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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 September 30, 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 October 27, 2017
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Common Stock, $.01 par value per share
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166,226,273 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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September 30, 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
|
$
|
530
|
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$
|
403
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Restricted cash
|
21
|
|
|
15
|
|
||
Financial investments, at fair value
|
207
|
|
|
245
|
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||
Receivables, net
|
320
|
|
|
429
|
|
||
Default funds and margin deposits
|
3,893
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|
3,301
|
|
||
Other current assets
|
175
|
|
|
167
|
|
||
Assets held for sale
|
300
|
|
|
—
|
|
||
Total current assets
|
5,446
|
|
|
4,560
|
|
||
Property and equipment, net
|
379
|
|
|
362
|
|
||
Deferred tax assets
|
611
|
|
|
717
|
|
||
Goodwill
|
6,154
|
|
|
6,027
|
|
||
Intangible assets, net
|
2,091
|
|
|
2,094
|
|
||
Other non-current assets
|
391
|
|
|
390
|
|
||
Total assets
|
$
|
15,072
|
|
|
$
|
14,150
|
|
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
168
|
|
|
$
|
175
|
|
Section 31 fees payable to SEC
|
31
|
|
|
108
|
|
||
Accrued personnel costs
|
130
|
|
|
207
|
|
||
Deferred revenue
|
204
|
|
|
162
|
|
||
Other current liabilities
|
94
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|
|
129
|
|
||
Default funds and margin deposits
|
3,893
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3,301
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||
Short-term debt
|
154
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|
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—
|
|
||
Liabilities held for sale
|
49
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—
|
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||
Total current liabilities
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4,723
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4,082
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Long-term debt
|
3,589
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3,603
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||
Deferred tax liabilities
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726
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|
|
720
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|
||
Non-current deferred revenue
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157
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|
171
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|
||
Other non-current liabilities
|
142
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|
|
144
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|
||
Total liabilities
|
9,337
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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, $0.01 par value, 300,000,000 shares authorized, shares issued: 171,454,303 at September 30, 2017 and 170,501,186 at December 31, 2016; shares outstanding: 166,594,818 at September 30, 2017 and 166,579,468 at December 31, 2016
|
2
|
|
|
2
|
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||
Additional paid-in capital
|
3,012
|
|
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3,104
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|
||
Common stock in treasury, at cost: 4,859,485 shares at September 30, 2017 and 3,921,718 shares at December 31, 2016
|
(241
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)
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|
(176
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)
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||
Accumulated other comprehensive loss
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(825
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)
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(979
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)
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||
Retained earnings
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3,787
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3,479
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Total Nasdaq stockholders’ equity
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5,735
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5,430
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Total liabilities and equity
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$
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15,072
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$
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14,150
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2017
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2016
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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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581
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$
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557
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$
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1,808
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$
|
1,661
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Corporate Services
|
161
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|
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162
|
|
|
486
|
|
|
467
|
|
||||
Information Services
|
150
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137
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432
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|
|
405
|
|
||||
Market Technology
|
77
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73
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|
|
215
|
|
|
199
|
|
||||
Total revenues
|
969
|
|
|
929
|
|
|
2,941
|
|
|
2,732
|
|
||||
Transaction-based expenses:
|
|
|
|
|
|
|
|
||||||||
Transaction rebates
|
(266
|
)
|
|
(265
|
)
|
|
(874
|
)
|
|
(804
|
)
|
||||
Brokerage, clearance and exchange fees
|
(96
|
)
|
|
(79
|
)
|
|
(275
|
)
|
|
(250
|
)
|
||||
Revenues less transaction-based expenses
|
607
|
|
|
585
|
|
|
1,792
|
|
|
1,678
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
169
|
|
|
168
|
|
|
493
|
|
|
484
|
|
||||
Professional and contract services
|
39
|
|
|
40
|
|
|
112
|
|
|
111
|
|
||||
Computer operations and data communications
|
31
|
|
|
28
|
|
|
91
|
|
|
80
|
|
||||
Occupancy
|
23
|
|
|
23
|
|
|
69
|
|
|
62
|
|
||||
General, administrative and other
|
15
|
|
|
19
|
|
|
64
|
|
|
50
|
|
||||
Marketing and advertising
|
7
|
|
|
8
|
|
|
22
|
|
|
22
|
|
||||
Depreciation and amortization
|
47
|
|
|
46
|
|
|
140
|
|
|
125
|
|
||||
Regulatory
|
9
|
|
|
8
|
|
|
25
|
|
|
21
|
|
||||
Merger and strategic initiatives
|
3
|
|
|
12
|
|
|
20
|
|
|
56
|
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
||||
Total operating expenses
|
343
|
|
|
352
|
|
|
1,036
|
|
|
1,052
|
|
||||
Operating income
|
264
|
|
|
233
|
|
|
756
|
|
|
626
|
|
||||
Interest income
|
2
|
|
|
1
|
|
|
6
|
|
|
4
|
|
||||
Interest expense
|
(34
|
)
|
|
(37
|
)
|
|
(107
|
)
|
|
(98
|
)
|
||||
Other investment income
|
—
|
|
|
—
|
|
|
2
|
|
|
3
|
|
||||
Net income from unconsolidated investees
|
4
|
|
|
2
|
|
|
10
|
|
|
6
|
|
||||
Income before income taxes
|
236
|
|
|
199
|
|
|
667
|
|
|
541
|
|
||||
Income tax provision
|
65
|
|
|
68
|
|
|
179
|
|
|
208
|
|
||||
Net income attributable to Nasdaq
|
$
|
171
|
|
|
$
|
131
|
|
|
$
|
488
|
|
|
$
|
333
|
|
Per share information:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
1.03
|
|
|
$
|
0.79
|
|
|
$
|
2.93
|
|
|
$
|
2.02
|
|
Diluted earnings per share
|
$
|
1.01
|
|
|
$
|
0.77
|
|
|
$
|
2.88
|
|
|
$
|
1.97
|
|
Cash dividends declared per common share
|
$
|
0.38
|
|
|
$
|
0.32
|
|
|
$
|
1.08
|
|
|
$
|
0.89
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
171
|
|
|
$
|
131
|
|
|
$
|
488
|
|
|
$
|
333
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gains (losses):
|
|
|
|
|
|
|
|
||||||||
Net foreign currency translation gains (losses)
|
92
|
|
|
(45
|
)
|
|
258
|
|
|
(34
|
)
|
||||
Income tax benefit (expense)
|
(25
|
)
|
|
23
|
|
|
(104
|
)
|
|
16
|
|
||||
Total other comprehensive income (loss), net of tax
|
67
|
|
|
(22
|
)
|
|
154
|
|
|
(18
|
)
|
||||
Comprehensive income attributable to Nasdaq
|
$
|
238
|
|
|
$
|
109
|
|
|
$
|
642
|
|
|
$
|
315
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
488
|
|
|
$
|
333
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
140
|
|
|
125
|
|
||
Share-based compensation
|
52
|
|
|
55
|
|
||
Deferred income taxes
|
(4
|
)
|
|
(10
|
)
|
||
Non-cash restructuring charges
|
—
|
|
|
8
|
|
||
Net income from unconsolidated investees
|
(10
|
)
|
|
(6
|
)
|
||
Other reconciling items included in net income
|
18
|
|
|
5
|
|
||
Net change in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Receivables, net
|
106
|
|
|
53
|
|
||
Other assets
|
311
|
|
|
(2
|
)
|
||
Accounts payable and accrued expenses
|
(18
|
)
|
|
(3
|
)
|
||
Section 31 fees payable to SEC
|
(77
|
)
|
|
(77
|
)
|
||
Accrued personnel costs
|
(82
|
)
|
|
(8
|
)
|
||
Deferred revenue
|
4
|
|
|
46
|
|
||
Other liabilities
|
(68
|
)
|
|
(27
|
)
|
||
Net assets held for sale
|
(251
|
)
|
|
—
|
|
||
Net cash provided by operating activities
|
609
|
|
|
492
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of trading securities
|
(291
|
)
|
|
(376
|
)
|
||
Proceeds from sales and redemptions of trading securities
|
334
|
|
|
328
|
|
||
Purchases of available-for-sale investment securities
|
(12
|
)
|
|
(7
|
)
|
||
Proceeds from maturities of available-for-sale investment securities
|
30
|
|
|
19
|
|
||
Acquisition of businesses, net of cash and cash equivalents acquired
|
—
|
|
|
(1,460
|
)
|
||
Purchases of property and equipment
|
(102
|
)
|
|
(85
|
)
|
||
Other investment activities
|
(32
|
)
|
|
(10
|
)
|
||
Net cash used in investing activities
|
(73
|
)
|
|
(1,591
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from commercial paper, net
|
154
|
|
|
—
|
|
||
Repayments of long-term debt
|
(683
|
)
|
|
(1,118
|
)
|
||
Payment of debt extinguishment cost
|
(9
|
)
|
|
—
|
|
||
Proceeds from utilization of credit commitment, net of debt issuance costs
|
10
|
|
|
878
|
|
||
Proceeds from issuances of senior unsecured notes, net of debt issuance costs
|
498
|
|
|
1,159
|
|
||
Proceeds from issuance of term loan facility
|
—
|
|
|
399
|
|
||
Cash paid for repurchase of common stock
|
(175
|
)
|
|
(100
|
)
|
||
Cash dividends
|
(180
|
)
|
|
(147
|
)
|
||
Proceeds received from employee stock activity
|
32
|
|
|
42
|
|
||
Payments related to employee shares withheld for taxes
|
(65
|
)
|
|
(58
|
)
|
||
Proceeds (disbursements) of customer funds
|
—
|
|
|
(38
|
)
|
||
Net cash (used in) provided by financing activities
|
(418
|
)
|
|
1,017
|
|
||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
15
|
|
|
1
|
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
133
|
|
|
(81
|
)
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
418
|
|
|
357
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
$
|
551
|
|
|
$
|
276
|
|
Supplemental Disclosure Cash Flow Information
|
|
|
|
||||
Cash paid for:
|
|
|
|
||||
Interest
|
$
|
114
|
|
|
$
|
96
|
|
Income taxes, net of refund
|
$
|
126
|
|
|
$
|
167
|
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|||||||
|
|
2017
|
|
2016
|
|
||||||
|
|
($ in millions)
|
|
|
|||||||
Income tax provision
|
|
$
|
65
|
|
|
$
|
68
|
|
|
(4.4
|
)%
|
Effective tax rate
|
|
27.5
|
%
|
|
34.2
|
%
|
|
|
|
||
|
|
|
|
|
|
|
|||||
|
|
Nine Months Ended September 30,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
|
|||||
|
|
($ in millions)
|
|
|
|||||||
Income tax provision
|
|
$
|
179
|
|
|
$
|
208
|
|
|
(13.9
|
)%
|
Effective tax rate
|
|
26.8
|
%
|
|
38.4
|
%
|
|
|
|
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.
