Cboe Global Markets

The stable outlook reflects S&P Global Ratings' expectation that Cboe will keep its leverage below 1.75x. Our expectation is that Cboe Clear Europe's financial safeguards won't weaken with the growth of the trading and clearing offering in European equity derivatives. We could lower the ratings if: Leverage exceeds 1.75x following a series of acquisitions or aggressive financial policies, or Cboe Clear Europe's financial safeguards unexpectedly weaken. We could raise the ratings if Cboe keeps reducing its dependence on flagship products and transaction-based revenue while maintaining financial safeguards at Cboe Clear Europe. U.S. economic growth of 2.7% in 2024 and 1.8% in 2025, which is somewhat favorable for the financial market infrastructure industry (since healthy economic growth supports capital market activities

...In our view, Cboe Global Markets maintains a leading position among options exchanges in the U.S. It has a 98.7% market share in index equity options, as well as a 31% market share overall this year through September (including single-name equity options). We expect Cboe to be more dependent on volatile trading revenue than its peers. Transaction-related revenue made up about 73% of Cboe's net revenue in the first nine months of 2024--far above the levels at Nasdaq Inc. and Intercontinental Exchange Inc. We continue to view Cboe's low leverage as a credit strength. Leverage, as measured by S&P Global Ratings-adjusted debt to EBITDA, improved to 0.8x as of Sept. 30, 2024, from 1.2x a year before because of strong cash flow generation. We expect it to stay below 1.0x given the company's focus on organic growth as opposed to growth via small debt-funded acquisitions. We believe the company benefits from providing three of the most widely recognized financial products that are traded and used...

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