Nasdaq Annual Report 2018

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FY2018 Annual Report · Nasdaq

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

For the transition period from ________ to ________

Commission file number: 000-32651

Nasdaq, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization)
One Liberty Plaza, New York, New York
(Address of Principal Executive Offices)

52-1165937
(I.R.S. Employer Identification No.)
10006
(Zip Code)

Registrant’s telephone number, including area code:
+1 212 401 8700
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, $.01 par value per share

Name of each exchange on which registered
The Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes  No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company

Accelerated filer
Smaller reporting company








If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised

financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of June 30, 2018, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $10.5 billion (this
amount represents approximately 114.8 million shares of Nasdaq, Inc.’s common stock based on the last reported sales price of $91.27 of the common stock on The
Nasdaq Stock Market on such date).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class
Common Stock, $.01 par value per share

Outstanding at February 14, 2019
165,420,039 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document
Certain portions of the Definitive Proxy Statement for the 2019 Annual Meeting of Stockholders

Parts Into Which Incorporated
Part III

Nasdaq, Inc.

Part I.

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Part II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Part III.

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Part IV.

Item 15. Exhibits, Financial Statement Schedules

Item 16. Form 10-K Summary

Page

About This Form 10-K

Throughout this Form 10-K, unless otherwise specified:

 “Nasdaq,” “we,” “us” and “our” refer to Nasdaq, Inc.

 “Nasdaq Baltic” refers to collectively, Nasdaq Tallinn AS, Nasdaq Riga, AS, and AB Nasdaq Vilnius.

 “Nasdaq BX” refers to the cash equity exchange operated by Nasdaq BX, Inc.

 “Nasdaq BX Options” refers to the options exchange operated by Nasdaq BX, Inc.

 “Nasdaq Clearing” refers to the clearing operations conducted by Nasdaq Clearing AB.

 “Nasdaq GEMX” refers to the options exchange operated by Nasdaq GEMX, LLC.

 “Nasdaq ISE” refers to the options exchange operated by Nasdaq ISE, LLC.

 “Nasdaq MRX” refers to the options exchange operated by Nasdaq MRX, LLC.

 “Nasdaq Nordic” refers to collectively, Nasdaq Clearing AB, Nasdaq Stockholm AB, Nasdaq Copenhagen A/S, Nasdaq Helsinki

Ltd, and Nasdaq Iceland hf.

 “Nasdaq PHLX” refers to the options exchange operated by Nasdaq PHLX LLC.

 “Nasdaq PSX” refers to the cash equity exchange operated by Nasdaq PHLX LLC.

 “The Nasdaq Options Market” refers to the options exchange operated by The Nasdaq Stock Market LLC.

 “The Nasdaq Stock Market” refers to the cash equity exchange operated by The Nasdaq Stock Market LLC.

* * * * * *
Nasdaq also provides as a tool for the reader the following list of abbreviations and acronyms that are used throughout this Annual
Report on Form 10-K.

401(k) Plan: Voluntary Defined Contribution Savings Plan

CCP: Central Counterparty

2016 Credit Facility: $400 million senior unsecured term loan

CFTC: U.S. Commodity Futures Trading Commission

facility which matures on November 25, 2019

2017 Credit Facility: $1 billion senior unsecured revolving credit

facility which matures on April 25, 2022

2019 Notes: $500 million aggregate principal amount of senior
unsecured floating rate notes due March 22, 2019 with an
interest rate equal to the three-month U.S. dollar LIBOR plus
0.39%

2020 Notes: $600 million aggregate principal amount of 5.55%

DEA: Designated Examining Authority

DWA: Dorsey, Wright & Associates, LLC

EMIR: European Market Infrastructure Regulation

Equity Plan: Nasdaq Equity Incentive Plan

ESPP: Nasdaq Employee Stock Purchase Plan

ETF: Exchange Traded Fund

senior unsecured notes due January 15, 2020

ETP: Exchange Traded Product

2021 Notes: €600 million aggregate principal amount of 3.875%

eVestment: eVestment, Inc. and its subsidiaries

senior unsecured notes due June 7, 2021

2023 Notes: €600 million aggregate principal amount of 1.75%

senior unsecured notes due May 19, 2023

2024 Notes: $500 million aggregate principal amount of 4.25%

senior unsecured notes due June 1, 2024

Exchange Act: Securities Exchange Act of 1934, as amended

FASB: Financial Accounting Standards Board

FICC: Fixed Income and Commodities Trading and Clearing

FINRA: Financial Industry Regulatory Authority

2026 Notes: $500 million aggregate principal amount of 3.85%

IPO: Initial Public Offering

senior unsecured notes due June 30, 2026

ASU: Accounting Standards Update

ATS: Alternative Trading System

BWise: BWise Beheer B.V. and its subsidiaries

ISE: U.S. Exchange Holdings, Inc. and its subsidiaries

LCH: LCH Group Holdings Limited

iii

LIBOR: London Interbank Offered Rate
MiFID II: Update to the Markets in Financial Instruments

Directive

MiFIR: Markets in Financial Instruments Regulation
MTF: Multilateral Trading Facility

SEC: U.S. Securities and Exchange Commission

SERP: Supplemental Executive Retirement Plan

SFSA: Swedish Financial Supervisory Authority

SMARTS: SMARTS Group Holdings Pty

NFX: Nasdaq Futures, Inc.

NPM: The NASDAQ Private Market, LLC

NSCC: National Securities Clearing Corporation

OCC: The Options Clearing Corporation

OTC: Over-the-Counter

Proxy Statement: Nasdaq’s Definitive Proxy Statement for the

2019 Annual Meeting of Stockholders

PSU: Performance Share Unit

Regulation NMS: Regulation National Market System

Regulation SCI: Regulation Systems Compliance and Integrity

S&P: Standard & Poor’s

S&P 500: S&P 500 Stock Index

SRO: Self-regulatory Organization

SSMA: Swedish Securities Markets Act 2007:528

TSR: Total Shareholder Return

U.S. GAAP: U.S. Generally Accepted Accounting Principles

UTP: Unlisted Trading Privileges

UTP Plan: Joint SRO Plan Governing

the Collection,
Consolidation, and Dissemination of Quotation and
Transaction Information for Nasdaq-Listed SecuritiesTraded
on Exchanges on a UTP Basis

VAT: Value Added Tax

* * * * *

NASDAQ, the NASDAQ logos, and other brand, service or product names or marks referred to in this report are trademarks or services
marks, registered or otherwise, of Nasdaq, Inc. and/or its subsidiaries. FINRA and TRADE REPORTING FACILITY are registered
trademarks of FINRA.

* * * * * *

This Annual Report on Form 10-K includes market share and industry data that we obtained from industry publications and surveys,
reports of governmental agencies and internal company surveys. Industry publications and surveys generally state that the information
they contain has been obtained from sources believed to be reliable, but we cannot assure you that this information is accurate or
complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic
assumptions relied upon therein. Statements as to our market position are based on the most currently available market data. For market
comparison purposes, The Nasdaq Stock Market data in this Annual Report on Form 10-K for IPOs is based on data generated internally
by us, which includes best efforts underwritings; therefore, the data may not be comparable to other publicly-available IPO data. Data in
this Annual Report on Form 10-K for new listings of equity securities on The Nasdaq Stock Market is based on data generated internally
by us, which includes best efforts underwritings, issuers that switched from other listing venues, closed-end funds and ETPs. Data in this
Annual Report on Form 10-K for IPOs and new listings of equity securities on the Nasdaq Nordic and Nasdaq Baltic exchanges also is
based on data generated internally by us. IPOs and new listings data is presented as of period end. While we are not aware of any
misstatements regarding industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on
various factors, including those discussed in “Item
1A. Risk Factors” in this Annual Report on Form 10-K.

Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC
Regulation FD and other disclosure obligations. These disclosures will be included on Nasdaq’s website under “Investor Relations.”

* * * * * *

[THIS PAGE INTENTIONALLY LEFT BLANK]

Forward-Looking Statements

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future
prospects and make informed investment decisions. This Annual Report on Form 10-K contains these types of statements. Words such as
“may,” “will,” “could,” “should,” “anticipates,” “envisions,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes”
and words or terms of similar substance used in connection with any discussion of future expectations as to industry and regulatory
developments or business initiatives and strategies, future operating results or financial performance, and other future developments
identify forward-looking statements. These include, among others, statements relating to:



our strategy, growth forecasts and 2019 outlook;
the integration of acquired businesses, including accounting decisions relating thereto;
the scope, nature or impact of acquisitions, divestitures, investments, joint ventures or other transactional activities;

the effective dates for, and expected benefits of, ongoing initiatives, including transactional activities and other strategic,
restructuring, technology, de-leveraging and capital return initiatives;
our products, order backlog and services;
the impact of pricing changes;
tax matters;
the cost and availability of liquidity and capital; and

any litigation, or any regulatory or government investigation or action, to which we are or could become a party or which
may affect us.

Forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the following:



our operating results may be lower than expected;

our ability to successfully integrate acquired businesses or divest sold businesses or assets, including the fact that any
integration or transition may be more difficult, time consuming or costly than expected, and we may be unable to realize
synergies from business combinations, acquisitions, divestitures or other transactional activities;

loss of significant trading and clearing volumes or values, fees, market share, listed companies, market data products
customers or other customers;
our ability to keep up with rapid technological advances and adequately address cybersecurity risks;

economic, political and market conditions and fluctuations, including interest rate and foreign currency risk, inherent in
U.S. and international operations;
the performance and reliability of our technology and technology of third parties on which we rely;
any significant error in our operational processes;
our ability to continue to generate cash and manage our indebtedness; and
adverse changes that may occur in the litigation or regulatory areas, or in the securities markets generally.

Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the uncertainty and
any risk related to forward-looking statements that we make. These risk factors are discussed under the caption “Item 1A. Risk
Factors,” in this Annual Report on Form 10-K. You are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. You should carefully read this entire Annual Report on Form 10-K, including “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements
and the related notes. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking
statement, release publicly any revisions to any forward-looking statements or report the occurrence of unanticipated events. For any
forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.

PART I

Item 1. Business
Overview

is a

leading provider of

Nasdaq, Inc.
trading, clearing,
marketplace technology, regulatory, securities listing, information
and public and private company services. Our global offerings are
diverse and include trading and clearing across multiple asset
classes, trade management services, data products, financial
indexes, capital formation solutions, corporate solutions, and
market technology products and services. Our technology powers
markets across the globe, supporting equity derivative trading,
clearing and settlement, cash equity trading, fixed income trading,
trading surveillance and many other functions.

History

Nasdaq was founded in 1971 as a wholly-owned subsidiary of
FINRA. Beginning in 2000, FINRArestructured and broadened
ownership in Nasdaq by selling shares to FINRA members,
investment companies and issuers listed on The Nasdaq Stock
Market. In connection with this restructuring, FINRA fully
divested its ownership of Nasdaq in 2006, and The Nasdaq Stock
Market became fully operational as an independent registered
national securities exchange in 2007. In 2006, Nasdaq also
reorganized its operations into a holding company structure.
In February 2008, Nasdaq and OMX AB combined their
businesses. This transformational combination resulted in the
expansion of our business from a U.S.-based exchange operator to
a global exchange company offering technology that powers our
own exchanges and markets as well as many other marketplaces
around the world. In connection with this acquisition, we changed
our corporate name to The NASDAQ OMX Group, Inc. We
operated under this name until we rebranded our business as
Nasdaq, Inc. in 2015.

Growth Strategy

Our Strategy: Our strategic direction is driven by our continuous
examination of:
regulatory and
(i) key macroeconomic,
technology trends, (ii) consultation with our clients about short-
and long-term trends in their businesses and (iii) the competitive
landscape.

Under the strategic direction that we have been implementing over
the past two years, we have focused on maximizing the resources,
people and capital allocated to our largest growth opportunities,
particularly in our Market Technology and Information Services
businesses. In addition, we are committed to maintaining and
enhancing the marketplace platform businesses that are core to
Nasdaq, and reducing capital and resources in areas that we
believe are not as strategic to our clients and have less growth
potential within Nasdaq.


Increasing Investment in Businesses Where We See the
Highest Growth Opportunity. We have increased investment
in areas that we believe help solve our clients’ biggest
challenges and are likely to generate growth for our
stockholders. In 2018, these businesses included: the data
analytics business within our Information Services segment,
NPM, within our Corporate Services segment, and our
Market Technology segment (including our regulatory
technology business).

Consistent with
this objective, we recently acquired
eVestment and Quandl, Inc., which are part of our
Information Services segment, and Sybenetix and Cinnober
Financial Technology AB, or Cinnober, which are now part
of our Market Technology segment. We also are investing
further in the Market Technology segment through the
Nasdaq Financial Framework, the expansion of our SMARTS
products and customers, and our efforts to commercialize
disruptive
including blockchain, machine
technologies,
intelligence and the cloud.
Sustaining Our Foundation. As we strive to grow our
business, we also have focused on enhancing our leadership
position in the marketplaces in which we operate as we
continue to innovate with new functionality and strong
market share in our core markets.



Since our transformative combination with OMX AB in 2008, we
have grown our business both organically and
through
acquisitions that have expanded our operations globally and
increasingly diversified our product and service offerings. This
evolution was driven by our ability to create opportunities in areas
adjacent
to our core businesses, many of which are
non-transaction based and rooted in innovative technology.To
keep pace with our understanding of future trends and to ensure
our continued success in the evolving business environment, we
have focused on refining our vision, mission and strategy:

 Optimizing Slower Growth Businesses. We continually
review areas that are not critical to our core. In these areas, we
expect to target resiliency and efficiency versus growth, and
free up resources when possible to redirect toward greater
opportunities. In furtherance of this strategy, in April 2018 we
sold the public relations (Public Relations Solutions) and
webcasting and webhosting (Digital Media Services)
businesses within our Corporate Solutions business to West
Corporation. In addition, in December 2018, we sold our
5.0% ownership interest in LCH.

Our Vision: We reimagine markets to realize the potential of
tomorrow.

Products and Services

Our Mission: We bring together ingenuity, integrity and insights
to deliver markets that accelerate economic progress and empower
people to achieve their greatest ambitions.

We manage, operate and provide our products and services in four
business segments: Market Services, Corporate Services,
Information Services and Market Technology.

Market Services

Our Market Services segment includes our Equity Derivative
Trading and Clearing, Cash Equity Trading, FICC and Trade
Management Services businesses.

Equity Derivative Trading and Clearing

We operate six electronic options exchanges in the U.S.: Nasdaq
PHLX, The Nasdaq Options Market, Nasdaq BX Options, Nasdaq
ISE, Nasdaq GEMX and Nasdaq MRX. These exchanges
facilitate the trading of equity, ETF, index and foreign currency
options. Together, our combined options market share in 2018
represented the largest share of the U.S. market for multiply-listed
options on equities and ETFs. Our options trading platforms
provide trading opportunities to both retail investors, algorithmic
trading firms and market makers, who tend to prefer electronic
trading, and institutional investors, who typically pursue more
complex trading strategies and often trade on the floor.

In Europe, Nasdaq offers trading in derivatives, such as stock
options and futures, index options and futures and fixed-income
options and futures. Nasdaq Clearing offers clearing services for
fixed-income options and futures, stock options and futures, index
options and futures, and interest rate swaps by serving as the CCP.
Nasdaq Clearing also operates a clearing service for the resale and
repurchase agreement market.

Cash Equity Trading

In the U.S., we operate three cash equity exchanges: The Nasdaq
Stock Market, Nasdaq BX and Nasdaq PSX. The Nasdaq Stock
Market is the largest single venue of liquidity for trading
U.S.-listed cash equities.

and

trading of both
Our U.S. cash equity exchanges offer
Nasdaq-listed
securities. Market
non-Nasdaq-listed
participants include market makers, broker-dealers, ATSs and
registered securities exchanges. In addition, we operate a
Canadian exchange with three independent markets, CXC, CX2
and CXD, for the trading of Canadian-listed securities.

In Europe, Nasdaq operates exchanges in Stockholm (Sweden),
Copenhagen (Denmark), Helsinki (Finland), and Reykjavik
(Iceland). We also operate exchanges in Tallinn (Estonia), Riga
(Latvia) and Vilnius (Lithuania).

Collectively, the Nasdaq Nordic and Nasdaq Baltic exchanges
offer trading in cash equities, depository receipts, warrants,
convertibles, rights, fund units and ETFs. Our platform allows the
exchanges to share the same trading system, which enables
efficient cross-border trading and settlement, cross membership
and a single source for Nordic data products. Settlement and
registration of cash equity trading takes place in Sweden, Finland,
Denmark and Iceland via the local central securities depositories.
In addition, Nasdaq owns two central securities depositories that
provide notary, settlement, central maintenance and other services
in the Baltic countries and Iceland.

FICC

Our FICC business includes the Nasdaq Fixed Income business,
NFX and Nasdaq Commodities.

The U.S. portion of Nasdaq Fixed Income includes an electronic
platform for trading U.S. Treasuries. The electronic trading
platform provides real-time institutional trading of benchmark

U.S. Treasury securities. Through this business, we provide
trading access to the U.S. Treasury securities market with an array
of trading instruments to meet various investment goals across the
fixed income spectrum.

The European portion of Nasdaq Fixed Income provides a wide
range of products and services, such as trading and clearing, for
fixed income products in Sweden, Denmark, Finland, Iceland,
Lithuania and Latvia. Nasdaq Stockholm is the largest bond listing
venue in the Nordics, with more than 7,000 listed retail and
institutional bonds. In addition, Nasdaq Nordic facilitates the
trading and clearing of Nordic fixed income derivatives in a
unique market structure. Buyers and sellers agree to trades in fixed
income derivatives through bilateral negotiations and then report
those trades to Nasdaq Clearing for CCPclearing. Nasdaq
Clearing acts as the counterparty to both the buyer and seller.

Nasdaq Commodities is the brand name for Nasdaq’s European
commodity-related products and services. Nasdaq Commodities’
offerings include derivatives in oil, power, natural gas and carbon
emission markets, tanker and dry cargo freight, seafood, iron ore,
electricity certificates and clearing services. These products are
listed on two of Nasdaq’s derivatives exchanges.

Nasdaq Oslo ASA, which is authorized by the Norwegian
Ministry of Finance and supervised by the Norwegian Financial
Supervisory Authority, is the commodity derivatives exchange for
European products. All trades with Nasdaq Oslo ASA are subject
to clearing with Nasdaq Clearing, which is a CCP authorized
under EMIR by the SFSA to conduct clearing operations.

We also operate NFX, which is a U.S. based designated contract
market authorized by the CFTC. NFX currently lists cash-settled
derivatives in freight and energy (including oil, natural gas and
U.S. power). All trades with NFX are subject to clearing with
OCC.

Trade Management Services

We provide market participants with a wide variety of alternatives
for connecting to and accessing our markets for a fee. Shifting
connectivity from proprietary networks to third-party networks
has significantly reduced technology and network costs and
increased our systems’ scalability while maintaining performance
and reliability.

Our marketplaces may be accessed via a number of different
protocols used for quoting, order entry, trade reporting and
connectivity to various data feeds. We also offer the Nasdaq
Workstation, a browser-based, front-end interface that allows
market participants to view data and enter orders, quotes and trade
reports. In addition, we offer a variety of add-on compliance tools
to help firms comply with regulatory requirements.

We provide co-location services to market participants, whereby
we offer firms cabinet space and power to house their own
equipment and servers within our data centers. Additionally, we
offer a number of wireless connectivity routes between select data
centers using millimeter wave and

microwave technology. We also earn revenues from annual and
monthly exchange membership and registration fees.

were part of our Corporate Solutions business
Corporation.

to West

Our broker services operations offer technology and customized
securities administration solutions to financial participants in the
Nordic market. Broker services provides services through a
registered securities company that is regulated by the SFSA.
Services primarily consist of flexible back-office systems, which
allow customers to entirely or partly outsource their company’s
back-office functions.

We offer customer and account registration, business registration,
clearing and settlement, electronic Nordic mutual fund service,
corporate action handling for reconciliations and reporting to
authorities. Available services also include direct settlement with
the Nordic central securities depositories, real-time updating and
communication via
the Society for Worldwide Interbank
Financial Telecommunication (SWIFT) to deposit banks.

Corporate Services

Our Corporate Services businesses deliver critical capital market
and governance solutions across the lifecycle of public and private
companies.

Corporate Solutions

As of December 31, 2018, we provided Corporate Solutions
products and services in the following key areas:



Investor Relations Intelligence. We offer a global team of
consultative experts that deliver advisory services including
Strategic Capital Intelligence, Shareholder Identification and
Perception Studies as well as an industry-leading software,
Nasdaq IR Insight®, to investor relations professionals.
These solutions allow investor relations officers to better
manage their investor relations programs, understand their
investor base, target new investors, manage meetings and
consume key data elements such as equity research,
consensus estimates and news.

 Board & Leadership. We provide a global technology
offering that streamlines the meeting process for board of
directors and executive leadership teams and helps them
accelerate decision marking and strengthen governance. Our
solutions protect sensitive data and facilitate productive
collaboration, so board members and teams can work faster
and more effectively.

 Governance, Risk & Compliance. We offer a global suite of
managed services and solutions for risk management, internal
audit and regulatory compliance.

In April 2018, we sold the Public Relations Solutions and Digital
Media Services products and services that formerly

In February 2019, we entered into an agreement with SAI Global
internal audit, regulatory compliance
to sell BWise, our
management, and operational risk management software that
comprises our governance, risk and compliance product offering.
Subject to regulatory approvals, works council and other
representative body consultations and notifications in applicable
jurisdictions, as well as other customary closing conditions, the
transaction is expected to close in the first half of 2019.

Listing Services

We operate a variety of listing platforms around the world to
provide multiple global capital raising solutions for private and
public companies. Companies listed on our markets represent a
diverse array of industries including, among others, health care,
consumer products, telecommunication services, information
technology, financial services, industrials and energy.Our main
listing markets are The Nasdaq Stock Market and the Nasdaq
Nordic and Nasdaq Baltic exchanges.

Companies seeking to list securities on The Nasdaq Stock Market
must meet minimum listing requirements, including specified
financial and corporate governance criteria. Once
listed,
companies must meet continued listing standards. The Nasdaq
Stock Market currently has three listing tiers: The Nasdaq Global
Select Market, The Nasdaq Global Market and The Nasdaq
Capital Market. All three market tiers maintain rigorous listing
and corporate governance standards (both initial and ongoing).

As of December 31, 2018, a total of 3,058 companies listed
securities on The Nasdaq Stock Market, with 1,418 listings on The
Nasdaq Global Select Market, 852 on The Nasdaq Global Market
and 788 on The Nasdaq Capital Market.

We aggressively pursue new listings from companies, including
those undergoing IPOs as well as companies seeking to switch
from alternative exchanges. In 2018, The Nasdaq Stock Market
attracted 303 new listings, including 186 IPOs, representing 72%
of U.S. IPOs in 2018. The new listings were comprised of the
following:

Switches from the New York Stock Exchange LLC, or

NYSE, and NYSE American LLC, or NYSE American

IPOs
Upgrades from OTC
ETPs and Other Listings

Total

18
186
43
56
303

The 18 NYSE or NYSE American listed companies that switched
to The Nasdaq Stock Market, represented approximately $111.3
billion in market capitalization. Notable switches included Xcel
Energy, Inc., United Continental Holdings, Inc., and Regency
Centers Corporation.

We also offer listings on the exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic. For smaller companies and growth

companies, we offer access to the financial markets through the
Nasdaq First North alternative marketplaces. As of December 31,
2018, a total of 1,019 companies listed securities on our Nordic
and Baltic exchanges and Nasdaq First North.