|
The adoption resulted in the recognition of excess tax benefit in our provision for income taxes rather than additional paid-in capital, which was $7 million for the three months ended September 30, 2017 and was $30 million for the nine months ended September 30, 2017.
|
Compensation - Stock Compensation
In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting.”
|
This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions.
|
We adopted this new standard on June 30, 2017 on a prospective basis.
|
Adopting this standard had no impact on our consolidated financial statements. The future impact will depend on the extent and nature of future changes to the terms of our share-based payment awards. Historically, we have not had significant changes to our share-based payment awards and therefore do not expect adoption of this guidance to have a material impact on our consolidated financial statements.
|
•
|
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.
|
|
Nine Months Ended September 30, 2016
|
||
|
|||
|
(in millions)
|
||
Severance
|
$
|
22
|
|
Facilities-related
|
1
|
|
|
Asset impairments
|
8
|
|
|
Other
|
10
|
|
|
Total restructuring charges
|
$
|
41
|
|
|
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
|
|
|
(38
|
)
|
|
111
|
|
|
141
|
|
|||||
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 useful life
|
Indefinite
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Customer relationships
|
$
|
148
|
|
|
$
|
103
|
|
|
$
|
29
|
|
|
$
|
76
|
|
Discount rate used
|
9.1
|
%
|
|
15.5
|
%
|
|
16.4
|
%
|
|
10.3
|
%
|
||||
Estimated average 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 useful life
|
Indefinite
|
|
|
1 year
|
|
|
2 years
|
|
|
—
|
|
||||
Technology
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Discount rate used
|
—
|
|
|
15.5
|
%
|
|
—
|
|
|
—
|
|
||||
Estimated average useful life
|
—
|
|
|
5 years
|
|
|
—
|
|
|
—
|
|
||||
Total intangible assets
|
$
|
623
|
|
|
$
|
111
|
|
|
$
|
31
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
•
|
Nasdaq GlobeNewswire;
|
•
|
Nasdaq Influencers;
|
•
|
Nasdaq Media Intelligence;
|
•
|
Nasdaq IR Websites and Newsrooms; and
|
•
|
Nasdaq Webcasts.
|
|
|
September 30, 2017
|
|||
|
|
(in millions)
|
|||
Receivables, net
|
|
$
|
23
|
|
|
Property and equipment, net
|
|
21
|
|
||
Goodwill
|
|
202
|
|
||
Intangible assets, net
|
|
41
|
|
||
Other assets
|
|
13
|
|
||
Total assets held for sale
|
|
$
|
300
|
|
|
|
|
|
|||
Deferred tax liabilities
|
|
$
|
20
|
|
|
Other current liabilities
|
|
29
|
|
||
Total liabilities held for sale
|
|
$
|
49
|
|
|
Market
Services
|
|
Corporate Services
|
|
Information Services
|
|
Market Technology
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance at December 31, 2016
|
$
|
3,390
|
|
|
$
|
674
|
|
|
$
|
1,806
|
|
|
$
|
157
|
|
|
$
|
6,027
|
|
Goodwill acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|||||
Measurement period adjustment
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Foreign currency translation adjustment
|
170
|
|
|
26
|
|
|
109
|
|
|
18
|
|
|
323
|
|
|||||
Goodwill reclassified as held for sale
(1)
|
—
|
|
|
(202
|
)
|
|
—
|
|
|
—
|
|
|
(202
|
)
|
|||||
Balance at September 30, 2017
|
$
|
3,560
|
|
|
$
|
491
|
|
|
$
|
1,915
|
|
|
$
|
188
|
|
|
$
|
6,154
|
|
|
September 30, 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
|
$
|
51
|
|
|
$
|
(20
|
)
|
|
$
|
31
|
|
|
8
|
|
$
|
38
|
|
|
$
|
(24
|
)
|
|
$
|
14
|
|
|
5
|
Customer relationships
|
1,330
|
|
|
(502
|
)
|
|
828
|
|
|
19
|
|
1,394
|
|
|
(464
|
)
|
|
930
|
|
|
18
|
||||||
Other
|
4
|
|
|
(3
|
)
|
|
1
|
|
|
10
|
|
7
|
|
|
(6
|
)
|
|
1
|
|
|
6
|
||||||
Foreign currency translation adjustment
|
(108
|
)
|
|
44
|
|
|
(64
|
)
|
|
|
|
(160
|
)
|
|
58
|
|
|
(102
|
)
|
|
|
||||||
Total finite-lived intangible assets
|
$
|
1,277
|
|
|
$
|
(481
|
)
|
|
$
|
796
|
|
|
|
|
$
|
1,279
|
|
|
$
|
(436
|
)
|
|
$
|
843
|
|
|
|
Indefinite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Exchange and clearing registrations
|
$
|
1,257
|
|
|
$
|
—
|
|
|
$
|
1,257
|
|
|
|
|
$
|
1,257
|
|
|
$
|
—
|
|
|
$
|
1,257
|
|
|
|
Trade names
|
127
|
|
|
—
|
|
|
127
|
|
|
|
|
130
|
|
|
—
|
|
|
130
|
|
|
|
||||||
Licenses
|
52
|
|
|
—
|
|
|
52
|
|
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
|
||||||
Foreign currency translation adjustment
|
(141
|
)
|
|
—
|
|
|
(141
|
)
|
|
|
|
(188
|
)
|
|
—
|
|
|
(188
|
)
|
|
|
||||||
Total indefinite-lived intangible assets
|
$
|
1,295
|
|
|
$
|
—
|
|
|
$
|
1,295
|
|
|
|
|
$
|
1,251
|
|
|
$
|
—
|
|
|
$
|
1,251
|
|
|
|
Total intangible assets
|
$
|
2,572
|
|
|
$
|
(481
|
)
|
|
$
|
2,091
|
|
|
|
|
$
|
2,530
|
|
|
$
|
(436
|
)
|
|
$
|
2,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
||||||
|
(in millions)
|
||||||||||
Finite-lived intangible assets reclassified as held for sale:
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
54
|
|
|
$
|
(17
|
)
|
|
$
|
37
|
|
Other
|
2
|
|
|
(1
|
)
|
|
1
|
|
|||
Total finite-lived intangible assets held for sale
|
56
|
|
|
(18
|
)
|
|
38
|
|
|||
Indefinite-lived intangible assets reclassified as held for sale - trade name
|
3
|
|
|
—
|
|
|
3
|
|
|||
Total intangible assets held for sale
|
$
|
59
|
|
|
$
|
(18
|
)
|
|
$
|
41
|
|
(1)
|
Represents the estimated amortization to be recognized for the remaining three months of 2017.
