Cboe Global Markets, Inc. 10-Qquarter ended 2026-09-30

Executive Summary

Cboe operates trading exchanges and clearinghouses for brokers, institutions and other market participants, earning transaction, clearing, data and access fees. It is concentrating resources around derivatives and market infrastructure, extending exclusive SPX options rights while exiting several international and digital-market operations. Options drove underlying growth, although revenue less cost of revenue grew more slowly in Q3 than year to date. The opportunity is to expand proprietary derivatives and data services; investors must distinguish that progress from pass-through regulatory fees and a disposal gain, while watching market-share losses and unresolved regulatory funding obligations.

What's Happening in the Business

Cboe strengthened its core options franchise by extending its exclusive S&P Dow Jones Indices licensing agreement through 2051, preserving exclusive SPX options trading rights. It also launched Cboe Predicts in June and moved cash-settled Bitcoin and Ether futures to Cboe Futures Exchange, where it launched continuous contracts. These initiatives expand products on retained platforms; the Digital Exchange currently has no listed products.

The portfolio is narrowing. Cboe sold Australia to TMX for ≈$300M on 7/31/2026, while the Canada sale remained subject to approvals. It also wound down Japanese equities operations and decommissioned its European derivatives exchange. Management expects the broader resource-allocation realignment to be substantially complete by year-end. These exits reduce the operating footprint, but the Australia gain makes reported profit growth look stronger than ongoing operations alone.

Key Financial Highlights

Q3 and 9M ended 9/30/2026; changes are Y/Y.

• Derivatives: Net revenue of $402M, +22%, supplied most retained-revenue growth. Options transaction and clearing fees reached $585M, +13%, on stronger index-options activity; industry options average daily volume rose 15%, slower than 9M’s 20%.
• Data Vantage: Net revenue reached $179M, +13%, versus 15% growth for 9M, providing growth beyond trading fees but also slowing.
• North American Equities: Higher net capture and access fees supported profit despite matched shares falling 12%; transaction and clearing fees declined to $275M from $305M. A $14.0M reserve against regulatory-funding notes also weighed on profit.
• Smaller segments: Europe and Asia Pacific includes the disposal gain. Futures benefited from lower expenses despite weaker activity; foreign-exchange average daily notional value rose 22% to $61.1B. Corporate costs outside the segments were $6.1M versus $2.3M.
• Liquidity and returns: Cash and equivalents were $2.66B against $650M principal of notes due January 2027. Nine-month repurchases were $132M versus $66.7M, and dividends $242M versus $209M; outstanding shares fell only 0.3%, showing limited net share-count reduction.

Risk Assessment

• Regulatory cost recovery: The Consolidated Audit Trail funding model remains interim and legally contested; Cboe could incur further costs and fail to recover loans supporting the system.
• Franchise and pricing pressure: Options market share slipped to 30.5% from 30.9%, and U.S. equities share to 8.9% from 9.8%; competition and potential fee-rule changes could weaken transaction economics.
• Clearing and funding: Member defaults can create urgent settlement obligations, while Cboe Clear Europe’s €1.20B facility matures in June 2027; inadequate replacement capacity or cross-default provisions could constrain liquidity.

This 10-Q lists no risk factors of its own and refers to the annual report. The risks above come from the rest of this filing. Full list: the company's 10-Ks on SEC.

What to Watch

• Options franchise: Exclusive SPX rights now extend through 2051, but market share slipped; subsequent filings should show whether index-options growth and new products outweigh competitive losses.
• Data Vantage: Quarterly net-revenue growth trails its year-to-date pace; renewed acceleration would broaden growth beyond trading, while further slowing would increase reliance on derivatives activity.
• Portfolio reset: Canada’s sale awaits approval and management expects substantial completion of realignment by year-end; completed exits and lower ongoing costs would validate the reset, while delays or further charges would weaken it.
• Funding: The January note maturity and June clearing-facility expiry approach with cash available; repayment or replacement financing would remove uncertainty, while depleted liquidity or reduced clearing capacity would signal strain.