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CREDIT LOSSES | 9 Months Ended
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Sep. 30, 2024
Credit Loss [Abstract] |
CREDIT LOSSES | CREDIT LOSSES Current expected credit losses are estimated for accounts receivable and certain notes receivable. Accounts receivable represent amounts due from the Company’s member firms. The allowance for accounts receivable credit losses is calculated using an aging schedule. The allowance for notes receivable credit losses is associated with notes receivable included within other assets, net on the condensed consolidated balance sheets and relates to promissory notes to fund the implementation and operation of the consolidated audit trail (“CAT”), a portion of which notes are expected to be repaid by Consolidated Audit Trail, LLC (“CATLLC”). CAT involves the creation of an audit trail that is required by Rule 613 under the Securities Exchange Act of 1934 (“Rule 613”), and it strives to enhance regulators’ ability to monitor trading activity in the U.S. national securities markets through a phased implementation. CATLLC is a national market system plan that was created by self-regulatory organizations that include the Cboe U.S. national securities exchanges, the other U.S. national securities exchanges and FINRA (who collectively are referred to as the “SROs” or “Plan Participants”) to implement and operate the CAT. On September 6, 2023, the SEC issued an order approving an amendment to the CAT national market system plan to implement a revised funding model (“CAT Funding Model”) for CATLLC to fund the CAT. The approved CAT Funding Model contemplates two categories of CAT fees calculated based on the “executed equivalent shares” of transactions in eligible securities: (i) CAT fees assessed by CATLLC to Industry Members who are CAT Executing Brokers (the brokers responsible for executing each side of the transaction) to recover a portion of historical CAT costs previously paid to CATLLC by the Plan Participants; and (ii) CAT fees assessed by CATLLC to CAT Executing Brokers and Plan Participants to fund a portion of prospective CAT costs. To date, the funding of the CAT has solely been provided by the Plan Participants in exchange for promissory notes. However, pursuant to the CAT Funding Model, the Plan Participants submitted fee filings during the third week of August 2024 to recover a portion of historical CAT costs incurred prior to 2022, effective as of October 1, 2024. Once collected from CAT Executing Brokers, CATLLC will remit funds to the Plan Participants to begin paying back the promissory notes issued by the Plan Participants to fund the CAT prior to January 1, 2022. Additional CAT fees related to a portion of other historical CAT costs incurred between January 1, 2022 and July 15, 2024 are planned to be introduced at a later time through separate fee filings submitted by the Plan Participants. Portions of promissory notes related to the funding of the implementation and operation of the CAT may not be collectible, including if the SEC finds that the Plan Participants did not satisfy any of the financial accountability milestones. Additionally, the Plan Participants submitted fee filings during the second week of August 2024 with the SEC to implement the applicable transaction-based fee rates that are to be assessed by CATLLC to CAT Executing Brokers to cover a portion of prospective CAT costs, effective as of September 3, 2024, to continue to fund CATLLC as it transitions to collecting fees from Plan Participants and Industry Members in accordance with the CAT Funding Model, Plan Participants issued short-term notes that Cboe seeks to stop issuing, pending repayment by February 2025. Cboe expects Plan Participants will not have to issue additional promissory notes to fund CAT given that CATLLC has begun imposing (and will soon collect) fees to cover going forward costs. The allowance for notes receivable credit losses associated with the CAT is calculated using a methodology that is primarily based on the structure of the notes and various potential outcomes under the CAT Funding Model. See Note 21 (“Commitments, Contingencies, and Guarantees”) for more information. The following represents the changes in allowance for credit losses during the nine months ended September 30, 2024 (in millions):
| Allowance for notes receivable credit losses |  | Allowance for accounts receivable credit losses |  | Total allowance for credit losses
Balance at December 31, 2023 | $ | 30.1 |  |  | $ | 4.5 |  |  | $ | 34.6 |
Current period provision for expected credit losses | — |  |  | 3.1 |  |  | 3.1 |
Write-offs charged against the allowance | — |  |  | (0.5) |  |  | (0.5) |
Recoveries collected | — |  |  | (0.1) |  |  | (0.1) |
Balance at September 30, 2024 | $ | 30.1 |  |  | $ | 7.0 |  |  | $ | 37.1 |

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