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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2017
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OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For the transition period from ________ to ________
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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52-1165937
(I.R.S. Employer
Identification No.)
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One Liberty Plaza, New York, New York
(Address of Principal Executive Offices)
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10006
(Zip Code)
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐ (Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Class
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Outstanding at May 2, 2017
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Common Stock, $.01 par value per share
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165,178,479 shares
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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•
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“Nasdaq,” “we,” “us” and “our” refer to Nasdaq, Inc.
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•
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“Nasdaq Baltic” refers to collectively, Nasdaq Tallinn AS, Nasdaq Riga, AS, and AB Nasdaq Vilnius.
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•
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“Nasdaq BX” refers to the cash equity exchange operated by NASDAQ BX, Inc.
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•
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“Nasdaq BX Options” refers to the options exchange operated by NASDAQ BX, Inc.
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•
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“Nasdaq Clearing” refers to the clearing operations conducted by Nasdaq Clearing AB.
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•
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“Nasdaq ISE” refers to the options exchange operated by International Securities Exchange, LLC.
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•
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“Nasdaq Nordic” refers to collectively, Nasdaq Clearing AB, Nasdaq Stockholm AB, Nasdaq Copenhagen A/S, Nasdaq Helsinki Ltd, and Nasdaq Iceland hf.
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•
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“Nasdaq PHLX” refers to the options exchange operated by NASDAQ PHLX LLC.
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•
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“Nasdaq PSX” refers to the cash equity exchange operated by NASDAQ PHLX LLC.
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•
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“The Nasdaq Stock Market” refers to the cash equity exchange operated by The NASDAQ Stock Market LLC.
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•
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our 2017 outlook;
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•
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the integration of acquired businesses, including accounting decisions relating thereto;
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•
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the scope, nature or impact of acquisitions, divestitures, investments, joint ventures or other transactional activities;
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•
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the effective dates for, and expected benefits of, ongoing initiatives, including transactional activities and other strategic, restructuring, technology, de-leveraging and capital return initiatives;
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•
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our products, order backlog and services;
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•
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the impact of pricing changes;
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•
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tax matters;
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•
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the cost and availability of liquidity and capital; and
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•
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any litigation, or any regulatory or government investigation or action, to which we are or could become a party.
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•
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our operating results may be lower than expected;
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•
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our ability to successfully integrate acquired businesses, including the fact that such integration may be more difficult, time consuming or costly than expected, and our ability to realize synergies from business combinations and acquisitions;
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•
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loss of significant trading and clearing volumes or values, fees, market share, listed companies, data products customers or other customers;
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•
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our ability to keep up with rapid technological advances and adequately address cybersecurity risks;
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•
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economic, political and market conditions and fluctuations, including interest rate and foreign currency risk, inherent in U.S. and international operations;
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•
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the performance and reliability of our technology and technology of third parties;
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•
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our ability to continue to generate cash and manage our indebtedness; and
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•
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adverse changes that may occur in the litigation or regulatory areas, or in the securities markets generally.
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March 31, 2017
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December 31, 2016
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||||
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(unaudited)
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||||
Assets
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|
||||
Current assets:
|
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||||
Cash and cash equivalents
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$
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386
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$
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403
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Restricted cash
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78
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15
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Financial investments, at fair value
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220
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245
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Receivables, net
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467
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429
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Default funds and margin deposits
|
3,633
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3,301
|
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Other current assets
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163
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|
|
167
|
|
||
Total current assets
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4,947
|
|
|
4,560
|
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||
Property and equipment, net
|
376
|
|
|
362
|
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Deferred tax assets
|
617
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|
|
717
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|
||
Goodwill
|
6,070
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|
|
6,027
|
|
||
Intangible assets, net
|
2,082
|
|
|
2,094
|
|
||
Other non-current assets
|
398
|
|
|
390
|
|
||
Total assets
|
$
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14,490
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$
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14,150
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|
||||
Liabilities
|
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|
||||
Current liabilities:
|
|
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||||
Accounts payable and accrued expenses
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$
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187
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$
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175
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|
Section 31 fees payable to SEC
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81
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|
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108
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Accrued personnel costs
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110
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|
|
207
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Deferred revenue
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322
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|
|
162
|
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Other current liabilities
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174
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129
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Default funds and margin deposits
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3,633
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3,301
|
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Current portion of debt obligations
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379
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—
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Total current liabilities
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4,886
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|
4,082
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Debt obligations
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3,242
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3,603
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Deferred tax liabilities
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702
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|
720
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|
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Non-current deferred revenue
|
164
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171
|
|
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Other non-current liabilities
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144
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144
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Total liabilities
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9,138
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8,720
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Commitments and contingencies
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Equity
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Nasdaq stockholders’ equity:
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Common stock, $0.01 par value, 300,000,000 shares authorized, shares issued: 169,760,142 at March 31, 2017 and 170,501,186 at December 31, 2016; shares outstanding: 165,168,584, at March 31, 2017 and 166,579,468 at December 31, 2016
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2
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|
|
2
|
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Additional paid-in capital
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2,963
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3,104
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Common stock in treasury, at cost: 4,591,558, shares at March 31, 2017 and 3,921,718 shares at December 31, 2016
|
(221
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)
|
|
(176
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)
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Accumulated other comprehensive loss
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(987
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)
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(979
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)
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Retained earnings
|
3,595
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3,479
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Total Nasdaq stockholders’ equity
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5,352