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(in millions)
|
||||||
Trading securities
|
$
|
207
|
|
|
$
|
228
|
|
Available-for-sale investment securities
|
—
|
|
|
17
|
|
||
Equity method investments
|
127
|
|
|
124
|
|
||
Cost method investments
|
151
|
|
|
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
|
12
|
|
|
9
|
|
|
468
|
|
|
170
|
|
|
659
|
|
|||||
Revenue recognized
|
(13
|
)
|
|
(17
|
)
|
|
(422
|
)
|
|
(197
|
)
|
|
(649
|
)
|
|||||
Translation adjustment
|
—
|
|
|
—
|
|
|
2
|
|
|
21
|
|
|
23
|
|
|||||
Deferred revenue reclassified as held for sale
(1)
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Balance at September 30, 2017
|
$
|
53
|
|
|
$
|
29
|
|
|
$
|
100
|
|
|
$
|
179
|
|
|
$
|
361
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at January 1, 2016
|
$
|
59
|
|
|
$
|
53
|
|
|
$
|
28
|
|
|
$
|
187
|
|
|
$
|
327
|
|
Additions
|
9
|
|
|
10
|
|
|
516
|
|
|
195
|
|
|
730
|
|
|||||
Revenue recognized
|
(13
|
)
|
|
(22
|
)
|
|
(433
|
)
|
|
(185
|
)
|
|
(653
|
)
|
|||||
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|||||
Balance at September 30, 2016
|
$
|
55
|
|
|
$
|
41
|
|
|
$
|
111
|
|
|
$
|
200
|
|
|
$
|
407
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Listing Revenues
|
|
Listing of Additional Shares Revenues
|
|
Annual Renewal and Other Revenues
|
|
Market Technology Revenues
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Fiscal year ended:
|
|
|
|
|
|
|
|
|
|||||||||||
2017
(1)
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
78
|
|
|
$
|
28
|
|
|
$
|
115
|
|
2018
|
15
|
|
|
13
|
|
|
22
|
|
|
57
|
|
|
107
|
|
|||||
2019
|
14
|
|
|
6
|
|
|
—
|
|
|
36
|
|
|
56
|
|
|||||
2020
|
10
|
|
|
4
|
|
|
—
|
|
|
33
|
|
|
47
|
|
|||||
2021
|
6
|
|
|
1
|
|
|
—
|
|
|
15
|
|
|
22
|
|
|||||
2022 and thereafter
|
4
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
14
|
|
|||||
|
$
|
53
|
|
|
$
|
29
|
|
|
$
|
100
|
|
|
$
|
179
|
|
|
$
|
361
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents deferred revenue that is anticipated to be recognized over the remaining three months of 2017.
|
|
December 31, 2016
|
|
Additions
|
|
Payments, Accretion
and Other
|
|
September 30, 2017
|
||||||||
|
(in millions)
|
||||||||||||||
Short-term debt - commercial paper
|
$
|
—
|
|
|
$
|
1,402
|
|
|
$
|
(1,248
|
)
|
|
$
|
154
|
|
Long-term debt:
|
|
|
|
|
|
|
|
||||||||
5.55% senior unsecured notes due January 15, 2020
|
598
|
|
|
—
|
|
|
—
|
|
|
598
|
|
||||
5.25% senior unsecured notes repaid on May 26, 2017
|
369
|
|
|
—
|
|
|
(369
|
)
|
|
—
|
|
||||
3.875% senior unsecured notes due June 7, 2021
|
625
|
|
|
—
|
|
|
80
|
|
|
705
|
|
||||
4.25% senior unsecured notes due June 1, 2024
|
495
|
|
|
—
|
|
|
1
|
|
|
496
|
|
||||
1.75% senior unsecured notes due May 19, 2023
|
622
|
|
|
—
|
|
|
79
|
|
|
701
|
|
||||
3.85% senior unsecured notes due June 30, 2026
|
495
|
|
|
—
|
|
|
1
|
|
|
496
|
|
||||
Senior unsecured floating rate notes due March 22, 2019
|
—
|
|
|
498
|
|
|
—
|
|
|
498
|
|
||||
$400 million senior unsecured term loan facility due November 25, 2019 (average interest rate of 2.43% for the period January 1, 2017 through September 30, 2017)
|
399
|
|
|
—
|
|
|
(299
|
)
|
|
100
|
|
||||
$1 billion revolving credit commitment due April 25, 2022 (average interest rate of 2.40% for the period April 25, 2017 through September 30, 2017)
|
—
|
|
|
15
|
|
|
(20
|
)
|
|
(5
|
)
|
||||
Total long-term debt
|
3,603
|
|
|
513
|
|
|
(527
|
)
|
|
3,589
|
|
||||
Total debt obligations
|
$
|
3,603
|
|
|
$
|
1,915
|
|
|
$
|
(1,775
|
)
|
|
$
|
3,743
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Share-based compensation expense before income taxes
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
52
|
|
|
$
|
55
|
|
Income tax benefit
|
(7
|
)
|
|
(8
|
)
|
|
(21
|
)
|
|
(23
|
)
|
||||
Share-based compensation expense after income taxes
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
31
|
|
|
$
|
32
|
|
|
Restricted Stock
|
|||||
|
Number of Awards
|
|
Weighted-Average Grant Date Fair Value
|
|||
Unvested balances at January 1, 2017
|
2,560,578
|
|
|
$
|
45.92
|
|
Granted
|
633,234
|
|
|
66.08
|
|
|
Vested
|
(1,095,663
|
)
|
|
38.43
|
|
|
Forfeited
|
(188,292
|
)
|
|
51.68
|
|
|
Unvested balances at September 30, 2017
|
1,909,857
|
|
|
$
|
56.33
|
|
|
Nine Months Ended September 30,
|
||||
|
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
|
|
$66.36
|
||
Weighted-average fair value at grant date
|
$81.57
|
|
$93.25
|
(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
|
|
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
|
197,075
|
|
|
65.51
|
|
|
803,712
|
|
|
55.57
|
|
||
Vested
|
(10,729
|
)
|
|
53.72
|
|
|
(1,079,925
|
)
|
|
42.83
|
|
||
Forfeited
|
(41,063
|
)
|
|
55.95
|
|
|
(28,497
|
)
|
|
87.86
|
|
||
Unvested balances at September 30, 2017
|
524,049
|
|
|
$
|
57.13
|
|
|
1,009,958
|
|
|
$
|
78.18
|
|
|
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
|
(1,074,321
|
)
|
|
21.87
|
|
|
|
|
|
|||
Forfeited
|
(978
|
)
|
|
21.33
|
|
|
|
|
|
|||
Outstanding at September 30, 2017
|
599,889
|
|
|
$
|
43.00
|
|
|
5.49
|
|
$
|
21
|
|
Exercisable at September 30, 2017
|
331,072
|
|
|
$
|
23.77
|
|
|
2.54
|
|
$
|
18
|
|
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
|
April 25, 2017
|
|
0.38
|
|
|
June 16, 2017
|
|
63
|
|
|
June 30, 2017
|
||
July 25, 2017
|
|
0.38
|
|
|
September 15, 2017
|
|
64
|
|
|
September 29, 2017
|
||
|
|
|
|
|
|
$
|
180
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions, except share and per share amounts)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
171
|
|
|
$
|
131
|
|
|
$
|
488
|
|
|
$
|
333
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding for basic earnings per share
|
166,694,755
|
|
|
165,606,199
|
|
|
166,195,433
|
|
|
164,971,288
|
|
||||
Weighted-average effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Employee equity awards
|
2,315,145
|
|
|
2,898,633
|
|
|
3,036,349
|
|
|
3,355,780
|
|
||||
Contingent issuance of common stock
|
992,247
|
|
|
992,247
|
|
|
334,384
|
|
|
333,163
|
|
||||
Weighted-average common shares outstanding for diluted earnings per share
|
170,002,147
|
|
|
169,497,079
|
|
|
169,566,166
|
|
|
168,660,231
|
|
||||
Basic and diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
1.03
|
|
|
$
|
0.79
|
|
|
$
|
2.93
|
|
|
$
|
2.02
|
|
Diluted earnings per share
|
$
|
1.01
|
|
|
$
|
0.77
|
|
|
$
|
2.88
|
|
|
$
|
1.97
|
|
|
September 30, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in millions)
|
||||||||||||||
Financial investments, at fair value
|
$
|
207
|
|
|
$
|
134
|
|
|
$
|
73
|
|
|
$
|
—
|
|
Default fund and margin deposit investments
|
1,905
|
|
|
252
|
|
|
1,653
|
|
|
—
|
|
||||
Total
|
$
|
2,112
|
|
|
$
|
386
|
|
|
$
|
1,726
|
|
|
$
|
—
|
|
|
December 31, 2016
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in millions)
|
||||||||||||||
Financial investments, at fair value
|
$
|
245
|
|
|
$
|
151
|
|
|
$
|
94
|
|
|
$
|
—
|
|
Default fund and margin deposit investments
|
1,900
|
|
|
614
|
|
|
1,286
|
|
|
—
|
|
||||
Total
|
$
|
2,145
|
|
|
$
|
765
|
|
|
$
|
1,380
|
|
|
$
|
—
|
|
|
September 30, 2017
|
||||||||||
|
Cash Contributions
|
|
Non-Cash Contributions
|
|
Total Contributions
|
||||||
|
(in millions)
|
||||||||||
Default fund contributions
|
$
|
361
|
|
|
$
|
133
|
|
|
$
|
494
|
|
Margin deposits
|
3,532
|
|
|
4,561
|
|
|
8,093
|
|
|||
Total
|
$
|
3,893
|
|
|
$
|
4,694
|
|
|
$
|
8,587
|
|
|
September 30, 2017
|
||
|
(in millions)
|
||
Commodity and seafood options, futures and forwards
(1)(2)(3)
|
$
|
646
|
|
Fixed-income options and futures
(1)(2)
|
700
|
|
|
Stock options and futures
(1)(2)
|
140
|
|
|
Index options and futures
(1)(2)
|
181
|
|
|
Total
|
$
|
1,667
|
|
(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.
|
|
September 30, 2017
|
|
September 30, 2016
|
||
Commodity and seafood options, futures and forwards
(1)
|
2,040,033
|
|
|
2,548,090
|
|
Fixed-income options and futures
|
14,788,850
|
|
|
10,656,778
|
|
Stock options and futures
|
20,070,584
|
|
|
22,012,777
|
|
Index options and futures
|
32,748,357
|
|
|
38,389,146
|
|
Total
|
69,647,824
|
|
|
73,606,791
|
|
(1)
|
The total volume in cleared power related to commodity contracts was
911
Terawatt hours (TWh) for the nine months ended
September 30, 2017
and
1,197
TWh for the
nine
months ended
September 30, 2016
.