Our European listing customers include companies, funds and
governments. Customers issue securities in the form of cash
equities, depository receipts, warrants, ETPs, convertibles, rights,
options, bonds or fixed-income related products. In 2018, a total
of 73 new companies listed on our Nordic and Baltic exchanges
and Nasdaq First North. In addition, 13 companies upgraded their
listings from Nasdaq First North to the Nordic and Baltic
exchanges.

Our Listing Services business also includes NPM, which provides
liquidity solutions for private companies and private funds.
NPM’s platform helps employees, investors, companies, funds
transactions, whether for private
and
companies, private investment funds, or other private asset
classes.

institutions execute

In December 2018, we launched a Corporate Bond exchange for
the listing and trading of corporate bonds. The new exchange
operates pursuant to The Nasdaq Stock Market exchange license
and is powered by the Nasdaq Financial Framework, similar to the
Nasdaq Fixed Income platform. Surveillance is conducted by the
Nasdaq regulatory team, assisted by our SMARTS surveillance
solution.

Information Services

Beginning in the second quarter of 2018, our Information Services
segment was recategorized into the following businesses:

 Market Data;



Index; and

Investment Data & Analytics.

Prior to the second quarter, our Information Services segment was
comprised of our Data Products and our Index Licensing and
Services businesses.

Market Data

Our Market Data business sells and distributes historical and
real-time quote and trade information to the sell-side, the
buy-side, retail online brokers, proprietary trading shops, other
venues, internet portals and data distributors. Our market data
products enhance transparency of market activity within our
exchanges and provide critical information to professional and
non-professional investors globally.

We collect, process and create information and earn revenues as a
distributor of our own, as well as select, third-party content. We
provide varying levels of quote and trade information to our
customers who in turn provide subscriptions for this information.
Our systems enable distributors to gain access to our market
depth, mutual fund valuation, order imbalances, market sentiment
and other analytical data.

We distribute this proprietary market information to both market
participants and non-participants through a number of proprietary
products, including Nasdaq Total View, our flagship market depth
quote product. TotalView shows subscribers quotes, orders and
total anonymous interest at every displayed price level in The
Nasdaq Stock Market for Nasdaq-listed securities and critical data
for the opening, closing, halt and IPO crosses. We also offer
TotalView products for our Nasdaq BX, Nasdaq PSX, Nasdaq
Fixed Income and other Nordic markets. We operate several other
proprietary services and data products to provide market
information, including Nasdaq Basic, a low cost alternative to the
industry Level 1 feed and Nasdaq Canada Basic, a low cost
alternative to other high priced data feeds. We also provide a
plethora of other data, including data relating to our six U.S.
options exchanges, Nordic and U.S. futures, Nordic commodities,
and U.S. Treasuries.

Our Market Data business also includes revenues from U.S. tape
plans. The plan administrators sell quotation and last sale
information for all transactions in Nasdaq-listed securities,
whether traded on The Nasdaq Stock Market or other exchanges,
to market participants and to data distributors, who then provide
the information to subscribers. After deducting costs, the plan
administrators distribute the tape revenues to the respective plan
participants based on a formula required by Regulation NMS that
takes into account both trading and quoting activity.

The Nasdaq Nordic and Nasdaq Baltic exchanges, as well as
Nasdaq Commodities, also offer data products and services. These
data products and services provide critical market transparency to
professional and non-professional investors who participate in
European marketplaces and, at the same time, give investors
greater insight into these markets.

Much like the U.S. products, European data products and services
are based on trading information from the Nasdaq Nordic and
Nasdaq Baltic exchanges, as well as Nasdaq Commodities, for the
following classes of assets: cash equities, bonds, derivatives and
commodities. We provide varying levels of quote and trade
information to market participants and to data distributors, who in
turn provide subscriptions for this information. Significant
European data products include Nordic Equity Total View, Nordic
Derivative Total View, and Nordic Fixed Income Total View<
Level 2, Analytics and Fixings.

Index

Our Index business develops and licenses Nasdaq-branded
indexes, associated derivatives, and financial products and also
provides custom calculation services for third-party clients.
License fees for our trademark licenses vary by product based on a
percentage of underlying assets, dollar value of a product
issuance, number of products or number of contracts traded. We
also license cash-settled options, futures and options on futures on
our indexes.

As of December 31, 2018, we had 365 ETPs licensed to Nasdaq’s
indexes which had $172 billion in assets under management. Our
flagship index, the Nasdaq-100 Index, includes the top 100
non-financial securities listed on The Nasdaq Stock Market.

Nasdaq’s market technology is utilized by leading markets in the
U.S., Europe and Asia as well as emerging markets in the Middle
East, Latin America, and Africa. Additionally, more than 160
market participants leverage our surveillance technology globally
to manage their integrity obligations and assist them in complying
with market rules, regulations and internal market surveillance
policies.

In January 2019, we completed a public offer to acquire Cinnober,
a major Swedish financial technology provider to brokers,
exchanges and clearinghouses worldwide
that provides
technology solutions similar and complimentary to our Market
Technology business. We expect the integration of Cinnober into
our business to strengthen our position as a leading market
infrastructure technology provider.

Market Infrastructure Operators (MIO) & New Markets Portfolio

For MIO’s, we provide and deliver mission-critical solutions
across the trade lifecycle via the Nasdaq Financial Framework,
which is our flexible and modular architecture and technology that
provides next generation capital markets capabilities in an open
and agile environment. The Nasdaq Financial Framework is
designed to cover all aspects of a market operator’s needs, from
trading and clearing to risk management, market surveillance,
index development, data, management, testing and quality
assurance. During 2018, we continued to invest in the Nasdaq
technologies,
Financial Framework by enabling emerging
including integrating blockchain technology for issuance and
settlement of securities, cloud-enabled trading and clearing, and
other blockchain and machine learning applications.

In 2018, we launched our New Markets initiative, which is
focused on extending
the Nasdaq Financial Framework’s
capabilities outside of capital markets. Market Technology
currently offers its services to a loyalty points exchange, digital
advertising exchange, reinsurance market and three horse racing
operators.

Many MIO and New Markets projects involve complex delivery
management and systems integration. Through our integration
services, we can assume responsibility for projects that involve
migration to a new system and the establishment of entirely new
marketplaces. We also offer operation and support for the
applications, systems platforms, networks and other components
included in an information technology solution, as well as
advisory services.

Buy- and Sell-side Portfolio

In 2018, we continued to make progress in expanding our Nasdaq
Financial Framework offering to the bank and broker community.
Regulatory pressure across multiple jurisdictions has made
outsourcing of front-office infrastructure an attractive option for
sell-side organizations and, as a result, we offer trading and
internalizers,
for
execution
single-dealers platforms and both multi-lateral and organized
trading facilities.

infrastructure

systematic

We provide index data products based on Nasdaq indexes. Index
data products include our Global Index Data Service, which
delivers real-time index values throughout the trading day, and
Global Index Watch/Global Index File Delivery Service, which
delivers weightings and components data, corporate actions and a
breadth of additional data. We also operate the Nasdaq Global
Index Family, which includes more than 40,000 indexes. The
family consists of global securities broken down by market
segment, region, country, size and sector. The Nasdaq Global
Index Family covers 45 countries and approximately 9,000
securities.

Nasdaq Dorsey Wright, or NDW, a market leader in data
analytics, passive indexing, smart beta strategies, provides
model-based strategies and analysis to support the financial
advisor community, as well as Systematic Relative Strength
strategies to manage separately and unified managed accounts.
ND We strengthens Nasdaq’s position as a leading smart beta
index provider in the U.S. As of December 31, 2018, there were
$7 billion in assets under management, or AUM, in ETPs that
track Nasdaq smart beta indexes and $2 billion in AUM and assets
under advisement tracking ND We investment strategies and
research.

Investment Data & Analytics

Our Investment Data & Analytics business is a leading content
and analytics cloud-based solutions provider used by asset
managers, investment consultants and asset owners to help
facilitate better investment decisions. Through eVestment, we
offer leading content and analytics used by asset managers,
investment consultants and asset owners to help facilitate
institutional investment decisions. eVestment provides a flexible
suite of cloud-based solutions to help the institutional investing
community identify and capitalize on global investment trends
and select and monitor investment managers. eVestment’s
products also enable asset managers to market their funds
worldwide. Additionally the Nasdaq Fund Network gathers and
distributes daily net asset values from over 35,000 funds and other
investment vehicles across North America.

In November 2018, we acquired Quandl, Inc., a premier
marketplace for unique, alpha-generating alternative datasets as
well as for economic and financial datasets.

Market Technology

Powering over 100 market infrastructure operators in more than
50 countries, our Market Technology business is a leading global
technology solutions provider and partner to exchanges, clearing
organizations, central securities depositories, regulators, banks,
brokers, buy-side firms and corporate businesses. Our solutions
can handle a wide array of assets, including but not limited to cash
equities, equity derivatives, currencies, various interest-bearing
securities, commodities, energy products and digital currencies.
Our solutions can also be used in the creation of new asset classes,
and in 2018, Nasdaq partnered with non-capital markets
customers, including those in insurance liabilities securitization
and digital advertising futures trading.

We also continue to gain market share for our SMARTS Trade
Surveillance solution, which is a managed service designed for
brokers and other market participants to assist them in complying
with market rules, regulations and internal market surveillance
policies, and TradeGuard, which is a suite of products that offer a
real-time, multi-tiered risk solution that integrates pre-, at- and
on-trade risk management,
including margining. In 2018,
SMARTS received four industry awards and is now used by over
160 client firms globally. In 2018, we completed the integration of
Sybenetix, our market surveillance and fair investor allocation
solution for the buy-side, and have begun deploying this solution
to an expanded customer base.

Technology

through

training,

Technology plays a key role in ensuring the growth, reliability and
regulation of financial markets. We have established a technology
risk program to evaluate the resiliency of critical systems,
including risks associated with cybersecurity. This program is
focused on (i) identifying areas for improvement in systems and
(ii) implementing changes and upgrades to technology and
processes to minimize future risk. We have continued our focus on
improving the security of our technology with an emphasis on
employee awareness
targeted phishing
campaigns, and new tool deployment for our securities operations
team. See “Item 1A. Risk Factors,” in this Annual Report on Form
10-K for further discussion.
Core Technology. The Nasdaq Financial Framework is Nasdaq’s
approach
for market
infrastructure operators, buy-side firms, sell-side firms and other
non-financial markets.The framework consists of a single
operational core platform that ties together Nasdaq’s portfolio of
functionality across the trade lifecycle, in an open framework
whereby exchanges, clearinghouses, CSDs and other entities can
easily integrate Nasdaq’s business applications with each other, as
well as other third-party solutions. In addition to being able to
integrate a broad range of business functions, the Nasdaq
Financial Framework enables end users to leverage recent
technology developments, such as blockchain and machine
learning. During 2018, Nasdaq Fixed Income was replatformed
using the Nasdaq Financial Framework Core Platform.

to delivering end-to-end solutions

 Provide data, tools and insights that drive sound decision

making.

Technological Strength

We are living through a time where innovative technologies are
transforming financial services. We have come a long way in
trading since Nasdaq launched the first fully electronic exchange
in 1971 and we see forces accelerating that will bring major
changes to the capital markets. The strength and resiliency of our
technology, enhanced by our
leading Market Technology
business, in meeting the advancing demands of our global
customer base is vital to the continued success of our business and
distinguishes us from our competitors.

A Focus on Client Needs Throughout the Marketplace

We strive to serve a diverse range of clients by:

 Brokers and Traders - Helping brokers and traders to
confidently plan, optimize and execute their business vision.

 Market Participants - Enabling market participants to

monitor and capitalize on real-time market changes.



Investors and Asset Managers - Offering products and
services to assist investors and asset managers in optimizing
their portfolios and offerings.

 Listed Companies - Promoting the capital health of our listed

companies.

 Private Companies - Working with private companies to
meet liquidity needs, manage relationships with long-term
institutional
their entire equity
program.

investors and oversee

 Market

Infrastructure Players

- Assisting market
infrastructure players (exchanges, regulators, clearinghouses,
and Central Securities Depositories) in increasing efficiency,
meeting customer needs and growing revenue.

 Capital-Markets

through
economies of scale (cost, speed, connectivity) to all members
of the capital-markets ecosystem.

- Delivering

efficiencies

Competitive Strengths

We are a global financial technology company that in recent years,
through building on capital markets experience, technological
expertise, and clear understanding of our client's needs, has
diversified its product and service offerings.

A Unique Value Proposition

We operate a diverse and resilient capital markets franchise with a
marketplace core. Our businesses provide capital-markets
infrastructure services to industry players, allowing us to:

 Develop efficient and reliable technologies to facilitate

capital markets activity;

 Manage the complexities and costs of business on a global

scale; and

Competition

Market Services

We face intense competition in North America and Europe in
businesses that comprise our Market Services segment. We seek
to provide market participants with greater functionality,
trading system stability, speed of execution, high levels of
customer service, and efficient pricing. In both North America and
Europe, our competitors include other exchange operators,
operators of non-exchange trading systems and banks and
brokerages that operate their own internal trading pools and
platforms.

In the U.S., our options markets compete with exchanges operated
by Cboe Global Markets, Inc., or CBOE, Miami International
Holdings, Inc., or Miami, and Intercontinental Exchange, Inc., or
ICE. In cash equities, we compete with

exchanges operated by CBOE and ICE. In addition, competitors
recently have launched, or announced a plan to launch, new
exchanges, including one to be established by a group of our
customers. In equities we also face competition from ATSs and
other less-heavily regulated broker-owned systems, some of
which are also known as “dark pools,” and from other types of
OTC trading. In Canada, our cash equities exchange competes
with exchanges such as the Toronto Stock Exchange, or TSX, and
other marketplaces.

In Europe, our cash equities markets compete with exchanges
such as CBOE, Euronext N.V., Deutsche Börse A.G. and London
Stock Exchange Group plc, or LSE, and MTFs. Our competitors
in the trading and clearing of options and futures on European
equities include the Eurex Group companies, or Eurex, ICE
Futures Europe and the MTFs. In addition, in equities we face
competition from other broker-owned systems, some of which are
also known as systematic internalizers, and from other types of
OTC trading. Competition among exchanges for trading European
equity derivatives tends to occur where there is competition in the
trading of the underlying equities. In addition to exchange-based
competition, we face competition from OTC derivative markets.

The implementation of MiFID II and MiFIR is expected to lead to
further competitive pressure on our European trading business.
MTFs are already attracting a significant share of electronically
matched volume. With the regulatory environment likely to
become more favorable to alternative trading venues, we expect
such venues to compete aggressively for the trading of equity
securities listed on our Nordic exchanges. Electronic trading
systems pursuing block business also remain active in Europe.
Trading on systematic internalizers has increased markedly as
volume migrates from other types of trading venues. In
responding to current and potential competition, we constantly
review our pricing and product offerings.

Our FICC business also operates in an intensely competitive
environment. Our trading platform for benchmark U.S. treasuries
faces competition from both long-established competitors, such as
Brokertec, and newly emerging electronic and voice brokerages,
and the operating environment remains extremely challenging.
Our European fixed income products and services are subject to
relentless competitive pressure from OTC dealers as well as
exchanges. Our suite of commodity-related products and services
is in many cases designed to challenge the more established
players.

Our Trade Management Services business competes with other
exchange operators, extranet providers, and data center providers.

Corporate Services

In our Corporate Solutions business, competition is varied and can
be fragmented. For our Investor Relations Intelligence business,
there are many regional competitors and relatively few global
providers. Other exchange operators are partnering with firms that
have capabilities in this area and seeking to acquire relevant assets
in order to provide investor relations services to customers

alongside listing services. The competitive landscape for our
Governance Solutions business varies by customer sector and
geography. Most participants offer
software-as-a-service
solutions that are supported by a data center strategy. Some firms
offer specialized services that focus on a single niche sector. The
larger players often offer additional services. Customers
frequently seek single-source providers that are able to address a
broad range of needs within a single platform.

Our Listing Services business in both the U.S. and Europe
provides a means of facilitating capital formation through public
capital markets. There are competing ways of raising capital, and
we seek to demonstrate the benefits of listing shares on an
exchange. Our primary competitor for larger company stock share
listings in the U.S. is NYSE. The Nasdaq Stock Market competes
with local and international markets located outside the U.S. for
listings of equity securities of both U.S. and non-U.S. companies
that choose to list (or dual-list) outside of their home country. For
example, The Nasdaq Stock Market competes for listings with
exchanges in Europe and Asia, such as LSE and The Stock
Exchange of Hong Kong Limited.

The Listings Services business in Europe is characterized by a
large number of exchanges competing for new or secondary
listings. Each country has one or more national exchanges, which
are often the first choice of companies in each respective country.
For those considering an alternative, competing European
exchanges that frequently attract many listings from outside their
respective home countries include LSE, Euronext N.V. and
Deutsche Börse A.G. In addition to the larger exchanges,
companies seeking capital or liquidity from public capital markets
are able to raise capital without a regulated market listing and can
consider trading their shares on smaller markets and quoting
facilities.

In risk intelligence, our products must compete with solutions that
are often part of larger suites, such as those related to information
technology management or general business management.

Information Services

Our Market Data business in the U.S. includes both proprietary
and consolidated data products. Proprietary data products are
made up exclusively of data derived from each exchange’s
systems. Consolidated data products are distributed by
SEC-mandated consolidators (one for Nasdaq-listed stocks and
another for NYSE and other-listed stocks) that share the revenue
among the exchanges that contribute data. In Europe, all data
products are proprietary as there is no official data consolidator.
Competition in the data business is intense and is influenced by
rapidly changing technology and the creation of new product and
service offerings.

The sale of our proprietary data products in both the U.S. and
Europe is under competitive threat from alternative exchanges and
trading venues that offer similar products. Our data business
competes with other exchanges and third party vendors to provide
information to market participants. Examples of our

competitors in proprietary data products are ICE, CBOE, TSX,
and Dow Jones & Company.

The consolidated data business is under competitive pressure from
other securities exchanges that trade Nasdaq-listed securities. In
addition, The Nasdaq Stock Market similarly competes for the
tape fees from the sale of information on securities listed on other
markets.

Our Index business faces competition from providers of various
competing financial indexes. For example, there are a number of
indexes that aim to track the technology sector and thereby
compete with the Nasdaq-100 Index and the Nasdaq Composite
Index. We face competition from investment banks, dedicated
index providers, markets and other product developers.

Our Investment Data & Analytics faces competition from a broad
array of data and analytics suppliers, both established firms and
small start-ups. The majority of the competitors today are offering
only a portion of the solutions that we offer. Our primary
competitors are Morningstar, Factset, Mercer and any number of
smaller firms along with start-up data providers and aggregators.
Additionally other large providers to the financial services
industry such as Bloomberg and Refinitiv are believed to be
interested in pursuing certain aspects of the services we provide.

Market Technology

Traditionally, exchanges and exchange-related businesses
internally developed technology, sometimes aided by consultants.
However, over time this model has changed as many operators
have recognized the cost-savings made possible by buying
technology from third parties. As a result, two types of
competitors have emerged in our Market Technology segment:
exchange operators and technology providers unaffiliated with
exchanges. These organizations make available a range of
off-the-shelf technology, including trading, clearing, market
surveillance,
information
dissemination, and offer customization and operation expertise.
Market conditions in Market Technology are evolving rapidly,
which makes continuous investment and innovation a necessity.

settlement,

depository

and

A wide range of providers compete with us in surveillance. In
surveillance, standardization of products and budget pressures
drive customers to focus on pricing.

Intellectual Property

We believe that our intellectual property assets are important for
maintaining the competitive differentiation of our products,
systems, software and services, enhancing our ability to access
technology of third parties and maximizing our return on research
and development investments.

To support our business objectives and benefit from our
investments in research and development, we actively create and
maintain a wide array of intellectual property assets, including
patents and patent applications related to our innovations,
products and services; trademarks related to our brands, products
and services; copyrights in software and creative content; trade
secrets; and through other intellectual property rights, licenses of
into
various kinds and contractual provisions. We enter

confidentiality and invention assignment agreements with our
employees and contractors, and utilize non-disclosure agreements
with third parties with whom we conduct business in order to
secure and protect our proprietary rights and to limit access to, and
disclosure of, our proprietary information.

We own, or have licensed, rights to trade names, trademarks,
domain names and service marks that we use in conjunction with
our operations and services. We have registered many of our most
important trademarks in the U.S. and in foreign countries. For
example, our primary “Nasdaq” mark is a registered trademark
that we actively seek to protect in the U.S. and in over 50 other
countries worldwide.

Over time, we have accumulated a robust portfolio of issued
patents in the U.S. and in many other jurisdictions across the
world. We currently hold rights to patents relating to certain
aspects of our products, systems, software and services, but we
primarily rely on the innovative skills, technical competence and
marketing abilities of our personnel. No single patent is in itself
core to the operations of Nasdaq or any of its principal business
areas.

Corporate Venture Practice

We operate a corporate venture program to make minority
investments primarily in emerging growth financial technology
companies that are strategically relevant to, and aligned with,
Nasdaq. Investments are made through the venture program to
further our organic research and development efforts and
accelerate the path to commercial viability. We expect that capital
invested will continue to be modest and will not have a material
impact on our consolidated financial statements, existing capital
return or deployment priorities.

Regulation

We are subject to extensive regulation in the U.S., Canada and
Europe.

U.S. Regulation

U.S. federal securities laws establish a system of cooperative
regulation of securities markets, market participants and listed
companies. SROs conduct the day-to-day administration and
regulation of the nation’s securities markets under the close
supervision of, and subject to extensive regulation, oversight and
enforcement by, the SEC. SROs, such as national securities
exchanges, are registered with the SEC.

This regulatory framework applies to our U.S. business in the
following ways:



regulation of our registered national securities exchanges; and

regulation of our U.S. broker-dealer and investment advisor
subsidiaries.

National Securities Exchanges. SROs in the securities industry are
an essential component of the regulatory scheme of the Exchange
Act for providing fair and orderly markets and

protecting investors. The Exchange Act and the rules thereunder,
as well as each SRO’s own rules, impose many regulatory and
operational responsibilities on SROs, including the day-to-day
responsibilities for market and broker-dealer oversight. Moreover,
an SRO is responsible for enforcing compliance by its members,
and persons associated with its members, with the provisions of
the Exchange Act, the rules and regulations thereunder, and the
rules of the SRO, including rules and regulations governing the
business conduct of its members.

Nasdaq currently operates three cash equity, six options markets
and one corporate bond market in the U.S. We operate The
Nasdaq Stock Market, The Nasdaq Options Market and the
Corporate Bond Market pursuant to The Nasdaq Stock Market’s
SRO license; Nasdaq BX and Nasdaq BX Options pursuant to
Nasdaq BX’s SRO license; Nasdaq PSX and Nasdaq PHLX
pursuant to Nasdaq PHLX’s SRO license; and Nasdaq ISE,
Nasdaq GEMX and Nasdaq MRX, each operates an options
market under its own SRO license. As SROs, each entity has
separate rules pertainingto its broker-dealer members and listed
companies. Broker-dealers that choose to become members of our
exchanges are subject to the rules of those exchanges.

All of our U.S. national securities exchanges are subject to SEC
oversight, as prescribed by the Exchange Act, including periodic
and special examinations by the SEC. Our exchanges also are
potentially subject to regulatory or legal action by the SEC at any
time in connection with alleged regulatory violations. We have
been subject to a number of routine reviews and inspections by the
SEC or external auditors in the ordinary course, and we have been
and may in the future be subject to SEC enforcement proceedings.
To the extent such actions or reviews and inspections result in
regulatory or other changes, we may be required to modify the
manner in which we conduct our business, which may adversely
affect our business.