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5,430
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Total liabilities and equity
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$
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14,490
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$
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14,150
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Three Months Ended March 31,
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||||||
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2017
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2016
|
||||
Revenues:
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||||
Market Services
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$
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606
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$
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572
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Corporate Services
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160
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143
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Information Services
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138
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133
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Market Technology
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67
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57
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Total revenues
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971
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905
|
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Transaction-based expenses:
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||||
Transaction rebates
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(301
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)
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(283
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)
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Brokerage, clearance and exchange fees
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(87
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)
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(88
|
)
|
||
Revenues less transaction-based expenses
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583
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534
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|
||
Operating expenses:
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|
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||||
Compensation and benefits
|
161
|
|
|
152
|
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Professional and contract services
|
36
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|
|
35
|
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Computer operations and data communications
|
30
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|
|
25
|
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||
Occupancy
|
23
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|
|
20
|
|
||
General, administrative and other
|
19
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|
|
14
|
|
||
Marketing and advertising
|
7
|
|
|
6
|
|
||
Depreciation and amortization
|
45
|
|
|
38
|
|
||
Regulatory
|
8
|
|
|
7
|
|
||
Merger and strategic initiatives
|
6
|
|
|
9
|
|
||
Restructuring charges
|
—
|
|
|
9
|
|
||
Total operating expenses
|
335
|
|
|
315
|
|
||
Operating income
|
248
|
|
|
219
|
|
||
Interest income
|
2
|
|
|
1
|
|
||
Interest expense
|
(37
|
)
|
|
(28
|
)
|
||
Other investment income
|
—
|
|
|
1
|
|
||
Net income from unconsolidated investees
|
4
|
|
|
2
|
|
||
Income before income taxes
|
217
|
|
|
195
|
|
||
Income tax provision
|
48
|
|
|
63
|
|
||
Net income attributable to Nasdaq
|
$
|
169
|
|
|
$
|
132
|
|
Per share information:
|
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|
||||
Basic earnings per share
|
$
|
1.02
|
|
|
$
|
0.80
|
|
Diluted earnings per share
|
$
|
0.99
|
|
|
$
|
0.78
|
|
Cash dividends declared per common share
|
$
|
0.32
|
|
|
$
|
0.57
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net income
|
$
|
169
|
|
|
$
|
132
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation gain (loss):
|
|
|
|
||||
Net foreign currency translation gain
|
42
|
|
|
138
|
|
||
Income tax expense
|
(50
|
)
|
|
(44
|
)
|
||
Total other comprehensive income (loss), net of tax
|
(8
|
)
|
|
94
|
|
||
Comprehensive income attributable to Nasdaq
|
$
|
161
|
|
|
$
|
226
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
169
|
|
|
$
|
132
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
45
|
|
|
38
|
|
||
Share-based compensation
|
15
|
|
|
16
|
|
||
Deferred income taxes
|
29
|
|
|
2
|
|
||
Net income from unconsolidated investees
|
(4
|
)
|
|
(2
|
)
|
||
Other reconciling items included in net income
|
7
|
|
|
4
|
|
||
Net change in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Receivables, net
|
(38
|
)
|
|
(5
|
)
|
||
Other assets
|
4
|
|
|
(2
|
)
|
||
Accounts payable and accrued expenses
|
12
|
|
|
14
|
|
||
Section 31 fees payable to SEC
|
(27
|
)
|
|
(18
|
)
|
||
Accrued personnel costs
|
(98
|
)
|
|
(89
|
)
|
||
Deferred revenue
|
149
|
|
|
147
|
|
||
Other liabilities
|
(19
|
)
|
|
18
|
|
||
Net cash provided by operating activities
|
244
|
|
|
255
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of trading securities
|
(93
|
)
|
|
(144
|
)
|
||
Proceeds from sales and redemptions of trading securities
|
120
|
|
|
94
|
|
||
Purchases of available-for-sale investment securities
|
(5
|
)
|
|
(5
|
)
|
||
Proceeds from maturities of available-for-sale investment securities
|
6
|
|
|
7
|
|
||
Acquisition of businesses, net of cash and cash equivalents acquired
|
—
|
|
|
(213
|
)
|
||
Purchases of property and equipment
|
(36
|
)
|
|
(23
|
)
|
||
Other investment activities
|
—
|
|
|
(10
|
)
|
||
Net cash used in investing activities
|
(8
|
)
|
|
(294
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments of debt obligations
|
—
|
|
|
(555
|
)
|
||
Proceeds from utilization of credit commitment
|
—
|
|
|
325
|
|
||
Proceeds from issuances of senior unsecured notes and term loan facility
|
—
|
|
|
399
|
|
||
Cash paid for repurchase of common stock
|
(156
|
)
|
|
(29
|
)
|
||
Cash dividends
|
(53
|
)
|
|
(41
|
)
|
||
Proceeds received from employee stock activity
|
1
|
|
|
1
|
|
||
Payments related to employee shares withheld for taxes
|
(47
|
)
|
|
(34
|
)
|
||
Proceeds (disbursements) of customer funds
|
63
|
|
|
(38
|
)
|
||
Net cash (used in) provided by financing activities
|
(192
|
)
|
|
28
|
|
||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
2
|
|
|
6
|
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
46
|
|
|
(5
|
)
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
418
|
|
|
357
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
$
|
464
|
|
|
$
|
352
|
|
Supplemental Disclosure Cash Flow Information
|
|
|
|
||||
Cash paid for:
|
|
|
|
||||
Interest
|
$
|
29
|
|
|
$
|
28
|
|
Income taxes, net of refund
|
$
|
26
|
|
|
$
|
35
|
|
|
|
Three Months Ended March 31,
|
|
Percentage Change
|
|||||||
|
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|||||
|
|
($ in millions)
|
|
|
|||||||
Income tax provision
|
|
$
|
48
|
|
|
$
|
63
|
|
|
(23.8
|
)%
|
Effective tax rate
|
|
22.1
|
%
|
|
32.3
|
%
|
|
(10.2
|
)%
|
Accounting Standard
|
Description
|
Effective Date
|
Effect on the Financial Statements or Other Significant Matters
|
Compensation - Stock Compensation
In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.”
|
This ASU involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance requires all income tax effects of awards to be recognized as income tax expense or benefit in the income statement when the awards vest or are settled, as opposed to additional paid-in-capital where it was previously recorded. This guidance impacts the calculation of our total diluted share count for the earnings per share calculation, as calculated under the treasury stock method. It also allows an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. All tax-related cash flows resulting from share-based payments are reported as operating activities on the statement of cash flows. In regards to forfeitures, a policy election is required to either estimate the number of awards that are expected to vest or account for forfeitures as they occur.
|
We adopted this new standard on January 1, 2017 on a prospective basis for the impacts on the accounting for income taxes and the effect on earnings per share. We have adopted the changes in cash flow statement classification retrospectively.
|
See discussion below.
|
•
|
revenue recognition for existing and new contracts will be recognized in earlier stages under the new standard;
|
•
|
expense recognition for Market Technology contracts will be recognized in earlier stages under the new standard;
|
•
|
a portion of revenues and expenses that were previously deferred will be recognized either in prior period revenues, through restatement, or as an adjustment to retained earnings upon adoption of the new standard; and
|
•
|
the overall value of our contracts and the timing of cash flows from customers will not change.
|
|
Three Months Ended
|
||
|
March 31, 2016
|
||
Severance
|
$
|
4
|
|
Asset impairments
|
3
|
|
|
Other
|
2
|
|
|
Total restructuring charges
|
$
|
9
|
|
|
Purchase Consideration
|
|
Total Net Assets (Liabilities) Acquired
|
|
Total Net Deferred Tax Liability
|
|
Acquired
Intangible Assets |
|
Goodwill
|
||||||||||
|
(in millions)
|
||||||||||||||||||
ISE
|
$
|
1,070
|
|
|
$
|
83
|
|
|
$
|
(185
|
)
|
|
$
|
623
|
|
|
$
|
549
|
|
Boardvantage
|
242
|
|
|
28
|
|
|
(45
|
)
|
|
111
|
|
|
148
|
|
|||||
Marketwired
|
111
|
|
|
(1
|
)
|
|
(5
|
)
|
|
31
|
|
|
86
|
|
|||||
Nasdaq CXC
|
116
|
|
|
6
|
|
|
(20
|
)
|
|
76
|
|
|
54
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
2016
|
||||||||||||||
|
ISE
|
|
Boardvantage
|
|
Marketwired
|
|
Nasdaq CXC
|
||||||||
|
($ in millions)
|
||||||||||||||
Intangible Assets
|
|
|
|
|
|
|
|
||||||||
Exchange registrations
|
$
|
467
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Discount rate used
|
8.6
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Estimated average remaining useful life
|
Indefinite
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Customer relationships
|
$
|
148
|
|
|
$
|
103
|
|
|
$
|
29
|
|
|
$
|
76
|
|
Discount rate used
|
9.1
|
%
|
|
15.5
|
%
|
|
16.4
|
%
|
|
10.3
|
%
|
||||
Estimated average remaining useful life
|
13 years
|
|
|
14 years
|
|
|
6 years
|
|
|
17 years
|
|
||||
Trade name
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
Discount rate used
|
8.6
|
%
|
|
15.0
|
%
|
|
15.8
|
%
|
|
—
|
|
||||
Estimated average remaining useful life
|
Indefinite
|
|
|
1 year
|
|
|
2 years
|
|
|
—
|
|
||||
Technology
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Discount rate used
|
—
|
|
|
15.5
|
%
|
|
—
|
|
|
—
|
|
||||
Estimated average remaining useful life
|
—
|
|
|
5 years
|
|
|
—
|
|
|
—
|
|
||||
Total intangible assets
|
$
|
623
|
|
|
$
|
111
|
|
|
$
|
31
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
Market Services
|
|
Corporate Services
|
|
Information Services
|
|
Market Technology
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance at December 31, 2016
|
$
|
3,390
|
|
|
$
|
674
|
|
|
$
|
1,806
|
|
|
$
|
157
|
|
|
$
|
6,027
|
|
Foreign currency translation adjustment
|
22
|
|
|
3
|
|
|
13
|
|
|
5
|
|
|
43
|
|
|||||
Balance at March 31, 2017
|
$
|
3,412
|
|
|
$
|
677
|
|
|
$
|
1,819
|
|
|
$
|
162
|
|
|
$
|
6,070
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Weighted-Average Useful Life (in Years)
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Weighted-Average Useful Life (in Years)
|
||||||||||||
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||||||||
Finite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Technology
|
$
|
38
|
|
|
$
|
(25
|
)
|
|
$
|
13
|
|
|
5
|
|
$
|
38
|
|
|
$
|
(24
|
)
|
|
$
|
14
|
|
|
5
|
Customer relationships
|
1,394
|
|
|
(485
|
)
|
|
909
|
|
|
18
|
|
1,394
|
|
|
(464
|
)
|
|
930
|
|
|
18
|
||||||
Other
|
7
|
|
|
(6
|
)
|
|
1
|
|
|
6
|
|
7
|
|
|
(6
|
)
|
|
1
|
|
|
6
|
||||||
Foreign currency translation adjustment
|
(153
|
)
|
|
56
|
|
|
(97
|
)
|
|
|
|
(160
|
)
|
|
58
|
|
|
(102
|
)
|
|
|
||||||
Total finite-lived intangible assets
|
$
|
1,286
|
|
|
$
|
(460
|
)
|
|
$
|
826
|
|
|
|
|
$
|
1,279
|
|
|
$
|
(436
|
)
|
|
$
|
843
|
|
|
|
Indefinite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Exchange and clearing registrations
|
$
|
1,257
|
|
|
$
|
—
|
|
|
$
|
1,257
|
|
|
|
|
$
|
1,257
|
|
|
$
|
—
|
|
|
$
|
1,257
|
|
|
|
Trade names
|
129
|
|
|
—
|
|
|
129
|
|
|
|
|
130
|
|
|
—
|
|
|
130
|
|
|
|
||||||
Licenses
|
52
|
|
|
—
|
|
|
52
|
|
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
|
||||||
Foreign currency translation adjustment
|
(182
|
)
|
|
—
|
|
|
(182
|
)
|
|
|
|
(188
|
)
|
|
—
|
|
|
(188
|
)
|
|
|
||||||
Total indefinite-lived intangible assets
|
$
|
1,256
|
|
|
$
|
—
|
|
|
$
|
1,256
|
|
|
|
|
$
|
1,251
|
|
|
$
|
—
|
|
|
$
|
1,251
|
|
|
|
Total intangible assets
|
$
|
2,542
|
|
|
$
|
(460
|
)
|
|
$
|
2,082
|
|
|
|
|
$
|
2,530
|
|
|
$
|
(436
|
)
|
|
$
|
2,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the estimated amortization to be recognized for the remaining nine months of 2017.
