REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2021

2. REVENUE RECOGNITION

The Company’s main types of revenue contracts are:

●

Transaction and clearing fees - Transaction fees represent fees charged by the Company for meeting the point-in-time performance obligation of executing a trade on its markets. These fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Transaction fees are recognized across all segments. Clearing fees, which include settlement fees, represent fees charged by the Company for meeting the point-in-time performance obligation for transactions cleared and settled by EuroCCP. Clearing fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Clearing fees are recognized in the Europe segment. Transaction and clearing fees, as well as any tiered volume discounts, are calculated and billed monthly in accordance with the Company’s published fee schedules.

●

Access and capacity fees - Access and capacity fees represent fees assessed for the opportunity to trade, including fees for trading-related functionality across all segments, terminal and other equipment rights, maintenance services, trading floor space and telecommunications services. Facilities, systems services and other fees are generally monthly fee-based. These fees are billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the performance obligations are met. All access and capacity fees associated with the trading floor are recognized over time in the Options segment, as the performance obligations are met.

●

Market data fees - Market data fees represent the fees received by the Company from the U.S. tape plans and fees charged to customers for proprietary market data. Fees from the U.S. tape plans are collected monthly based on published fee schedules and distributed quarterly to the Exchanges based on a known formula. A contract for proprietary market data is entered into and charged on a monthly basis in accordance with the Company’s published fee schedules as the service is provided. Both types of market data are satisfied over time, and revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the Company provides the data to meet its performance obligation. U.S. tape plan market data is recognized in the North American Equities and Options segments. Proprietary market data fees are recognized across all segments.

●

Regulatory fees - There are two types of regulatory fees that the Company recognizes. The first type represents fees collected by the Company to cover the Section 31 fees charged to the Exchanges by the SEC for meeting the point-in-time performance obligation of executing a trade on its markets. The fees charged to customers are based on the fee set by the SEC per notional value of U.S. Equities exchange transactions and per round turn of Options transactions executed on the Company’s U.S. securities markets. These fees are calculated and billed monthly and are recognized in the North American Equities and Options segments. As the Exchanges are responsible for the ultimate payment to the SEC, the Exchanges are considered the principal in these transactions. Regulatory fees also include the options regulatory fee (“ORF”) which supports the Company’s regulatory oversight function in the Options segment, along with other miscellaneous regulatory fees, and neither can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the performance obligation is fulfilled.

●

Other revenue - Other revenue primarily includes revenue from various licensing agreements, interest income from clearing operations, all fees related to the trade reporting facility operated in the Europe segment, and revenue associated with advertisements through the Company’s websites.

All revenue recognized in the condensed consolidated statements of income is considered to be revenue from contracts with customers, with the exception of interest income from clearing operations. The following table depicts the disaggregation of revenue according to segment (in millions):


			North								Corporate
			American						Global		Items and
	Options		Equities		Futures		Europe		FX		Eliminations		Total
Three Months Ended June 30, 2021
Transaction and clearing fees	$	283.2	$	268.0	$	22.2	$	33.3	$	11.5	$	—	$	618.2
Access and capacity fees		29.6		23.8		4.3		7.2		2.2		—		67.1
Market data fees		21.0		34.8		1.7		5.1		0.2		—		62.8
Regulatory fees		10.7		26.1		0.1		—		—		—		36.9
Other revenue		5.5		0.8		—		9.5		—		—		15.8
	$	350.0	$	353.5	$	28.3	$	55.1	$	13.9	$	—	$	800.8
Timing of revenue recognition
Services transferred at a point in time	$	299.4	$	294.9	$	22.3	$	42.8	$	11.5	$	—	$	670.9
Services transferred over time		50.6		58.6		6.0		12.3		2.4		—		129.9
	$	350.0	$	353.5	$	28.3	$	55.1	$	13.9	$	—	$	800.8

Three Months Ended June 30, 2020
Transaction and clearing fees	$	250.8	$	325.1	$	15.8	$	15.2	$	11.4	$	—	$	618.3
Access and capacity fees		23.9		20.9		4.1		4.7		2.1		—		55.7
Market data fees		17.8		35.8		1.7		3.2		0.2		—		58.7
Regulatory fees		21.0		107.7		—		—		—		—		128.7
Other revenue		4.1		1.0		—		2.2		—		—		7.3
	$	317.6	$	490.5	$	21.6	$	25.3	$	13.7	$	—	$	868.7
Timing of revenue recognition
Services transferred at a point in time	$	275.9	$	433.8	$	15.8	$	17.4	$	11.4	$	—	$	754.3
Services transferred over time		41.7		56.7		5.8		7.9		2.3		—		114.4
	$	317.6	$	490.5	$	21.6	$	25.3	$	13.7	$	—	$	868.7


			North								Corporate
			American						Global		Items and
	Options		Equities		Futures		Europe		FX		Eliminations		Total
Six Months Ended June 30, 2021
Transaction and clearing fees	$	591.9	$	649.8	$	47.8	$	68.0	$	23.9	$	—	$	1,381.4
Access and capacity fees		59.0		47.2		8.7		14.3		4.3		—		133.5
Market data fees		41.5		72.3		3.3		9.1		0.4		—		126.6
Regulatory fees		29.8		108.5		0.1		—		—		—		138.4
Other revenue		10.2		1.7		—		19.5		—		0.3		31.7
	$	732.4	$	879.5	$	59.9	$	110.9	$	28.6	$	0.3	$	1,811.6
Timing of revenue recognition
Services transferred at a point in time	$	631.9	$	760.0	$	47.9	$	87.5	$	23.9	$	0.3	$	1,551.5
Services transferred over time		100.5		119.5		12.0		23.4		4.7		—		260.1
	$	732.4	$	879.5	$	59.9	$	110.9	$	28.6	$	0.3	$	1,811.6

Six Months Ended June 30, 2020
Transaction and clearing fees	$	535.0	$	629.1	$	51.7	$	37.5	$	26.5	$	—	$	1,279.8
Access and capacity fees		51.1		40.9		8.1		9.6		3.7		—		113.4
Market data fees		35.0		69.8		3.3		6.4		0.4		—		114.9
Regulatory fees		43.3		222.2		—		—		—		—		265.5
Other revenue		9.7		2.2		—		4.7		—		—		16.6
	$	674.1	$	964.2	$	63.1	$	58.2	$	30.6	$	—	$	1,790.2
Timing of revenue recognition
Services transferred at a point in time	$	588.0	$	853.5	$	51.7	$	42.2	$	26.5	$	—	$	1,561.9
Services transferred over time		86.1		110.7		11.4		16.0		4.1		—		228.3
	$	674.1	$	964.2	$	63.1	$	58.2	$	30.6	$	—	$	1,790.2

Contract liabilities as of June 30, 2021 primarily represent prepayments of transaction fees and certain access and capacity and market data fees to the Exchanges. The revenue recognized from contract liabilities and the remaining balance is shown below (in millions):


	Balance at January 1, 2021		Cash Additions		Revenue Recognized		Balance at June 30, 2021
Liquidity provider sliding scale (1)	$	—	$	7.2	$	(3.6)	$	3.6
Other, net		10.2		9.3		(5.8)		13.7
Total deferred revenue	$	10.2	$	16.5	$	(9.4)	$	17.3

(1)

Liquidity providers are eligible to participate in the sliding scale program, which involves prepayment of transaction fees, and to receive reduced fees based on the achievement of certain volume thresholds within a calendar month. These transaction fees are amortized and recorded ratably as the transactions occur over the period.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details