Section 19 of the Exchange Act provides that our exchanges must
submit to the SEC proposed changes to any of the SROs’ rules,
practices and procedures, including revisions to provisions of our
certificate of incorporation and by-laws that constitute SRO rules.
The SEC will typically publish such proposed changes for public
comment, following which the SEC may approve or disapprove
the proposal, as it deems appropriate. SEC approval requires a
finding by the SEC that the proposal is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder, Pursuant to the requirements of the Exchange Act, our
exchanges must file with the SEC, among other things, all
proposals to change their pricing structure.

including

Pursuant to regulatory services agreements between FINRA and
our SROs, FINRA provides certain regulatory services to our
markets,
trading activity and
the regulation of
surveillance and investigative functions. Nevertheless, we have a
direct regulatory role in conducting certain real-time market
monitoring, certain equity surveillance not involving cross-market,
activity most options surveillance, most rule making and some
membership functions through our Nasdaq Regulation department.
We review suspicious trading behavior discovered

by our regulatory staff, and depending on the nature of the
activity, may refer the activity to FINRA for further investigation.
Our SROs retain ultimate regulatory responsibility for all
regulatory activities performed under regulatory agreements by
FINRA, and for fulfilling all regulatory obligations for which
FINRA does not have responsibility under the regulatory services
agreements. In addition to its other SRO responsibilities, The
Nasdaq Stock Market, as a listing market, also is responsible for
overseeing each listed company’s compliance with The Nasdaq
Stock Market’s financial and corporate governance standards. Our
listing qualifications department evaluates applications submitted
by issuers interested in listing their securities on The Nasdaq
the quantitative and
Stock Market
qualitative listing standards have been satisfied. Once securities
are listed, the listing qualifications department monitors each
issuer’s on-going compliance with The Nasdaq Stock Market’s
continued listing standards.

to determine whether

Broker-dealer regulation. Nasdaq’s broker-dealer subsidiaries are
subject to regulation by the SEC, the SROs and various state
securities regulators. Nasdaq operates five broker-dealers: Nasdaq
Execution Services, LLC, Execution Access, LLC, NPM
Securities, SMTX, LLC, and Nasdaq Capital Markets Advisory
LLC. Each broker-dealer is registered with the SEC, a member of
FINRA and registered in the U.S. states and territories required by
the operation of its business.

Nasdaq Execution Services operates as our routing broker for
sending orders from Nasdaq's U.S. cash equity and options
exchanges to other venues for execution. SMTX acts as an
intermediary to facilitate closings of, and introduce prospective
accredited investors in connection with, private non-capital
raising transactions. Nasdaq Capital Markets Advisory acts as a
third-party advisor to privately-held or publicly-traded companies
during IPOs and various other offerings., Two of our
broker-dealers also are registered with the SEC as an ATS.
Execution Access operates as the broker-dealer for our fixed
income business, including Nasdaq Fixed Income’s registered
ATS for U.S. Treasury securities. NPM Securities operates an
ATS that facilitates the purchase and sale of ownership interests in
primary and secondary transactions in certain funds (both
registered or not registered under the Investment Company Act of
1940), business development companies, certain closed end funds
and private real estate investment funds.

The SEC, FINRA and the exchanges adopt rules and examine
broker-dealers and require strict compliance with their rules and
regulations. The SEC, SROs and state securities commissions may
conduct administrative proceedings which can result in censures,
fines, the issuance of cease-and-desist orders or the suspension or
expulsion of a broker-dealer its officers or employees. The SEC
and state regulators may also institute proceedings against
broker-dealers seeking an injunction or other sanction. All
broker-dealers have an SRO that is assigned by the SEC as the
broker-dealer’s DEA. The DEAis responsible for examining a
broker-dealer for compliance with the SEC’s

financial responsibility rules. FINRA is the current DEA for each
of our broker-dealer subsidiaries.

registered broker-dealers are subject

Our
regulatory
requirements intended to ensure their general financial soundness
and liquidity, which require that they comply with certain
minimum capital requirements. As of December 31, 2018, each of
our broker-dealers were in compliance with all of the applicable
capital requirements.

Regulatory contractual relationships with FINRA. Our SROs have
signed a series of regulatory service agreements covering the
services FINRA provides to the respective SROs. Under these
agreements, FINRA personnel act as our agents in performing the
regulatory functions outlined above, and FINRA bills us a fee for
these services. These agreements have enabled us to reduce our
headcount while ensuring that the markets for which we are
responsible are properly regulated. However, our SROs retain
ultimate regulatory responsibility for all regulatory activities
performed under these agreements by FINRA.

Exchange Act Rule 17d-2 permits SROs to enter into agreements,
commonly called Rule 17d-2 agreements, approved by the SEC
with respect to enforcement of common rules relating to common
members. Our SROs have entered into several such agreements
under which FINRA assumes regulatory responsibility for
specifics covered by the agreement, including:



agreements with FINRA covering the enforcement of
common rules, the majority of which relate to the regulation
of common members of our SROs and FINRA;

joint industry agreements with FINRA covering
responsibility for enforcement of insider trading rules;

joint industry agreement with FINRA covering enforcement
of rules related to cash equity sales practices and certain other
non-market related rules; and

joint industry agreement covering enforcement of rules
related to options sales practices.

Regulation NMS and Options Intermarket Linkage Plan. We are
subject to Regulation NMS for our cash equity markets, and our
options markets have joined the Options Intermarket Linkage
Plan. These are designed to facilitate the routing of orders among
exchanges to create a national market system as mandated by the
Exchange Act. One of the principal purposes of a national market
system is to assure that brokers may execute investors’orders at
the best market price. Both Regulation NMS and the Options
that exchanges avoid
Intermarket Linkage Plan
trade-throughs, locking or crossing of markets and provide market
participants with electronic access to the best prices among the
markets for the applicable cash equity or options order.

require

In addition, Regulation NMS requires that every national
securities exchange on which an NMS stock is traded and every
national securities association act jointly pursuant to one or more
national market system plans
to disseminate consolidated
information, including a national best bid and national best offer,
on quotations for transactions in NMS stocks, and that such plan

or plans provide for the dissemination of all consolidated
information for an individual NMS stock through a single plan
processor.

The UTP Plan was filed with and approved by the SEC as a
national market system plan in accordance with the Exchange Act
and Regulation NMS to provide for the collection, consolidation
and dissemination of such
information for Nasdaq-listed
securities. The Nasdaq Stock Market serves as the processor for
the UTP Plan pursuant to a contract that was extended for a
five-year term beginning in October 2015. The Nasdaq Stock
Market also serves as the administrator for the UTPPlan. To fulfill
its obligations as the processor, The Nasdaq Stock Market has
implemented, maintained, and operated a data
designed,
processing and communications system, hardware, and software
and communications infrastructure to provide processing for the
UTP Plan. As the administrator, The Nasdaq Stock Market
manages the distribution of market data, the collection of the
resulting market data revenue, and the dissemination of that
revenue to plan members in accordance with the terms of the UTP
Plan and of Regulation NMS.

Regulation SCI. Regulation SCI is a set of rules designed to
strengthen the technology infrastructure of the U.S. securities
markets. Regulation SCI applies to national securities exchanges,
operators of certain ATSs, market data information providers and
clearing agencies, subjecting these entities to extensive new
compliance obligations, with the goals of reducing the occurrence
of technical issues that disrupt the securities markets and
improving
time when disruptions occur. We
implemented an inter-disciplinary program to ensure compliance
with Regulation SCI. New Regulation SCI policies and
procedures were created, internal policies and procedures were
updated, and an information technology governance program was
rolled out to ensure compliance.

recovery

Regulation of Registered Investment Advisor Subsidiary. Our
subsidiary DWA is an investment advisor registered with the SEC
under the Investment Advisors Act of 1940. In this capacity,
DWA is subject to oversight and inspections by the SEC. Among
other things, registered investment advisors like DWA must
comply with certain disclosure obligations, advertising and fee
restrictions and requirements relating to client suitability and
custody of funds and securities. Registered investment advisors
are also subject to anti-fraud provisions under both federal and
state law.

CFTC Regulation. We also operate NFX, a designated contract
market under the Commodity Exchange Act that is subject to
regulatory oversight by the CFTC, an independent agency with the
mandate to regulate commodity futures and options markets in the
U.S. The National Futures Association provides regulatory
services to NFX pursuant to a regulatory services agreement.

As a designated contract market, NFX is required to comply with
23 Core Principles set forth in Section 5(d) of the Commodity
Exchange Act and with Part 38 of the CFTC’s regulations. NFX is
also subject to the requirements of Part 40

of the CFTC’s regulations with respect to the adoption of new
rules or rule amendments and the listing of new products.

NFX is subject to CFTC rule enforcement reviews conducted by
the CFTC’s Division of Market Oversight. Rule enforcement
reviews may examine a designated contract market’s audit trail,
trade practice surveillance, disciplinary and dispute resolution
programs for compliance with the relevant Core Principles.

The Dodd-Frank Wall Street Reform and Consumer Protection
Act also has resulted in increased CFTC regulation of our use of
certain regulated derivatives products, as well as the operations of
some of our subsidiaries outside the U.S. and their customers.

Canadian Regulation

Regulation of Nasdaq Canada is performed by the Canadian
Securities Administrators, an umbrella organization of Canada’s
provincial and territorial securities regulators. As a recognized.
exchange in Ontario, Nasdaq Canada must comply with the terms
and conditions of its exchange recognition order. Exempted from
exchange recognition in each jurisdiction in Canada other than
Ontario where Nasdaq Canada carries on business, Nasdaq must
comply with the terms and conditions of an exemption order
granted by the other jurisdictions. Oversight of the exchange is
performed by the Nasdaq Canada’s lead regulator, the Ontario
Securities Commission.

Nasdaq Canada is subject to several national marketplace related
instruments which set out
for marketplace
operations, trading rules and managing electronic trading risk.
Exchange terms and conditions include but are not limited to,
requirements for, governance, regulation, rules and rulemaking,
fair access, conflict management and financial viability.

requirements

European Regulation

Regulation of our markets in the European Union and the
European Economic Area focuses on matters relating to financial
services, listing and trading of securities, clearing and settlement
of securities and commodities as well as issues related to market
abuse.

In July 2016, the European Union’s Market Abuse Regulation,
which is intended to prevent market abuse, entered into force.
MiFID II and MiFIR entered into force in January 2018 and
primarily affect our European trading businesses. Many of the
provisions of MiFID II and MiFIR are implemented through
technical standards drafted by the European Securities and
Markets Authority and approved by the European Commission. In
addition, in 2016, the European Union adopted legislation on
governance and control of the production and use of benchmark
indexes. The Benchmark Regulation applies in the European
Union from early 2018. However, due to transitional clauses in the
Benchmark Regulation, Nasdaq as a benchmark provider, does
not need to be in compliance with the Benchmark Regulation until
January 1, 2020. As the regulatory environment continues to
evolve and related opportunities arise, we intend to continue
developing our products and services development to ensure that

the exchanges and clearinghouses that comprise Nasdaq Nordic
and Nasdaq Baltic maintain favorable liquidity and offer fair and
efficient trading. The entities that operate trading venues in the
Nordic and Baltic countries are each subject to local regulations.
As a result, we have a strong local presence in each jurisdiction in
which we operate regulated businesses. The regulated entities
have decision-making power and can adopt policies and
procedures and retain resources to manage all operations subject
to their license. In Sweden, general supervision of the Nasdaq
Stockholm exchange is carried out by the SFSA, while Nasdaq
Clearing’s role as CCP in the clearing of derivatives is supervised
by the SFSA and overseen by the Swedish central bank
(Riksbanken). Additionally, as a function of the Swedish two-tier
supervisory model, certain surveillance in relation to the exchange
market is carried out by the Nasdaq Stockholm exchange, through
its surveillance function.

Nasdaq Stockholm’s exchange activities are regulated primarily
by the SSMA, which implements MiFID II into Swedish law and
which sets up basic requirements regarding the board of the
exchange and its share capital, and which also outlines the
conditions on which exchange licenses are issued. The SSMA also
provides that any changes to the exchange’s articles of association
following initial registration must be approved by the SFSA.
Nasdaq Clearing holds the license as a CCP under EMIR.

With respect to ongoing operations, the SSMA requires exchanges
to conduct their activities in an honest, fair and professional
manner, and in such a way as to maintain public confidence in the
securities markets. When operating a regulated market, an
exchange must apply the principles of free access (i.e., that each
person which meets the requirements established by law and by
the exchange may participate in trading), neutrality (i.e., that the
exchange’s rules for the regulated market are applied in a
consistent manner to all those who participate in trading) and
transparency (i.e., that the participants must be given speedy,
simultaneous and correct information concerning trading and that
the general public must be given the opportunity to access this
information). Additionally, the exchange operator must identify
and manage the risks that may arise in its operations, use secure
technical systems and identify and handle the conflicts of interest
that may arise between the exchange or its owners’interests and
the interest in safeguarding effective risk management and secure
technical systems. Similar requirements are set up by EMIR in
relation to clearing operations.

The SSMA also contains the framework for both the SFSA’s
supervisory work in relation to exchanges and clearinghouses and
the surveillance to be carried out by the exchanges themselves.
The latter includes the requirement that an exchange should have
“an independent surveillance function with sufficient resources
and powers to meet the exchange’s obligations.” That requires the
exchange to, among other things, supervise trading and price
information, compliance with laws, regulations and good market
practice, participant compliance with trading participation rules,
financial instrument compliance with relevant listing rules and the
extent to which

issuers meet
information to relevant authorities.

their obligation

to submit regular financial

The regulatory environment in the other Nordic and Baltic
countries in which a Nasdaq entity has a trading venue is broadly
similar to the regulatory environment in Sweden. Since 2005,
there has been cooperation between the SFSA and the main
supervisory authorities in Iceland, Denmark and Finland, which
looks to safeguard effective and comprehensive supervision of the
exchanges comprising Nasdaq Nordic and the systems operated
by it, and to ensure a common supervisory approach.

We operate a licensed exchange, Nasdaq Oslo ASA, in Norway
that trades and lists commodity derivatives. Although Norway is
not a member of the EU, as a result of the European Economic
Area, or EEA, agreement (agreement on the EEA entered into
between the EU and European Free Trade Association) the
regulatory environment is broadly similar to what applies in EU
member states. In addition, in January 2019 new legislation
entered into force in Norway mirroring the provisions of MiFID II
and MIFIR. As a result, the regulatory environment in Norway is
similar to Sweden. The Norwegian FSA supervises the Norwegian
exchange on an autonomous basis and the Norwegian exchange
has a separate market surveillance function overseen by the
Norwegian FSA.

Confidence in capital markets is paramount for trading to function
properly. Nasdaq Nordic carries out market surveillance through
an independent unit that is separate from the business operations.
The surveillance work is conceptually organized into two
functions: one for the review and admission of listing applications
and surveillance activities related to issuers (issuer surveillance)
and one for surveillance of trading (trading surveillance). The
real-time trading surveillance for the Finnish, Icelandic, Danish
and Swedish markets has been centralized to Stockholm. In
addition, there are special personnel who carry out surveillance
activities at Nasdaq Oslo and each of the three Baltic exchanges.
In Finland and Sweden, decisions to list new companies are made
by
independent
members in addition to members from each respective exchange
and in the other countries the decision is made by the respective
president of the exchange.

listing committees

independent

that have

If there is suspicion that a listed company or member has acted in
breach of exchange regulations, the matter is handled by the
respective surveillance department. Serious breaches are
considered by the respective disciplinary committee in Denmark,
Finland, Iceland and Sweden. Suspected insider trading is
reported to the appropriate authorities in the respective country.

Employees

As of December 31, 2018, Nasdaq had 4,099 employees.

Nasdaq Website and Availability of SEC Filings

We file periodic reports, proxy statements and other information
with the SEC. The SEC maintains a website that contains reports,
proxy and information statements, and other information

site

that

is http://www.

sec.gov. Our website

regarding issuers that file electronically with the SEC. The address
of
is
www.business.nasdaq.com. Information on our website is not a
part of this Form 10-K. We make available free of charge on our
website, or provide a link to, our Forms 10-K, Forms 10-Q and
Forms 8-K and any amendments to these documents, that are filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the SEC. To access these
filings, go to Nasdaq’s website and click on “Investor Relations,”
then under “Financials” click on “SEC Filings.”

Item 1A. Risk Factors

The risks and uncertainties described below are not the only ones
facing us. Additional risks and uncertainties not presently known
to us or that we currently believe to be immaterial may also
adversely affect our business. If any of the following risks actually
occur, our business, financial condition, or operating results
could be adversely affected.

Economic conditions and market factors, which are beyond our
control, may adversely affect our business and financial
condition.

Our business performance is impacted by a number of factors,
including general economic conditions in both the U.S. and
Europe, market volatility, changes in investment patterns and
priorities, and other factors that are generally beyond our control.
To the extent that global or national economic conditions weaken
and result in slower growth or recessions, our business is likely to
be negatively impacted. Adverse market conditions could reduce
customer demand for our services and the ability of our customers,
lenders and other counterparties to meet their obligations to us.
Poor economic conditions may result in a reduction in the demand
for our products and services, including our market technology,
data, index and corporate solutions, a decline in trading volumes
or values and deterioration of the economic welfare of our listed
companies. Over 73% of our revenues less transaction-based
expenses in 2018 were recurring or subscription-based and if
adverse conditions cause our customers to delay or cancel existing
orders or subscriptions, our revenues will decline.

Trading volumes and values are driven primarily by general
market conditions and declines in trading volumes or values may
affect our market share and impact our pricing. In addition, our
Market Services businesses receive revenues from a relatively
small number of customers concentrated in the financial industry,
so any event that impacts one or more customers or the financial
industry in general could impact our revenues.

The number of listings on our markets is primarily influenced by
factors such as investor demand, the global economy, available
sources of financing, and tax and regulatory policies. Adverse
conditions may jeopardize the ability of our listed companies to
comply with the continued listing requirements of our exchanges.

Information Services revenues may be significantly affected by
global economic conditions. Professional subscriptions to our data
products are at risk if staff reductions occur in financial services
companies, which could result in significant reductions in our
professional user revenue. In addition, adverse market conditions
may cause reductions in the number of non-professional investors
with investments in the market and in ETP assets under
management tracking Nasdaq indexes. There may be less demand
for our Corporate Solutions or Market Technology products if
global economic conditions are weak. Our customers historically
cut back on purchases of new services and technology when
growth rates decline, thereby reducing our opportunities to sell
new products and services or upgrade existing products and
services.

A reduction in trading volumes or values, market share of trading,
the number of our listed companies, or demand for Information
Services, Market Technology or Corporate Services products and
services due to economic conditions or other market factors could
adversely affect our business, financial condition and operating
results.

The industries we operate in are highly competitive.

We face significant competition in our Market Technology,
Information Services and Corporate Services businesses from
other market participants. We face intense competition from other
exchanges and markets for market share of trading activity and
listings. This competition includes both product and price
competition.

The liberalization and globalization of world markets has resulted
in greater mobility of capital, greater international participation in
local markets and more competition. As a result, both in the U.S.
and in other countries, the competition among exchanges and
other execution venues has become more intense. Marketplaces in
both Europe and the U.S. have also merged to achieve greater
economies of scale and scope.

Regulatory changes also have facilitated the entry of new
participants in the European Union that compete with our
European markets. The regulatory environment, both in the U.S.
and in Europe, is structured to maintain this environment of
intense competition. In addition, a high proportion of business in
the securities markets is becoming concentrated in a smaller
number of institutions and our revenue may therefore become
concentrated in a smaller number of customers. We also compete
globally with other regulated exchanges and markets, ATSs,
MTFs and other traditional and non-traditional execution venues.
Some of these competitors also are our customers. Competitors
may develop market trading platforms that are more competitive
than ours. Competitors may leverage data more effectively or
enter into strategic partnerships, mergers or acquisitions that could
listings, clearing, data or technology
make
businesses more competitive than ours.

trading,

their

We face intense price competition in all areas of our business. In
particular, the trading industry is characterized by intense price
competition. We have in the past lowered prices, and in the U.S.,
increased rebates for trade executions to attempt to gain or
maintain market share. These strategies have not always been

successful and have at times hurt operating performance.
Additionally, we have also been, and may once again be, required
to adjust pricing to respond to actions by competitors and new
entrants, which could adversely impact operating results. We also
compete with respect to the pricing of data products and with
respect to products for pre-trade book data and for post-trade last
sale data. In addition, pricing in our Corporate Services, Index
Licensing and Services and Market Technology businesses is
subject to competitive pressures. If we are unable to compete
successfully in the industries in which we do business, our
business, financial condition and operating results will be
adversely affected.

System limitations or failures could harm our business.

Our businesses depend on the integrity and performance of the
technology, computer and communications systems supporting
them. If new systems fail to operate as intended or our existing
systems cannot expand to cope with increased demand or
otherwise fail to perform, we could experience unanticipated
disruptions in service, slower response times and delays in the
introduction of new products and services. These consequences
could result in service outages, lower trading volumes or values,
financial losses, decreased customer satisfaction and regulatory
sanctions. Our markets and the markets that rely on our
technology have experienced systems failures and delays in the
past and could experience future systems failures and delays.

Although we currently maintain and expect to maintain multiple
computer facilities that are designed to provide redundancy and
back-up to reduce the risk of system disruptions and have facilities
in place that are expected to maintain service during a system
disruption, such systems and facilities may prove inadequate. If
trading volumes increase unexpectedly or other unanticipated
events occur, we may need to expand and upgrade our technology,
transaction processing systems and network infrastructure. We do
not know whether we will be able to accurately project the rate,
timing or cost of any volume increases, or expand and upgrade our
systems and infrastructure to accommodate any increases in a
timely manner.

While we have programs in place to identify and minimize our
exposure to vulnerabilities and work in collaboration with the
technology industry to share corrective measures with our
business partners, we cannot guarantee that such events will not
occur in the future. Any system issue that causes an interruption in
services, decreases the responsiveness of our services or otherwise
affects our services could impair our reputation, damage our brand
name and negatively impact our business, financial condition and
operating results.

We must continue to introduce new products, initiatives and
enhancements to maintain our competitive position.

We intend to launch new products and initiatives and continue to
explore and pursue opportunities to strengthen our business and
grow our company. We may spend substantial time and money
developing new products, initiatives and enhancements to existing
products. If these products and initiatives are not

successful, we may not be able to offset their costs, which could
have an adverse effect on our business, financial condition and
operating results.

In our technology operations, we have invested substantial
amounts in the development of system platforms, the rollout of
our platforms and the adoption of new technologies, such as
blockchain, machine intelligence and the cloud. Although
investments are carefully planned, there can be no assurance that
the demand for such platforms or technologies will justify the
related investments. If we fail to generate adequate revenue from
planned system platforms or the adoption of new technologies, or
if we fail to do so within the envisioned timeframe, it could have
an adverse effect on our results of operations and financial
condition. In addition, clients may delay purchases in anticipation
of new products or enhancements.

Adecline in trading and clearing volumes or values or market
share will decrease our trading and clearing revenues.

Trading and clearing volumes and values are directly affected by
economic, political and market conditions, broad trends in
business and finance, unforeseen market closures or other
disruptions in trading, the level and volatility of interest rates,
inflation, changes in price levels of securities and the overall level
of investor confidence. In recent years, trading and clearing
volumes and values across our markets have fluctuated
significantly depending on market conditions and other factors
beyond our control. Current initiatives being considered by
regulators and governments could have a material adverse effect
on overall trading and clearing volumes or values. Because a
significant percentage of our revenues is tied directly to the
volume or value of securities traded and cleared on our markets, it
is likely that a general decline in trading and clearing volumes or
values would lower revenues and may adversely affect our
operating results if we are unable to offset falling volumes or
values through pricing changes. Declines in trading and clearing
volumes or values may also impact our market share or pricing
structures and adversely affect our business and financial
condition.

