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REGULATORY CAPITAL | 9 Months Ended
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Sep. 30, 2021
REGULATORY CAPITAL |
REGULATORY CAPITAL | 16. REGULATORY CAPITAL As broker-dealers registered with the SEC, Cboe Trading and BIDS Trading are subject to the SEC’s Uniform Net Capital Rule (“Rule 15c3-1”), which requires the maintenance of minimum net capital, as defined therein. The SEC’s requirement also provides that equity capital may not be withdrawn or a cash dividend paid if certain minimum net capital requirements are not met. Cboe Trading and BIDS Trading compute the net capital requirements under the basic method provided for in Rule 15c3-1. As of September 30, 2021, Cboe Trading and BIDS Trading were required to maintain net capital equal to the greater of 6.67% of aggregate indebtedness items, as defined, or $0.1 million. As entities regulated by the FCA, Cboe Europe is subject to the Financial Resource Requirement (“FRR”) and Cboe Chi-X Europe is subject to the Capital Resources Requirement (“CRR”). As a RIE, Cboe Europe computes its FRR in accordance with its Financial Risk Assessment, as agreed by the FCA. In accordance with the Markets in Financial Instruments Directive of the FCA requirements, Cboe Chi-X Europe computes its CRR as the greater of the base requirement of $0.1 million at September 30, 2021, or the summation of the credit risk, market risk and fixed overheads requirements, as defined. Cboe Chi-X Europe Limited is currently dormant having ceased offering its routing service in November 2018. On March 8, 2019, Cboe NL received approval from the Dutch Ministry of Finance to operate a RM, a MTF, and an approved publication arrangement in the Netherlands. As a RM, Cboe NL is subject to minimum capital requirements, as established by the Dutch Ministry of Finance in the license dated March 8, 2019. EuroCCP was granted authorization under European Market Infrastructure Regulation (“EMIR”) by the National Competent Authority, DNB. EuroCCP is required by the EMIR, to maintain a minimum amount of capital to reflect an estimate of the capital required to wind down or restructure the activities of the clearinghouse, cover operational, legal and business risks and to reserve capital to meet credit, counterparty and market risks not covered by the clearing participants’ collateral and clearing funds. The Investment Industry Regulatory Organization of Canada (“IIROC”) sets and monitors regulatory capital requirements for MATCHNow to protect its clients and counterparties. MATCHNow is required to maintain a prescribed minimum level of risk adjusted capital in accordance with such requirements as IIROC may from time to time prescribe. ​ The following table presents the Company’s subsidiaries with regulatory capital requirements discussed above, as well as the actual and minimum regulatory capital requirements of the subsidiary as of September 30, 2021 (in millions): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Minimum
Subsidiary | ​ | Regulatory Authority | ​ | Actual | ​ | Requirement
Cboe Trading | ​ | FINRA/SEC | ​ | $ | 20.7 | ​ | $ | 0.7
BIDS Trading | ​ | FINRA/SEC | ​ | ​ | 12.2 | ​ | ​ | 0.9
Cboe Europe | ​ | FCA | ​ | ​ | 65.0 | ​ | ​ | 27.4
Cboe Chi-X Europe | ​ | FCA | ​ | ​ | 0.4 | ​ | ​ | 0.1
Cboe NL | ​ | Dutch Authority for Financial Markets | ​ | ​ | 8.6 | ​ | ​ | 4.0
EuroCCP | ​ | DNB | ​ | ​ | 53.2 | ​ | ​ | 44.1
MATCHNow | ​ | IIROC | ​ | ​ | 3.6 | ​ | ​ | 0.2
​ As a designated contract market regulated by the CFTC, CFE is required to meet two capital adequacy tests: (i) its financial resources must be equal to at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets, which may include a line of credit, must be equal to at least six months of its projected operating costs. As of September 30, 2021, CFE had annual projected operating expenses of $49.8 million and had financial resources that exceeded this amount. Additionally, as of September 30, 2021, CFE had projected operating expenses for the upcoming six months of $24.9 million and had unencumbered, liquid financial assets, including a line of credit from Cboe, that exceeded this amount. As a swap execution facility regulated by the CFTC, Cboe SEF is required to meet two capital adequacy tests: (i) its financial resources must exceed at least twelve months of its projected operating costs and (ii) its unencumbered, liquid financial assets must be equal to the greater of: (a) three months of projected operating costs or (b) its projected wind-down costs. As of September 30, 2021, Cboe SEF had annual projected operating expenses of $0.8 million and had financial resources that exceeded this amount. Additionally, as of September 30, 2021, Cboe SEF had projected operating expenses for the upcoming three months of $0.2 million and had unencumbered, liquid financial assets that exceeded this amount. Chi-X Australia Pty Ltd (“Chi-X Australia”) is regulated by the Australian Securities and Investments Commission (“ASIC”). Chi-X Australia is required to maintain sufficient financial resources to operate the market properly in accordance with Section 794A(d) of the Corporations Act, which Chi-X Australia satisfies by maintaining a prudent cash reserve, which must be equal to at least six months of its projected operating expenses. As of September 30, 2021, Chi-X Australia holds $4.4 million in cash deposits to meet this requirement. Chi-X Japan Limited (“Chi-X Japan”) is regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”). Chi-X Japan is required to maintain a minimum level of regulatory capital ratio of 120% in accordance with such requirements prescribed by the JFSA and JSDA. As of September 30, 2021, Chi-X Japan had a regulatory capital ratio of 262%.

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