|
•
|
junior capital contributed by Nasdaq Clearing, which totaled
$18 million
at
September 30, 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 clearinghouse rules, which totaled
$25 million
at
September 30, 2017
; and
|
•
|
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 September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
581
|
|
|
$
|
161
|
|
|
$
|
150
|
|
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
969
|
|
Transaction-based expenses
|
(362
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(362
|
)
|
||||||
Revenues less transaction-based expenses
|
219
|
|
|
161
|
|
|
150
|
|
|
77
|
|
|
—
|
|
|
607
|
|
||||||
Operating income (loss)
|
$
|
118
|
|
|
$
|
45
|
|
|
$
|
111
|
|
|
$
|
16
|
|
|
$
|
(26
|
)
|
|
$
|
264
|
|
Three Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
557
|
|
|
$
|
162
|
|
|
$
|
137
|
|
|
$
|
73
|
|
|
$
|
—
|
|
|
$
|
929
|
|
Transaction-based expenses
|
(344
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(344
|
)
|
||||||
Revenues less transaction-based expenses
|
213
|
|
|
162
|
|
|
137
|
|
|
73
|
|
|
—
|
|
|
585
|
|
||||||
Operating income (loss)
|
$
|
114
|
|
|
$
|
42
|
|
|
$
|
97
|
|
|
$
|
19
|
|
|
$
|
(39
|
)
|
|
$
|
233
|
|
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
1,808
|
|
|
$
|
486
|
|
|
$
|
432
|
|
|
$
|
215
|
|
|
$
|
—
|
|
|
$
|
2,941
|
|
Transaction-based expenses
|
(1,149
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,149
|
)
|
||||||
Revenues less transaction-based expenses
|
659
|
|
|
486
|
|
|
432
|
|
|
215
|
|
|
—
|
|
|
1,792
|
|
||||||
Operating income (loss)
|
$
|
359
|
|
|
$
|
133
|
|
|
$
|
318
|
|
|
$
|
44
|
|
|
$
|
(98
|
)
|
|
$
|
756
|
|
Nine Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
1,661
|
|
|
$
|
467
|
|
|
$
|
405
|
|
|
$
|
199
|
|
|
$
|
—
|
|
|
$
|
2,732
|
|
Transaction-based expenses
|
(1,054
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,054
|
)
|
||||||
Revenues less transaction-based expenses
|
607
|
|
|
467
|
|
|
405
|
|
|
199
|
|
|
—
|
|
|
1,678
|
|
||||||
Operating income (loss)
|
$
|
332
|
|
|
$
|
117
|
|
|
$
|
290
|
|
|
$
|
46
|
|
|
$
|
(159
|
)
|
|
$
|
626
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Amortization expense of acquired intangible assets
|
$
|
22
|
|
|
$
|
23
|
|
|
$
|
67
|
|
|
$
|
59
|
|
Restructuring charges
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
||||
Merger and strategic initiatives expense
|
3
|
|
|
12
|
|
|
20
|
|
|
56
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
Sublease loss reserve
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Other
|
1
|
|
|
4
|
|
|
1
|
|
|
5
|
|
||||
Total
|
$
|
26
|
|
|
$
|
39
|
|
|
$
|
98
|
|
|
$
|
159
|
|
•
|
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 September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Market Services
|
|
|
|
|
|
|
|
|
||||||||
Equity Derivative Trading and Clearing
|
|
|
|
|
|
|
|
|
||||||||
U.S. equity options
|
|
|
|
|
|
|
|
|
||||||||
Total industry average daily volume (in millions)
|
|
14.1
|
|
|
13.8
|
|
|
14.5
|
|
|
14.4
|
|
||||
Nasdaq PHLX matched market share
|
|
16.9
|
%
|
|
16.0
|
%
|
|
16.9
|
%
|
|
16.1
|
%
|
||||
The Nasdaq Options Market matched market share
|
|
9.1
|
%
|
|
8.5
|
%
|
|
9.5
|
%
|
|
7.6
|
%
|
||||
Nasdaq BX Options matched market share
|
|
0.7
|
%
|
|
0.8
|
%
|
|
0.7
|
%
|
|
0.9
|
%
|
||||
Nasdaq ISE Options matched market share
(1)
|
|
8.8
|
%
|
|
12.0
|
%
|
|
9.1
|
%
|
|
12.0
|
%
|
||||
Nasdaq GEMX Options matched market share
(1)
|
|
5.3
|
%
|
|
1.8
|
%
|
|
5.3
|
%
|
|
1.8
|
%
|
||||
Nasdaq MRX Options matched market share
(1)
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
|
0.2
|
%
|
||||
Total matched market share executed on Nasdaq’s exchanges
|
|
41.0
|
%
|
|
39.3
|
%
|
|
41.6
|
%
|
|
38.6
|
%
|
||||
Nasdaq Nordic and Nasdaq Baltic options and futures
|
|
|
|
|
|
|
|
|
||||||||
Total average daily volume of options and futures contracts
(2)
|
|
296,086
|
|
|
291,410
|
|
|
335,679
|
|
|
391,884
|
|
||||
Cash Equity Trading
|
|
|
|
|
|
|
|
|
||||||||
Total U.S.-listed securities
|
|
|
|
|
|
|
|
|
||||||||
Total industry average daily share volume (in billions)
|
|
6.06
|
|
|
6.59
|
|
|
6.58
|
|
|
7.45
|
|
||||
Matched share volume (in billions)
|
|
69.1
|
|
|
71.0
|
|
|
223.2
|
|
|
245.3
|
|
||||
The Nasdaq Stock Market matched market share
|
|
14.1
|
%
|
|
13.4
|
%
|
|
14.2
|
%
|
|
14.1
|
%
|
||||
Nasdaq BX matched market share
|
|
3.3
|
%
|
|
2.6
|
%
|
|
3.0
|
%
|
|
2.3
|
%
|
||||
Nasdaq PSX matched market share
|
|
0.7
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
|
1.0
|
%
|
||||
Total matched market share executed on Nasdaq’s exchanges
|
|
18.1
|
%
|
|
16.9
|
%
|
|
18.0
|
%
|
|
17.4
|
%
|
||||
Market share reported to the FINRA/Nasdaq Trade Reporting Facility
|
|
34.1
|
%
|
|
33.5
|
%
|
|
34.3
|
%
|
|
32.8
|
%
|
||||
Total market share
(3)
|
|
52.2
|
%
|
|
50.4
|
%
|
|
52.3
|
%
|
|
50.2
|
%
|
||||
Nasdaq Nordic and Nasdaq Baltic securities
|
|
|
|
|
|
|
|
|
||||||||
Average daily number of equity trades executed on Nasdaq’s exchanges
|
|
545,115
|
|
|
410,999
|
|
|
547,985
|
|
|
465,555
|
|
||||
Total average daily value of shares traded (in billions)
|
|
$
|
5.1
|
|
|
$
|
4.4
|
|
|
$
|
5.3
|
|
|
$
|
5.1
|
|
Total market share executed on Nasdaq’s exchanges
|
|
67.9
|
%
|
|
61.3
|
%
|
|
66.2
|
%
|
|
62.1
|
%
|
||||
FICC
|
|
|
|
|
|
|
|
|
||||||||
Fixed Income
|
|
|
|
|
|
|
|
|
||||||||
U.S. fixed income notional trading volume (in billions)
|
|
$
|
3,975
|
|
|
$
|
4,816
|
|
|
$
|
13,770
|
|
|
$
|
16,039
|
|
Total average daily volume of Nasdaq Nordic and Nasdaq Baltic fixed income contracts
|
|
101,026
|
|
|
73,422
|
|
|
110,004
|
|
|
88,276
|
|
||||
Commodities
|
|
|
|
|
|
|
|
|
||||||||
Power contracts cleared (TWh)
(4)
|
|
264
|
|
|
321
|
|
|
911
|
|
|
1,197
|
|
||||
Corporate Services
|
|
|
|
|
|
|
|
|
||||||||
Initial public offerings
|
|
|
|
|
|
|
|
|
||||||||
The Nasdaq Stock Market
|
|
34
|
|
|
31
|
|
|
87
|
|
|
66
|
|
||||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic
|
|
10
|
|
|
5
|
|
|
60
|
|
|
38
|
|
||||
Total new listings
|
|
|
|
|
|
|
|
|
||||||||
The Nasdaq Stock Market
(5)
|
|
78
|
|
|
80
|
|
|
184
|
|
|
200
|
|
||||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic
(6)
|
|
11
|
|
|
10
|
|
|
72
|
|
|
57
|
|
||||
Number of listed companies
|
|
|
|
|
|
|
|
|
||||||||