If our total market share in securities decreases relative to our
competitors, our venues may be viewed as less attractive sources
of liquidity. If our exchanges are perceived to be less liquid, then
our business, financial condition and operating results could be
adversely affected.

Since some of our exchanges offer clearing services in addition to
trading services, a decline in market share of trading could lead to
a decline in clearing revenues. Declines in market share also could
result in issuers viewing the value of a listing on our exchanges as
less attractive, thereby adversely affecting our listing business.
Finally, declines in market share of Nasdaq-listed securities could
lower The Nasdaq Stock Market’s share of tape pool revenues
under the consolidated data plans, thereby reducing the revenues
of our Data Products business.

Our role in the global marketplace may place us at greater risk
for a cyberattack.

Our systems and operations are vulnerable to damage or
interruption from security breaches. Some of these threats include
attacks from foreign governments, hacktivists, insiders and
criminal organizations. Foreign governments may seek to obtain a
foothold in U.S. critical infrastructure, hacktivists may seek to
deploy denial of service attacks to bring attention to their cause,
insiders may pose a risk by human error or malicious activity and
criminal organizations may seek to profit from stolen data.
Computer viruses and worms also continue to be a threat with
ransomware increasingly being used by criminals to extort money.
Given our position in the global securities industry, we may be
more likely than other companies to be a direct target, or an
indirect casualty, of such events.

While we continue to employ resources to monitor our systems
and protect our infrastructure, these measures may prove
insufficient depending upon the attack or threat posed. Any
system issue, whether as a result of an intentional breach,
collateral damage from a new virus or a non-malicious act, could
damage our reputation and cause us to lose customers, experience
lower trading volumes or values, incur significant liabilities or
otherwise have a negative impact on our business, financial
condition and operating results. Any system breach may go
undetected for an extended period of time. We also could incur
significant expense in addressing any of these problems and in
addressing related data security and privacy concerns.

The success of our business depends on our ability to keep up
technological and other competitive changes
with rapid
affecting our
industry. Specifically, we must complete
development of, successfully implement and maintain platforms
that have the functionality, performance, capacity, reliability
and speed required by our business and our regulators, as well
as by our customers.

The markets in which we compete are characterized by rapidly
changing technology, evolving industry and regulatory standards,
frequent enhancements to existing products and services, the
adoption of new services and products and changing customer
demands. We may not be able to keep up with rapid technological
and other competitive changes affecting our industry. For
example, we must continue to enhance our platforms to remain
competitive as well as to address our regulatory responsibilities,
and our business will be negatively affected if our platforms or the
technology solutions we sell to our customers fail to function as
expected. If we are unable to develop our platforms to include
other products and markets, or if our platforms do not have the
required functionality, performance, capacity, reliability and
speed required by our business and our regulators, as well as by
our customers, we may not be able to compete successfully.
Further, our failure to anticipate or respond adequately to changes
in technology and customer preferences or any significant delays
in product development efforts, could have a material adverse
effect on our business, financial condition and operating results.

We may not be able to successfully integrate acquired businesses,
which may result in an inability to realize the anticipated benefits
of our acquisitions.
We must rationalize, coordinate and integrate the operations of our
acquired businesses, including Quandl and Cinnober. This process
involves complex technological, operational and personnel-related
challenges, which are time-consuming and expensive and may
disrupt our business. The difficulties, costs and delays that could be
encountered may include:



in combining

difficulties, costs or complications
the
companies’ operations, including technology platforms, which
could lead to us not achieving the synergies we anticipate or
customers not renewing their contracts with us as we migrate
platforms;
incompatibility of systems and operating methods;

reliance on, or provision of, transition services;

inability to use capital assets efficiently to develop the business
of the combined company

government-imposed
difficulties
regulations in the U.S. and abroad, which may be conflicting;

complying with

resolving possible inconsistencies in standards, controls,
procedures and policies, business cultures and compensation
structures;

the diversion of management’s attention from ongoing
business concerns and other strategic opportunities;

difficulties in operating businesses we have not operated
before;

difficulties of
simultaneously;

integrating multiple acquired businesses

the retention of key employees and management;

the implementation of disclosure controls, internal controls and
financial reporting systems at non-U.S. subsidiaries to enable
us to comply with U.S. GAAP and U.S. securities laws and
regulations, including the Sarbanes Oxley Act of 2002,
required as a result of our status as a reporting company under
the Exchange Act;

the coordination of geographically separate organizations;

the coordination and consolidation of ongoing and future
research and development efforts;

possible tax costs or inefficiencies associated with integrating
the operations of a combined company

pre-tax restructuring and revenue investment costs;

the retention of strategic partners and attracting new strategic
partners; and

negative impacts on employee morale and performance as a
result of job changes and reassignments.

For these reasons, we may not achieve the anticipated financial and
strategic benefits from our acquisitions and initiatives. Any actual

cost savings and synergies may be lower than we expect and may
take a longer time to achieve than we anticipate, and we may fail to
realize the anticipated benefits of acquisitions.

We will need to invest in our operations to maintain and grow our
business and to integrate acquisitions, and we may need
additional funds, which may not be readily available.

We depend on the availability of adequate capital to maintain and
develop our business.Although we believe that we can meet our
current capital requirements from internally generated funds, cash
on hand and borrowings under our revolving credit facility and
commercial paper program, if the capital and credit markets
experience volatility, access to capital or credit may not be available
on terms acceptable to us or at all. Limited access to capital or credit
in the future could have an impact on our ability to refinance debt,
maintain our credit rating, meet our regulatory capital requirements,
engage in strategic initiatives, make acquisitions or strategic
investments in other companies, pay dividends, repurchase our
stock or react to changing economic and business conditions. If we
are unable to fund our capital or credit requirements, it could have
an adverse effect on our business, financial condition and operating
results.

In addition to our debt obligations, we will need to continue to
invest in our operations for the foreseeable future to integrate
acquired businesses and to fund new initiatives. If we do not
achieve the expected operating results, we will need to reallocate
our cash resources. This may include borrowing additional funds to
service debt payments, which may impair our ability to make
investments in our business or to integrate acquired businesses.

Should we need to raise funds through issuing additional equity, our
equity holders will suffer dilution. Should we need to raise funds
through incurring additional debt, we may become subject to
covenants even more restrictive than those contained in our credit
facilities, the indentures governing our notes and our other debt
instruments. Furthermore, if adverse economic conditions occur,
we could experience decreased revenues from our operations which
could affect our ability to satisfy financial and other restrictive
covenants to which we are subject under our existing indebtedness.

We operate in a highly regulated industry and may be subject to
censures, fines and enforcement proceedings if we fail to comply
with regulatory obligations that can be ambiguous and can
change unexpectedly.

We operate in a highly regulated industry and are subject to
extensive regulation in the U.S., Europe and Canada. The securities
trading industry is subject to significant regulatory oversight and
could be subject to increased governmental and public scrutiny in
the future that can change in response to global conditions and
events.

Our ability to comply with complex and changing regulation is
largely dependent on our establishment and maintenance of
compliance, audit and reporting systems that can quickly adapt and
respond, as well as our ability to attract and retain qualified
compliance and other risk management personnel. While we

have policies and procedures to identify, monitor and manage our
risks and regulatory obligations, we cannot assure you that our
policies and procedures will always be effective or that we will
always be successful in monitoring or evaluating the risks to
which we are or may be exposed.

procedures and offset the future market risk on the defaulting
member’s positions. The default resulted in a loss of $133 million
which was allocated to Nasdaq Clearing and the members of the
commodities default fund in accordance with the liability
waterfall.

Our regulated markets are subject to audits, investigations,
administrative proceedings and enforcement actions relating to
compliance with applicable rules and regulations. Regulators have
broad powers to impose fines, penalties or censure, issue
cease-and-desist orders, prohibit operations, revoke licenses or
registrations and impose other sanctions on our exchanges,
broker-dealers and markets
for violations of applicable
requirements.

For example, during 2016, the SFSA and the other Nordic
financial supervisory authorities conducted investigations of
cybersecurity processes at our Nordic exchanges and
clearinghouse. In December 2016, we were issued a $6 million
fine by the SFSA as a result of findings in connection with its
investigation. The SFSA’s conclusions related to governance
issues rather than systems and platform security. We have
appealed this decision and the final outcome is still pending.

In the future, we could be subject to regulatory investigations or
enforcement proceedings that could result in substantial sanctions,
including revocation of our operating licenses. Any such
investigations or proceedings, whether successful or unsuccessful,
could result in substantial costs, the diversion of resources,
including management time, and potential harm to our reputation,
which could have a material adverse effect on our business, results
of operations or financial condition. In addition, our exchanges
could be required to modify or restructure their regulatory
functions
the regulatory
environment, or they may be required to rely on third parties to
perform regulatory and oversight functions, each of which may
require us to incur substantial expenses and may harm our
reputation if our regulatory services are deemed inadequate.

to any changes

in response

Our clearinghouse operations expose us to risks, including
credit or liquidity risks that may include defaults by clearing
members, or insufficiencies in margins or default funds.

We are subject to risks relating to our operation of a
clearinghouse, including counterparty and liquidity risks, risk of
defaults by clearing members and risks associated with adequacy
of the customer margin and of default funds. Our clearinghouse
operations expose us to counterparties with differing risk profiles.
We may be adversely impacted by the financial distress or failure
of a clearing member, which may cause us negative financial
impact, reputational harm or regulatory consequences, including
litigation or regulatory enforcement actions.

In September 2018, a member of
the Nasdaq Clearing
commodities market defaulted due to an inability to post sufficient
collateral to cover increased margin requirements for the positions
of the relevant member, which had experienced losses due to
sharp adverse movements in the Nordic - German power market
spread. Nasdaq Clearing followed default

To the extent that our regulatory capital and risk management
policies are not adequate to manage future financial and
operational risks in our clearinghouse, we may experience adverse
consequences to our operating results or ability to conduct our
business.

We are exposed to credit risk from third parties, including
customers, counterparties and clearing agents.

We are exposed to credit risk from third parties, including
customers, counterparties and clearing agents. These parties may
default on their obligations to us due to bankruptcy, lack of
liquidity, operational failure or other reasons.

We clear or stand as riskless principal to a range of equity-related
and fixed-income-related derivative products, commodities and
resale and repurchase agreements. We assume the counterparty
risk for all transactions that are cleared through our markets and
guarantee that our cleared contracts will be honored. We enforce
minimum financial and operational criteria for membership
eligibility, require members and investors to provide collateral,
and maintain established risk policies and procedures to ensure
that the counterparty risks are properly monitored and proactively
managed; however, none of these measures provides absolute
assurance against experiencing financial losses from defaults by
our counterparties on their obligations. No guarantee can be given
that the collateral provided will at all times be sufficient. Although
we maintain clearing capital resources to serve as an additional
layer of protection to help ensure that we are able to meet our
obligations, these resources may not be sufficient.

In addition, one of our broker-dealer subsidiaries, Execution
Access, has a clearing arrangement with the Industrial and
Commercial Bank of China Financial Services LLC, or ICBC. As
of December 31, 2018, we have contributed $15 million of
clearing deposits to ICBC in connection with this clearing
arrangement. Some of the trading activity in Execution Access is
cleared by ICBC through the Fixed Income Clearing Corporation.
Execution Access assumes the counterparty risk of clients that do
not clear through the Fixed Income Clearing Corporation.
Counterparty risk of clients exists for Execution Access between
the trade date and settlement date of the individual transactions,
which is at least one business day (or more, if specified by the U.S.
Treasury issuance calendar). Counterparties that do not clear
through the Fixed Income Clearing Corporation are subject to a
credit due diligence process and may be required to post collateral,
provide principal letters, or provide other forms of credit
enhancement to Execution Access for the purpose of mitigating
counterparty risk. Daily position trading limits are also enforced
for such counterparties. Although we believe that the potential for
us to be required to make payments under these arrangements is
mitigated through the pledged collateral and our risk

management policies, no guarantee can be provided that these
arrangements will at all times be sufficient.

We also have credit
transaction and
subscription-based revenues that are billed to customers on a
monthly or quarterly basis, in arrears.

risk

Credit losses such as those described above could adversely affect
our consolidated financial position and results of operations.

The regulatory framework under which we operate and new
regulatory requirements or new interpretations of existing
regulatory requirements could require substantial time and
resources for compliance, which could make it difficult and
costly for us to operate our business.

Under current U.S. federal securities laws, changes in the rules
and operations of our securities markets, including our pricing
structure, must be reviewed and in many cases explicitly approved
by the SEC. The SEC may approve, disapprove, or recommend
changes to proposals that we submit. In addition, the SEC may
delay either the approval process or the initiation of the public
comment process. Favorable SEC rulings and interpretations can
be challenged in and reversed by federal courts of appeals,
reducing or eliminating the value of such prior interpretations.
NFX, our futures exchange, is also regulated by the CFTC and
subject to a requirement to self-certify changes to these rules by
filing with the CFTC. Any delay in approving changes, or the
altering of any proposed change, could have an adverse effect on
our business, financial condition and operating results.

We must compete not only with ATSs that are not subject to the
same SEC approval process but also with other exchanges that
may have lower regulation and surveillance costs than us. There is
a risk that trading will shift to exchanges that charge lower fees
because, among other reasons, they spend significantly less on
regulation.

increased regulatory obligations,

In 2016, the SEC approved a plan for Nasdaq and other exchanges
to establish a market-wide consolidated audit trail, or CAT to
improve regulators’ ability to monitor trading activity. In addition
to
implementation of a
consolidated audit trail has resulted in significant additional
expenditures, including to implement the new technology to meet
any plan’s requirements. Creating CAT has required the
implementation of complex and costly
development and
technology. This development effort has been funded by the SROs
(including Nasdaq) in exchange for promissory notes that Nasdaq
expects to be repaid at such time that the SEC approves the
assessment of fees for the funding of CAT. The SEC could
determine not to approve the assessment of such fees in which
case some or all of the promissory notes would not be repaid. In
addition, the ongoing failure to timely launch or properly operate
such technology exposes Nasdaq and other exchanges to SEC
fines.

In addition, our registered broker-dealer subsidiaries are subject to
regulation by
the SEC, FINRA and other SROs. These
subsidiaries are subject to regulatory requirements intended to
ensure their general financial soundness and liquidity, which

that

require
they comply with certain minimum capital
requirements. The SEC and FINRA impose rules that require
notification when a broker-dealer s net capital falls below certain
predefined criteria, dictate the ratio of debt to equity in the
regulatory capital composition of a broker-dealer and constrain
the ability of a broker-dealer to expand its business under certain
circumstances. Additionally, the SEC’s Uniform Net Capital Rule
and FINRA rules impose certain requirements that may have the
effect of prohibiting a broker-dealer from distributing or
withdrawing capital and requiring prior notice to the SEC and
FINRA for certain withdrawals of capital. Any failure to comply
with these broker-dealer regulations could have a material adverse
effect on the operation of our business, financial condition and
operating results.

Our non-U.S. business is subject to regulatory oversight in all the
countries in which we operate regulated businesses, such as
exchanges, clearinghouses or central securities depositories. In
these countries, we have received authorization from the relevant
authorities to conduct our regulated business activities. The
authorities may revoke this authorization if we do not suitably
carry out our regulated business activities. The authorities are also
entitled to request that we adopt measures in order to ensure that
we continue to fulfill the authorities’ requirements.

Furthermore, certain of our customers operate in a highly
impose
industry. Regulatory authorities could
regulated
regulatory changes that could impact the ability of our customers
to use our exchanges. The loss of a significant number of
customers or a reduction in trading activity on any of our
exchanges as a result of such changes could have a material
adverse effect on our business, financial condition and operating
results.

Regulatory changes and changes in market structure could have
a material adverse effect on our business.

Regulatory changes adopted by the SEC or other regulators of our
markets, and regulatory changes that our markets may adopt in
fulfillment of their regulatory obligations, could materially affect
our business operations. In recent years, there has been increased
regulatory and governmental focus on issues affecting the
securities markets, including market structure, technological
oversight and transaction fees. The SEC, FINRA and the national
securities exchanges have introduced several initiatives to ensure
the oversight, integrity and resilience of markets.

Industry responses to the MiFID II and MiFIR rules, EU
Benchmark Regulation or other applicable rules could affect our
operations in Europe. Changes to the rules themselves could also
affect our operations in Europe. In addition, actions on any of the
specific regulatory issues currently under review in the U.S. and
Europe could have a material impact on our business. With respect
to our regulated businesses, our business model can be severely
impacted by policy decisions. For example, the SEC has recently
proposed an exchange transaction fee pilot program that could
result in future regulatory changes and we, along with other stock
exchanges, have challenged the SEC's

order adopting the program in a court action. Our opponents in
some market are larger and better funded and, if successful in
influencing certain policies, may successfully advocate for
positions that adversely impact our business. While we support
regulatory efforts to review and improve the structure, resilience
and integrity of the markets, these proposed regulatory changes
and future reforms could impose significant costs, including
litigation costs, and other obligations on the operation of our
exchanges and processor systems and have other impacts on our
business.

Regulatory changes or future court rulings may have an adverse
impact on our revenue from proprietary data products.

Regulatory and legal developments could reduce the amount of
revenue that we earn from our proprietary data products. In the
U.S., we generally are required to file with the SEC to establish or
modify the fees that we charge for our data products. In recent
years, certain industry groups have objected to the ability of
exchanges to charge for certain data products.

In October 2018, the SEC determined that we had not established
that a fee for one of our data products was fair and reasonable, and
also directed us to establish a procedure for reviewing other
challenged fees. We have appealed both SEC actions to a federal
appeals court. If the results of appeals, or further actions by the
SEC, are detrimental to our U.S. exchanges’ ability to charge for
data products, there could be a negative impact on our revenues.
We cannot predict whether, or in what form, any regulatory
changes will be implemented, or their potential impact on our
business. A determination by the SEC, for example, to link data
fees to marginal costs, to take a more active role in the data
rate-setting process, or to reduce the current levels of data fees
could have an adverse effect on our Data Products revenues.

In Canada, all new marketplace fees and changes to existing fees,
including trading and data fees, must be filed with and approved
by the Ontario Securities Commission. In 2016, the Canadian
Securities Administrators approved amendments adopting a Data
Fees Methodology that restricts the total amount of fees that can
be charged by all marketplaces to a reference level that is not yet
defined. When a reference is established, all marketplaces will be
subject to annual reviews of their market data fees tying market
data revenues to market share.

Our European exchanges currently offer data products to
customers on a non-discriminatory and reasonable commercial
basis. The MiFID II/MiFIR rules entail that the price for regulated
data such as pre- and post-trade data shall be based on cost plus a
reasonable margin. However, what constitutes “reasonable
margin” is not clearly defined. There is a risk that a different
interpretation of this term may influence the fees for European
data products adversely. In addition, any future actions by the
European Commission or European court decisions could affect
our ability to offer data products in the same manner as today,
thereby causing an adverse effect on our Data Products revenues.

Technology issues relating to our role as exclusive processor for
Nasdaq-listed stocks could affect our business.

Nasdaq, as technology provider to the UTP Operating Committee,
implemented in 2016 measures to enhance the resiliency of the
existing processor system. Additionally, the UTP Operating
Committee approved Nasdaq’s proposal to transfer the processor
technology from its current enhanced platform to our INET
platform. The migration, which was completed in late 2016,
further enhanced the resiliency of the processor systems. In 2018,
we further improved the systems resiliency by adding the UTP
SnapShot service. However if, despite these improvement
measures, future outages occur or the processor systems fail to
function properly while we are operating the systems, it could
have an adverse effect on our business, reputation, financial
condition or operating results.

Our operational processes are subject to the risk of error, which
may result in financial loss or reputational damage.

We have instituted extensive controls to reduce the risk of error
inherent in our operations; however, such risk cannot completely
be eliminated. Our businesses are highly dependent on our ability
to process and report, on a daily basis, a large number of
transactions across numerous and diverse markets. Some of our
operations require complex processes, and the introduction of new
products or services or changes in processes or reporting due to
regulatory requirements may result in an increased risk of errors
for a period after implementation. Data, other content or
information that we distribute may contain errors or be delayed,
causing reputational harm. Use of our products and services as
part of the investment process creates the risk that clients, or the
parties whose assets are managed by our clients, may pursue
claims against us in the event of such delay or error. Even with a
favorable outcome, significant litigation against us might unduly
burden management, personnel, financial and other resources.

In addition, the sophisticated software we sell to our customers
may contain undetected errors or vulnerabilities, some of which
may be discovered only after delivery. These errors may result in
negative customer experiences that could damage our reputation,
thereby causing loss of customers, loss of revenues and liability
for damages, thereby adversely affecting our business and
financial results.

Uncertainty relating to the United Kingdom’s exit from the
European Union could cause uncertainty and adversely impact
our business.

We continue to evaluate the potential effect of the United
Kingdom’s planned departure from
the European Union
(commonly referred to as Brexit) on our business operations and
financial results. If the United Kingdom's membership in the
European Union terminates without an agreement for the United
Kingdom's orderly departure from the European Union there
could be unfavorable consequences including a deterioration of
general economic conditions, increased costs from re-imposition
of tariffs on trade between the United Kingdom and European
Union, volatility of foreign exchange rates and legal uncertainty.
Brexit may also have adverse tax

effects on movement of products or activities between the UK and
EU.

Our credit rating could increase the cost of our funding from the
capital markets.

Currently, we do not anticipate that Brexit will have a material
impact on our operations or our financial results. While we have
operations in the UK, these operations are limited in scope and not
material to our overall business. However, we may be impacted if
our customers in the UK are subject to additional costs or
restrictions in accessing our products or services. In addition, the
overall impact of Brexit may create further global economic
uncertainty, which may adversely impact the activities of our
customers.

Laws and regulations regarding the handling of personal data
and information may affect our services or result in increased
costs, legal claims or fines against us.

Our business relies on the processing of data in many jurisdictions
and the movement of data across national borders. Legal and
contractual requirements relating to the collection, storage,
handling, use, disclosure, transfer and security of personal data
continue to evolve; regulatory scrutiny in this area is increasing
around the world. Significant uncertainty exists as privacy and
data protection laws may be interpreted and applied differently
across jurisdictions and may create inconsistent or conflicting
requirements.

The European Union General Data Protection Regulation, or
GDPR, which became effective in May 2018, extends the scope of
the European Union data protection law and requires companies to
meet new requirements regarding the handling of personal data. In
addition to directly applying to certain Nasdaq business activities,
this regulation impacts many of our customers, which may affect
their requirements and decisions related to services that we offer.
Although we have implemented a program to address GDPR
requirements, our efforts to comply with GDPR and other privacy
and data protection laws may entail substantial expenses, may
divert resources from other initiatives and projects, and could
impact the services that we offer Furthermore, enforcement
actions and investigations by regulatory authorities related to data
security incidents and privacy violations continue to increase. The
enactment of more restrictive laws, rules or regulations or future
enforcement actions or investigations could impact us through
increased costs or restrictions on our business, and noncompliance
could result in regulatory penalties and significant legal liability.

Stagnation or decline in the listings market could have an
adverse effect on our revenues.

The market for listings is dependent on the prosperity of
companies and the availability of risk capital. A stagnation or
decline in the number of new listings on The Nasdaq Stock Market
and the Nasdaq Nordic and Nasdaq Baltic exchanges could cause
a decrease in revenues for future years. Furthermore, a prolonged
decrease in the number of listings could negatively impact the
growth of our transactions revenues. Our Corporate Solutions
business is also impacted by declines in the listings market or
there will be fewer
in acquisitions activity as
increases
publicly-traded customers that need our products.

