INVESTMENTS

6 Months Ended

Jun. 30, 2020

INVESTMENTS

INVESTMENTS

4.   INVESTMENTS

As of June 30, 2020 and December 31, 2019, the Company’s investments were comprised of the following (in millions):

	June 30,		December 31,
	2020		2019
Equity Method Investments:
Investment in Signal Trading Systems, LLC	$	12.4	$	12.6
Investment in EuroCCP		10.2		10.3
Total equity method investments		22.6		22.9
Other Equity Investments:
Investment in Eris Exchange Holdings, LLC		20.0		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 Eris Digital Holdings, LLC		0.8		—
Investment in OCC		0.3		0.3
Other equity investments		6.1		5.7
Total other equity investments		38.7		38.3
Total investments	$	61.3	$	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. As of June 30, 2020, Cboe Europe Limited owned 20% of EuroCCP and was able to exercise significant influence over the entity as an equal shareholder with four other investors. The Company acquired the remaining 80% interest in EuroCCP on July 1, 2020, see Note 23 (“Subsequent Events”) for more information.

Other Equity Investments

The carrying amount of other equity investments totaled $38.7 million as of June 30, 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 given the absence of readily determinable fair values for the respective investments and due to the Company’s inability to exercise significant influence over the investments based upon the respective ownership interests held. As of June 30, 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”), Eris Exchange Holdings, LLC, and Eris Digital Holdings, LLC.

The Company’s contributed capital to OCC has been recorded under investments in the condensed consolidated balance sheets as of June 30, 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 six months ended June 30, 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 June 30, 2020 and December 31, 2019, respectively.

In May 2020, Eris Exchange Holdings, LLC completed a restructuring transaction to spin out Eris Digital Holdings, LLC into a stand-alone entity. The restructuring qualifies as an exchange of ownership interest, though it required no additional consideration exchanged to execute the exchange of units. The restructuring did not result in a change in number of units owned by the Company or a substantial change in the Company’s ownership interest percentage. No gain or loss is recognized as a result of the restructuring. The Company’s investment in Eris Digital Holdings, LLC is included within “Other equity investments” in the above table.