01—Abstract
Summary
Summary of the 10-K/A filed May 2, 2013. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) operates as a leading exchange for trading listed options contracts on individual stocks, market indexes, and other exchange-traded products.
In 2012, the company processed over 1.1 billion options contracts, underscoring its significant market presence. CBOE's revenue is primarily driven by transaction fees, with a growing contribution from market data and other services. The company highlights its competitive strengths, including a strong brand, innovative product development (such as the VIX Index), exclusive product listings (like S&P 500 options), its hybrid trading model, and a robust proprietary technology platform.
CBOE is also actively pursuing growth through international expansion, product development, and attracting over-the-counter market participants. Despite a slight decline in overall trading volume in 2012 compared to the previous year, the company is strategically positioned to leverage industry growth trends, with a particular focus on enhancing its trading platform and expanding its service offerings, including market data.
02—Key points
Key Highlights
- CBOE is a major player in the options market, processing over 1.1 billion contracts in 2012 and holding a significant market share.
- The company's revenue is primarily derived from transaction fees, with a growing contribution from market data and other services.
- Key competitive strengths include a strong brand reputation, exclusive product listings (e.g., S&P 500 options), innovative products like the VIX Index, and a proprietary 'Hybrid' trading model.
- CBOE is focused on growth through product innovation, international expansion (e.g., London hub), and attracting over-the-counter market participants.
- The company is investing in its proprietary technology platform, CBOE Command, to maintain its competitive edge in performance and functionality.
- Despite a slight overall volume decrease in 2012, CBOE saw strong growth in VIX options and futures, indicating a growing demand for volatility-related products.
- The company faces intense price competition from other exchanges, necessitating continuous efforts to attract order flow and liquidity providers through competitive pricing and incentives.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2012filed May 2, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $512.34M$508.14M | +0.8% |
| Operating Expenses | $268.24M$266.51M | +0.6% |
| Operating Income | $244.10M$241.63M | +1.0% |
| Net Income | $157.40M$139.41M | +12.9% |
| EPS (Basic) | $1.78$1.52 | +17.1% |
| EPS (Diluted) | $1.78$1.52 | +17.1% |
| Shares Outstanding (Basic) | 87.46M89.99M | −2.8% |
| Shares Outstanding (Diluted) | 87.46M89.99M | −2.8% |
05—Questions
Frequently Asked Questions
What are Cboe Global Markets' primary sources of revenue?
Cboe Global Markets' primary source of revenue is transaction fees, which are generated from the contracts traded on its exchanges. Additionally, the company generates revenue from market data fees, access fees for trading permits, exchange services, licensing of proprietary indexes (like VIX), and other miscellaneous fees.
What are Cboe's key competitive advantages?
Cboe's competitive advantages include its established brand and reputation as the first options exchange, its innovation in product development (e.g., VIX index options), exclusive listings for key index options like the S&P 500, its unique Hybrid trading model combining open outcry and electronic trading, and its advanced proprietary technology platform (CBOE Command).
What are the main risks facing Cboe Global Markets?
Cboe faces several risks, including intense price competition from other exchanges, potential loss of exclusive licenses for key index options, the possibility of technological failures or cyber-attacks, regulatory changes impacting its business, and general economic conditions that can affect trading volumes. The company also noted an SEC investigation into its compliance with self-regulatory obligations.
How did Cboe Global Markets perform in 2012 compared to 2011?
In 2012, Cboe's total operating revenues saw a slight increase of 0.8% to $512.3 million from $508.1 million in 2011. Net income increased by 12.9% to $157.4 million. While overall contract volume decreased by 6.8% in 2012, Cboe's market share of total options contracts traded on U.S. exchanges increased to 27.8%. The company experienced strong growth in VIX options and futures despite the overall volume decline.
06—Continue