Our long-term debt is currently rated investment grade by two of
the major rating agencies. These rating agencies regularly
evaluate us, and their ratings of our long-term debt and
commercial paper are based on a number of factors, including our
financial strength and corporate development activity, as well as
factors not entirely within our control, including conditions
affecting our industry generally. There can be no assurance that
we will maintain our current ratings. Our failure to maintain those
ratings could reduce or eliminate our ability to issue commercial
paper and adversely affect the cost and other terms upon which we
are able to obtain funding and increase our cost of capital. A
reduction in credit ratings would also result in increases in the cost
of our commercial paper and other outstanding debt as the interest
rate on the outstanding amounts under our credit facilities and
most tranches of our senior notes fluctuates based on our credit
ratings.

Damage to our reputation or brand name could have a material
adverse effect on our businesses.

One of our competitive strengths is our strong reputation and
brand name. Various issues may give rise to reputational risk,
including issues relating to:
 our ability to maintain the security of our data and systems;



the quality and reliability of our technology platforms and
systems;

the ability to fulfill our regulatory obligations;

the ability to execute our business plan, key initiatives or new
business ventures and the ability to keep up with changing
customer demand;

the representation of our business in the media;

the accuracy of our financial statements and other financial
and statistical information;

the accuracy of our financial guidance or other information
provided to our investors;

the quality of our corporate governance structure;

the quality of our products, including the reliability of our
transaction-based, Corporate Solutions
and Market
Technology products, the accuracy of the quote and trade
information provided by our Data Products business and the
accuracy of calculations used by our Index Licensing and
Services business for indexes and unit investment trusts;

the quality of our disclosure controls or internal controls over
financial reporting, including any failures in supervision;

extreme price volatility on our markets;

any negative publicity surrounding our listed companies;



any negative publicity surrounding the use of our products
or\and services by our customers, including in connection
with emerging asset classes such as crypto assets; and

any misconduct, fraudulent activity or theft by our employees
or other persons formerly or currently associated with us.

Damage to our reputation could cause some issuers not to list their
securities on our exchanges, as well as reduce the trading volumes
or values on our exchanges or cause us to lose customers in our
Data Products, Index Licensing and Services, Corporate Solutions
or Market Technology businesses. This, in turn, may have a
material adverse effect on our business, financial condition and
operating results.

We may be required to recognize impairments of our goodwill,
intangible assets or other long-lived assets in the future.

Our business acquisitions typically result in the recording of
goodwill and intangible assets, and the recorded values of those
assets may become impaired in the future. As of December 31,
2018, goodwill totaled $6.4 billion and intangible assets, net of
accumulated amortization, totaled $2.3 billion. The determination
of the value of such goodwill and intangible assets requires
management to make estimates and assumptions that affect our
consolidated financial statements.

We assess goodwill and intangible assets, as well as other
long-lived assets, including equity and cost method investments
and property and equipment, for impairment on an annual basis or
more frequently if indicators of impairment arise. We estimate the
fair value of such assets by assessingmany factors, including
historical performance, capital requirements and projected cash
flows. Considerable management judgment is necessary to project
future cash flows and evaluate the impact of expected operating
and macroeconomic changes on these cash flows. The estimates
and assumptions we use are consistent with our internal planning
process. However there are inherent uncertainties in these
estimates.

There was no impairment of goodwill for the years ended
December 31, 2018, 2017 and 2016, and there were no
indefinite-lived intangible asset impairment charges in 2018 and
2017. As discussed in “Goodwill and Indefinite-Lived Intangible
Assets,” of Note 2, “Summary of Significant Accounting
Policies,” to the consolidated financial statements, we recorded an
indefinite-lived intangible asset impairment charge of $578
million in 2016.

We may experience future events that may result in asset
impairments. Future disruptions to our business, prolonged
economic weakness or significant declines in operating results at
any of our reporting units or businesses, may result in impairment
charges to goodwill, intangible assets or other long-lived
assets.Asignificant impairment charge in the future could have a
material adverse effect on our operating results.

For additional discussion of our goodwill, indefinite-lived
intangible assets and other long-lived assets, including related
impairment,
Impairment,”
“Indefinite-Lived Intangible Assets and Related Impairment,” and

and Related

“Goodwill

see

“Other Long-Lived Assets and Related Impairment,” of “Critical
Accounting Policies and Estimates,” of Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” and “Goodwill and Indefinite-Lived Intangible
Assets,” and “Valuation of Other Long-Lived Assets,” of Note 2,
“Summary of Significant Accounting Policies,” and Note 5,
“Goodwill and Acquired Intangible Assets,” to the consolidated
financial statements.

We may experience fluctuations in our operating results, which
may adversely affect the market price of our common stock.

Our industry is risky and unpredictable and is directly affected by
many national and international factors beyond our control,
including:



economic, political and geopolitical market conditions;

natural disasters, terrorism, war or other catastrophes;

broad trends in finance and technology;

changes in price levels and volatility in the stock markets;

the level and volatility of interest rates;

changes in government monetary or tax policy;

the perceived attractiveness of the U.S. or European capital
markets; and



inflation.

Any one of these factors could have a material adverse effect on
our business, financial condition and operating results by causing
a substantial decline in the financial services markets and reducing
trading volumes or values.

Additionally, since borrowings under our credit facilities bear
interest at variable rates, any increase in interest rates on debt that
we have not fixed using interest rate hedges will increase our
interest expense, reduce our cash flow or increase the cost of
future borrowings or refinancings. Other than variable rate debt,
we believe our business has relatively large fixed costs and low
variable costs, which magnifies the impact of revenue fluctuations
on our operating results. As a result, a decline in our revenue may
lead to a relatively larger impact on operating results. A
substantial portion of our operating expenses is related to
personnel costs, regulation and corporate overhead, none of which
can be adjusted quickly and some of which cannot be adjusted at
all. Our operating expense levels are based on our expectations for
future revenue. If actual revenue is below management’s
expectations, or if our expenses increase before revenues do, both
revenues less transaction-based expenses and operating results
would be materially and adversely affected. Because of these
factors, it is possible that our operating results or other operating
metrics may fail to meet the expectations of stock market analysts
and investors. If this happens, the market price of our common
stock may be adversely affected.

Our leverage limits our financial flexibility, increases our
exposure to weakening economic conditions and may adversely
affect our ability to obtain additional financing.

Our indebtedness as of December 31, 2018 was $3.8 billion. We
may borrow additional amounts by utilizing available liquidity
under our existing credit facilities or issuing short-term, unsecured
commercial paper notes through our commercial paper program.

Our leverage could:



reduce funds available to us for operations and general
corporate purposes or for capital expenditures as a result of
the dedication of a substantial portion of our consolidated
cash flow from operations to the payment of principal and
interest on our indebtedness;
increase our exposure to a continued downturn in general
economic conditions;
place us at a competitive disadvantage compared with our
competitors with less debt;
affect our ability to obtain additional financing in the future
for refinancing indebtedness, acquisitions, working capital,
capital expenditures or other purposes; and
increase our cost of debt and reduce or eliminate our ability to
issue commercial paper.

In addition, we must comply with the covenants in our credit
facilities. Among other things, these covenants restrict our ability
to incur additional indebtedness, grant liens on assets, dispose of
assets and pay dividends (although we are permitted to pay cash
dividends on our common stock). Failure to meet any of the
covenant terms of our credit facilities could result in an event of
default. If an event of default occurs, and we are unable to receive
a waiver of default, our lenders may increase our borrowing costs,
restrict our ability to obtain additional borrowings and accelerate
all amounts outstanding.

We are subject to litigation risks and other liabilities.

Many aspects of our business potentially involve substantial
liability risks. Although under current law we are immune from
private suits arising from conduct within our regulatory authority
and from acts and forbearances incident to the exercise of our
regulatory authority this immunity only covers certain of our
activities in the U.S., and we could be exposed to liability under
national and local laws, court decisions and rules and regulations
promulgated by regulatory agencies.

Some of our other liability risks arise under the laws and
regulations relating to the tax, employment, intellectual property,
anti-money laundering, technology export, foreign asset controls,
foreign corrupt practices areas, employee labor and employment
areas, including anti-discrimination and fair - pay laws and
regulations.

Liability could also result from disputes over the terms of a trade,
claims that a system failure or delay cost a customer money,
claims we entered into an unauthorized transaction or claims that
we provided materially false or misleading statements in
connection with a securities transaction. As we intend to defend
any such litigation actively, significant legal expenses could be
incurred. Although we carry insurance that may limit our risk of
damages in some cases, we still may sustain

uncovered losses or losses in excess of available insurance that
would affect our financial condition and results of operations.

We have self-regulatory obligations and also operate for-profit
businesses, and these two roles may create conflicts of interest.

We have obligations to regulate and monitor activities on our
markets and ensure compliance with applicable law and the rules
of our markets by market participants and listed companies. In the
U.S., some have expressed concern about potential conflicts of
interest of “for-profit” markets performing
the regulatory
functions of an SRO. Although our U.S. cash equity and options
exchanges outsource a portion of their market regulation functions
to FINRA, we do perform regulatory functions and bear
regulatory responsibility related to our listed companies and our
markets. Any failure by us to diligently and fairly regulate our
markets or to otherwise fulfill our regulatory obligations could
significantly harm our reputation, prompt SEC scrutiny and
adversely affect our business and reputation.

Our Nordic and Baltic exchanges monitor trading and compliance
with listing standards in accordance with the European Union’s
Market Abuse Regulation and other applicable laws. The prime
objective of such monitoring activities is to promote confidence in
the exchanges among the general public and to ensure fair and
orderly functioning markets. The monitoring functions within the
Nasdaq Nordic and Nasdaq Baltic exchanges are the responsibility
of the surveillance departments or other surveillance personnel.
The surveillance departments or personnel are intended to
strengthen the integrity of and confidence in these exchanges and
to avoid conflicts of interest. Any failure to diligently and fairly
regulate the Nordic and Baltic exchanges could significantly harm
our reputation, prompt scrutiny from regulators and adversely
affect our business and reputation.

Failure to protect our intellectual property rights, or allegations
that we have infringed on the intellectual property rights of
others, could harm our brand-building efforts and ability to
compete effectively.

To protect our intellectual property rights, we rely on a
combination of trademark laws, copyright laws, patent laws, trade
secret protection, confidentiality agreements and other contractual
arrangements with our affiliates, clients, strategic partners,
employees and others. However, the efforts we have taken to
protect our intellectual property and proprietary rights might not
be sufficient, or effective, at stopping unauthorized use of those
rights. We may be unable to detect the unauthorized use of, or take
appropriate steps to enforce, our intellectual property rights.

We have registered, or applied to register, our trademarks in the
United States and in over 50 foreign jurisdictions and have
pending U.S. and foreign applications for other trademarks. We
also maintain copyright protection on our branded materialsand
pursue patent protection for software products, inventions and
other processes developed by us. We also hold a number of
patents, patent applications and licenses in the United States

and other foreign jurisdictions. However, effective trademark,
copyright, patent and trade secret protection might not be
available or cost-effective in every country in which our services
and products are offered. Moreover, changes in patent law, such as
changes in the law regarding patentable subject matter, could also
impact our ability to obtain patent protection for our innovations.
In particular, recent amendments to the U.S. patent law may affect
our ability to protect and defend our innovations. There is also a
risk that the scope of protection under our patents may not be
sufficient in some cases, or that existing patents may be deemed
invalid or unenforceable. Failure to protect our intellectual
property adequately could harm our brand and affect our ability to
compete effectively. Further, defending our intellectual property
rights could result in the expenditure of significant financial and
managerial resources.

Third parties may assert intellectual property rights claims against
us, which may be costly to defend, could require the payment of
damages and could limit our ability to use certain technologies,
trademarks or other intellectual property. Any intellectual
property claims, with or without merit, could be expensive to
litigate or settle and could divert management resources and
attention. Successful challenges against us could require us to
modify or discontinue our use of technology or business processes
where such use is found to infringe or violate the rights of others,
or require us to purchase licenses from third parties, any of which
could adversely affect our business, financial condition and
operating results.

We rely on third parties to perform certain functions, and our
business could be adversely affected if these third parties fail to
perform as expected.

We rely on third parties for regulatory, data center, data storage,
data content, clearing and other services. To the extent that any of
our vendors or other third-party service providers experiences
difficulties, materially changes their business relationship with us
or is unable for any reason to perform their obligations, our
business or our reputation may be materially adversely affected.

We also rely on members of our trading community to maintain
markets and add liquidity. To the extent that any of our largest
members experiences difficulties, materially changes its business
relationship with us or is unable for any reason to perform market
making activities, our business or our reputation may be
materially adversely affected.

We are a holding company that depends on cash flow from our
subsidiaries to meet our obligations, and any restrictions on our
subsidiaries’ ability to pay dividends or make other payments to
us may have a material adverse effect on our results of
operations and financial condition.

As a holding company, we require dividends and other payments
from our subsidiaries to meet cash requirements. Minimum capital
requirements mandated by
regulatory authorities having
jurisdiction over some of our regulated subsidiaries indirectly
restrict the amount of dividends paid upstream.

In addition, unremitted earnings of certain subsidiaries outside of
the U.S. are used to finance our international operations and are
considered to be indefinitely reinvested.

If our subsidiaries are unable to pay dividends and make other
payments to us when needed, we may be unable to satisfy our
obligations, which would have a material adverse effect on our
business, financial condition and operating results.

Acquisitions, dispositions, investments, joint ventures and other
transactional activities may require significant resources and/or
result in significant unanticipated losses, costs or liabilities.

Over the past several years, acquisitions have been significant
factors in our growth. We also may divest additional businesses or
assets in the future. Although we cannot predict our transactional
activities with complete accuracy, we believe that additional
acquisitions, divestments, investments, joint ventures and other
transactional activities will be important to our strategy. Such
transactions may be material in size and scope. Many of the other
potential purchasers of assets in our industry have greater
financial resources than we have. Therefore, we cannot be sure
that we will be able to complete future transactions on terms
favorable to us.

We also invest in startups through our Nasdaq Venture program
and also hold minority interests in other entities. Given the size of
these investments, we do not have operational control of these
entities and may have limited visibility into risk management
practices. Thus, we may be subject to additional capital
requirements
financial and
in certain circumstances and
reputational risks if there are operational failures.

We may finance future transactions by issuing additional equity
and/or debt. The issuance of additional equity in connection with
any such transaction could be substantially dilutive to existing
shareholders. In addition, announcement or implementation of
future transactions by us or others could have a material effect on
the price of our common stock. The issuance of additional debt
could increase our leverage substantially. We could face financial
risks associated with incurring additional debt, particularly if the
debt results in significant incremental leverage. Additional debt
may reduce our liquidity, curtail our access to financing markets,
impact our standing with credit rating agencies and increase the
cash flow required for debt service. Any incremental debt incurred
to finance a transaction could also place significant constraints on
the operation of our business.

Furthermore, any future transactions could entail a number of
additional risks, including:

•

problems with effective integration of operations;

the inability to maintain key pre-transaction business
relationships;

reliance on, or provision of, transition services;

increased operating costs;

the diversion of our management team from other operations;

•

problems with regulatory bodies;

risks associated with divesting employees, customers or
vendors when divesting businesses or assets;

declines in the value of investments;

exposure to unanticipated liabilities;

difficulties in realizing projected efficiencies, synergies and
cost savings; and

changes in our credit rating and financing costs.

Changes in tax laws, regulations or policies could have a
material adverse effect on our financial results.

Like other corporations, we are subject to taxes at the federal, state
and local levels, as well as in non-U.S. jurisdictions. Changes in
tax laws, regulations or policies could result in us having to pay
higher taxes, which would in turn reduce our net income.

In addition, some of our subsidiaries are subject to tax in the
jurisdictions in which they are organized or operate. In computing
our tax obligation in these jurisdictions, we take various tax
positions. We cannot assure you that upon review of these
positions the applicable authorities will agree with our positions.
A successful challenge by a tax authority could result in additional
tax imposed on our subsidiaries.

Failure to attract and retain key personnel may adversely affect
our ability to conduct our business.

Our future success depends, in large part, upon our ability to
attract and retain highly qualified professional personnel.
Competition for key personnel in the various localities and
business segments in which we operate is intense. Our ability to
attract and retain key personnel, in particular senior officers or
technology personnel, will be dependent on a number of factors,
including prevailing market conditions and compensation
packages offered by companies competing for the same talent.
There is no guarantee that we will have the continued service of
key employees who we rely upon to execute our business strategy
and identify and pursue strategic opportunities and initiatives. In
particular, we may have to incur costs to replace senior officers or
other key employees who leave, and our ability to execute our
business strategy could be impaired if we are unable to replace
such persons in a timely manner.

Our non-U.S. business operates in various international
markets, particularly emerging markets that are subject to
greater political, economic and social uncertainties than
developed countries.

Our non-U.S. business operates in various international markets,
including but not limited to Northern Europe, the Baltics, the
Middle East, Africa and Asia. Therefore, our non-U.S. operations
are subject to the risk inherent in the international environment.
Political, economic or social events or developments in one or
more of our non-U.S. locations could adversely affect our
operations and financial results. Some locations, such as
Lithuania, India and the Philippines, may increase risk. Some of

these economies may be subject to greater political, economic and
social uncertainties
than countries with more developed
institutional structures.

Unforeseen or catastrophic events could interrupt our critical
business functions. In addition, our U.S. and European
businesses are heavily concentrated in particular areas and may
be adversely affected by events in those areas.

We may incur losses as a result of unforeseen or catastrophic
events, such as terrorist attacks, natural disasters, extreme
weather, fire, power loss, telecommunications failures, human
error, theft, sabotage and vandalism. Given our position in the
global capital markets, we may be more likely than other
companies to be a target for malicious disruption activities.

In addition, our U.S. and European business operations are heavily
concentrated in the U.S. East Coast, and Stockholm respectively.
Any event that impacts either of those geographic areas could
potentially affect our ability to operate our businesses.

We have disaster recovery and business continuity plans and
capabilities for critical systems and business functions to mitigate
the risk of an interruption. In April 2018, Nasdaq activated its
disaster recovery and business continuity plans when its primary
data center site in Vasby, Sweden became unavailable due to an
errant fire suppression system. Any interruption in our critical
business functions or systems could negatively impact our
financial condition and operating results. For example, some
co-location customers lack adequate disaster recovery solutions to
avoid loss of trade flow from a sustained interruption of our
critical systems.

Because we have operations in numerous countries, we are
exposed to currency risk.

We have operations in the U.S., the Nordic and Baltic countries,
the U.K., Australia and many other foreign countries. We
therefore have significant exposure to exchange rate movements
between the Euro, Swedish Krona and other foreign currencies
towards the U.S. dollar. Significant inflation or disproportionate
changes in foreign exchange rates with respect to one or more of
these currencies could occur as a result of general economic
conditions, acts of war or terrorism, changes in governmental
monetary or tax policy, changes in local interest rates or other
factors. These exchange rate differences will affect the translation
of our non-U.S. results of operations and financial condition into
U.S. dollars as part of the preparation of our consolidated financial
statements and could adversely affect our financial results.

If our risk management methods are not effective, our business,
reputation and financial results may be adversely affected.

We utilize widely-accepted methods to identify, assess, monitor
and manage our risks, including oversight of risk management by
Nasdaq’s Global Risk Management Committee, which comprises
senior executives and has responsibility for regularly reviewing
risks and referring significant risks to the board of directors or
specific board committees. By definition, some risk

management methods require subjective evaluation of dynamic
information regarding markets, customers or other matters. That
variable information may not in all cases be accurate, complete,
up-to-date or properly evaluated. If we do not successfully
identify, assess, monitor or manage the risks to which we are
exposed, our business, reputation, financial condition and
operating results could be materially adversely affected.

Charges to earnings resulting from acquisition, integration and
restructuring costs may materially adversely affect the market
value of our common stock.

tangible assets, amortizable

In accordance with U.S. GAAP, we are accounting for the
completion of our acquisitions using the acquisition method of
accounting. We are allocating the total estimated purchase prices
to net
intangible assets and
indefinite-lived intangible assets, and based on their fair values as
of the date of completion of the acquisitions, recording the excess
of the purchase price over those fair values as goodwill. Our
financial results, including earnings per share, could be adversely
affected by a number of financial adjustments including the
following:

• we may incur additional amortization expense over the
estimated useful lives of certain of the intangible assets
acquired in connection with acquisitions during such
estimated useful lives;

• we may have additional depreciation expense as a result of

recording acquired tangible assets at fair value, in accordance
with U.S. GAAP, as compared to book value as recorded;

•

to the extent the value of goodwill or intangible assets
becomes impaired, we may be required to incur material
charges relating to the impairment of those assets;

• we may incur additional costs from integrating our

acquisitions. The success of our acquisitions depends, in part,
on our ability to integrate these businesses into our existing
operations and realize anticipated cost savings, revenue
synergies and growth opportunities; and

• we may incur restructuring costs in connection with the

reorganization of any of our businesses.

Decisions to declare future dividends on our common stock will
be at the discretion of our board of directors based upon a review
of relevant considerations. Accordingly, there can be no
guarantee that we will pay future dividends to our stockholders.

Our board of directors regularly declares quarterly cash dividend
payments on our outstanding common stock. Future declarations
of quarterly dividends and the establishment of future record and
payment dates are subject to approval by Nasdaq’s board of
directors. The board’s determination to declare dividends will
depend upon our profitability and financial condition, contractual
restrictions, restrictions imposed by applicable law and other
factors that the board deems relevant. Based on an evaluation of
these factors, the board of directors may determine not to declare
future dividends at all or to declare future dividends at a reduced
amount. Accordingly, there can be no guarantee that we will pay
future dividends to our stockholders.

Provisions of our certificate of incorporation, by-laws, exchange
rules (including provisions included to address SEC concerns)
and governing law restrict the ownership and voting of our
common stock. In addition, such provisions could delay or
prevent a change in control of us and entrench current
management.

Our organizational documents place restrictions on the voting
rights of certain stockholders. The holders of our common stock
are entitled to one vote per share on all matters to be voted upon by
the stockholders except that no person may exercise voting rights
in respect of any shares in excess of 5% of the then outstanding
shares of our common stock. Any change to the 5% voting
limitation would require SEC approval.

In response to the SEC’s concern about a concentration of our
ownership, the rules of some of our exchange subsidiaries include
a prohibition on any member or any person associated with a
member of the exchange from beneficially owning more than 20%
of our outstanding voting interests. SEC consent would be
required before any investor could obtain more than a 20% voting
interest in us. The rules of some of our exchange subsidiaries also
require the SEC’s approval of any business ventures with
exchange members, subject to exceptions.

Our organizational documents contain provisions that may be
deemed to have an anti-takeover effect and may delay, deter or
prevent a change of control of us, such as a tender offer or
takeover proposal that might result in a premium over the market
price for our common stock. Additionally, certain of these
provisions make it more difficult to bring about a change in the
composition of our board of directors, which could result in
entrenchment of current management.

Our certificate of incorporation and by-laws:

•

do not permit stockholders to act by written consent;

require certain advance notice for director nominations and
actions to be taken at annual meetings; and

authorize the issuance of undesignated preferred stock, or
“blank check” preferred stock, which could be issued by our
board of directors without stockholder approval.

Section 203 of the Delaware General Corporation Law imposes
restrictions on mergers and other business combinations between
us and any holder of 15% or more (or, in some cases, a holder who
previously held 15% or more) of our common stock. In general,
Delaware law prohibits a publicly held corporation from engaging
in a “business combination” with an “interested stockholder” for
interested
three years after
stockholder, unless the corporation’s board of directors and
stockholders approve the business combination in a prescribed
manner.

the stockholder becomes an

Finally, many of the European countries where we operate
regulated entities require prior governmental approval before an
investor acquires 10% or greater of our common stock.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The following is a description of our principal properties which are all leased.