The Nasdaq Stock Market
(7)
|
|
2,935
|
|
|
2,872
|
|
|
2,935
|
|
|
2,872
|
|
||||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic
(8)
|
|
952
|
|
|
875
|
|
|
952
|
|
|
875
|
|
||||
Information Services
|
|
|
|
|
|
|
|
|
||||||||
Number of licensed ETPs
|
|
314
|
|
|
289
|
|
|
314
|
|
|
289
|
|
||||
ETP assets under management tracking Nasdaq indexes (in billions)
|
|
$
|
154
|
|
|
$
|
118
|
|
|
$
|
154
|
|
|
$
|
118
|
|
Market Technology
|
|
|
|
|
|
|
|
|
||||||||
Order intake (in millions)
(9)
|
|
$
|
66
|
|
|
$
|
49
|
|
|
$
|
177
|
|
|
$
|
140
|
|
Total order value (in millions)
(10)
|
|
$
|
805
|
|
|
$
|
738
|
|
|
$
|
805
|
|
|
$
|
738
|
|
(1)
|
For the nine months ended September 30, 2016, Nasdaq ISE, Nasdaq GEMX and Nasdaq MRX matched market share represents trading volume which commenced 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
362
separately listed ETPs at
September 30, 2017
and 295 at
September 30, 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 8, “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 September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions, except per share amounts)
|
|
|
|
(in millions, except per share amounts)
|
|
|
||||||||||||||
Revenues less transaction-based expenses
|
|
$
|
607
|
|
|
$
|
585
|
|
|
3.8
|
%
|
|
$
|
1,792
|
|
|
$
|
1,678
|
|
|
6.8
|
%
|
Operating expenses
|
|
343
|
|
|
352
|
|
|
(2.6
|
)%
|
|
1,036
|
|
|
1,052
|
|
|
(1.5
|
)%
|
||||
Operating income
|
|
264
|
|
|
233
|
|
|
13.3
|
%
|
|
756
|
|
|
626
|
|
|
20.8
|
%
|
||||
Interest expense
|
|
(34
|
)
|
|
(37
|
)
|
|
(8.1
|
)%
|
|
(107
|
)
|
|
(98
|
)
|
|
9.2
|
%
|
||||
Income before income taxes
|
|
236
|
|
|
199
|
|
|
18.6
|
%
|
|
667
|
|
|
541
|
|
|
23.3
|
%
|
||||
Income tax provision
|
|
65
|
|
|
68
|
|
|
(4.4
|
)%
|
|
179
|
|
|
208
|
|
|
(13.9
|
)%
|
||||
Net income attributable to Nasdaq
|
|
$
|
171
|
|
|
$
|
131
|
|
|
30.5
|
%
|
|
$
|
488
|
|
|
$
|
333
|
|
|
46.5
|
%
|
Diluted earnings per share
|
|
$
|
1.01
|
|
|
$
|
0.77
|
|
|
31.2
|
%
|
|
$
|
2.88
|
|
|
$
|
1.97
|
|
|
46.2
|
%
|
Cash dividends declared per common share
|
|
$
|
0.38
|
|
|
$
|
0.32
|
|
|
18.8
|
%
|
|
$
|
1.08
|
|
|
$
|
0.89
|
|
|
21.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Market Services
|
|
$
|
581
|
|
|
$
|
557
|
|
|
4.3
|
%
|
|
$
|
1,808
|
|
|
$
|
1,661
|
|
|
8.9
|
%
|
Transaction-based expenses
|
|
(362
|
)
|
|
(344
|
)
|
|
5.2
|
%
|
|
(1,149
|
)
|
|
(1,054
|
)
|
|
9.0
|
%
|
||||
Market Services revenues less transaction-based expenses
|
|
219
|
|
|
213
|
|
|
2.8
|
%
|
|
659
|
|
|
607
|
|
|
8.6
|
%
|
||||
Corporate Services
|
|
161
|
|
|
162
|
|
|
(0.6
|
)%
|
|
486
|
|
|
467
|
|
|
4.1
|
%
|
||||
Information Services
|
|
150
|
|
|
137
|
|
|
9.5
|
%
|
|
432
|
|
|
405
|
|
|
6.7
|
%
|
||||
Market Technology
|
|
77
|
|
|
73
|
|
|
5.5
|
%
|
|
215
|
|
|
199
|
|
|
8.0
|
%
|
||||
Total revenues less transaction-based expenses
|
|
$
|
607
|
|
|
$
|
585
|
|
|
3.8
|
%
|
|
$
|
1,792
|
|
|
$
|
1,678
|
|
|
6.8
|
%
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Market Services Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity Derivative Trading and Clearing Revenues
(1)
|
|
$
|
178
|
|
|
$
|
164
|
|
|
8.5
|
%
|
|
$
|
560
|
|
|
$
|
368
|
|
|
52.2
|
%
|
Transaction-based expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transaction rebates
|
|
(106
|
)
|
|
(90
|
)
|
|
17.8
|
%
|
|
(335
|
)
|
|
(191
|
)
|
|
75.4
|
%
|
||||
Brokerage, clearance and exchange fees
(1)
|
|
(10
|
)
|
|
(7
|
)
|
|
42.9
|
%
|
|
(29
|
)
|
|
(17
|
)
|
|
70.6
|
%
|
||||
Equity derivative trading and clearing revenues less transaction-based expenses
|
|
62
|
|
|
67
|
|
|
(7.5
|
)%
|
|
196
|
|
|
160
|
|
|
22.5
|
%
|
||||
Cash Equity Trading Revenues
(2)
|
|
304
|
|
|
302
|
|
|
0.7
|
%
|
|
958
|
|
|
1,023
|
|
|
(6.4
|
)%
|
||||
Transaction-based expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Transaction rebates
|
|
(157
|
)
|
|
(171
|
)
|
|
(8.2
|
)%
|
|
(526
|
)
|
|
(599
|
)
|
|
(12.2
|
)%
|
||||
Brokerage, clearance and exchange fees
(2)
|
|
(85
|
)
|
|
(72
|
)
|
|
18.1
|
%
|
|
(245
|
)
|
|
(231
|
)
|
|
6.1
|
%
|
||||
Cash equity trading revenues less transaction-based expenses
|
|
62
|
|
|
59
|
|
|
5.1
|
%
|
|
187
|
|
|
193
|
|
|
(3.1
|
)%
|
||||
FICC Revenues
|
|
24
|
|
|
22
|
|
|
9.1
|
%
|
|
72
|
|
|
74
|
|
|
(2.7
|
)%
|
||||
Transaction-based expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Transaction rebates
|
|
(3
|
)
|
|
(4
|
)
|
|
(25.0
|
)%
|
|
(13
|
)
|
|
(14
|
)
|
|
(7.1
|
)%
|
||||
Brokerage, clearance and exchange fees
|
|
(1
|
)
|
|
—
|
|
|
N/M
|
|
|
(1
|
)
|
|
(2
|
)
|
|
(50.0
|
)%
|
||||
FICC revenues less transaction-based expenses
|
|
20
|
|
|
18
|
|
|
11.1
|
%
|
|
58
|
|
|
58
|
|
|
—
|
%
|
||||
Trade Management Services Revenues
|
|
75
|
|
|
69
|
|
|
8.7
|
%
|
|
218
|
|
|
196
|
|
|
11.2
|
%
|
||||
Total Market Services revenues less transaction-based expenses
|
|
$
|
219
|
|
|
$
|
213
|
|
|
2.8
|
%
|
|
$
|
659
|
|
|
$
|
607
|
|
|
8.6
|
%
|
(1)
|
Includes Section 31 fees of $9 million in the third quarter of 2017, $27 million in the first nine months of 2017, $7 million in the third quarter of 2016 and $16 million for the first nine months 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 $82 million in the third quarter of 2017, $234 million for the first nine months of 2017, $67 million in the third quarter of 2016 and $215 million in the first nine months of 2016. Section 31 fees are recorded as cash equity trading revenues with a corresponding amount recorded in transaction-based expenses.
|
•
|
lower U.S. industry trading volumes, partially offset by;
|
•
|
higher European industry trading volumes;
|
•
|
an increase in Section 31 pass-through fee revenue; and
|
•
|
an increase in our overall U.S. matched market share and European market share executed on Nasdaq's exchanges.
|
•
|
an increase in European cash equities revenues due to higher industry trading volumes and market share executed on Nasdaq’s exchanges.
|
•
|
lower U.S. industry trading volumes, partially offset by;
|
•
|
an increase in our overall U.S. matched market share and European market share executed on Nasdaq’s exchanges; and
|
•
|
higher European industry trading volumes.
|
•
|
lower U.S. industry trading volumes, partially offset by;
|
•
|
an increase in our overall U.S. matched market share.
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Corporate Services:
|
|
|
|
|
|
|
|||||||||||||||
Corporate Solutions
|
$
|
94
|
|
|
$
|
94
|
|
|
—
|
%
|
|
$
|
287
|
|
|
$
|
265
|
|
|
8.3
|
%
|
Listing Services
|
67
|
|
|
68
|
|
|
(1.5
|
)%
|
|
199
|
|
|
202
|
|
|
(1.5
|
)%
|
||||
Total Corporate Services
|
$
|
161
|
|
|
$
|
162
|
|
|
(0.6
|
)%
|
|
$
|
486
|
|
|
$
|
467
|
|
|
4.1
|
%
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Information Services:
|
|
|
|
|
|
|
||||||||||||||||
Data Products
|
|
$
|
116
|
|
|
$
|
109
|
|
|
6.4
|
%
|
|
$
|
335
|
|
|
$
|
322
|
|
|
4.0
|
%
|
Index Licensing and Services
|
|
34
|
|
|
28
|
|
|
21.4
|
%
|
|
97
|
|
|
83
|
|
|
16.9
|
%
|
||||
Total Information Services
|
|
$
|
150
|
|
|
$
|
137
|
|
|
9.5
|
%
|
|
$
|
432
|
|
|
$
|
405
|
|
|
6.7
|
%
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Market Technology
|
|
$
|
77
|
|
|
$
|
73
|
|
|
5.5
|
%
|
|
$
|
215
|
|
|
$
|
199
|
|
|
8.0
|
%
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Compensation and benefits
|
|
$
|
169
|
|
|
$
|
168
|
|
|
0.6
|
%
|
|
$
|
493
|
|
|
$
|
484
|
|
|
1.9
|
%
|
Professional and contract services
|
|
39
|
|
|
40
|
|
|
(2.5
|
)%
|
|
112
|
|
|
111
|
|
|
0.9
|
%
|
||||
Computer operations and data communications
|
|
31
|
|
|
28
|
|
|
10.7
|
%
|
|
91
|
|
|
80
|
|
|
13.8
|
%
|
||||
Occupancy
|
|
23
|
|
|
23
|
|
|
—
|
%
|
|
69
|
|
|
62
|
|
|
11.3
|
%
|
||||
General, administrative and other
|
|
15
|
|
|
19
|
|
|
(21.1
|
)%
|
|
64
|
|
|
50
|
|
|
28.0
|
%
|
||||
Marketing and advertising
|
|
7
|
|
|
8
|
|
|
(12.5
|
)%
|
|
22
|
|
|
22
|
|
|
—
|
%
|
||||
Depreciation and amortization
|
|
47
|
|
|
46
|
|
|
2.2
|
%
|
|
140
|
|
|
125
|
|
|
12.0
|
%
|
||||
Regulatory
|
|
9
|
|
|
8
|
|
|
12.5
|
%
|
|
25
|
|
|
21
|
|
|
19.0
|
%
|
||||
Merger and strategic initiatives
|
|
3
|
|
|
12
|
|
|
(75.0
|
)%
|
|
20
|
|
|
56
|
|
|
(64.3
|
)%
|
||||
Restructuring charges
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
41
|
|
|
(100.0
|
)%
|
||||
Total operating expenses
|
|
$
|
343
|
|
|
$
|
352
|
|
|
(2.6
|
)%
|
|
$
|
1,036
|
|
|
$
|
1,052
|
|
|
(1.5
|
)%
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Interest income
|
|
$
|
2
|
|
|
$
|
1
|
|
|
100.0
|
%
|
|
$
|
6
|
|
|
$
|
4
|
|
|
50.0
|
%
|
Interest expense
|
|
(34
|
)
|
|
(37
|
)
|
|
(8.1
|
)%
|
|
(107
|
)
|
|
(98
|
)
|
|
9.2
|
%
|
||||
Net interest expense
|
|
(32
|
)
|
|
(36
|
)
|
|
(11.1
|
)%
|
|
(101
|
)
|
|
(94
|
)
|
|
7.4
|
%
|
||||
Other investment income
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
2
|
|
|
3
|
|
|
(33.3
|
)%
|
||||
Net income from unconsolidated investees
|
|
4
|
|
|
2
|
|
|
100.0
|
%
|
|
10
|
|
|
6
|
|
|
66.7
|
%
|
||||
Total non-operating expenses
|
|
$
|
(28
|
)
|
|
$
|
(34
|
)
|
|
(17.6
|
)%
|
|
$
|
(89
|
)
|
|
$
|
(85
|
)
|
|
4.7
|
%
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Interest expense on debt
|
|
$
|
32
|
|
|
$
|
36
|
|
|
(11.1
|
)%
|
|
$
|
101
|
|
|
$
|
94
|
|
|
7.4
|
%
|
Accretion of debt issuance costs and debt discount
|
|
1
|
|
|
1
|
|
|
—
|
%
|
|
4
|
|
|
3
|
|
|
33.3
|
%
|
||||
Other bank and investment-related fees
|
|
1
|
|
|
—
|
|
|
N/M
|
|
|
2
|
|
|
1
|
|
|
100.0
|
%
|
||||
Interest expense
|
|
$
|
34
|
|
|
$
|
37
|
|
|
(8.1
|
)%
|
|
$
|
107
|
|
|
$
|
98
|
|
|
9.2
|
%
|
|
|
Three Months Ended September 30,
|
|
Percentage Change
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||
|
|
($ in millions)
|
|
|
|
($ in millions)
|
|
|
||||||||||||||
Income tax provision
|
|
$
|
65
|
|
|
$
|
68
|
|
|
(4.4
|
)%
|
|
$
|
179
|
|
|
$
|
208
|
|
|
(13.9
|
)%
|
Effective tax rate
|
|
27.5
|
%
|
|
34.2
|
%
|
|
|
|
|
26.8
|
%
|
|
38.4
|
%
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
|
Three Months Ended September 30, 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
|
|
$
|
171
|
|
|
$
|
1.01
|
|
|
$
|
131
|
|
|
$
|
0.77
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Amortization expense of acquired intangible assets
|
|
22
|
|
|
0.13
|
|
|
23
|
|
|
0.14
|
|
||||
Merger and strategic initiatives
|
|
3
|
|
|
0.02
|
|
|
12
|
|
|
0.07
|
|
||||
Other
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Adjustment to the income tax provision to reflect non-GAAP adjustments
(1)
|
|
(16
|
)
|
|
(0.10
|
)
|
|
(12
|
)
|
|
(0.07
|
)
|
||||
Total non-GAAP adjustments, net of tax
|
|
10
|
|
|
0.05
|
|
|
23
|
|
|
0.14
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Non-GAAP net income attributable to Nasdaq and diluted earnings per share
|
|
$
|
181
|
|
|
$
|
1.06
|
|
|
$
|
154
|
|
|
$
|
0.91
|
|
Weighted-average common shares outstanding for diluted earnings per share
|
|
|
|
170,002,147
|
|
|
|
|
169,497,079
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Nine Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 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
|
|
$
|
488
|
|
|
$
|
2.88
|
|
|
$
|
333
|
|
|
$
|
1.97
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization expense of acquired intangible assets
|
|
67
|
|
|
0.39
|
|
|
59
|
|
|
0.35
|
|
||||
Restructuring charges
|
|
—
|
|
|
—
|
|
|
41
|
|
|
0.24
|
|
||||
Merger and strategic initiatives
|
|
20
|
|
|
0.12
|
|
|
56
|
|
|
0.33
|
|
||||
Extinguishment of debt
|
|
10
|
|
|
0.06
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
3
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||
Sublease loss reserve
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(0.01
|
)
|
||||
Adjustment to the income tax provision to reflect non-GAAP adjustments
(1)
|
|
(48
|
)
|
|
(0.28
|
)
|
|
(28
|
)
|
|
(0.17
|
)
|
||||
Total non-GAAP adjustments, net of tax
|
|
52
|
|
|
0.30
|
|
|
126
|
|
|
0.74
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Non-GAAP net income attributable to Nasdaq and diluted earnings per share
|
|
$
|
540
|
|
|
$
|
3.18
|
|
|
$
|
459
|
|
|
$
|
2.71
|
|
Weighted-average common shares outstanding for diluted earnings per share
|
|
|
|
169,566,166
|
|
|
|
|
168,660,231
|
|
(1)
|
We determine the tax effect of each item based on the tax rules in the respective jurisdiction where the transaction occurred. The non-GAAP adjustment to the income tax provision also reflects the recognition of previously unrecognized tax benefits associated with positions taken in prior years of $8 million for the three months ended September 30, 2017 and $12 million for the nine months ended September 30, 2017. For the nine months ended September 30, 2016, also included in this adjustment is $27 million in tax expense associated with an unfavorable decision from the Finnish Supreme Administrative Court on a tax position.
|
•
|
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.
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
530
|
|
|
$
|
403
|
|
Restricted cash
|
|
21
|
|
|
15
|
|
||
Financial investments, at fair value
|
|
207
|
|
|
245
|
|
||
Total financial assets
|
|
$
|
758
|
|
|
$
|
663
|
|
•
|
net cash provided by operating activities;
|
•
|
net proceeds received from the issuance of the 2019 Notes; and
|
•
|
net proceeds received from commercial paper, net, partially offset by;
|
•
|
repayments of long-term debt;
|
•
|
cash dividends paid on our common stock;
|
•
|
repurchases of our common stock; and
|
•
|
purchases of property and equipment.