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
|
(in millions)
|
||||||
Trading securities
|
$
|
203
|
|
|
$
|
228
|
|
Available-for-sale investment securities
|
17
|
|
|
17
|
|
||
Equity method investments
|
128
|
|
|
124
|
|
||
Cost method investments
|
145
|
|
|
144
|
|
|
Initial Listing Revenues
|
|
Listing of Additional Shares Revenues
|
|
Annual Renewal and Other Revenues
|
|
Market Technology Revenues
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance at January 1, 2017
|
$
|
54
|
|
|
$
|
37
|
|
|
$
|
57
|
|
|
$
|
185
|
|
|
$
|
333
|
|
Additions
|
4
|
|
|
5
|
|
|
306
|
|
|
46
|
|
|
361
|
|
|||||
Amortization
|
(5
|
)
|
|
(9
|
)
|
|
(142
|
)
|
|
(55
|
)
|
|
(211
|
)
|
|||||
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|||||
Balance at March 31, 2017
|
$
|
53
|
|
|
$
|
33
|
|
|
$
|
221
|
|
|
$
|
179
|
|
|
$
|
486
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at January 1, 2016
|
$
|
59
|
|
|
$
|
53
|
|
|
$
|
28
|
|
|
$
|
187
|
|
|
$
|
327
|
|
Additions
|
1
|
|
|
2
|
|
|
314
|
|
|
67
|
|
|
384
|
|
|||||
Amortization
|
(4
|
)
|
|
(7
|
)
|
|
(143
|
)
|
|
(64
|
)
|
|
(218
|
)
|
|||||
Translation adjustment
|
—
|
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|
(1
|
)
|
|||||
Balance at March 31, 2016
|
$
|
56
|
|
|
$
|
48
|
|
|
$
|
200
|
|
|
$
|
188
|
|
|
$
|
492
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Listing Revenues
|
|
Listing of Additional Shares Revenues
|
|
Annual Renewal and Other Revenues
|
|
Market Technology Revenues
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Fiscal year ended:
|
|
|
|
|
|
|
|
|
|||||||||||
2017
(1)
|
$
|
12
|
|
|
$
|
15
|
|
|
$
|
216
|
|
|
$
|
58
|
|
|
$
|
301
|
|
2018
|
14
|
|
|
11
|
|
|
4
|
|
|
38
|
|
|
67
|
|
|||||
2019
|
12
|
|
|
5
|
|
|
1
|
|
|
32
|
|
|
50
|
|
|||||
2020
|
8
|
|
|
2
|
|
|
—
|
|
|
30
|
|
|
40
|
|
|||||
2021
|
5
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
18
|
|
|||||
2022 and thereafter
|
2
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
10
|
|
|||||
|
$
|
53
|
|
|
$
|
33
|
|
|
$
|
221
|
|
|
$
|
179
|
|
|
$
|
486
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents deferred revenue that is anticipated to be recognized over the remaining nine months of 2017.
|
|
December 31, 2016
|
|
Additions
|
|
Payments, Accretion
and Other
|
|
March 31, 2017
|
||||||||
|
(in millions)
|
||||||||||||||
5.55% senior unsecured notes due January 15, 2020
|
$
|
598
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
598
|
|
5.25% senior unsecured notes due January 16, 2018
|
369
|
|
|
—
|
|
|
—
|
|
|
369
|
|
||||
3.875% senior unsecured notes due June 7, 2021
|
625
|
|
|
—
|
|
|
8
|
|
|
633
|
|
||||
4.25% senior unsecured notes due June 1, 2024
|
495
|
|
|
—
|
|
|
1
|
|
|
496
|
|
||||
1.75% senior unsecured notes due May 19, 2023
|
622
|
|
|
—
|
|
|
9
|
|
|
631
|
|
||||
3.85% senior unsecured notes due June 30, 2026
|
495
|
|
|
—
|
|
|
—
|
|
|
495
|
|
||||
$400 million senior unsecured term loan facility due November 25, 2019 (average interest rate of
2.28
% for the period January 1, 2017 through March 31, 2017)
|
399
|
|
|
—
|
|
|
—
|
|
|
399
|
|
||||
$750 million revolving credit commitment due November 25, 2019 (average interest rate of 0.00% for the period January 1, 2017 through March 31, 2017)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total debt obligations
|
3,603
|
|
|
—
|
|
|
18
|
|
|
3,621
|
|
||||
Less current portion
|
—
|
|
|
—
|
|
|
—
|
|
|
(379
|
)
|
||||
Total long-term debt obligations
|
$
|
3,603
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
3,242
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Share-based compensation expense before income taxes
|
$
|
15
|
|
|
$
|
16
|
|
Income tax benefit
|
(6
|
)
|
|
(7
|
)
|
||
Share-based compensation expense after income taxes
|
$
|
9
|
|
|
$
|
9
|
|
|
Restricted Stock
|
|||||
|
Number of Awards
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested balances at January 1, 2017
|
2,560,578
|
|
|
$
|
45.92
|
|
Granted
|
559,698
|
|
|
65.92
|
|
|
Vested
|
(343,633
|
)
|
|
42.83
|
|
|
Forfeited
|
(79,164
|
)
|
|
46.48
|
|
|
Unvested balances at March 31, 2017
|
2,697,479
|
|
|
$
|
50.45
|
|
|
Three Months Ended March 31,
|
||||
|
2017
|
|
2016
|
||
Weighted-average risk free interest rate
(1)
|
1.44
|
%
|
|
0.84
|
%
|
Expected volatility
(2)
|
19.2
|
%
|
|
21.0
|
%
|
Weighted-average grant date share price
|
$69.45
|
|
$66.38
|
||
Weighted-average fair value at grant date
|
$81.57
|
|
$93.30
|
(1)
|
The risk-free interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.
|
(2)
|
We use historic volatility for PSU awards issued under the
three
-year PSU program, as implied volatility data could not be obtained for all the companies in the peer groups used for relative performance measurement within the program.