Location
Stockholm, Sweden
New York, New York
Philadelphia, Pennsylvania
Atlanta, Georgia
New York, New York
Bengaluru, India
New York, New York
Vilnius, Lithuania
Rockville, Maryland
Manila, Philippines
London, England
Sydney, Australia
Toronto, Canada

Use
European headquarters
U.S. headquarters
General office space
General office space
Location of MarketSite
General office space
General office space
General office space
General office space
General office space
General office space
General office space
General office space

Size (approximate, in square feet)
264,000
113,000
74,000
68,000
66,000
63,000
53,000
51,000
48,000
36,000
31,000
29,000
26,000

Outside the U.S., we also maintain leased locations in Belgium, China, Denmark, Estonia, Finland, France, Germany, Hong Kong,
Iceland, Italy, Japan, Latvia, Netherlands, Norway, Singapore, South Korea, Spain and Ukraine. In some countries, we maintain multiple
locations.

Within the U.S., we also maintain leased locations in California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Oregon,
Virginia and Washington, DC. In some states, we maintain multiple locations.

In addition to the above, we also lease approximately 67,000 square feet of space used as data centers and disaster preparedness facilities
in multiple locations.

Generally, our properties are not earmarked for use by a particular segment. Instead, most of our properties are used by two or more
segments. We believe the facilities we occupy are adequate for the purposes for which they are currently used and are well-maintained.

Item 3. Legal Proceedings

See “Legal and Regulatory Matters - Litigation,” of Note 19, “Commitments, Contingencies and Guarantees,” to the consolidated
financial statements, which is incorporated herein by reference.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is listed on The Nasdaq Stock Market under the ticker symbol “NDAQ.” As of February 14, 2019, we had
approximately 250 holders of record of our common stock.

Issuer Purchases of Equity Securities

Share Repurchase Program

See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders’ Equity,” to the consolidated financial statements for further
discussion of our share repurchase program.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table summarizes the share repurchase activity of our common stock during the fiscal quarter ended December 31, 2018:

Period
October 2018
Share repurchase program
Employee transactions(1)

November 2018
Share repurchase program
Employee transactions(1)

December 2018
Share repurchase program
Employee transactions(1)

Total Quarter Ended December 31, 2018
Share repurchase program

Employee transactions

(a) Total Number of
Shares Purchased

(b) Average Price
Paid Per Share

(d) Maximum
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans or
Programs
(in millions)

—
2,060

—
1,370

—
66,133

—

69,563

—
84.57

—
87.33

—
82.11

—

82.29

—
N/A

—

N/A

332
N/A

332

N/A

(1) Represents shares we purchased from employees in connection with the settlement of employee tax withholding obligations arising

from the vesting of restricted stock and PSUs.

PERFORMANCE GRAPH

The following graph compares the total return of our common stock to the Nasdaq Composite Index, the S&P 500 and a selected peer
group for the past five years. The peer group includes ASX Limited, CBOE, CME Group Inc., Deutsche Börse A.G., ICE, LSE, and
TMX Group Limited. Information for the indices and the peer group is provided from December 31, 2013 through December 31, 2018.
The figures represented below assume an initial investment of $100 in the common stock or index at the closing price on December 31,
2013 and the reinvestment of all dividends.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Nasdaq, Inc., the Nasdaq Composite Index, the S&P 500, and a Peer Group

* $100 invested on 12/31/2013 in stock or index, including reinvestment of dividends.

Nasdaq, Inc.
Nasdaq Composite
S&P 500
Peer Group

Fiscal Year Ended December 31,

2013

2014

2015

2016

2017

2018

$ 100 $
100
100
100

122
115
114
107

151
123
115
121

177
133
129
139

207
172
157
187

224
166
150
208

Item 6. Selected Financial Data.

The following tables present selected financial data and should be
read in conjunction with the consolidated financial statements and
notes thereto of Nasdaq included elsewhere in this Form 10-K. We
completed a divestiture in April 2018 and several acquisitions
during the years ended December 31, 2018, 2017, 2016 and 2015

and included the financial results of such acquisitions in our
consolidated financial statements from the respective acquisition
dates. On January 1, 2018, we adopted Topic 606 using the full
retrospective method which required restatement of 2017 and
2016 financial statements. Earlier periods were not restated.

Selected Financial Data

Year Ended December 31,

2018

2017

2016

2015

2014

(in millions, except share and per share amounts)

4,277
(1,751 )

3,948
(1,537 )

3,704
(1,428 )

3,403
(1,313 )

3,500
(1,433 )

2,526
1,498
1,028
458

2,411
1,420
991
729

2,276
1,440
836
106

2,090
1,370
720
428

$
$

2.77
2.73

$
$

4.38
4.30

$
$

0.64
0.63

$
$

2.56
2.50

$
$

1.70

1.46

1.21

0.90

2,067
1,313
754
414

2.45
2.39

0.58

Statements of Income Data:
Total revenues
Transaction-based expenses

Revenues less transaction-based

expenses

Total operating expenses
Operating income
Net income attributable to Nasdaq
Per share information:
Basic earnings per share
Diluted earnings per share
Cash dividends declared per common

Weighted-average common shares

outstanding for earnings per share:

Basic
Diluted

165,349,471
167,691,299

166,364,299
169,585,031

165,182,290
168,800,997

167,285,450
171,283,271

168,926,733
173,018,849

Balance Sheets Data:
Cash and cash equivalents and financial investments
Default funds and margin deposits
Goodwill
Total assets
Long-term debt
Total Nasdaq stockholders' equity

December 31,

2018

2017

2016

2015

2014

(in millions)

813
4,742
6,363
15,700
2,956
5,449

612
3,988
6,586
15,354
3,727
5,880

648
3,301
6,027
13,411
3,603
5,428

502
2,228
5,395
11,257
2,364
5,609

601
2,194
5,538
11,542
2,297
5,794

Factors Affecting Our Business

In broad terms, our business performance is impacted by a number
of drivers including macroeconomic events affecting the risk and
return of financial assets, investor sentiment, government and
private sector demands for capital, the regulatory environment for
capital markets, changes in technology, and changes in investment
patterns and priorities. Our future revenues and net income will
continue to be influenced by a number of domestic and
international economic trends including, among others:

•

the challenges created by the automation of market data
consumption, including competition and the quickly evolving
nature of the market data business;

regulatory changes relating to market structure, including
market data, or affecting certain types of instruments,
transactions, pricing structures or capital market participants;

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 market
data and trade management services;

the demand for ETPs licensed to Nasdaq's indexes, enhanced
analytics and other financial products based on our indexes as
well as changes to the underlying assets associated with
existing licensed financial products;

the outlook of our technology customers for capital market
activity;

technological advances and members’ and customers’
demand for speed, efficiency, and reliability;

the acceptance of cloud-based services and advanced
analytics by our customers and global regulators;

trading volumes and values in equity derivatives, cash
equities 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 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;

continuing pressure in transaction fee pricing due to intense
competition in the U.S. and Europe; and

competition related to pricing, product features and service
offerings.

Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

The following discussion and analysis of the financial condition
and results of operations of Nasdaq should be read in conjunction
with our consolidated financial statements and related notes
included in this Form 10-K, as well as the discussion under “Item
1A. Risk Factors.” For further discussion of our business,
including our growth strategy, see “Item 1. Business.”

Overview

Our Company

We are a leading provider of trading, clearing, marketplace
technology, regulatory, securities listing, information and public
and private company services. Our global offerings are diverse
and include trading and clearing across multiple asset classes,
trade management services, market data products, financial
indexes,
investment data and analytics, capital formation
solutions, corporate solutions, and market technology products
and services. Our technology powers markets across the globe,
supporting equity derivative trading, clearing and settlement, cash
equity trading, fixed income trading, trading surveillance and
many other functions.

Strategic Direction

Under the strategic direction that we have been implementing over
the past two years, we have focused on maximizing the resources,
people and capital allocated to our largest growth opportunities,
particularly in our Market Technology and Information Services
businesses. Our investments include our organic initiatives,
notably the Nasdaq Financial Framework and related initiatives to
deliver our marketplace expertise to banks, brokers and market
operators outside the financial industry, as well as to provide
compliance capabilities to the buy-side, and our eVestment
private markets solutions. It also includes the recent acquisitions
of Cinnober and Quandl.

The other pillar of our strategic direction is our continued
investment and commitment to sustain our marketplace core.
These foundational businesses, comprising the Market Services
and Corporate Services segments, have earned Nasdaq a strategic
position at the center of the capital markets in the U.S. and Europe.
We have been able to create strategic relationships across
broker-dealers, investment professionals, corporate clients, and
other global market centers, which then provides the potential to
expand those relationships with our technology and analytics
capabilities.

The focus for both our non-trading (which includes Market
Technology, Information Services, Corporate Services and Trade
Management Services) and trading (which includes all of Market
Services except Trade Management Services) businesses
continues to include identifying organic growth and developing
adjacent opportunities to our existing businesses. In addition, our
strategy includes identifying acquisitions that both complement
our strengths and extend our capabilities, as well as offer
opportunities for revenue and expense synergies and increased
shareholder value.

The following chart presents the current consensus forecast for
gross domestic product growth:

•

globalization of exchanges, customers and competitors
extending the competitive horizon beyond national markets.

Business Segments

We manage, operate and provide our products and services in four
business segments: Market Services, Corporate Services,
Information Services and Market Technology. See Note 1,
“Organization and Nature of Operations,” and Note 20, “Business
Segments,” to the consolidated financial statements for further
discussion of our reportable segments and geographic data, as well
as how management allocates resources, assesses performance
and manages these businesses as four separate segments.

Sources of Revenues and Transaction-Based Expenses

See “Revenue Recognition and Transaction-Based Expenses,”
of Note 2, “Summary of Significant Accounting Policies,” to the
consolidated financial statements for further discussion of our
sources of revenues and transaction-based expenses.

Although employment and wage data in many regions seems
robust, indicating that the underlying global economy is still quite
strong, leading indicators in many regions are pointing to a
slowdown. Global gross domestic product growth forecasts have
recently started to slow. In the last quarter of 2018, consensus
2019 growth forecasts have declined 0.1 percentage points to
2.5% for the U.S. and 0.5 percentage points to 1.3% for the
Eurozone. There are a number of significant structural and
political issues continuing to impact the global economy.
Uncertainty surrounding the impact of China's economy, trade
tariffs and Brexit contributed to an increase in market volatility in
the last quarter of 2018 and continue to pose a risk to global
growth.

Additional
the
impacts on our business drivers
international enactment and implementation of legislative and
regulatory initiatives (notably MiFID II in Europe), the evolution
of market participants’ trading and investment strategies, and the
continued rapid progression and deployment of new technology in
the financial services industry.

include

The business environment that we expect may influence our
financial performance in 2019 may be characterized as follows:

•

rapidly evolving technology for our businesses and their
clients;

increased demand
for applications using emerging
technologies and sophisticated analytics by both new entrants
and industry incumbents;

the expansion of the number of industries, and emergence of
new industries, seeking to use advanced market technology;

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; and

Nasdaq’s Operating Results

Key Drivers

The following table includes key drivers for our Market Services, Corporate Services, Information Services and Market Technology
segments. In evaluating the performance of our business, our senior management closely evaluates these key drivers.

Market Services
Equity Derivative Trading and Clearing
U.S. equity options
Total industry average daily volume (in millions)
Nasdaq PHLX matched market share
The Nasdaq Options Market matched market share
Nasdaq BX Options matched market share
Nasdaq ISE Options matched market share
Nasdaq GEMX Options matched market share
Nasdaq MRX Options matched market share
Total matched market share executed on Nasdaq’s exchanges
Nasdaq Nordic and Nasdaq Baltic options and futures
Total average daily volume of options and futures contracts(1)
Cash Equity Trading
Total U.S.-listed securities
Total industry average daily share volume (in billions)
Matched share volume (in billions)
The Nasdaq Stock Market matched market share
Nasdaq BX matched market share
Nasdaq PSX matched market share
Total matched market share executed on Nasdaq’s exchanges
Market share reported to the FINRA/Nasdaq Trade Reporting Facility
Total market share(2)
Nasdaq Nordic and Nasdaq Baltic securities
Average daily number of equity trades executed on Nasdaq’s exchanges
Total average daily value of shares traded (in billions)
Total market share executed on Nasdaq’s exchanges
FICC
Fixed Income
U.S. fixed income notional trading volume (in billions)

Total average daily volume of Nasdaq Nordic and Nasdaq Baltic fixed income contracts

Commodities
Power contracts cleared (TWh)(3)
Corporate Services
Initial public offerings

The Nasdaq Stock Market
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic

Total new listings

The Nasdaq Stock Market(4)
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(5)

Number of listed companies

The Nasdaq Stock Market(6)
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(7)

Information Services
Number of licensed ETPs
ETP assets under management tracking Nasdaq indexes (in billions)
Market Technology
Order intake (in millions)(8)
Total order value (in millions)(9)

Year Ended December 31,

2018

2017

2016

18.2
15.7 %
9.4 %
0.4 %
8.8 %
4.5 %
0.1 %
38.9 %

14.7
17.3 %
9.2 %
0.7 %
9.1 %
5.2 %
0.1 %
41.6 %

14.4
16.0 %
7.8 %
0.8 %
5.8 %
1.1 %
0.1 %
31.6 %

339,139

330,218

376,730

7.32
358.5

15.9 %
2.8 %
0.8 %
19.5 %
31.3 %
50.8 %

6.53
295.9

14.2 %
3.1 %
0.8 %
18.1 %
34.5 %
52.6 %

7.35
321.6

14.0 %
2.4 %
1.0 %
17.4 %
33.1 %
50.5 %

618,579
5.6
67.0 %

552,104
5.3
67.5 %

472,428
5.1
62.5 %

15,983
132,475

$ 17,800
116,357

$ 21,504
89,252

1,067

1,199

1,658

186
53

303
73

3,058
1,019

136
88

268
108

2,949
984

$
$

365
172

223
695

$
$

324
167

249
717

$
$

91
62

283
88

2,897
900

298
124

235
691

(1) Includes Finnish option contracts traded on Eurex.
(2) 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.

(3) Transactions executed on Nasdaq Commodities or OTC and reported for clearing to Nasdaq Commodities measured by Terawatt

hours (TWh).

(4) 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.

(5) 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.

(6) Number of total listings on The Nasdaq Stock Market at period end, including 392 ETPs as of December 31, 2018, 373 as of

December 31, 2017 and 328 as of December 31, 2016.

(7) Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of

Nasdaq First North at period end.

(8) Total contract value of orders signed during the period.
(9) 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 consolidated financial statements, represents consideration received that is yet to be
recognized as revenue for these signed orders. Total order value for the years ended December 31, 2017 and 2016 was restated as a
result of the adoption of Topic 606.

Financial Summary

* * * * * *

The following table summarizes our financial performance for the year ended December 31, 2018 when compared with the same period
in 2017 and for the year ended December 31, 2017 when compared with the same period in 2016. The comparability of our results of
operations between reported periods is impacted by the divestiture of the Public Relations Solutions and Digital Media Services
businesses in April 2018 and the acquisition of eVestment in October 2017. See Note 3, “Acquisitions and Divestiture,” to the
consolidated financial statements for further discussion of these transactions. For a detailed discussion of our results of operations, see
“Segment Operating Results” below. In addition, on January 1, 2018, we adopted Topic 606 using the full retrospective method which
required restatement of 2017 and 2016 financial statements.

Revenues less transaction-based expenses
Operating expenses

Operating income
Interest expense
Gain on sale of investment security
Net gain on divestiture of businesses
Asset impairment charge
Income before income taxes
Income tax provision
Net income attributable to Nasdaq
Diluted earnings per share
Cash dividends declared per common share

_______

N/M - Not meaningful.

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs. 2017

2017 vs. 2016

(in millions, except per share amounts)

2,526
1,498

$ 2,411
1,420

$ 2,276
1,440

1,028
(150 )
118
33
—
1,064
606
458
2.73
1.70

$
$
$

991
(143 )
—
—
—
872
143
729
4.30
1.46

$
$
$

836
(135 )
—
—
(578 )
133
27
106
0.63
1.21

$
$
$

4.8 %
5.5 %

3.7 %
4.9 %

N/M
N/M

— %
22.0 %
323.8 %
(37.2 )%
(36.5 )%
16.4 %

5.9 %
(1.4 )%

18.5 %
5.9 %
— %
— %
(100.0 )%
555.6 %
429.6 %
587.7 %
582.5 %
20.7 %

In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates.
Impacts on our revenues less transaction-based expenses and operating income associated with fluctuations in foreign currency are
discussed in more detail under “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”

Segment Operating Results

The following table shows our revenues by segment, transaction-based expenses for our Market Services segment and total revenues less
transaction-based expenses:

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs. 2017

2017 vs. 2016

Market Services
Transaction-based expenses
Market Services revenues less transaction-based expenses
Corporate Services
Information Services
Market Technology
Other revenues(1)
Total revenues less transaction-based expenses

(in millions)
$ 2,418

$ 2,255

(1,537 )
881
501
588
247
194
$ 2,411

(1,428 )
827
477
540
241
191
$
$ 2,276

2,709
(1,751 )
958
528
714
270
56
2,526

12.0 %
13.9 %
8.7 %
5.4 %
21.4 %
9.3 %
(71.1 )%
4.8 %

7.2 %
7.6 %
6.5 %
5.0 %
8.9 %
2.5 %
1.6 %
5.9 %

(1)

Includes the revenues from the Public Relations Solutions and Digital Media Services businesses which were sold in April 2018.
Prior to the sale date, these revenues were included in our Corporate Solutions business. See “2018 Divestiture,” of Note 3,
“Acquisitions and Divestiture,” to the consolidated financial statements for further discussion.

The following charts show our Market Services, Corporate Services, Information Services and Market Technology segments as a
percentage of our total revenues less transaction-based expenses of $2,526 million in 2018, $2,411 million in 2017 and $2,276 million in
2016:

MARKET SERVICES

The following table shows total revenues, transaction-based expenses, and total revenues less transaction-based expenses from our
Market Services segment:

Market Services Revenues:
Equity Derivative Trading and Clearing Revenues(1)
Transaction-based expenses:
Transaction rebates
Brokerage, clearance and exchange fees(1)
Equity derivative trading and clearing revenues less

transaction-based expenses

Cash Equity Trading Revenues(2)
Transaction-based expenses:
Transaction rebates
Brokerage, clearance and exchange fees(2)
Cash equity trading revenues less transaction-based expenses

FICC Revenues
Transaction-based expenses:
Transaction rebates
Brokerage, clearance and exchange fees
FICC revenues less transaction-based expenses

Trade Management Services Revenues

Total Market Services revenues less transaction-based

Year Ended December 31,

Percentage Change

2018

2017
(in millions)

2016

2018 vs. 2017 2017 vs. 2016

849

752

541

12.9 %

39.0 %

(506 )
(44 )

(450 )
(43 )

(288 )
(25 )

12.4 %
2.3 %

56.3 %
72.0 %

299

259

228

15.4 %

13.6 %

1,476

1,279

1,349

15.4 %

(5.2 )%

(830 )
(361 )
285

(8 )
(2 )
82
292

(692 )
(334 )
253

(16 )
(2 )
78
291

(785 )
(309 )
255

19.9 %
8.1 %
12.6 %

(11.8 )%
8.1 %
(0.8 )%

(4.2 )%

(3.0 )%

(19 )
(2 )
78
266

(50.0 )%
— %
5.1 %
0.3 %

(15.8 )%
— %
— %
9.4 %

expenses

958

881

827

8.7 %

6.5 %

(1)

(2)

Includes Section 31 fees of $39 million in 2018, $40 million in 2017, and $24 million in 2016. Section 31 fees are recorded as equity
derivative trading and clearing revenues with a corresponding amount recorded in transaction-based expenses.

Includes Section 31 fees of $343 million in 2018, $319 million in 2017, and $290 million in 2016. Section 31 fees are recorded as
cash equity trading revenues with a corresponding amount recorded in transaction-based expenses.

Equity Derivative Trading and Clearing Revenues

Equity derivative trading and clearing revenues and equity
derivative trading and clearing revenues less transaction-based
expenses increased in both 2018 compared with 2017 and 2017
compared with 2016.

The increases in 2018 were primarily due to higher U.S. industry
trading volumes, partially offset by a decrease in our overall U.S.
matched market share executed on Nasdaq's exchanges.

The increases in 2017 were primarily due to the inclusion of a full
year of revenues from our acquisition of ISE compared with six
months in 2016, higher U.S. industry trading volumes and an
increase in our overall matched market share executed on
Nasdaq's U.S. exchanges. Further impacting the increase in equity
derivative trading revenues was higher Section 31 pass-through
fee revenue.

Section 31 fees are recorded as equity derivative trading and
clearing revenues with a corresponding amount recorded as
transaction-based expenses. In the U.S., we are assessed these fees
from the SEC and pass them through to our customers in the form
of incremental fees. Pass-through fees can increase or decrease
due to rate changes by the SEC, our percentage of the overall
industry volumes processed on our systems, and differences in
actual dollar value of shares traded. Since the amount recorded in
revenues is equal to the amount recorded as transaction-based
expenses,
less
transaction-based expenses. Section 31 fees decreased slightly in
2018 compared with 2017 and increased in 2017 compared with
2016. The increase in 2017 was primarily due to the inclusion of a
full year of Section 31 fees from our acquisition of ISE compared
with six months in 2016.

impact on our

revenues

is no

there

Transaction rebates, in which we credit a portion of the per share
execution charge to the market participant, increased in both

Transaction rebates increased in 2018 compared with 2017 and
decreased in 2017 compared with 2016. For The Nasdaq Stock

Market, Nasdaq PSX and Nasdaq Canada, we credit a portion of
the per share execution charge to the market participant that
provides the liquidity, and for Nasdaq BX, we credit a portion of
the per share execution charge to the market participant that takes
the liquidity. The increase in 2018 was primarily due to an
increase in our overall U.S. matched market share executed on
Nasdaq’s exchanges and higher U.S. industry trading volumes,
partially offset by a decrease in the U.S. rebate capture rate. The
decrease in 2017 was primarily due to lower U.S. industry trading
volumes, partially offset by an increase in our matched market
share executed on Nasdaq’s exchanges.

Brokerage, clearance and exchange fees increased in both 2018
compared with 2017 and 2017 compared with 2016. The increases
were primarily due to higher Section 31 pass-through fees, as
discussed above.

FICC Revenues

FICC revenues decreased in 2018 compared with the same period
in 2017 primarily due to a decline in revenues related to U.S. fixed
income products. FICC revenues less transaction-based expenses
increased in 2018 compared with 2017 primarily due to higher net
revenues at NFX, partially offset by a decline in revenues related
to U.S. fixed income products.

to volume declines

FICC revenues decreased in 2017 compared with the same period
in 2016 primarily due
in European
commodities products and U.S. fixed income products, partially
offset by higher volumes and pricing changes at NFX. FICC
revenues less transaction-based expenses were flat in 2017
compared with 2016 as declines in European commodities
products and U.S. fixed income products were offset by higher
volumes and pricing changes at NFX.

Trade Management Services Revenues

Trade management services revenues increased slightly in 2018
compared with 2017 primarily due to an increase in co-location
revenues, partially offset by a decline in port connectivity
revenues. The increase in 2017 compared with 2016 was primarily
due to an increase in customer demand for third party
connectivity, co-location, and test facilities and the inclusion of a
full year of revenues from our acquisition of ISE compared with
six months in 2016.