|
|
2017
|
|
2016
|
||||
First quarter
|
$
|
0.32
|
|
|
$
|
0.57
|
|
Second quarter
|
0.38
|
|
|
—
|
|
||
Third quarter
|
0.38
|
|
|
0.32
|
|
|
|
Maturity Date
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
(in millions)
|
||||||
Short-term debt - commercial paper
|
|
Weighted-average maturity of 19 days
|
|
$
|
154
|
|
|
$
|
—
|
|
Long-term debt:
|
|
|
|
|
|
|
||||
5.25% senior unsecured notes
|
|
Repaid May 2017
|
|
—
|
|
|
369
|
|
||
Senior unsecured floating rate notes
|
|
March 2019
|
|
498
|
|
|
—
|
|
||
$400 million senior unsecured term loan facility
|
|
November 2019
|
|
100
|
|
|
399
|
|
||
5.55% senior unsecured notes
|
|
January 2020
|
|
598
|
|
|
598
|
|
||
3.875% senior unsecured notes
|
|
June 2021
|
|
705
|
|
|
625
|
|
||
$1 billion revolving credit commitment
|
|
April 2022
|
|
(5
|
)
|
|
—
|
|
||
1.75% senior unsecured notes
|
|
May 2023
|
|
701
|
|
|
622
|
|
||
4.25% senior unsecured notes
|
|
June 2024
|
|
496
|
|
|
495
|
|
||
3.85% senior unsecured notes
|
|
June 2026
|
|
496
|
|
|
495
|
|
||
Total long-term debt
|
|
|
|
3,589
|
|
|
3,603
|
|
||
Total debt obligations
|
|
|
|
$
|
3,743
|
|
|
$
|
3,603
|
|
Broker-Dealer Subsidiaries
|
|
Total Net Capital
|
|
Required Minimum Net Capital
|
|
Excess Capital
|
||||||
|
|
(in millions)
|
||||||||||
Nasdaq Execution Services
|
|
$
|
7.7
|
|
|
$
|
0.3
|
|
|
$
|
7.4
|
|
Execution Access
|
|
48.6
|
|
|
0.3
|
|
|
48.3
|
|
|||
NPM Securities
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||
SMTX
|
|
1.2
|
|
|
0.3
|
|
|
0.9
|
|
|||
Nasdaq Capital Markets Advisory
|
|
0.6
|
|
|
0.3
|
|
|
0.3
|
|
|
|
Nine Months Ended September 30,
|
|
Percentage Change
|
|||||||
|
|
2017
|
|
2016
|
|
||||||
|
|
(in millions)
|
|
|
|||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|||||
Operating activities
|
|
$
|
609
|
|
|
$
|
492
|
|
|
23.8
|
%
|
Investing activities
|
|
(73
|
)
|
|
(1,591
|
)
|
|
(95.4
|
)%
|
||
Financing activities
|
|
(418
|
)
|
|
1,017
|
|
|
(141.1
|
)%
|
||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
|
15
|
|
|
1
|
|
|
1,400.0
|
%
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
|
133
|
|
|
(81
|
)
|
|
(264.2
|
)%
|
||
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
|
|
$
|
551
|
|
|
$
|
276
|
|
|
99.6
|
%
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Long-term debt obligations by contract maturity
(1)
|
|
$
|
4,382
|
|
|
$
|
280
|
|
|
$
|
1,322
|
|
|
$
|
939
|
|
|
$
|
1,841
|
|
Minimum rental commitments under non-cancelable operating leases, net
(2)
|
|
390
|
|
|
76
|
|
|
132
|
|
|
86
|
|
|
96
|
|
|||||
Other obligations
(3)
|
|
13
|
|
|
9
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
4,785
|
|
|
$
|
365
|
|
|
$
|
1,458
|
|
|
$
|
1,025
|
|
|
$
|
1,937
|
|
(1)
|
Our long-term debt obligations include both principal and interest obligations. At
September 30, 2017
, an interest rate of 3.05% was used to compute the amount of the contractual obligations for interest on the 2016 Credit Facility and 1.82% was used to compute the amount of the contractual obligations for interest on the 2019 Notes. All other debt obligations were primarily calculated on a 360-day basis at the contractual fixed rate multiplied by the aggregate principal amount at
September 30, 2017
. See Note 9, “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 15, “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 16, “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;
|
•
|
Legal and regulatory matters; and
|
•
|
Tax audits.
|
|
|
Euro
|
|
Swedish Krona
|
|
Other Foreign Currencies
|
|
U.S. Dollar
|
|
Total
|
||||||||||
|
|
(in millions, except currency rate)
|
||||||||||||||||||
Three Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average foreign currency rate to the U.S. dollar
|
|
1.1749
|
|
|
0.1229
|
|
|
#
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Percentage of revenues less transaction-based expenses
|
|
10.4
|
%
|
|
8.8
|
%
|
|
5.8
|
%
|
|
75.0
|
%
|
|
100.0
|
%
|
|||||
Percentage of operating income
|
|
16.7
|
%
|
|
3
|
%
|
|
(5.6
|
)%
|
|
85.9
|
%
|
|
100.0
|
%
|
|||||
Impact of a 10% adverse currency fluctuation on revenues less transaction-based expenses
|
|
$
|
(6
|
)
|
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
Impact of a 10% adverse currency fluctuation on operating income
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Euro
|
|
Swedish Krona
|
|
Other Foreign Currencies
|
|
U.S. Dollar
|
|
Total
|
||||||||||
|
|
(in millions, except currency rate)
|
||||||||||||||||||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average foreign currency rate to the U.S. dollar
|
|
1.1110
|
|
|
0.1160
|
|
|
#
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Percentage of revenues less transaction-based expenses
|
|
9.7
|
%
|
|
8.7
|
%
|
|
5.7
|
%
|
|
75.9
|
%
|
|
100.0
|
%
|
|||||
Percentage of operating income
|
|
15.1
|
%
|
|
1.1
|
%
|
|
(3.8
|
)%
|
|
87.6
|
%
|
|
100.0
|
%
|
|||||
Impact of a 10% adverse currency fluctuation on revenues less transaction-based expenses
|
|
$
|
(17
|
)
|
|
$
|
(16
|
)
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
(43
|
)
|
Impact of a 10% adverse currency fluctuation on operating income
|
|
$
|
(11
|
)
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
#
|
Represents multiple foreign currency rates.
|
N/A
|
Not applicable.
|
|
|
Net Assets
|
|
Impact of a 10% Adverse Currency Fluctuation
|
||||
|
|
(in millions)
|
||||||
Swedish Krona
(1)
|
|
$
|
3,423
|
|
|
$
|
(342
|
)
|
Norwegian Krone
|
|
206
|
|
|
(21
|
)
|
||
Canadian Dollar
|
|
194
|
|
|
(19
|
)
|
||
British Pound
|
|
147
|
|
|
(15
|
)
|
||
Euro
|
|
147
|
|
|
(15
|
)
|
||
Australian Dollar
|
|
107
|
|
|
(11
|
)
|
(1)
|
Includes goodwill of $2,680 million and intangible assets, net of $646 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)
|
|||||
July 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
$
|
273
|
|
Employee transactions
|
|
222,356
|
|
|
$
|
75.43
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|||||
August 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
$
|
273
|
|
Employee transactions
|
|
3,929
|
|
|
$
|
74.85
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|||||
September 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
239,416
|
|
|
$
|
75.86
|
|
|
239,416
|
|
$
|
255
|
|
Employee transactions
|
|
590
|
|
|
$
|
74.73
|
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Quarter Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|||
Share repurchase program
|
|
239,416
|
|
|
$
|
75.86
|
|
|
239,416
|
|
$
|
255
|
|
Employee transactions
|
|
226,875
|
|
|
$
|
75.42
|
|
|
N/A
|
|
N/A
|
|
Exhibit
Number
|
|
|
|
|
|
|
Agreement and Plan of Merger, dated as of September 4, 2017, by and among eVestment, Inc., Nasdaq, Inc., Echo Holding Company and Insight Venture Partners, LLC (solely in its capacity as representative for eVestment’s securityholders) (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on September 8, 2017).†
|
|
|
|
|
|
Fifth Supplemental Indenture, dated as of September 22, 2017, among Nasdaq, Inc. and Wells Fargo Bank, National Association, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on September 22, 2017).
|
|
|
|
|
|
Nonqualified Stock Option Award Certificate to Adena T. Friedman from Nasdaq, Inc. in connection with grant made on January 3, 2017.*
|
|
|
|
|
|
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 and nine months ended
September 30, 2017
, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of
September 30, 2017
and
December 31, 2016
; (ii) Condensed Consolidated Statements of Income for the three and nine months ended
September 30, 2017
and
2016
; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended
September 30, 2017
and
2016
; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 2017
and
2016
; and (v) notes to condensed consolidated financial statements.
|
†
|
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Nasdaq hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.
|
|
Nasdaq, Inc.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
Date: November 7, 2017
|
By:
|
/s/ Adena T. Friedman
|
|
|
|
Name:
|
Adena T. Friedman
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: November 7, 2017
|
By:
|
/s/ Michael Ptasznik
|
|
|
|
Name:
|
Michael Ptasznik
|
|
|
|
Title:
|
Executive Vice President, Corporate Strategy and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Vesting.
|
(a)
|
Subject to Section 3 hereof and contingent upon the Optionee’s continued employment with the Company until the applicable vesting date (except as otherwise provided in paragraphs (c) and (d) below) the Options shall vest as follows:
|
(i)
|
33% on December 31, 2017
, but only if the 2017 Performance Goal (as defined below) is achieved,
|
(ii)
|
33% on December 31, 2018
but only if the 2018 Performance Goal (as defined below) is achieved, or
|
(iii)
|
Remaining balance on December 31, 2019
but only if the 2019 Performance Goal (as defined below) is achieved.
|
(i)
|
“2017 Performance Goal” is achieved if the 2017 Fully Diluted EPS is at least 3% greater than 2016 Fully Diluted EPS.
|
(ii)
|
“2018 Performance Goal” is achieved if (A) the 2018 Fully Diluted EPS is at least 3% greater than 2016, and (B) the 2018 Fully Diluted EPS Growth is at least 3%; or Average Annual 2017 and 2018 Fully Diluted EPS Growth is at least 3%.
|
(iii)
|
“2019 Performance Goal” is achieved if (A) the 2019 Fully Diluted EPS is at least 3% greater than 2016, and (B) the 2019 Fully Diluted EPS Growth is at least 3%; or Average Annual 2017, 2018 and 2019 Fully Diluted EPS Growth is at least 3%.
|
(iv)
|
“Annual Fully Diluted EPS Growth” shall be determined based upon the percentage by which the Fully Diluted EPS for the fiscal year of the Company exceeds the Fully Diluted EPS of the prior fiscal year of the Company.
