10-K/APeriod: FY2012

Cboe Global Markets, Inc. Annual Report (Amendment), Year Ended Dec 31, 2012

Filed May 2, 2013For Securities:CBOE

Summary

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.

Financial Highlights

42 data points
Beta

Revenue

$512.34M

Net Income

$157.40M

30.7% Net Margin

EPS (Diluted)

$1.78

Total Assets

$338.86M

Cash & Equivalents

$135.60M

Free Cash Flow

$200.53M

Financial Statements
Beta
Revenue$512.34M
Operating Expenses$268.24M
Operating Income$244.10M
Net Income$157.40M
EPS (Basic)$1.78
EPS (Diluted)$1.78
Shares Outstanding (Basic)87.46M
Shares Outstanding (Diluted)87.46M

Key Highlights

  • 1CBOE is a major player in the options market, processing over 1.1 billion contracts in 2012 and holding a significant market share.
  • 2The company's revenue is primarily derived from transaction fees, with a growing contribution from market data and other services.
  • 3Key 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.
  • 4CBOE is focused on growth through product innovation, international expansion (e.g., London hub), and attracting over-the-counter market participants.
  • 5The company is investing in its proprietary technology platform, CBOE Command, to maintain its competitive edge in performance and functionality.
  • 6Despite a slight overall volume decrease in 2012, CBOE saw strong growth in VIX options and futures, indicating a growing demand for volatility-related products.
  • 7The company faces intense price competition from other exchanges, necessitating continuous efforts to attract order flow and liquidity providers through competitive pricing and incentives.

Frequently Asked Questions

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.

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).

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.

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.