2018 compared with 2017 and 2017 compared with 2016. The
increase in 2018 was primarily due to higher U.S. industry trading
volumes, partially offset by decrease in our overall U.S. matched
market share executed on Nasdaq's exchanges. The increase in
2017 was primarily due to the inclusion of a full year of rebates
associated with our acquisition of ISE compared with six months
in 2016, increases in the U.S. rebate capture rate, higher U.S.
industry trading volumes, and an increase in our overall U.S.
matched market share.

Brokerage, clearance and exchange fees increased slightly in 2018
compared with 2017. The increase was primarily due to higher
routing fees partially offset by lower Section 31 pass-through fees.
The increase in 2017 compared with 2016 was primarily due to
higher Section 31 pass-through fees, associated with our
acquisition of ISE, as discussed above.

Cash Equity Trading Revenues

Cash equity trading revenues and cash equity trading revenues
less transaction-based expenses increased in 2018 compared 2017
and decreased in 2017 compared with 2016.

The increases in 2018 were primarily due to higher U.S. and
European industry trading volumes and an increase in our overall
matched market share executed on Nasdaq's U.S. exchanges.
Further impacting the increase in cash equity trading revenues in
2018 was an increase in Section 31 pass-through fee revenue.

Cash equity trading revenues and cash equity trading revenues
less transaction-based expenses decreased in 2017 compared with
2016.

The decreases in 2017 were primarily due to:

•

lower U.S. industry trading volumes, partially offset by;

higher European industry trading volumes; and

an increase in our overall U.S. matched market share and
European market share executed on Nasdaq's exchanges.

The decrease in cash equity trading revenues in 2017 was also
partially offset by an increase in Section 31 pass-through fee
revenue.

Similar to equity derivative trading and clearing, in the U.S. we
record Section 31 fees as cash equity trading revenues with a
corresponding amount recorded as transaction-based expenses.
We are assessed these fees from the SEC and pass them through to
our customers in the form of incremental fees. Since the amount
recorded as revenues is equal to the amount recorded as
transaction-based expenses, there is no impact on our revenues
less transaction-based expenses. Section 31 fees increased in both
2018 compared with 2017 and 2017 compared with 2016. The
increase in 2018 was primarily due to higher dollar value traded
on Nasdaq’s exchanges, partially offset by lower average SEC fee
rates. The increase in 2017 was primarily due to higher dollar
value traded on Nasdaq’s exchanges and higher average SEC fee
rates.

CORPORATE SERVICES

The following table shows revenues from our Corporate Services segment:

Corporate Services:
Corporate Solutions
Listing Services
Total Corporate Services

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs. 2017

2017 vs. 2016

(in millions)

238
290
528

234
267
501

208
269
477

1.7 %
8.6 %
5.4 %

12.5 %
(0.7 )%
5.0 %

Corporate Solutions Revenues

Listing Services Revenues

Corporate solutions revenues increased in both 2018 compared
with 2017 and 2017 compared with 2016. The increase in 2018
was primarily due to an increase in board & leadership revenues
and a favorable impact from foreign exchange of $2 million,
partially offset by a decrease in our governance, risk &
compliance revenues. The increase in 2017 was primarily due to
the inclusion of revenues associated with the acquisition of
Boardvantage. See “Acquisition of Boardvantage,” of Note 3,
“Acquisitions and Divestiture,” to the consolidated financial
statements for further discussion of the Boardvantage acquisition.

Listing services revenues increased in 2018 compared with 2017
and decreased in 2017 compared with 2016. The increase in 2018
was primarily from client adoption of our all-inclusive annual
listing fee program and an increase in the number and size of
IPOs, partially offset by the run-off of fees earned from U.S.
listing of additional shares. The decrease in 2017 was primarily
due to a decrease in U.S. listing of additional share fees as a result
of our all-inclusive annual listing fee program, partially offset by
an increase in European listing services revenues due to new
company listings.

INFORMATION SERVICES

The following table shows revenues from our Information Services segment:

* * * * * *

Information Services:
Market Data
Index
Investment Data & Analytics

Total Information Services

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs. 2017

2017 vs. 2016

(in millions)

390
206
118

369
171
48

714

588

354
149
37

540

5.7 %
20.5 %
145.8 %

21.4 %

4.2 %
14.8 %
29.7 %

8.9 %

Market Data Revenues

Index Revenues

Market data revenues increased in both 2018 compared with 2017
and 2017 compared with 2016. The increase in 2018 was
primarily due to higher revenues from sales of data subscriptions
(notably growth in the Asia Pacific region), an increase in market
share in U.S. tape plans and higher revenues from under reported
usage. Further impacting the increase in market data revenues was
a favorable impact from foreign exchange of $4 million. The
increase in 2017 was primarily due to growth in U.S. equities and
European data products subscriptions.

Index revenues increased in both 2018 compared with 2017 and
2017 compared with 2016. The increases in both 2018 and 2017
were primarily due to higher assets under management in ETPs
linked to Nasdaq indexes and higher licensing revenues from
futures trading volume related to the Nasdaq 100 Index.

Investment Data & Analytics Revenues

Investment data & analytics revenues increased in both 2018
compared with 2017 and 2017 compared with 2016. The increases
in both 2018 and 2017 were primarily due to the inclusion of
revenues associated with the acquisition of eVestment.

MARKET TECHNOLOGY

The following table shows revenues from our Market Technology segment:

Market Technology

Market Technology Revenues

Year Ended December 31,

Percentage Change

2018

2017

270

(in millions)
247

2016

2018 vs. 2017

2017 vs.
2016

241

9.3 %

2.5 %

Market technology revenues increased in both 2018 compared with 2017 and 2017 compared with 2016. The increase in 2018 was
primarily due to an increase in delivery and support revenues and higher software as a service revenues, partially offset by a decrease in
change request and advisory revenues and an unfavorable impact from foreign exchange of $2 million. The increase in 2017 was
primarily due to higher change request revenues and an increase in revenues from software as a service.

OTHER REVENUES

Other revenues include the revenues from the Public Relations Solutions and Digital Media Services businesses which were sold in April
2018. Prior to the sale date, these revenues were included in our Corporate Solutions business. See “2018 Divestiture,” of Note 3,
“Acquisitions and Divestiture,” to the consolidated financial statements for further discussion.

Expenses

Operating Expenses

The following table shows our operating expenses:

Compensation and benefits
Professional and contract services
Computer operations and data communications
Occupancy
General, administrative and other
Marketing and advertising
Depreciation and amortization
Regulatory
Merger and strategic initiatives
Restructuring charges

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs. 2017

2017 vs. 2016

(in millions)
670
153
125
94
82
31
188
33
44
—

712
144
127
95
120
37
210
32
21
—

665
153
111
86
73
30
170
35
76
41

6.3 %
(5.9 )%
1.6 %
1.1 %
46.3 %
19.4 %
11.7 %
(3.0 )%
(52.3 )%
— %

0.8 %
— %
12.6 %
9.3 %
12.3 %
3.3 %
10.6 %
(5.7 )%
(42.1 )%
(100.0 )%

Total operating expenses

1,498

1,420

1,440

5.5 %

(1.4 )%

The increase in compensation and benefits expense in 2018 was
primarily due to overall higher compensation costs resulting from
our acquisition of eVestment and higher compensation expense
reflecting higher performance incentives, partially offset by lower
compensation costs due to the sale of the Public Relations
Solutions and Digital Media Services businesses. The increase in
compensation and benefits expense in 2017 was primarily due to
overall higher compensation costs resulting from our 2017 and
2016 acquisitions and an unfavorable impact from foreign
exchange of $2 million, partially offset by lower compensation
expense reflecting lower performance incentives. Also impacting
the increase in compensation expense in 2017 was accelerated

expense recorded in 2016 for equity awards previously granted
due to the retirement of the company's former CEO.

Headcount decreased to 4,099 employees as of December 31,
2018 from 4,734 as of December 31, 2017 primarily due to the
sale of the Public Relations Solutions and Digital Media Services
businesses, partially offset by our 2018 acquisitions.

Professional and contract services expense decreased in 2018
primarily due to the sale of the Public Relations Solutions and
Digital Media Services businesses, partially offset by additional
expense associated with our 2017 acquisitions and litigation costs.

Computer operations and data communications expense increased
in 2018 primarily due to higher market data feed costs

due to higher volumes as well as higher software maintenance
costs, and additional costs associated with our 2017 acquisitions,
partially offset by lower costs resulting from the sale of the Public
Relations Solutions and Digital Media Services businesses. The
increase in 2017 was due to higher hardware and license costs
associated with our 2017 and 2016 acquisitions.

Occupancy expense increased in 2018 primarily due to additional
facility and rent costs resulting from expansion of our new world
headquarters, partially offset by lower costs from the sale of the
Public Relations Solutions and Digital Media Services businesses.
The increase in 2017 was associated with our 2017 and 2016
acquisitions.

The increase in general, administrative and other expense in 2018
was primarily due to charges associated with the clearing default
and lower regulatory fine collections. See “Nasdaq Commodities
Clearing Default,” of Note 15, “Clearing Operations,” for further
discussion of the capital relief program and default. The increase
in 2017 was primarily due to a pre-tax charge of $10 million in the
second quarter of 2017 which primarily included a make-whole
redemption price premium paid on the early extinguishment of
previously outstanding debt and lower regulatory fine collections.

Marketing and advertising expense increased in both 2018
compared with 2017 and 2017 compared with 2016 primarily due
to an increase in advertising spend relating to our Listing Services
and Information Services businesses.

Depreciation and amortization expense increased in both 2018
compared with 2017 and 2017 compared with 2016 primarily due
to additional amortization expense associated with acquired
intangible assets. The increase in 2018 was associated with our
2017 acquisition and in the increase in 2017 was associated with
our 2017 and 2016 acquisitions. The increase in 2018 was also
associated with software assets placed in service.

Merger and strategic initiatives expense decreased in both 2018
compared with 2017 and 2017 compared with 2016. We have
pursued various strategic initiatives and completed a divestiture
and a number of acquisitions in recent years which have resulted
in expenses which would not have otherwise been incurred. These
expenses generally include integration costs, as well as legal, due
diligence and other third party transaction costs and will vary
based on the size and frequency of the activities described above.

See Note 18, “Restructuring Charges,” to the consolidated
financial statements for a discussion of our restructuring charges
recorded during 2016.

Non-operating Income and Expenses

The following table shows our non-operating income and expenses:

* * * * * *

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs. 2017

2017 vs. 2016

Interest income
Interest expense

Net interest expense

Gain on sale of investment security
Net gain on divestiture of businesses
Asset impairment charge
Other investment income
Net income from unconsolidated investees
Total non-operating income (expenses)

N/M - Not meaningful.

Interest Income

10
(150 )

(in millions)
7
(143 )

(140 )
118
33
—
7
18
36

(136 )
—
—
—
2
15

(119 ) $

5
(135 )

(130 )
—
—
(578 )
3
2
(703 )

42.9 %
4.9 %

2.9 %

N/M
N/M

— %
250.0 %
20.0 %
(130.3 )%

40.0 %
5.9 %

4.6 %
— %
— %
(100.0 )%
(33.3 )%
650.0 %
(83.1 )%

Interest income increased in both 2018 compared with 2017 and 2017 compared with 2016 primarily due to an increase in prevailing
market rates.

Interest Expense

The following table shows our interest expense:

Interest expense on debt
Accretion of debt issuance costs and debt discount
Other bank and investment-related fees

Interest expense

Interest expense increased in both 2018 and 2017 primarily due to
higher interest rates on floating rate debt and debt issuances
related to our acquisitions. See Note 9, “Debt Obligations,” to the
consolidated financial statements for further discussion of our
debt obligations.

Gain on Sale of Investment Security

In December 2018, we recorded a pre-tax gain of $118 million
($93 million after tax) on the sale of an investment security. See
“Equity Securities,” of Note 6, “Investments,” to the consolidated
financial statements for further discussion.

Net Gain on Divestiture of Businesses

In April 2018, we sold our Public Relations Solutions and Digital
Media Services businesses. See “2018 Divestiture,” of Note 3,
“Acquisitions and Divestiture,” to the consolidated financial
statements for further discussion.

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs.
2017

2017 vs.
2016

(in millions)
135
6
2

140
7
3

150

143

Asset Impairment Charge

129
5
1

135

3.7 %
16.7 %
50.0 %

4.9 %

4.7 %
20.0 %
100.0 %

5.9 %

The asset impairment charge in 2016 relates to a pre-tax, non-cash
intangible asset impairment charge related to the full write-off of a
trade name from an acquired business due to a continued decline
in the operating performance of the business during 2016 and a
rebranding of our fixed income business under a single brand
called Nasdaq Fixed Income.

Other Investment Income

Other investment income in 2018 primarily related to dividend
income received on an equity security.

Net Income from Unconsolidated Investees

Net income from unconsolidated investees in both 2018 and 2017
primarily relates to income recognized from our equity method
investment in OCC. See “Equity Method Investments,” of Note 6,
“Investments,” to the consolidated financial statements for further
discussion of our equity method investments.

Tax Matters

The following table shows our income tax provision and effective tax rate:

* * * * * *

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs.
2017

2017 vs.
2016

Income tax provision
Effective tax rate

The effective tax rate may vary from period to period depending
on, among other factors, the geographic and business mix of
earnings and losses. These same and other factors, including
history of pre-tax earnings and losses, are taken into account in
assessing the ability to realize deferred tax assets.

($ in millions)
143
$
16.4 %

606
57.0 %

323.8 %

429.6 %

20.3 %

Non-GAAP Financial Measures

In addition to disclosing results determined in accordance with
U.S. GAAP, we also have provided non-GAAP net income
attributable to Nasdaq and non-GAAP diluted earnings per share.
Management uses this non-GAAP information internally, along
with U.S. GAAP information, in evaluating our performance and
in making financial and operational decisions. We believe our
presentation of these measures provides investors with greater
transparency and supplemental data relating to our financial
condition and results of operations. In addition, we believe the
presentation of these measures is useful to investors for
period-to-period comparisons of our ongoing operating
performance.

These measures are not in accordance with, or an alternative to,
U.S. GAAP, and may be different from non-GAAP measures used
by other companies. Investors should not rely on any single
financial measure when evaluating our business. We recommend
investors review the U.S. GAAP financial measures included in
this Annual Report on Form 10-K, including our consolidated
financial statements and the notes thereto. When viewed in
conjunction with our U.S. GAAP results and the accompanying
reconciliation, we believe these non-GAAP measures provide
greater transparency and a more complete understanding of
factors affecting our business than U.S. GAAP measures alone.

We understand that analysts and investors regularly rely on
non-GAAP financial measures, such as non-GAAP net income
attributable to Nasdaq and non-GAAP diluted earnings per share,
to assess operating performance. We use non-GAAP net income
attributable to Nasdaq and non-GAAP diluted earnings per share
because they highlight trends more clearly in our business that
may not otherwise be apparent when relying solely on U.S. GAAP
financial measures, since these measures eliminate from our
results specific financial items that have less bearing on our
income
ongoing operating performance. Non-GAAP net
attributable to Nasdaq for the periods presented below is
calculated by adjusting for the following items:

Amortization expense of acquired intangible assets: We amortize
intangible assets acquired in connection with various acquisitions.
Intangible asset amortization expense can vary from period to
period due to episodic acquisitions completed, rather than from
our ongoing business operations. As such, if intangible asset
amortization is included in performance measures, it is more
difficult to assess the day-to-day operating performance of the
businesses, the relative operating performance of the businesses
between periods, and the earnings power of Nasdaq. Performance
measures excluding
intangible asset amortization therefore
provide investors with a more useful representation of our
businesses’ ongoing activity in each period.

Merger and strategic initiatives expense: We have pursued
various strategic initiatives and completed a divestiture and a
number of acquisitions in recent years which have resulted in
expenses which would not have otherwise been incurred. These
expenses generally include integration costs, as well as legal, due
diligence and other third party transaction costs. The frequency
and the amount of such expenses vary significantly based on the
size, timing and complexity of the transaction. Accordingly, we
exclude these costs for purposes of calculating non-GAAP
measures which provide a more meaningful analysis of Nasdaq’s
ongoing operating performance or comparisons in Nasdaq’s
performance between periods.

Clearing Default: For the year ended December 31, 2018, we
recorded $31 million in expense related to the clearing default of a
in
Nasdaq Clearing commodities member
September 2018. We recorded an $8 million loss in September
2018 relating to this default. In December 2018, we recorded a
$23 million charge as a result of initiating a capital relief program.
These charges are recorded in general, administrative and

that occurred

other expense in our Consolidated Statements of Income. See
“Nasdaq Commodities Clearing Default,” of Note 15, “Clearing
Operations,” for further discussion of the default. We have
excluded these charges as we believe they are non-recurring, as
there has never been a loss due to member default in our
clearinghouse, and they should be excluded when evaluating the
ongoing operating performance of Nasdaq. Any expenses
associated with the enhancement of processes and procedures
relating to our clearing business will not be excluded from our
GAAP results.

Other significant items: We have excluded certain other charges
or gains, including certain tax items, that are the result of other
non-comparable events to measure operating performance. We
believe the exclusion of such amounts allows management and
investors to better understand the ongoing financial results of
Nasdaq.

For the year ended December 31, 2018, other significant items
primarily included:

•

gain on sale of investment security which represents our
pre-tax gain of $118 million on the sale of our 5.0%
ownership interest in LCH;

net gain on divestiture of businesses which represents our
pre-tax net gain of $33 million on the sale of the Public
Relations Solutions and Digital Media Services businesses;

•

other items:

◦

charges related to uncertain positions pertaining to sales
and use tax and VAT which are recorded in general,
administrative and other expense in our Consolidated
Statements of Income; and

certain litigation costs which are recorded in professional
and contract services expense in our Consolidated
Statements of Income.

For the year ended December 31, 2017, other significant items
primarily included:

•

loss on extinguishment of debt of $10 million which is
recorded in general, administrative and other expense in our
Consolidated Statements of Income; and

• wind down costs associated with an equity method

investment that was previously written off which are recorded
in net income from unconsolidated investees in our
Consolidated Statements of Income.

For the year ended December 31, 2016, other significant items
primarily included:

•

restructuring charges of $41 million which were associated
with our 2015 restructuring plan;

an asset impairment charge of $578 million related to the full
write-off of a trade name from an acquired business;

executive compensation of $12 million which represents
accelerated expense for equity awards previously granted due
to the retirement of the company’s former CEO which

is recorded in compensation and benefits expense in our
a regulatory matter
Consolidated Statements of Income;•
that resulted in a regulatory fine of $6 million received by our
Nordic exchanges and clearinghouse which is recorded in
regulatory expense in our Consolidated Statements of
Income;

•

other items:

◦

the release of a sublease loss reserve due to the early exit
of a facility which is recorded in occupancy expense in
our Consolidated Statements of Income; and

the impact of the write-off of an equity method
investment, partially offset by a gain resulting from the
sale of a percentage of a separate equity method
investment which is recorded in net income from
unconsolidated investees in our Consolidated Statements
of Income.

Significant tax items: The non-GAAP adjustment to the income
tax provision included the tax impact of each non-GAAP
adjustment and:

•

tax expense due

for the year ended December 31, 2018, a net $7 million
increase
to a remeasurement of
unrecognized tax benefits (excluding the reversal of certain
Swedish tax benefits discussed below) and the impact of state
tax rate changes;

for the year ended December 31, 2017, a $12 million decrease
to tax expense due to a remeasurement of unrecognized tax
benefits; and

for the year ended December 31, 2016, a tax expense of $27
million due to an unfavorable tax ruling received during the
second quarter of 2016, the impact of which is related to prior
periods.

Additional adjustments included the following items:

• The impact of newly enacted U.S. tax legislation is related to
the Tax Cuts and Jobs Act which was enacted on December
22, 2017.

◦

For the year ended December 31, 2018, we recorded an
increase to tax expense of $290 million and a reduction to
deferred tax assets related to foreign currency translation
as a result of the finalization of the provisional estimate
related to this act.

For the year ended December 31, 2017, we recorded a
decrease to tax expense of $89 million, primarily related
to the remeasurement of our net U.S. deferred tax
liability at the lower U.S. federal corporate income tax
rate which reflected the provisional impact associated
with the enactment of this act.

• The reversal of certain Swedish tax benefits. See Note 17,
“Income Taxes,” to the consolidated financial statements for
further discussion.

• Excess

tax benefits related

to employee share-based
compensation of $9 million for the year ended December 31,
2018 and $40 million for the year ended December 31, 2017,
were recorded as a result of the adoption of accounting
guidance on January 1, 2017. This guidance requires all
income tax effects of share-based awards to be recognized as
income tax expense or benefit in the income statement when
the awards vest or are settled on a prospective basis, as
opposed to stockholders’ equity where it was previously
recorded, and will be a recurring item going forward. This
item is subject to volatility and will vary based on the timing
of the vesting of employee share-based compensation
arrangements and fluctuation in our stock price.

We believe the exclusion of such amounts allows management
and investors to better understand the financial results of Nasdaq.

The following table represents reconciliations between U.S. GAAP net income attributable to Nasdaq and diluted earnings per share and
non-GAAP net income attributable to Nasdaq and diluted earnings per share:

U.S. GAAP net income attributable to
Nasdaq and diluted earnings per
share

Non-GAAP adjustments:
Amortization expense of acquired

intangible assets

Merger and strategic initiatives
expense
Clearing default
Gain on sale of investment security
Net gain on divestiture of businesses
Extinguishment of debt
Restructuring charges
Asset impairment charge
Executive compensation
Regulatory matter
Other
Adjustment to the income tax

provision to reflect non-GAAP
adjustments and other tax items
Impact of newly enacted U.S. tax

legislation

Reversal of certain Swedish tax
benefits
Excess tax benefits related to
employee share-based
compensation

Total non-GAAP adjustments,

109

21
31
(118 )
(33 )
—
—
—
—
—
17

290

Year Ended December 31, 2018
Net
Income

Diluted Earnings Per
Share

Year Ended December 31, 2017
Net
Income

Diluted Earnings Per
Share

Year Ended December 31, 2016
Net
Income

Diluted Earnings Per
Share

(in millions, except share and per share amounts)

$ 458

2.73

$ 729

4.30

$ 106

0.63

0.65

0.13
0.18
(0.69 )
(0.20 )
—
—
—
—
—
0.10

44
—
—
—
10
—
—
—
—
5

0.54

0.26
—
—
—
0.06
—
—
—
—
0.02

76
—
—
—
—
41
578
12
6
5

0.49

0.45
—
—
—
—
0.24
3.42
0.07
0.04
0.03

0.02

(70 )

(0.40 )

(287 )

(1.70 )

1.73

0.24

(89 )

—

(0.52 )

—

(9 )

(0.05 )

(40 )

(0.24 )

—

net of tax

353

2.11

(48 )

(0.28 )

513

3.04

Non-GAAP net income attributable to
Nasdaq and diluted earnings per
share

Weighted-average common shares

outstanding for diluted earnings per
share

$ 811

4.84

$ 681

4.02

$ 619

3.67

167,691,299

* * * * * *

169,585,031

168,800,997

Liquidity and Capital Resources

Historically, we have funded our operating activities and met our
commitments through cash generated by operations, augmented
by the periodic issuance of our common stock and debt. See Note
9, “Debt Obligations,” to the consolidated financial statements for
further discussion. Currently, our cost and availability of funding
remain healthy.

As part of the purchase price consideration of a prior acquisition,
Nasdaq has contingent future obligations to issue 992,247 shares
stock. See “Non-Cash Contingent
of Nasdaq common
Consideration,” of Note 19, “Commitments, Contingencies and
Guarantees,” to the consolidated financial statements for further
discussion.