|
|
PSUs
|
||||||||||||
|
One-Year Program
|
|
Three-Year Program
|
||||||||||
|
Number of Awards
|
|
Weighted-Average Grant Date Fair Value
|
|
Number of Awards
|
|
Weighted-Average Grant Date Fair Value
|
||||||
Unvested balances at January 1, 2017
|
378,766
|
|
|
$
|
52.55
|
|
|
1,314,668
|
|
|
$
|
63.18
|
|
Granted
|
193,710
|
|
|
65.50
|
|
|
801,448
|
|
|
55.49
|
|
||
Vested
|
(10,729
|
)
|
|
53.72
|
|
|
(1,079,925
|
)
|
|
42.83
|
|
||
Forfeited
|
(25,782
|
)
|
|
53.89
|
|
|
(24,178
|
)
|
|
88.98
|
|
||
Unvested balances at March 31, 2017
|
535,965
|
|
|
$
|
57.14
|
|
|
1,012,013
|
|
|
$
|
78.19
|
|
|
Number of Stock Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining
Contractual Term (in years) |
|
Aggregate Intrinsic
Value (in millions) |
|||||
|
|
|
|
|
|
|
|
|||||
Outstanding at January 1, 2017
|
1,406,371
|
|
|
$
|
22.32
|
|
|
2.65
|
|
$
|
63
|
|
Granted
|
268,817
|
|
|
66.68
|
|
|
|
|
|
|||
Exercised
|
(40,416
|
)
|
|
20.98
|
|
|
|
|
|
|||
Outstanding at March 31, 2017
|
1,634,772
|
|
|
$
|
29.64
|
|
|
3.62
|
|
$
|
65
|
|
Exercisable at March 31, 2017
|
1,365,955
|
|
|
$
|
22.35
|
|
|
2.44
|
|
$
|
64
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Number of shares of common stock repurchased
|
|
2,215,755
|
|
|
490,032
|
|
||
Average price paid per share
|
|
$
|
70.64
|
|
|
$
|
59.37
|
|
Total purchase price (in millions)
|
|
$
|
156
|
|
|
$
|
29
|
|
Declaration Date
|
|
Dividend Per
Common Share
|
|
Record Date
|
|
Total Amount Paid
|
|
Payment Date
|
||||
|
|
|
|
|
|
(in millions)
|
|
|
||||
January 30, 2017
|
|
$
|
0.32
|
|
|
March 17, 2017
|
|
$
|
53
|
|
|
March 31, 2017
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions, except share and per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income attributable to common shareholders
|
$
|
169
|
|
|
$
|
132
|
|
Denominator:
|
|
|
|
||||
Weighted-average common shares outstanding for basic earnings per share
|
166,473,073
|
|
|
164,281,692
|
|
||
Weighted-average effect of dilutive securities:
|
|
|
|
||||
Employee equity awards
|
3,773,874
|
|
|
4,086,752
|
|
||
Weighted-average common shares outstanding for diluted earnings per share
|
170,246,947
|
|
|
168,368,444
|
|
||
Basic and diluted earnings per share:
|
|
|
|
||||
Basic earnings per share
|
$
|
1.02
|
|
|
$
|
0.80
|
|
Diluted earnings per share
|
$
|
0.99
|
|
|
$
|
0.78
|
|
|
March 31, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in millions)
|
||||||||||||||
Financial investments, at fair value
|
$
|
220
|
|
|
$
|
203
|
|
|
$
|
17
|
|
|
$
|
—
|
|
Default fund and margin deposit investments
|
2,186
|
|
|
1,610
|
|
|
576
|
|
|
—
|
|
||||
Total
|
$
|
2,406
|
|
|
$
|
1,813
|
|
|
$
|
593
|
|
|
$
|
—
|
|
|
December 31, 2016
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in millions)
|
||||||||||||||
Financial investments, at fair value
|
$
|
245
|
|
|
$
|
228
|
|
|
$
|
17
|
|
|
$
|
—
|
|
Default fund and margin deposit investments
|
1,900
|
|
|
1,763
|
|
|
137
|
|
|
—
|
|
||||
Total
|
$
|
2,145
|
|
|
$
|
1,991
|
|
|
$
|
154
|
|
|
$
|
—
|
|
|
March 31, 2017
|
||||||||||
|
Cash Contributions
|
|
Non-Cash Contributions
|
|
Total Contributions
|
||||||
|
(in millions)
|
||||||||||
Default fund contributions
|
$
|
334
|
|
|
$
|
99
|
|
|
$
|
433
|
|
Margin deposits
|
3,299
|
|
|
3,646
|
|
|
6,945
|
|
|||
Total
|
$
|
3,633
|
|
|
$
|
3,745
|
|
|
$
|
7,378
|
|
|
March 31, 2017
|
||
|
(in millions)
|
||
Commodity and seafood options, futures and forwards
(1)(2)(3)
|
$
|
550
|
|
Fixed-income options and futures
(1)(2)
|
743
|
|
|
Stock options and futures
(1)(2)
|
132
|
|
|
Index options and futures
(1)(2)
|
101
|
|
|
Total
|
$
|
1,526
|
|
(1)
|
We determined the fair value of our option contracts using standard valuation models that were based on market-based observable inputs including implied volatility, interest rates and the spot price of the underlying instrument.
|
(2)
|
We determined the fair value of our futures contracts based upon quoted market prices and average quoted market yields.
|
(3)
|
We determined the fair value of our forward contracts using standard valuation models that were based on market-based observable inputs including LIBOR rates and the spot price of the underlying instrument.
|
|
March 31, 2017
|
|
March 31, 2016
|
||
Commodity and seafood options, futures and forwards
(1)
|
726,739
|
|
|
907,921
|
|
Fixed-income options and futures
|
5,158,237
|
|
|
4,368,986
|
|
Stock options and futures
|
7,383,538
|
|
|
8,303,721
|
|
Index options and futures
|
11,315,176
|
|
|
14,685,731
|
|
Total
|
24,583,690
|
|
|
28,266,359
|
|
(1)
|
The total volume in cleared power related to commodity contracts was
379
Terawatt hours (TWh) for the three months ended
March 31, 2017
and
420
TWh for the three months ended
March 31, 2016
.
|
•
|
junior capital contributed by Nasdaq Clearing, which totaled
$18 million
at
March 31, 2017
;
|
•
|
a loss sharing pool related only to the financial market that is contributed to by clearing members and only applies if the defaulting member’s portfolio includes interest rate swap products;
|
•
|
specific market default fund where the loss occurred (i.e., the financial, commodities, or seafood market), which includes capital contributions of the clearing members on a pro-rata basis;
|
•
|
senior capital contributed to each specific market by Nasdaq Clearing, calculated in accordance with
|
•
|
mutualized default fund, which includes capital contributions of the clearing members on a pro-rata basis.
|
|
Market Services
|
|
Corporate Services
|
|
Information Services
|
|
Market Technology
|
|
Corporate Items
|
|
Consolidated
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
606
|
|
|
$
|
160
|
|
|
$
|
138
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
971
|
|
Transaction-based expenses
|
(388
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(388
|
)
|
||||||
Revenues less transaction-based expenses
|
218
|
|
|
160
|
|
|
138
|
|
|
67
|
|
|
—
|
|
|
583
|
|
||||||
Operating income (loss)
|
$
|
119
|
|
|
$
|
43
|
|
|
$
|
102
|
|
|
$
|
13
|
|
|
$
|
(29
|
)
|
|
$
|
248
|
|
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
572
|
|
|
$
|
143
|
|
|
$
|
133
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
905
|
|
Transaction-based expenses
|
(371
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(371
|
)
|
||||||
Revenues less transaction-based expenses
|
201
|
|
|
143
|
|
|
133
|
|
|
57
|
|
|
—
|
|
|
534
|
|
||||||
Operating income (loss)
|
$
|
113
|
|
|
$
|
34
|
|
|
$
|
97
|
|
|
$
|
10
|
|
|
$
|
(35
|
)
|
|
$
|
219
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Amortization expense of acquired intangible assets
|
$
|
23
|
|
|
$
|
17
|
|
Restructuring charges
|
—
|
|
|
9
|
|
||
Merger and strategic initiatives expense
|
6
|
|
|
9
|
|
||
Total
|
$
|
29
|
|
|
$
|
35
|
|
•
|
Trading volumes and values in equity derivative, cash equity and FICC, which are driven primarily by overall macroeconomic conditions;
|
•
|
The number of companies seeking equity financing, which is affected by factors such as investor demand, the global economy, and availability of diverse sources of financing, as well as tax and regulatory policies;
|
•
|
The demand for information about, or access to, our markets, which is dependent on the products we trade, our importance as a liquidity center, and the quality and pricing of our data and trade management services;
|
•
|
The demand by companies and other organizations for the products sold by our Corporate Solutions business, which is largely driven by the overall state of the economy and the attractiveness of our offerings;
|
•
|
The demand for licensed ETPs and other financial products based on our indexes as well as changes to the underlying assets associated with existing licensed financial products;
|
•
|
The challenges created by the automation of market data consumption, including competition and the quickly evolving nature of the data business;
|
•
|
The outlook of our technology customers for capital market activity;
|
•
|
Continuing pressure in transaction fee pricing due to intense competition in the U.S. and Europe;
|
•
|
Competition related to pricing, product features and service offerings;
|
•
|
Regulatory changes relating to market structure or affecting certain types of instruments, transactions, pricing structures or capital market participants; and
|
•
|
Technological advances and members’ and customers’ demand for speed, efficiency, and reliability.