|
(v)
|
“Fully Diluted EPS” shall be determined by the Committee in accordance with the U.S. Generally Accepted Accounting Principles (GAAP) for the Company and in making this determination, the Committee may include or exclude the effect of any one or more of the applicable extraordinary events described in Section 2 of the Plan that may occur during the fiscal year. The Committee may also decide to include or exclude share buybacks or share issuances in making this determination.
|
(c)
|
If, prior to vesting of the Options under paragraph (a) above the Optionee has a Separation from Service (as defined in the Plan) with the Company or any of its subsidiaries for any reason (voluntary or involuntary)), then such non-vested Options shall be immediately and irrevocably forfeited, except as otherwise provided in Section 6(j)(ii) of the Plan (Separation from Service by reason of death or Retirement) or Section 12 of the Plan (Separation from Service following a Change in Control) but modified to provide a two-year period of protection following a Change in Control. Following Separation from Service, the Optionee’s vested Options shall remain exercisable for a limited period of time, as set forth in Section 6(j)(ii) or Section 12 of the Plan, as applicable. Notwithstanding anything to the contrary in the Plan or this Award Certificate, and for purposes of clarity, any Separation from Service shall be effective as of
|
(d)
|
If, prior to the vesting of the Options under paragraph (a) above the Optionee is determined by the insurance carrier under the Company’s then-current long-term disability plan to be entitled to receive benefits under such plan, and, by reason of such disability, is deemed to have a Separation from Service (within the meaning of the Plan), then an amount of unvested Options shall vest as described on Section 6(j)(iii) of the Plan, and the Optionee’s vested Options shall be exercisable for a limited period of time as described in Section 6(j)(iii) of the Plan.
|
2.
|
Exercise of the Options.
|
(a)
|
Subject to the provisions of the Plan (including without limitation Section 6(j) of the Plan (Separation from Service) and Section 12 of the Plan (Change in Control)) and this Award Certificate, the Optionee may exercise all or a portion of the vested Options at any time prior to the Expiration Date; provided that Options may be exercised with respect to whole Shares only; and provided further that Options may not be exercised at any one time as to fewer than 100 Shares (or such number of Shares as to which the Options are then exercisable if such number is less than 100). In no event shall the Options be exercisable on or after the Expiration Date.
|
(b)
|
In accordance with Section 2(a) hereof, the Options may be exercised by delivering to the Company a notice of intent to exercise. The Optionee shall deliver such notice by such method (whether telephonic, electronic or written) as may be specified by the Committee from time to time. The date of exercise shall be the date the required notice is received by the Company; provided, however, that if payment in full is not received by the Company as described herein or as otherwise permitted, such notice shall be deemed not to have been received. Such notice shall specify the number of Shares as to which the Options are being exercised and shall be accompanied by payment in full, or adequate provision therefor, of the Exercise Price and any applicable withholding tax.
|
(c)
|
The payment of the Exercise Price shall be made in accordance with any process or procedure permitted by the Plan as of the date of exercise, including without limitation payment (i) in cash, or its equivalent, (ii) by exchanging Shares owned by the Optionee for at least six months (which are not the subject of any pledge or other security interest), (iii) by having the Company “net settle” the Shares by withholding from the Shares which would otherwise be delivered to the Optionee such Shares with a Fair Market Value sufficient to satisfy the withholding required with respect thereto as determined by the Committee, (iv) through any broker’s cashless exercise procedure approved by the Committee, or (v) by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the
|
(d)
|
Notwithstanding any other provision of the Plan or this Award Certificate to the contrary, no Option may be exercised prior to the completion of any registration or qualification of such Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any government body, national securities exchange, or inter-dealer market system that the Committee shall in its sole discretion determine to be necessary or advisable.
|
(e)
|
As soon as practicable following the Company’s determination that an Option has been validly exercised as to any of the Shares, and the receipt by the Company of payment in full of the Exercise Price (as well as any applicable tax withholding as described in Section 5 hereof), the Company shall make delivery of Shares by either (A) delivering certificates representing such Shares to the Optionee, registered in the name of the Optionee, or (B) depositing such Shares into a stock brokerage account maintained for the Optionee. The Company will not deliver any fractional Shares but will instead round down to the next full number of Shares to be delivered. The Company shall not be liable to the Optionee for damages relating to any delays in issuing the certificates or in the certificates themselves.
|
3.
|
No Right to Continued Employment: No Rights as a Shareholder
. Neither the Plan nor this Award Certificate shall confer on the Optionee any right to be retained in any position, as an employee, consultant or director of the Company. Further, nothing in the Plan or this Award Certificate shall be construed to limit the discretion of the Company to terminate the Optionee’s employment at any time, with or without cause. The Optionee shall not have any rights as a shareholder with respect to any Shares subject to an Option prior to the date of exercise of the Option.
|
4.
|
Transferability
.
|
(a)
|
Except as provided below, the Options are nontransferable and may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Optionee, except by will or the laws of descent and distribution. Notwithstanding the foregoing, the Optionee may transfer vested Options to members of his or her immediate family (defined as his or her spouse,
|
(b)
|
In order to comply with any applicable securities laws, the Shares may only be sold by the Optionee following registration under the Securities Act of 1933, as amended, or pursuant to an exemption therefrom.
|
5.
|
Tax Liability and Withholding
. Regardless of any action the Company takes with respect to any or all income tax (including U.S. federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items legally due by the Optionee is and remains the Optionee’s responsibility, and the Company (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Options, including the grant of the Options, the vesting of the Options, the exercise of the Options, the subsequent sale of any Shares acquired pursuant to the Options and the receipt of any dividends; and (b) does not commit to structure the terms of the grant or any aspect of the Options to reduce or eliminate the Optionee’s liability for Tax-Related Items.
|
6.
|
Securities Laws
. The Company may require, as a condition of the exercise of an Option, that upon the acquisition of any Shares pursuant to the exercise of the Option, the Optionee or the Optionee’s transferee, if applicable, make or enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with applicable securities laws, with this Award Certificate, or as the Committee otherwise deems necessary or advisable. The Committee may require that the Optionee, as a condition of the exercise of an Option, execute a stockholders agreement containing terms and conditions generally applicable to some or all of the stockholders of the Company.
|
7.
|
Administration
. This Award Certificate shall at all times be subject to the terms and conditions of the Plan. Capitalized terms not defined in this Award Certificate shall have the meanings set forth in the Plan. The Committee shall have sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the Committee with respect thereto and this Award Certificate shall be final and binding upon the Optionee and the Company. The Committee has the authority and discretion to determine any questions which arise in connection with the grant of the Options hereunder.
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8.
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Code Section 409A
. The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify this Award Certificate as may be necessary to ensure that all grants, vesting and exercises provided under this Award Certificate are made in a manner that is exempt from Section 409A of the Code; provided, however, that the Company makes no representation that the Options provided under this Award Certificate will be exempt from and/or comply with Section 409A of the Code.
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9.
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Imposition of Other Requirements
. The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, on the Options and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require, as a condition of the exercise of an Option, the Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
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10.
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Amendments
. The Committee has the right, as set forth in the Plan, to amend, alter, suspend, discontinue or cancel this Award, prospectively or retroactively; provided however, that no such amendment, alteration, suspension, discontinuance or cancelation of the Options will adversely affect Optionee’s material rights under this Award Certificate without Optionee’s consent. The Company has the authority to amend this Award Certificate, consistent with the foregoing, without the Optionee’s written agreement, except as set forth in this Section 10.
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11.
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Notices
. Any notice, request, instruction or other document given under this Award Certificate shall be in writing and may be delivered by such method as may be permitted by the Company, and shall be addressed and delivered, in the case of the Company, to the Secretary of the Company at the principal office of the Company and, in the case of the Optionee, to the Optionee’s address as shown in the records of the Company or to such other address as may be designated in writing (or by such other method approved by the Company) by either party.
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12.
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Option Subject to Plan: Amendments to the Award Certificate
. This Award Certificate is subject to the Plan as approved by the stockholders of the Company. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of this Award Certificate will govern and prevail.
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13.
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Severability
. The invalidity or unenforceability of any provision of the Plan or this Award Certificate shall not affect the validity or enforceability of any other provision of the Plan or this Award Certificate, and each other provision of the Plan and this Award Certificate shall be severable and enforceable to the extent permitted by law.
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14.
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Discretionary Nature of Plan; No Vested Rights
. The Plan is discretionary in nature and limited in duration, and may be amended, cancelled, or terminated by the Company, in its
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15.
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Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any
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16.
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No Advice Regarding Grant
. The Company is not providing any tax, legal or financial
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17.
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Entire Agreement
. This Award Certificate represents the entire understanding and
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18.
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No Impact on Other Benefits
. The value of the Optionee’s Options is not part of the Optionee’s normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
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/s/ Adena T. Friedman
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Name:
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Adena T. Friedman
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Title:
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President and Chief Executive Officer
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/s/ Michael Ptasznik
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Name:
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Michael Ptasznik
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Title:
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Executive Vice President, Corporate Strategy and Chief Financial Officer
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/s/ Adena T. Friedman
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Name:
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Adena T. Friedman
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Title:
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President and Chief Executive Officer
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Date:
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November 7, 2017
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/s/ Michael Ptasznik
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Name:
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Michael Ptasznik
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Title:
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Executive Vice President, Corporate Strategy and Chief Financial Officer
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Date:
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November 7, 2017
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