In April 2017, we entered into the 2017 Credit Facility which
replaced a former credit facility. We also entered into a
commercial paper program which enables us to borrow efficiently
at reasonable short-term interest rates and is supported by our
2017 Credit Facility. See “Commercial Paper Program,” and
“2017 Credit Facility,” of Note 9, “Debt Obligations,” to the
consolidated financial statements for further discussion.

credit. As such, as of December 31, 2018, the total remaining
amount available under the 2017 Credit Facility was $723 million.

In the near term, we expect that our operations and the availability
under our revolving credit commitment and commercial paper
program will provide sufficient cash to fund our operating
expenses, capital expenditures, debt repayments, any share
repurchases, and any dividends.

The value of various assets and liabilities, including cash and cash
equivalents, receivables, accounts payable and accrued expenses,
and commercial paper can fluctuate from month to month.
Working capital (calculated as current assets less current
liabilities) was $(200) million as of December 31, 2018, compared
with $276 million as of December 31, 2017, a decrease of $476
million. Current asset balance changes increased working capital
by $860 million, with increases in default funds and margin
deposits, cash and cash equivalents, financial investments, at fair
value, receivables, net and restricted cash, partially offset by a
decrease in other current assets. Current liability balance changes
decreased working capital by $1,336 million, due to increases in
default funds and margin deposits, short-term debt, other current
liabilities, deferred revenue, accrued personnel costs, and
accounts payable and accrued expenses, partially offset by a
decrease in Section 31 fees payable to the SEC.

Principal factors that could affect the availability of our
internally-generated funds include:

•

deterioration of our revenues in any of our business segments;

changes in regulatory and working capital requirements; and

an increase in our expenses.

Principal factors that could affect our ability to obtain cash from
external sources include:

•

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.

The following sections discuss the effects of changes in our
financial assets, debt obligations, clearing and broker-dealer net
capital requirements, and cash flows on our liquidity and capital
resources.

Financial Assets

The following table summarizes our financial assets:

December 31, 2018

December 31, 2017

Cash and cash equivalents
Restricted cash
Financial investments, at

fair value

Total financial assets

(in millions)
545
$
41

268
854

377
22

235
634

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents includes all non-restricted cash in
banks and highly liquid investments with original maturities of 90
days or less at the time of purchase. The balance retained in cash
and cash equivalents is a function of anticipated or possible
short-term cash needs, prevailing interest rates, our investment
policy, and alternative investment choices. As of December 31,
2018, our cash and cash equivalents of $545 million were
primarily invested in bank deposits, money market funds and
commercial paper. In the long-term, we may use both internally
generated funds and external sources to satisfy our debt
obligations and other long-term liabilities. Cash and cash
equivalents as of December 31, 2018 increased $168 million from
December 31, 2017, primarily due to:

•

net cash provided by operating activities;

proceeds from divestiture of businesses, net;

proceeds received from the sale of an investment security,
partially offset by;

repurchases of our common stock;

cash dividends paid on our common stock;

repayments made on commercial paper, net;

repayments of long-term debt;

purchases of property and equipment;

cash paid for acquisitions, net of cash and cash equivalents
acquired and other investment activities;

net purchases of securities; and

net payments related to employee stock activity.

See “Cash Flow Analysis” below for further discussion.

Restricted cash is restricted from withdrawal due to a contractual
or regulatory requirements or is not available for general use.
Restricted cash was $41 million as of December 31, 2018 and $22
million as of December 31, 2017, an increase of $19 million. The
increase primarily relates to an increase in cash pledged as
collateral and an increase in regulatory capital requirements.
Restricted cash is classified as restricted cash in the Consolidated
Balance Sheets.

Repatriation of Cash

Our cash and cash equivalents held outside of the U.S. in various
foreign subsidiaries totaled $367 million as of December 31, 2018
and $137 million as of December 31, 2017. The remaining

Financial Investments, at Fair Value

Our financial investments, at fair value totaled $268 million as of
December 31, 2018 and $235 million as of December 31, 2017
and are primarily comprised of trading securities, mainly highly
rated European government debt securities. Of these securities,
$166 million as of December 31, 2018 and $160 million as of
December 31, 2017 are assets primarily utilized to meet regulatory
capital requirements, mainly for our clearing operations at Nasdaq
Clearing. See Note 6, “Investments,” to the consolidated financial
statements for further discussion of our trading investment
securities.

balance held in the U.S. totaled $178 million as of December 31,
2018 and $240 million as of December 31, 2017.

Unremitted earnings of subsidiaries outside of the U.S. are used to
finance our international operations and are considered to be
indefinitely reinvested.

Share Repurchase Program

See “Share Repurchase Program,” of Note 12, “Nasdaq
Stockholders’ Equity,” to the consolidated financial statements for
further discussion of our share repurchase program.

Cash Dividends on Common Stock

The following table shows quarterly cash dividends paid per
common share on our outstanding common stock:

First quarter
Second quarter
Third quarter
Fourth quarter

Total

2018

2017

0.38
0.44
0.44
0.44

1.70

0.32
0.38
0.38
0.38

1.46

See “Cash Dividends on Common Stock,” of Note 12, “Nasdaq
Stockholders’ Equity,” to the consolidated financial statements for
further discussion of the dividends.

Debt Obligations

The following table summarizes our debt obligations by contractual maturity:

* * * * * *

Short-term debt:

Commercial paper
Senior unsecured floating rate notes(1)
$400 million senior unsecured term loan facility(2)

Total short-term debt
Long-term debt:

5.55% senior unsecured notes
3.875% senior unsecured notes
$1 billion revolving credit commitment
1.75% senior unsecured notes
4.25% senior unsecured notes
3.85% senior unsecured notes

Total long-term debt
Total debt obligations

Maturity Date

December 31, 2018

December 31, 2017

(in millions)

Weighted-average
maturity of 33 days

March 2019
November 2019

January 2020
June 2021
April 2022
May 2023
June 2024
June 2026

275
500
100
875

599
686

(4 )

682
497
496
2,956
3,831

480
498
100
1,078

599
716
110
712
496
496
3,129
4,207

(1) Balance was reclassified to short-term debt as of March 31, 2018.
(2) Balance was reclassified to short-term debt as of December 31, 2018.

In addition to the $1 billion revolving credit commitment, we also have other credit facilities primarily related to our Nasdaq Clearing
operations in order to provide further liquidity. Other credit facilities, which are available in multiple currencies, totaled $220 million as
of December 31, 2018 and $187 million as of December 31, 2017, in available liquidity, none of which was utilized.

As of December 31, 2018, we were in compliance with the covenants of all of our debt obligations.

See Note 9, “Debt Obligations,” to the consolidated financial statements for further discussion of our debt obligations.

* * * * * *

Regulatory Capital Requirements

Nordic and Baltic Exchange Regulatory Capital Requirements

The entities that operate trading venues in the Nordic and Baltic
countries are each subject to local regulations and are required to
maintain regulatory capital intended to ensure their general
financial soundness and liquidity. As of December 31, 2018, our
required regulatory capital of $34 million is primarily invested in
in financial
European mortgage bonds
investments, at fair value and restricted cash in the Consolidated
Balance Sheets.

that are

included

Other Capital Requirements

We operate several other businesses which are subject to local
regulation and are required to maintain certain levels of regulatory
capital. As of December 31, 2018, other required regulatory
capital was $17 million and was primarily included in restricted
cash and financial investments, at fair value in the Consolidated
Balance Sheets.

Clearing Operations Regulatory Capital Requirements

We are required to maintain minimum levels of regulatory capital
for the clearing operations of Nasdaq Clearing. The level of
regulatory capital required to be maintained is dependent upon
many factors, including market conditions and creditworthiness of
the counterparty. As of December 31, 2018, our required
regulatory capital of $121 million is primarily comprised of highly
rated European government debt securities that are included in
financial investments, at fair value in the Consolidated Balance
Sheets.

Broker-Dealer Net Capital Requirements

Our broker-dealer subsidiaries, Nasdaq Execution Services,
Execution Access, NPM Securities, SMTX, and Nasdaq Capital
Markets Advisory, are subject to regulatory requirements intended
to ensure their general financial soundness and liquidity. These
requirements obligate these subsidiaries to comply with minimum
net capital requirements. The required minimum net capital is
included in restricted cash in the Consolidated Balance Sheets.
The following table summarizes the net capital requirements for
our broker-dealer subsidiaries as of December 31, 2018:

Broker-Dealer Subsidiaries

Nasdaq Execution Services
Execution Access
NPM Securities
SMTX
Nasdaq Capital Markets

Advisory

Total Net
Capital

Required
Minimum
Net Capital

Excess
Capital

(in millions)
0.3
0.3
0.3
0.3

16.3
47.1
0.6
4.0

16.0
46.8
0.3
3.7

0.5

0.3

0.2

Cash Flow Analysis

The following table summarizes the changes in cash flows:

* * * * * *

Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and cash equivalents and

restricted cash

Year Ended December 31,

Percentage Change

2018

2017

2016

2018 vs. 2017

2017 vs. 2016

$ 1,028
196

(in millions)
$ 909
(890 ) (1,657 )

$ 776

(1,027 )

(53 )

948

13.1 %
(122.0 )%
1,837.7 %

17.1 %
(46.3 )%
(105.6 )%

(10 )

(6 )

(166.7 )%

(350.0 )%

Net increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at end of period

187
399
$ 586

(19 )

61
357
$ 418

418
$ 399

(1,084.2 )%
(4.5 )%
46.9 %

(131.1 )%
17.1 %
(4.5 )%

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased $119 million
in 2018 compared with 2017 and increased $133 million in 2017
compared with 2016. The increase in 2018 was primarily due to
higher operating income due to growth in our equity derivative
trading and clearing, cash equity trading, market data, index and
listing services businesses, and growth related to a full year of
eVestment activity, these increases were partially offset by an
increase in estimated tax payments, a payment to increase the
funded status of our U.S. defined-benefit pension plans and higher
Section 31 fee payments. The increase in 2017 was primarily due
to higher net income, mainly due to the inclusion of a full year of
cash flows from our 2016 acquisitions, partially offset by higher
compensation payments driven by our 2016 acquisitions.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities increased $1,086 million
in 2018 compared with 2017. The increase was primarily due to a
decrease in cash flows used for acquisitions of businesses, net of
cash and cash equivalents acquired, an increase in proceeds from
divestiture of businesses, net and an increase in proceeds from the
sale of an investment security.

Net cash used in investing activities decreased $767 million in
2017 compared with 2016. The decrease was primarily due to a
decrease in cash flows used for acquisitions of businesses, net of
cash and cash equivalents acquired.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities increased $974 million in
2018 compared with 2017. The increase was primarily due to an
increase in repayments of commercial paper, a decrease in
proceeds from long-term debt issuances, and an increase in
repurchases of common stock and dividends paid, partially offset
by a decrease in repayments of long-term debt.

Net cash used in financing activities increased $1,001 million in
2018 compared with 2017. The increase was primarily due to a
decrease in proceeds from long-term debt issuances and an
increase in repurchases of common stock and dividends paid,
partially offset by an increase in proceeds from commercial paper
and a decrease in repayments of long-term debt.

See Note 3, “Acquisitions and Divestiture,” to the consolidated
financial statements for further discussion of our divestiture and
acquisitions.

See “Equity Securities,” of Note 6, “Investments,” to the
consolidated financial statements for further discussion of the sale
of an investment security and consideration received under a
market technology agreement.

See Note 9, “Debt Obligations,” to the consolidated financial
statements for further discussion of our debt obligations.

See “Share Repurchase Program,” and “Cash Dividends on
Common Stock,” of Note 12, “Nasdaq Stockholders’ Equity,” to
the consolidated financial statements for further discussion of our
share repurchase program and cash dividends paid on our
common stock.

Contractual Obligations and Contingent Commitments

Nasdaq has contractual obligations to make future payments under debt obligations by contract maturity, minimum rental commitments
under non-cancelable operating leases, net and other obligations. The following table shows these contractual obligations as of
December 31, 2018:

Contractual Obligations

Total

Less than 1 year

Payments Due by Period

1-3 years

(in millions)

3-5 years

More than 5 years

Debt obligations by contract maturity(1)
Minimum rental commitments under

non-cancelable operating leases, net(2)

Purchase obligations(3)
Other obligations(4)
Total

4,311

996

1,463

793

1,059

637
21
12
4,981

75
11
12
1,094

131
10
—
1,604

86
—
—
879

345
—
—
1,404

(1) Our debt obligations include both principal and interest obligations. As of December 31, 2018, an interest rate of 4.04% was used to
compute the amount of the contractual obligations for interest on the 2016 Credit Facility, 3.72% was used to compute the amount of
the contractual obligations for interest on the 2017 Credit Facility and 3.21% 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 as of December 31, 2018. See Note 9, “Debt Obligations,” to the
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) Purchase obligations primarily represent minimum outstanding obligations due under software license agreements.
(4) Other obligations primarily consist of potential future escrow agreement payments related to prior acquisitions.

Acquisition of Cinnober

Off-Balance Sheet Arrangements

For further discussion of our acquisition of Cinnober, see
“Acquisition of Cinnober,” of Note 3, “Acquisitions and
Divestiture,” to the consolidated financial statements.

Other Commitment

We have a 40.0% ownership in OCC. Under the OCC's capital
plan, the OCC shareholders have committed to contribute up to
$200 million in equity capital if certain capital thresholds are
breached, including up to $80 million to be contributed by
Nasdaq. See “Equity Method Investments,” of Note 6,
“Investments,” to the consolidated financial statements for further
discussion of our equity method investment in OCC.

Offer for Oslo Børs VPS

For further discussion of our offer for Oslo Børs VPS, see “Offer
for Oslo Børs VPS,” of Note 21, “Subsequent Events,” to the
consolidated financial statements.

Non-Cash Contingent Consideration

See “Non-Cash Contingent Consideration,” of Note 19,
the
“Commitments, Contingencies and Guarantees,”
consolidated financial statements for further discussion.

For discussion of off-balance sheet arrangements see:

• Note 15, “Clearing Operations,” to the consolidated financial
statements for further discussion of our non-cash default fund
contributions and margin deposits received for clearing
operations; and

• Note 19, “Commitments, Contingencies and Guarantees,” to

the 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;

• Acquisition of Cinnober;

• Other commitment;

• Offer for Oslo Børs VPS;

• Legal and regulatory matters; and

• Tax audits.

Quantitative and Qualitative Disclosures About Market Risk

Financial Investments

Market risk represents the potential for losses that may result from
changes in the market value of a financial instrument due to
changes in market conditions. As a result of our operating,
investing and financing activities, we are exposed to market risks
such as interest rate risk and foreign currency exchange rate risk.
We are also exposed to credit risk as a result of our normal
business activities.

We have implemented policies and procedures to measure,
manage, monitor and report risk exposures, which are reviewed
regularly by management and the board of directors. We identify
risk exposures and monitor and manage such risks on a daily
basis.

We perform sensitivity analyses to determine the effects of market
risk exposures. We may use derivative instruments solely to hedge
financial risks related to our financial positions or risks that are
incurred during the normal course of business. We do not use
derivative instruments for speculative purposes.

Interest Rate Risk

We are subject to the risk of fluctuating interest rates in the normal
course of business. Our exposure to market risk for changes in
interest rates relates primarily to our financial investments and
debt obligations which are discussed below.

As of December 31, 2018, our investment portfolio was primarily
comprised of trading securities, mainly highly rated European
government debt securities, which pay a fixed rate of interest.
These securities are subject to interest rate risk and will decrease
in value if market interest rates increase. If market interest rates
were to increase immediately and uniformly by 100 basis points
from levels as of December 31, 2018, the fair value of this
portfolio would have declined by $4 million.

Debt Obligations

As of December 31, 2018, substantially all of our debt obligations
are fixed-rate obligations. While changes in interest rates will
have no impact on the interest we pay on fixed-rate obligations,
we are exposed to changes in interest rates as a result of the
issuance of our 2019 Notes, borrowings under our 2017 Credit
Facility and 2016 Credit Facility, and amounts outstanding from
the sale of commercial paper under our commercial paper
program, all of which have variable interest rates. As of
December 31, 2018, we had principal amounts outstanding of
$500 million on the 2019 Notes, $100 million under the 2016
Credit Facility, and $276 million of commercial paper. A
hypothetical 100 basis points increase in interest rates on our
outstanding 2019 Notes, the 2016 Credit Facility and our
outstanding commercial paper would increase annual interest
expense by approximately $9 million based on borrowings as of
December 31, 2018.

Foreign Currency Exchange Rate Risk

As a leading global exchange group, we are subject to foreign currency transaction risk. Our primary exposure to foreign currency
denominated revenues less transaction-based expenses and operating income for the years ended December 31, 2018 and 2017 are
presented in the following table:

Year Ended December 31, 2018
Average foreign currency rate to the U.S. dollar
Percentage of revenues less transaction-based expenses
Percentage of operating income
Impact of a 10% adverse currency fluctuation on revenues less

Euro

Swedish
Krona

Other
Foreign
Currencies

U.S. Dollar

Total

(in millions, except currency rate)

1.1800

0.1150

8.9 %
11.3 %

7.3 %
0.1 %

#
5.2 %
(7.0 )%

N/A
78.6 %
95.6 %

N/A
100.0 %
100.0 %

transaction-based expenses

(23 )

(18 )

(13 )

—

(54 )

Impact of a 10% adverse currency fluctuation on operating

income

(12 )

—

(7 )

—

(19 )

Year Ended December 31, 2017
Average foreign currency rate to the U.S. dollar
Percentage of revenues less transaction-based expenses
Percentage of operating income
Impact of a 10% adverse currency fluctuation on revenues less

Euro

Swedish
Krona

Other
Foreign
Currencies

U.S. Dollar

Total

(in millions, except currency rate)

1.1273

0.1170

9.7 %
15.4 %

8.2 %
2.5 %

#
6.0 %
(4.9 )%

N/A
76.1 %
87.0 %

N/A
100.0 %
100.0 %

transaction-based expenses

(24 )

(20 )

(14 )

—

(58 )

Impact of a 10% adverse currency fluctuation on operating

income

(15 )

(2 )

(5 )

—

(22 )

# Represents multiple foreign currency rates.

N/A Not applicable.

* * * * * *

Our investments in foreign subsidiaries are exposed to volatility in
currency exchange rates through translation of the foreign
subsidiaries’ net assets or equity to U.S. dollars. Substantially all
of our foreign subsidiaries operate in functional currencies other
than the U.S. dollar. Fluctuations in currency exchange rates may
create volatility in our results of operations as we are required to
translate the balance sheets and operational results of these foreign
for
currency denominated subsidiaries
consolidated reporting. The translation of foreign subsidiaries’
non-U.S. dollar balance sheets into U.S. dollars for consolidated
reporting results in a cumulative translation adjustment which is
recorded in accumulated other comprehensive loss within
stockholders’ equity in the Consolidated Balance Sheets.

into U.S. dollars

Our primary exposure to net assets in foreign currencies as of
December 31, 2018 is presented in the following table:

Swedish Krona(1)
Norwegian Krone
Canadian Dollar
British Pound
Euro
Australian Dollar

Net Assets

Impact of a 10%
Adverse Currency
Fluctuation

(in millions)
$

3,477
176
120
145
89
107

(348 )
(18 )
(12 )
(14 )
(9 )
(11 )

(1)

Includes goodwill of $2,466 million and intangible assets, net
of $580 million.

Credit Risk

Credit risk is the potential loss due to the default or deterioration
in credit quality of customers or counterparties. We are exposed to
credit risk from third parties, including customers, counterparties
and clearing agents. These parties may default on their obligations
to us due to bankruptcy, lack of liquidity, operational failure or
other reasons. We limit our exposure to credit risk by evaluating
the counterparties with which we make investments and execute
agreements. The financial investment portfolio objective is to
invest in securities to preserve principal while maximizing yields,
without significantly increasing risk. Credit risk associated with
investments is minimized substantially by ensuring that these
financial assets are placed with governments which have
investment grade ratings, well-capitalized financial institutions
and other creditworthy counterparties.

Our subsidiary, Nasdaq Execution Services, may be exposed to
credit risk, due to the default of trading counterparties, in
connection with the routing services it provides for our trading
customers. System trades in cash equities routed to other market
centers for members of our cash equity exchanges are routed by
Nasdaq Execution Services for clearing to the NSCC. In this
function, Nasdaq Execution Services is to be neutral by the end of
the trading day, but may be exposed to intraday risk if a trade
extends beyond the trading day and into the next day, thereby
leaving Nasdaq Execution Services susceptible to counterparty
risk in the period between accepting the trade and routing it to the
clearinghouse. In this interim period, Nasdaq Execution Services
is not novating like a clearing broker but instead is subject to the
short-term risk of counterparty failure before the clearinghouse
enters the transaction. Once the clearinghouse officially accepts
the trade for novation, Nasdaq Execution Services is legally
removed from trade execution risk. However, Nasdaq has
membership obligations
independent of Nasdaq
to NSCC
Execution Services’ arrangements.

Pursuant to the rules of the NSCC and Nasdaq Execution
Services’ clearing agreement, Nasdaq Execution Services is liable
for any losses incurred due to a counterparty or a clearing agent’s
failure to satisfy its contractual obligations, either by making
payment or delivering securities. Adverse movements in the
prices of securities that are subject to these transactions can
increase our credit risk. However, we believe that the risk of
material loss is limited, as Nasdaq Execution Services’ customers
are not permitted to trade on margin and NSCC rules limit
counterparty risk on self-cleared transactions by establishing
credit limits and capital deposit requirements for all brokers that
clear with NSCC. Historically, Nasdaq Execution Services has
never incurred a liability due to a customer’s failure to satisfy its
contractual obligations as counterparty to a system trade. Credit
difficulties or insolvency, or the perceived possibility of credit
difficulties or insolvency, of one or more larger or visible market
participants could also result in market-wide credit difficulties or
other market disruptions.

Execution Access is an introducing broker which operates the
trading platform for our Fixed Income business to trade in U.S.
Treasury securities. Execution Access has a clearing arrangement

clear

through

with Industrial and Commercial Bank of China Financial Services
LLC, or ICBC. As of December 31, 2018, we have contributed
$15 million of clearing deposits to ICBC in connection with this
clearing arrangement. These deposits are recorded in other current
assets in our Consolidated Balance Sheets. Some of the trading
activity in Execution Access is cleared by ICBC through the Fixed
Income Clearing Corporation, with ICBC acting as agent.
Execution Access assumes the counterparty risk of clients that do
Clearing
not
Corporation. Counterparty risk of clients exists for Execution
Access between the trade date and settlement date of the
individual transactions, which is at least one business day (or
issuance
more,
calendar). Counterparties that do not clear through the Fixed
Income Clearing Corporation are subject to a credit due diligence
process and may be required to post collateral, provide principal
letters, or provide other forms of credit enhancement to Execution
Access for the purpose of mitigating counterparty risk. Daily
position trading limits are also enforced for such counterparties.

the U.S. Treasury

specified

Income

Fixed

the

We have credit risk related to transaction and subscription-based
revenues that are billed to customers on a monthly or quarterly
basis, in arrears. Our potential exposure to credit losses on these
transactions is represented by the receivable balances in our
Consolidated Balance Sheets. We review and evaluate changes in
the status of our counterparties’ creditworthiness. Credit losses
such as those described above could adversely affect our
consolidated financial position and results of operations.

We also are exposed to credit risk through our clearing operations
with Nasdaq Clearing. See Note 15, “Clearing Operations,” to the
consolidated financial statements for further discussion. