INVESTMENTS

3 Months Ended

Mar. 31, 2020

INVESTMENTS

INVESTMENTS

4.   INVESTMENTS

As of March 31, 2020 and December 31, 2019, the Company’s investments were comprised of the following (in millions):

	March 31,		December 31,
	2020		2019
Equity Method Investments:
Investment in Signal Trading Systems, LLC	$	13.5	$	12.6
Investment in EuroCCP		9.8		10.3
Total equity method investments		23.3		22.9
Other Equity Investments:
Investment in Eris Exchange Holdings, LLC		20.8		20.8
Investment in American Financial Exchange, LLC		8.6		8.6
Investment in Cboe Vest Financial Group, Inc.		2.9		2.9
Investment in OCC		0.3		0.3
Other equity investments		6.4		5.7
Total other equity investments		39.0		38.3
Total investments	$	62.3	$	61.2

Equity Method Investments

Equity method investments include investments in Signal Trading Systems, LLC, a 50% joint venture with FlexTrade System, Inc. to develop and market a multi-asset front-end order entry system, and EuroCCP, a Dutch domiciled clearing house. EuroCCP is one of three interoperable central counterparties, or CCPs, used to clear trades conducted on Cboe Europe Limited’s and Cboe Europe NL’s markets. Cboe Europe Limited owns 20% of EuroCCP and can exercise significant influence over the entity as an equal shareholder with four other investors. As announced on December 10, 2019, the Company plans to acquire the remaining 80% interest in EuroCCP. The closing of the transaction is subject to various conditions, including the receipt of regulatory approvals. As a result, the timing of the closing is uncertain but the Company presently anticipates a closing in the second quarter of 2020.

Other Equity Investments

The carrying amount of other equity investments totaled $39.0 million as of March 31, 2020 and $38.3 million as of December 31, 2019, respectively, and is included in investments in the condensed consolidated balance sheets. The Company accounts for these investments using the measurement alternative primarily as a result of the Company’s inability to exercise significant influence as the Company is a smaller shareholder of these investments and without readily determinable fair values. As of March 31, 2020, other equity investments primarily reflect a 20% investment in OCC and minority investments in American Financial Exchange, LLC, CurveGlobal, Cboe Vest Financial Group, Inc. (“Vest”), and Eris Exchange Holdings, LLC.

The Company’s contributed capital to OCC has been recorded under investments in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019. Under OCC’s current capital management policy, which was approved by the SEC on January 24, 2020, if OCC’s equity capital falls below certain defined thresholds, OCC can access additional capital through an operational loss fee charged to clearing members. None of OCC’s shareholders

(including Cboe Options) has any obligation to contribute capital to OCC under the capital management policy, nor does any shareholder have the right to receive dividends from OCC under such policy. As such, the Company reversed the $8.8 million OCC dividend declared in 2018, which was to be paid in 2019, in other expense, net in the condensed consolidated statement of income for the three months ended March 31, 2019.

In August 2019, the Company’s ownership in Vest was restructured, including a partial sale of its interest to a third-party. As a result of the restructuring, the Company’s ownership and voting interests decreased to less than 20% and less than 5%, respectively, and the Company deconsolidated Vest and changed the accounting methodology to be in line with the other equity investments. The deconsolidation resulted in a reduction of net assets of $14.5 million and noncontrolling interest of $5.8 million, as well as recognition of $2.9 million investment for the Company’s remaining ownership interest. Additionally, the Company recorded an interest-bearing note receivable of $3.7 million for the consideration received from the third-party, which was recorded in other assets, net in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively.