K risk factors40 risks
Cboe relies heavily on exclusive licenses for index options like S&P 500 and VIX, generating most revenues from transaction fees.
Filed Feb 21, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.