|
•
|
Intense competition among U.S. exchanges and dealer-owned systems for cash equity trading and strong competition between MTFs and exchanges in Europe for cash equity trading;
|
•
|
Globalization of exchanges, customers and competitors extending the competitive horizon beyond national markets; and
|
•
|
Improvement in fund flows and market performance in ETPs.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Market Services
|
|
|
|
|
||||
Equity Derivative Trading and Clearing
|
|
|
|
|
||||
U.S. equity options
|
|
|
|
|
||||
Total industry average daily volume (in millions)
|
|
14.6
|
|
|
15.3
|
|
||
Nasdaq PHLX matched market share
|
|
17.1
|
%
|
|
16.1
|
%
|
||
The Nasdaq Options Market matched market share
|
|
9.5
|
%
|
|
7.1
|
%
|
||
Nasdaq BX Options matched market share
|
|
0.7
|
%
|
|
0.9
|
%
|
||
Nasdaq ISE Options matched market share
(1)
|
|
9.5
|
%
|
|
—
|
%
|
||
Nasdaq GEMX Options matched market share
(1)
|
|
5.6
|
%
|
|
—
|
%
|
||
Nasdaq MRX Options matched market share
(1)
|
|
0.1
|
%
|
|
—
|
%
|
||
Total matched market share executed on Nasdaq’s exchanges
|
|
42.5
|
%
|
|
24.1
|
%
|
||
Nasdaq Nordic and Nasdaq Baltic options and futures
|
|
|
|
|
||||
Total average daily volume of options and futures contracts
(2)
|
|
338,463
|
|
|
452,178
|
|
||
Cash Equity Trading
|
|
|
|
|
||||
Total U.S.-listed securities
|
|
|
|
|
||||
Total industry average daily share volume (in billions)
|
|
6.84
|
|
|
8.56
|
|
||
Matched share volume (in billions)
|
|
74.7
|
|
|
93.7
|
|
||
The Nasdaq Stock Market matched market share
|
|
14.0
|
%
|
|
14.9
|
%
|
||
Nasdaq BX matched market share
|
|
2.7
|
%
|
|
2.0
|
%
|
||
Nasdaq PSX matched market share
|
|
0.9
|
%
|
|
1.0
|
%
|
||
Total matched market share executed on Nasdaq’s exchanges
|
|
17.6
|
%
|
|
17.9
|
%
|
||
Market share reported to the FINRA/Nasdaq Trade Reporting Facility
|
|
34.9
|
%
|
|
31.9
|
%
|
||
Total market share
(3)
|
|
52.5
|
%
|
|
49.8
|
%
|
||
Nasdaq Nordic and Nasdaq Baltic securities
|
|
|
|
|
||||
Average daily number of equity trades executed on Nasdaq’s exchanges
|
|
507,647
|
|
|
525,857
|
|
||
Total average daily value of shares traded (in billions)
|
|
$
|
4.8
|
|
|
$
|
5.7
|
|
Total market share executed on Nasdaq’s exchanges
|
|
66.8
|
%
|
|
62.5
|
%
|
||
FICC
|
|
|
|
|
||||
Fixed Income
|
|
|
|
|
||||
U.S. fixed income notional trading volume (in billions)
|
|
$
|
5,041
|
|
|
$
|
5,968
|
|
Total average daily volume of Nasdaq Nordic and Nasdaq Baltic fixed income contracts
|
|
112,004
|
|
|
101,470
|
|
||
Commodities
|
|
|
|
|
||||
Power contracts cleared (TWh)
(4)
|
|
379
|
|
|
420
|
|
||
Corporate Services
|
|
|
|
|
||||
Initial public offerings
|
|
|
|
|
||||
The Nasdaq Stock Market
|
|
17
|
|
|
10
|
|
||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic
|
|
11
|
|
|
8
|
|
||
Total new listings
|
|
|
|
|
||||
The Nasdaq Stock Market
(5)
|
|
42
|
|
|
47
|
|
||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic
(6)
|
|
16
|
|
|
14
|
|
||
Number of listed companies
|
|
|
|
|
||||
The Nasdaq Stock Market
(7)
|
|
2,890
|
|
|
2,852
|
|
||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic
(8)
|
|
910
|
|
|
847
|
|
||
Information Services
|
|
|
|
|
||||
Number of licensed ETPs
|
|
306
|
|
|
226
|
|
||
ETP assets under management tracking Nasdaq indexes (in billions)
|
|
$
|
138
|
|
|
$
|
105
|
|
Market Technology
|
|
|
|
|
||||
Order intake (in millions)
(9)
|
|
$
|
47
|
|
|
$
|
22
|
|
Total order value (in millions)
(10)
|
|
$
|
777
|
|
|
$
|
783
|
|
(1)
|
Matched market share for Nasdaq ISE, Nasdaq GEMX and Nasdaq MRX is not disclosed for the three months ended March 31, 2016 since Nasdaq's acquisition of ISE closed on June 30, 2016.
|
(2)
|
Includes Finnish option contracts traded on EUREX Group.
|
(3)
|
Includes transactions executed on The Nasdaq Stock Market’s, Nasdaq BX’s and Nasdaq PSX’s systems plus trades reported through the FINRA/Nasdaq Trade Reporting Facility.
|
(4)
|
Transactions executed on Nasdaq Commodities or OTC and reported for clearing to Nasdaq Commodities measured by Terawatt hours (TWh).
|
(5)
|
New listings include IPOs, including those completed on a best efforts basis, issuers that switched from other listing venues, closed-end funds and separately listed ETPs.
|
(6)
|
New listings include IPOs and represent companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North.
|
(7)
|
Number of total listings on The Nasdaq Stock Market at period end, including 332 separately listed ETPs at March 31, 2017 and 241 at March 31, 2016.
|
(8)
|
Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North at period end.
|
(9)
|
Total contract value of orders signed during the period.
|
(10)
|
Represents total contract value of signed orders that are yet to be recognized as revenue. Market technology deferred revenue, as discussed in Note 7, “Deferred Revenue,” to the condensed consolidated financial statements, represents consideration received that is yet to be recognized as revenue for these signed orders.
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions, except per share amounts)
|
|
|
|||||||
Revenues less transaction-based expenses
|
|
$
|
583
|
|
|
$
|
534
|
|
|
9.2
|
%
|
Operating expenses
|
|
335
|
|
|
315
|
|
|
6.3
|
%
|
||
Operating income
|
|
248
|
|
|
219
|
|
|
13.2
|
%
|
||
Interest expense
|
|
(37
|
)
|
|
(28
|
)
|
|
32.1
|
%
|
||
Income before income taxes
|
|
217
|
|
|
195
|
|
|
11.3
|
%
|
||
Income tax provision
|
|
48
|
|
|
63
|
|
|
(23.8
|
)%
|
||
Net income attributable to Nasdaq
|
|
$
|
169
|
|
|
$
|
132
|
|
|
28.0
|
%
|
Diluted earnings per share
|
|
$
|
0.99
|
|
|
$
|
0.78
|
|
|
26.9
|
%
|
Cash dividends declared per common share
|
|
$
|
0.32
|
|
|
$
|
0.57
|
|
|
(43.9
|
)%
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Market Services
|
|
$
|
606
|
|
|
$
|
572
|
|
|
5.9
|
%
|
Transaction-based expenses
|
|
(388
|
)
|
|
(371
|
)
|
|
4.6
|
%
|
||
Market Services revenues less transaction-based expenses
|
|
218
|
|
|
201
|
|
|
8.5
|
%
|
||
Corporate Services
|
|
160
|
|
|
143
|
|
|
11.9
|
%
|
||
Information Services
|
|
138
|
|
|
133
|
|
|
3.8
|
%
|
||
Market Technology
|
|
67
|
|
|
57
|
|
|
17.5
|
%
|
||
Total revenues less transaction-based expenses
|
|
$
|
583
|
|
|
$
|
534
|
|
|
9.2
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Market Services Revenues:
|
|
|
|
|
|
|
|||||
Equity Derivative Trading and Clearing Revenues
(1)
|
|
$
|
191
|
|
|
$
|
101
|
|
|
89.1
|
%
|
Transaction-based expenses:
|
|
|
|
|
|
|
|||||
Transaction rebates
|
|
(113
|
)
|
|
(48
|
)
|
|
135.4
|
%
|
||
Brokerage, clearance and exchange fees
(1)
|
|
(10
|
)
|
|
(5
|
)
|
|
100.0
|
%
|
||
Equity derivative trading and clearing revenues less transaction-based expenses
|
|
68
|
|
|
48
|
|
|
41.7
|
%
|
||
Cash Equity Trading Revenues
(2)
|
|
320
|
|
|
382
|
|
|
(16.2
|
)%
|
||
Transaction-based expenses:
|
|
|
|
|
|
|
|
||||
Transaction rebates
|
|
(183
|
)
|
|
(230
|
)
|
|
(20.4
|
)%
|
||
Brokerage, clearance and exchange fees
(2)
|
|
(76
|
)
|
|
(82
|
)
|
|
(7.3
|
)%
|
||
Cash equity trading revenues less transaction-based expenses
|
|
61
|
|
|
70
|
|
|
(12.9
|
)%
|
||
FICC Revenues
|
|
25
|
|
|
26
|
|
|
(3.8
|
)%
|
||
Transaction-based expenses:
|
|
|
|
|
|
|
|
||||
Transaction rebates
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
%
|
||
Brokerage, clearance and exchange fees
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
%
|
||
FICC revenues less transaction-based expenses
|
|
19
|
|
|
20
|
|
|
(5.0
|
)%
|
||
Trade Management Services Revenues
|
|
70
|
|
|
63
|
|
|
11.1
|
%
|
||
Total Market Services revenues less transaction-based expenses
|
|
$
|
218
|
|
|
$
|
201
|
|
|
8.5
|
%
|
(1)
|
Includes Section 31 fees of $9 million in the first quarter of 2017 and $5 million in the first quarter of 2016. Section 31 fees are recorded as equity derivative trading and clearing revenues with a corresponding amount recorded in transaction-based expenses.
|
(2)
|
Includes Section 31 fees of $72 million in the first quarter of 2017 and $75 million in the first quarter of 2016. Section 31 fees are recorded as cash equity trading revenues with a corresponding amount recorded in transaction-based expenses.
|
•
|
the inclusion of rebates associated with our acquisition of ISE, partially offset by;
|
•
|
lower U.S. industry trading volumes.
|
•
|
lower U.S. and European industry trading volumes, partially offset by;
|
•
|
the inclusion of revenues associated with our acquisition of Nasdaq CXC.
|
•
|
lower U.S. industry trading volumes, partially offset by;
|
•
|
the inclusion of rebates associated with our acquisition of Nasdaq CXC.
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
(in millions)
|
|
|
|||||||
Corporate Services:
|
||||||||||
Corporate Solutions
|
$
|
95
|
|
|
$
|
77
|
|
|
23.4
|
%
|
Listing Services
|
65
|
|
|
66
|
|
|
(1.5
|
)%
|
||
Total Corporate Services
|
$
|
160
|
|
|
$
|
143
|
|
|
11.9
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Information Services:
|
|||||||||||
Data Products
|
|
$
|
108
|
|
|
$
|
105
|
|
|
2.9
|
%
|
Index Licensing and Services
|
|
30
|
|
|
28
|
|
|
7.1
|
%
|
||
Total Information Services
|
|
$
|
138
|
|
|
$
|
133
|
|
|
3.8
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Market Technology
|
|
$
|
67
|
|
|
$
|
57
|
|
|
17.5
|
%
|
|
Total Order Value
|
||
|
(in millions)
|
||
Fiscal year ended:
|
|
||
2017
(1)
|
$
|
172
|
|
2018
|
206
|
|
|
2019
|
128
|
|
|
2020
|
118
|
|
|
2021
|
73
|
|
|
2022 and thereafter
|
80
|
|
|
Total
|
$
|
777
|
|
(1)
|
Represents deferred revenue that is anticipated to be recognized over the remaining nine months of 2017.
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Compensation and benefits
|
|
$
|
161
|
|
|
$
|
152
|
|
|
5.9
|
%
|
Professional and contract services
|
|
36
|
|
|
35
|
|
|
2.9
|
%
|
||
Computer operations and data communications
|
|
30
|
|
|
25
|
|
|
20.0
|
%
|
||
Occupancy
|
|
23
|
|
|
20
|
|
|
15.0
|
%
|
||
General, administrative and other
|
|
19
|
|
|
14
|
|
|
35.7
|
%
|
||
Marketing and advertising
|
|
7
|
|
|
6
|
|
|
16.7
|
%
|
||
Depreciation and amortization
|
|
45
|
|
|
38
|
|
|
18.4
|
%
|
||
Regulatory
|
|
8
|
|
|
7
|
|
|
14.3
|
%
|
||
Merger and strategic initiatives
|
|
6
|
|
|
9
|
|
|
(33.3
|
)%
|
||
Restructuring charges
|
|
—
|
|
|
9
|
|
|
(100.0
|
)%
|
||
Total operating expenses
|
|
$
|
335
|
|
|
$
|
315
|
|
|
6.3
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Interest income
|
|
$
|
2
|
|
|
$
|
1
|
|
|
100.0
|
%
|
Interest expense
|
|
(37
|
)
|
|
(28
|
)
|
|
32.1
|
%
|
||
Net interest expense
|
|
(35
|
)
|
|
(27
|
)
|
|
29.6
|
%
|
||
Other investment income
|
|
—
|
|
|
1
|
|
|
(100.0
|
)%
|
||
Net income from unconsolidated investees
|
|
4
|
|
|
2
|
|
|
100.0
|
%
|
||
Total non-operating expenses
|
|
$
|
(31
|
)
|
|
$
|
(24
|
)
|
|
29.2
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Interest expense
|
|
$
|
35
|
|
|
$
|
27
|
|
|
29.6
|
%
|
Accretion of debt issuance costs and debt discount
|
|
2
|
|
|
1
|
|
|
100.0
|
%
|
||
Total interest expense
|
|
$
|
37
|
|
|
$
|
28
|
|
|
32.1
|
%
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
($ in millions)
|
|
|
|||||||
Income tax provision
|
|
$
|
48
|
|
|
$
|
63
|
|
|
(23.8
|
)%
|
Effective tax rate
|
|
22.1
|
%
|
|
32.3
|
%
|
|
(10.2
|
)%
|
|
|
Three Months Ended March 31, 2017
|
|
Three Months Ended March 31, 2016
|
||||||||||||
|
|
Net Income
|
|
Diluted Earnings Per Share
|
|
Net Income
|
|
Diluted Earnings Per Share
|
||||||||
|
|
(in millions, except share and per share amounts)
|
||||||||||||||
U.S. GAAP net income attributable to Nasdaq and diluted earnings per share
|
|
$
|
169
|
|
|
$
|
0.99
|
|
|
$
|
132
|
|
|
$
|
0.78
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Amortization expense of acquired intangible assets
|
|
23
|
|
|
0.14
|
|
|
17
|
|
|
0.10
|
|
||||
Restructuring charges
|
|
—
|
|
|
—
|
|
|
9
|
|
|
0.05
|
|
||||
Merger and strategic initiatives
|
|
6
|
|
|
0.04
|
|
|
9
|
|
|
0.05
|
|
||||
Adjustment to the income tax provision to reflect non-GAAP adjustments
(1)
|
|
(11
|
)
|
|
(0.07
|
)
|
|
(14
|
)
|
|
(0.07
|
)
|
||||
Total non-GAAP adjustments, net of tax
|
|
18
|
|
|
0.11
|
|
|
21
|
|
|
0.13
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Non-GAAP net income attributable to Nasdaq and diluted earnings per share
|
|
$
|
187
|
|
|
$
|
1.10
|
|
|
$
|
153
|
|
|
$
|
0.91
|
|
Weighted-average common shares outstanding for diluted earnings per share
|
|
|
|
170,246,947
|
|
|
|
|
168,368,444
|
|
(1)
|
We determine the tax effect of each item based on the tax rules in the respective jurisdiction where the transaction occurred.
|
•
|
deterioration of our revenues in any of our business segments;
|
•
|
changes in our working capital requirements; and
|
•
|
an increase in our expenses.
|
•
|
operating covenants contained in our credit facilities that limit our total borrowing capacity;
|
•
|
increases in interest rates under our credit facilities;
|
•
|
credit rating downgrades, which could limit our access to additional debt;
|
•
|
a decrease in the market price of our common stock; and
|
•
|
volatility or disruption in the public debt and equity markets.
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
386
|
|
|
$
|
403
|
|
Restricted cash
|
|
78
|
|
|
15
|
|
||
Financial investments, at fair value
|
|
220
|
|
|
245
|
|
||
Total financial assets
|
|
$
|
684
|
|
|
$
|
663
|
|
|
2017
|
|
2016
|
||||
First quarter
|
$
|
0.32
|
|
|
$
|
0.57
|
|
|
|
Maturity Date
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
(in millions)
|
||||||
5.25% senior unsecured notes
|
|
January 2018
|
|
$
|
369
|
|
|
$
|
369
|
|
$750 million revolving credit commitment
|
|
November 2019
|
|
—
|
|
|
—
|
|
||
$400 million senior unsecured term loan facility
|
|
November 2019
|
|
399
|
|
|
399
|
|
||
5.55% senior unsecured notes
|
|
January 2020
|
|
598
|
|
|
598
|
|
||
3.875% senior unsecured notes
|
|
June 2021
|
|
633
|
|
|
625
|
|
||
1.75% senior unsecured notes
|
|
May 2023
|
|
631
|
|
|
622
|
|
||
4.25% senior unsecured notes
|
|
June 2024
|
|
496
|
|
|
495
|
|
||
3.85% senior unsecured notes
|
|
June 2026
|
|
495
|
|
|
495
|
|
||
Total debt obligations
|
|
|
|
3,621
|
|
|
3,603
|
|
||
Less current portion
|
|
|
|
(379
|
)
|
|
—
|
|
||
Total long-term debt obligations
|
|
|
|
$
|
3,242
|
|
|
$
|
3,603
|
|
Broker-Dealer Subsidiaries
|
|
Total Net Capital
|
|
Required Minimum Net Capital
|
|
Excess Capital
|
||||||
|
|
(in millions)
|
||||||||||
Nasdaq Execution Services
|
|
$
|
9.2
|
|
|
$
|
0.3
|
|
|
$
|
8.9
|
|
Execution Access
|
|
46.9
|
|
|
0.5
|
|
|
46.4
|
|
|||
NPM Securities
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||
SMTX
|
|
0.6
|
|
|
0.3
|
|
|
0.3
|
|
|||
Nasdaq Capital Markets Advisory
|
|
0.6
|
|
|
0.3
|
|
|
0.3
|
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Percentage Change
|
|||||
|
|
(in millions)
|
|
|
|||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|||||
Operating activities
|
|
$
|
244
|
|
|
$
|
255
|
|
|
(4.3
|
)%
|
Investing activities
|
|
(8
|
)
|
|
(294
|
)
|
|
(97.3
|
)%
|
||
Financing activities
|
|
(192
|
)
|
|
28
|
|
|
(785.7
|
)%
|
||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
|
2
|
|
|
6
|
|
|
(66.7
|
)%
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
|
46
|
|
|
(5
|
)
|
|
(1,020.0
|
)%
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
|
418
|
|
|
357
|
|
|
17.1
|
%
|
||
Cash and cash equivalents and restricted cash at end of period
|
|
$
|
464
|
|
|
$
|
352
|
|
|
31.8
|
%
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Debt obligations by contract maturity
(1)
|
|
$
|
4,341
|
|
|
$
|
505
|
|
|
$
|
626
|
|
|
$
|
1,409
|
|
|
$
|
1,801
|
|
Minimum rental commitments under non-cancelable operating leases, net
(2)
|
|
407
|
|
|
66
|
|
|
131
|
|
|
91
|
|
|
119
|
|
|||||
Other obligations
(3)
|
|
31
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
4,779
|
|
|
$
|
602
|
|
|
$
|
757
|
|
|
$
|
1,500
|
|
|
$
|
1,920
|
|
(1)
|
Our debt obligations include both principal and interest obligations. At
March 31, 2017
, an interest rate of 3.00% was used to compute the amount of the contractual obligations for interest on the 2016 Credit Facility. All other debt obligations were primarily calculated on a 360-day basis at the contractual fixed rate multiplied by the aggregate principal amount at
March 31, 2017
. See Note 8, “Debt Obligations,” to the condensed consolidated financial statements for further discussion.
|
(2)
|
We lease some of our office space under non-cancelable operating leases with third parties and sublease office space to third parties. Some of our leases contain renewal options and escalation clauses based on increases in property taxes and building operating costs.
|
(3)
|
Other obligations primarily consist of potential future escrow agreement payments related to prior acquisitions.
|
•
|
Note 14, “Clearing Operations,” to the condensed consolidated financial statements for further discussion of our non-cash default fund contributions and margin deposits received for clearing operations; and
|
•
|
Note 15, “Commitments, Contingencies and Guarantees,” to the condensed consolidated financial statements for further discussion of:
|
•
|
Guarantees issued and credit facilities available;
|
•
|
Lease commitments;
|
•
|
Other guarantees;
|
•
|
Non-cash contingent consideration;
|
•
|
Escrow agreements;
|
•
|
Routing brokerage activities;
|
•
|
Litigation; and
|
•
|
Tax audits.
|
|
|
Euro
|
|
Swedish Krona
|
|
Other Foreign Currencies
|
|
U.S. Dollar
|
|
Total
|
||||||||||
|
|
(in millions, except currency rate)
|
||||||||||||||||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average foreign currency rate to the U.S. dollar
|
|
1.0652
|
|
|
0.1120
|
|
|
#
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Percentage of revenues less transaction-based expenses
|
|
9.3
|
%
|
|
8.8
|
%
|
|
5.6
|
%
|
|
76.3
|
%
|
|
100.0
|
%
|
|||||
Percentage of operating income
|
|
14.3
|
%
|
|
2.6
|
%
|
|
(4.3
|
)%
|
|
87.4
|
%
|
|
100.0
|
%
|
|||||
Impact of a 10% adverse currency fluctuation on revenues less transaction-based expenses
|
|
$
|
(6
|
)
|
|
$
|
(5
|
)
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
Impact of a 10% adverse currency fluctuation on operating income
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
#
|
Represents multiple foreign currency rates.
|
N/A
|
Not applicable.
|
|
|
Net Assets
|
|
Impact of a 10% Adverse Currency Fluctuation
|
||||
|
|
(in millions)
|
||||||
Swedish Krona
(1)
|
|
$
|
3,197
|
|
|
$
|
(320
|
)
|
Norwegian Krone
|
|
192
|
|
|
(19
|
)
|
||
Canadian Dollar
|
|
184
|
|
|
(18
|
)
|
||
British Pound
|
|
122
|
|
|
(12
|
)
|
||
Euro
|
|
104
|
|
|
(10
|
)
|
||
Australian Dollar
|
|
88
|
|
|
(9
|
)
|
(1)
|
Includes goodwill of $2,435 million and intangible assets, net of $592 million.
|
Period
|
|
(a) Total Number of Shares Purchased
|
|
(b) Average Price Paid Per Share
|
|
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(in millions)
|
|||||
January 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
$
|
429
|
|
Employee transactions
|
|
337
|
|
|
$
|
67.77
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|||||
February 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
595,974
|
|
|
$
|
70.81
|
|
|
595,974
|
|
$
|
388
|
|
Employee transactions
|
|
478
|
|
|
$
|
69.74
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|||||
March 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
1,619,781
|
|
|
$
|
70.58
|
|
|
1,619,781
|
|
$
|
273
|
|
Employee transactions
|
|
667,223
|
|
|
$
|
69.14
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Quarter Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
2,215,755
|
|
|
$
|
70.64
|
|
|
2,215,755
|
|
$
|
273
|
|
Employee transactions
|
|
668,038
|
|
|
$
|
69.14
|
|
|
N/A
|
|
N/A
|
|
|
Nasdaq, Inc.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
Date: May 10, 2017
|
By:
|
/s/ Adena T. Friedman
|
|
|
|
Name:
|
Adena T. Friedman
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: May 10, 2017
|
By:
|
/s/ Michael Ptasznik
|
|
|
|
Name:
|
Michael Ptasznik
|
|
|
|
Title:
|
Executive Vice President, Corporate Strategy and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
|
|
|
|
|
Form of Nasdaq Continuing Obligations Agreement.*
|
|
|
|
|
|
Employment Offer Letter, dated as of May 10, 2016, between Nasdaq, Inc. and Michael Ptasznik.*
|
|
|
|
|
11
|
|
Statement regarding computation of per share earnings (incorporated herein by reference from Note 12 to the condensed consolidated financial statements under Part I, Item 1 of this Form 10-Q).
|
|
|
|
|
Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).
|
|
|
|
|
|
Certification of Executive Vice President, Corporate Strategy and Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley.
|
|
|
|
|
|
Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley.
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.**
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
101.DEF
|
|
Taxonomy Extension Definition Linkbase.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
*
|
Management contract or compensatory plan or arrangement.
|
**
|
The following materials from the Nasdaq, Inc. Quarterly Report on Form 10-Q for the three months ended
March 31, 2017
, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of
March 31, 2017
and
December 31, 2016
; (ii) Condensed Consolidated Statements of Income for the three months ended
March 31, 2017
and
2016
; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended
March 31, 2017
and
2016
; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2017
and
2016
; and (v) notes to condensed consolidated financial statements.
|
a)
|
Non-Solicitation of Customers, Potential Customers and Employees (Applicable BOTH to Employees and Contractors)
.
|
b)
|
Non-Competition (NOT applicable in California) (Applicable ONLY to Employees)
.
|
a)
|
Ownership of Nasdaq Inventions by the Company
.
|
b)
|
Exception to Designation of Nasdaq Inventions as Works Made for Hire (Applicable ONLY to Consultants/Independent Contractors in California)
.
|
c)
|
Certain Exceptions to Assignment of Rights (Applicable ONLY in California)
.
|
CALIFORNIA LABOR CODE SECTION 2870
INVENTION ON OWN TIME-EXEMPTION FROM AGREEMENT
(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.
|
(b) Immunity From Liability for Confidential Disclosure of a Trade Secret to the Government or in a Court Filing.—
(1) Immunity.—An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—
(A) is made—
(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and
(ii) solely for the purpose of reporting or investigating a suspected violation of law; or
(B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(2) Use of trade secret information in anti-retaliation lawsuit.—An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual—
(A) files any document containing the trade secret under seal; and
(B) does not disclose the trade secret, except pursuant to court order.
|
|
One Liberty Plaza / 50th Floor
New York, NY 10006 / USA
Nasdaq.com
|
1)
|
Your
base salary
will be
$500,000
per annum, paid on a bi-weekly basis, in accordance with the Company’s regular payroll practices and subject to appropriate withholdings and deductions.
|
2)
|
You will be eligible to participate in the Nasdaq Executive Corporate Incentive Program (ECIP) as governed by the
provisions of that program. Your
target bonus opportunity will be $750,000
, less applicable taxes and withholdings,
and is payable during the normal award payment timeframe (expected first quarter 2017). Your bonus target for 2016 will not be pro-rated due to your start date, however your bonus goals, and associated upside and downside, will cover the timeframe from your start date through December 31, 2016, not the full calendar year. Your maximum 2016 bonus opportunity will be $1,200,000, assuming a start date in June. The level of actual payout could exceed or fall below the target amount of your target bonus opportunity and is based upon corporate financial, business unit and individual performance results.
|
3)
|
You will be eligible to receive an
annual equity grant
based on our standard Executive Vice President (“EVP”) equity guidelines and subject to the approval of the Committee. Details relating to this equity award will be outlined in the equity award agreements you will be asked to sign and subject to the terms and conditions of the Equity Plan in affect at the time of the grant. Your
target equity grant will be $1,100,000
. Your 2016 grant will consist of 50% percent performance share units (“PSUs”) and 50% restricted stock units (”RSUs”). The PSUs will vest 100% after 3 years, to vest December 31, 2018. The PSU value will be determined based on 3-year relative total shareholder return versus both Nasdaq’s global exchange peers (50%) and the companies in the Standard and Poor’s 500 (50%). The actual payout will range from 0% to 200% of target based on the performance results. The RSUs will vest 1/3 each year over a three year period as measured from your grant date.
|
4)
|
You will be eligible for
relocation assistance
in direct connection with your relocation from Toronto, Canada to New York City, United States as per the below. All benefits are to be received net of tax, unless otherwise stated. Net of tax means that the Company will cover any state, local, federal or FICA tax imposed on the taxable benefits listed below.
|
•
|
One home finding trip for up to 6 days/5 nights performed by a provider selected by the Company.
|
•
|
New home purchase closing costs or lease acquisition fees.
|
•
|
Removal of household goods up to a maximum of 40 cubic meters from Toronto to New York City performed by a provider selected by the Company. Storage of household goods for up to 60 days, if applicable. Movement of two automobiles, if applicable.
|
•
|
Final trip expenses, including airline tickets, meals, short-term lodging, for you and your immediate family from Toronto to New York City.
|
•
|
A miscellaneous allowance of $10,000, net of tax, to cover additional relocation expenses not directly reimbursed.
|
•
|
Destination services for 2 days performed by a provider selected by the Company. The services can include assistance with local matters such as obtaining a social security number, opening bank accounts, obtaining mortgage pre-approval, and other practical items.
|
•
|
Temporary housing up to 60 days by a provider selected by the Company. The Company may at its sole discretion decide on appropriate location and size of the temporary housing.
|
•
|
United States tax briefing and tax return filing assistance for Canada and United States filings for 2016 and 2017 tax years performed by a provider selected by the Company. You are responsible for providing the provider with the information requested in a timely manner to ensure completion of your tax returns.
|
•
|
Visa and immigration assistance by a provider selected by the Company. This benefit includes obtaining the initial residence permit for your family and work permit for you and your spouse.
|
5)
|
As a full-time employee, you will be eligible to participate in Nasdaq’s employee benefit programs generally available to similarly situated Company Employees, as may be in effect from time to time at the Company, subject to the terms and conditions of the relevant plans. If you elect health and welfare benefits during your initial enrollment period, they will become effective the first day of the month following employment. An overview of the Nasdaq employee benefit program is enclosed with this letter. In addition, you will be eligible for
five weeks of vacation
per calendar year.
|
6)
|
As an EVP of the Company, you will be eligible to participate in the Company’s executive benefits, including
executive health exams and financial planning services
. These programs are provided to you 100% company-paid; you are responsible for the taxes if you use the financial planning benefit.
|
7)
|
If you are
terminated by the Company
, other than for Cause,
or for Good Reason
, you will be entitled to severance pay under the EVP severance policy, which will be no less than 1.5x salary plus target bonus plus 12 months of health insurance coverage at the active employee rate. Additionally, your unvested equity at the time of termination of employment will continue to vest for an additional 18 months after termination. If the termination occurs prior to the full vesting of your one time Welcome Equity Grant, 100% of the Welcome Equity Grant vesting will be accelerated upon termination. Per the Nasdaq, Inc. Equity Incentive Plan, the Management Compensation Committee of the Board of Directors shall have the authority to determine any additional vesting continuation or acceleration upon termination of employment.
|
8)
|
Per the Nasdaq, Inc. Equity Incentive Plan, the Management Compensation Committee of the Board of Directors shall have the authority to determine any additional vesting continuation or acceleration upon termination of employment.
|
a.
|
“
Cause
” means (i) your conviction of, or pleading nolo contendere to, any crime, whether a felony or misdemeanor, involving the purchase or sale of any security, mail or wire fraud, theft, embezzlement, moral turpitude, or Nasdaq or its affiliates’ property (with the exception of minor traffic violations or similar misdemeanors); (ii) your repeated neglect of duties; or (iii) your willful misconduct in connection with the performance of duties.
|
b.
|
“
Good Reason
” shall mean (i) reducing your position, duties, or authority; or (ii) relocating your principal work location beyond a 50 mile radius of your work location; provided that no event or condition shall constitute Good Reason unless (A) you give written notice specifying your objection to such event or condition within 90 days following the occurrence of such event or condition, (B) such event or condition is not corrected, in all material respects, in a manner that is reasonably satisfactory to you within 30 days following the receipt of such notice, and (C) you resign from your employment within not more than 30 days following the expiration of the 30-day period described in the foregoing clause (B).
|
9)
|
If you are
terminated by the Company
, other than for Cause,
or for Good Reason
(Good Reason and Cause defined in the Change in Control Severance Plan)
within two years following a change-in-control,
you will be entitled to severance pay under the EVP Change in Control Severance Plan, which equates to no less than 2x salary plus 1 times target bonus plus prorated current year bonus
|
10)
|
This offer is subject to a satisfactory completion of a drug test, background check, and fingerprint check, as applicable to your location and as evaluated by the Company in its sole discretion. It is recommended that you not resign from, or give notice to, your current employer until you have been notified that you have successfully cleared the background screening. In addition, this offer is contingent upon you providing satisfactory proof of identity and legal authority to work in the United States.
|
11)
|
As a condition of employment with the Company, you are required to execute the Company’s Continuation of Obligations Agreement attached hereto as Appendix A. Please review and execute the Continuation of Obligations Agreement and return it with your signed copy of this letter.
|
12)
|
The Company maintains and from time to time modifies and implements various Company policies and procedures including, but not limited to, a Company Employee Handbook and Company Code of Ethics. You will be expected to comply with all such policies and procedures.
|
13)
|
Please disclose to us any and all agreements that may affect your eligibility to be employed by Nasdaq, its affiliates or subsidiaries, or that may limit the manner in which you may be employed. It is our understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. You agree not to bring any third party confidential information to Nasdaq, its affiliates or subsidiaries, including that of any former employer, and that in performing your duties you will not in any way utilize any such information. You further agree that, during the term of your employment, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which we are now involved or become involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to us.
|
14)
|
By signing below, you also represent and warrant that you are not subject to any contract, agreement, or restrictive covenant of any kind that would prevent you from accepting employment with the Company and/or beginning work for the Company, or from freely and fully performing your duties hereunder. You further promise that should you become aware of any reason you cannot join or remain employed by the Company, or fully execute your responsibilities for the Company, you will immediately notify the Company of such development, in writing. Similarly, if you receive any communication from a former employer or any other person or entity claiming you cannot join or continue employment at the Company, you will immediately notify the Company in writing. You also represent that you will abide by all contractual obligations you may have to all prior employers and that you will not retain, review, or utilize any other person’s or entity’s confidential or proprietary information in connection with your work for the Company or share or disclose such information to any other person or entity.
|
15)
|
This offer of employment, with Appendix A–Continuation of Obligations Agreement, constitutes the entire offer, superseding any prior offers, understandings, communications, representations and/or agreements with respect to the subject matter hereof. This offer of employment shall be governed by the laws of the State of New York without giving effect to the principles of conflicts of law.
|
16)
|
Your employment will be on an “at-will” basis meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause or prior notice. The Company also reserves the right to modify the terms, benefits, and conditions of your employment at any time.
|
|
|
|
/s/ Adena T. Friedman
|
|
|
Name:
|
Adena T. Friedman
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
/s/ Michael Ptasznik
|
|
|
Name:
|
Michael Ptasznik
|
|
|
Title:
|
Executive Vice President, Corporate Strategy and Chief Financial Officer
|
|
|
|
/s/ Adena T. Friedman
|
|
|
Name:
|
Adena T. Friedman
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
Date:
|
May 10, 2017
|
|
|
|
|
|
|
|
/s/ Michael Ptasznik
|
|
|
Name:
|
Michael Ptasznik
|
|
|
Title:
|
Executive Vice President, Corporate Strategy and Chief Financial Officer
|
|
|
Date:
|
May 10, 2017
|