ICEIntercontinental Exchange

In 2016, the SEC approved a plan to establish a market-wide consolidated audit trail, or the CAT, to improve regulators’ ability to monitor trading activity. In 2018, the first phase of implementation went live and required SRO participants to begin reporting to the CAT. In 2024, the final phase went live. In addition to increased risk in connection with our regulatory obligations, the implementation of the CAT has resulted in, and in the future could continue to result in significant additional expenditures, which may not be reimbursed. Prior reimbursed, especially in light of a court challenge to SEC approval the CAT funding model in the United States Court of billing of certain costs to broker-dealers beginning in 2024, funding Appeals for the Eleventh Circuit and follow-on cases. Funding for the CAT was has been provided primarily by the SROs, partly in exchange for promissory notes, which increased the risk that SROs, including us, will not be fully reimbursed in whole or in part for costs expended to build and operate the CAT. CAT or for future promissory notes, if any. In addition, if the SEC determines that we have failed to properly implement the CAT, we may be unable to recover our prior expenses. Due to the replacement of the original plan processor, we recorded promissory note impairment charges of $16 million, $2 million and $16 million in 2023, 2020 and 2019, respectively. The SEC approved a funding model that shares the cost of the CAT between SROs and broker-dealers in September 2023, however, that approval has been challenged in the United States Court of Appeals for the Eleventh Circuit, and another open litigation matter challenges the CAT as it currently exists. If either challenge is successful, there is a risk that SROs will not be partially or fully reimbursed. As of December 31, 2024, 2025, we have accrued approximately $118 $88 million as a receivable in connection with our portion of expenses related to the CAT implementation. In addition, there are additional risks to SRO participants related to regulatory actions or fines in connection with the operation and use of the CAT, including the storage of sensitive and confidential information. information, potential misuse by users with access to the system or if the plan participants do not renew a contract with the plan processor. Furthermore, there is a risk that, upon completion of a review by the SEC, there may be changes required to the system or its governance that could increase costs.

We account for business combinations using the acquisition method of accounting. Assets acquired and liabilities assumed in connection with our acquisitions are recorded at their estimated fair values. We recognize specifically identifiable intangibles if the intangible is either contractual or separable, and we estimate the useful life of the intangible asset based on the estimated period over which the asset is expected to contribute directly or indirectly to future cash flows. Goodwill represents the excess of the purchase price of an acquired company over the fair value of its identifiable net assets, including identified intangible assets. We recognize specifically identifiable intangibles, such as customer relationships, developed technology, trading products, data and databases, trademarks and trade names, exchange registrations, backlog, and licenses when a specific right or contract is acquired. Our determination of the fair value of the intangible assets and whether or not these assets may be impaired following their acquisition requires us to apply significant judgments and make significant estimates and assumptions regarding assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, forecasted future cash flows. If we change our strategy or if market conditions shift, our judgments flows, revenue and margin growth rates, customer attrition rates and discount rates that are unobservable and require judgment. The resulting fair value calculations and estimates may change, which may result in adjustments to recorded asset balances. Intangible assets with finite on assigning useful lives affect our future amortization expense, as acquired finite-lived intangible assets are amortized over their estimated useful lives lives, whereas goodwill and any indefinite lived intangible assets with indefinite useful lives assets, including goodwill, are not. not amortized.

Our clearing houses are exposed to concentrations of credit risk as a result of maintaining clearing member cash deposits at various financial institutions (see Note 14). Cash deposit accounts are established at large, highly-rated financial institutions and entered into so that they restrict the rights of offset or imposition of liens by the banks. We also limit our risk of loss by holding the majority of the cash deposits in cash accounts at certain central banks, short-term reverse repurchase agreements with various counterparties securitized by highly rated highly-rated sovereign debt or direct investments in short-term high quality high-quality sovereign and supranational debt issues primarily with original maturities of three months or less at the time of purchase. While we seek to achieve a reasonable rate of return which may generate interest income for issues. When engaging in reverse repurchase agreements, our clearing members, we houses take delivery of the underlying securities in custody accounts under clearing house control. The underlying securities are primarily concerned valued daily and are subject to collateral maintenance provisions pursuant to which the counterparty must provide additional collateral, if needed, to maintain sufficient collateralization. Thus, in the event that a reverse repurchase counterparty defaults on its obligation to repurchase the underlying reverse repurchase securities, our clearing house will have possession of securities with preservation of capital and managing a value potentially greater than the risks associated with these deposits. As reverse repurchase counterparty’s obligation to the clearing houses may pass on interest revenues, minus costs, to the members, this could include negative or reduced yield due to market conditions. house.

In the ordinary course of our business, from time to time we are subject to legal proceedings, lawsuits, government investigations and other claims with respect to a variety of matters. In addition, we are subject to periodic reviews, inspections, examinations and investigations by regulators in the U.S. and other jurisdictions, any of which may result in claims, legal proceedings, assessments, fines, penalties, restrictions on our business or other sanctions. We record estimated expenses and reserves for legal or regulatory matters or other claims when these matters present loss contingencies that are probable and the related amount is reasonably estimable, and gain contingencies when they become certain. Any such accruals may be adjusted as circumstances change. Assessments of losses are inherently subjective and involve unpredictable factors. While the outcome of legal and regulatory matters is inherently difficult to predict and/or the range of loss often cannot be reasonably estimable, we do not believe that the liabilities, if any, which may ultimately result from the resolution of the various legal and regulatory matters that arise in the ordinary course of our business, including the matter described below, business are likely to have a material adverse effect on our consolidated financial condition, results of operations, or liquidity. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially and adversely affected by any developments relating to these legal and regulatory matters. A range of possible losses related to certain cases cannot be reasonably estimated at this time, except for $19 million of accruals related to regulatory matters, of which $4 million was recorded during 2025.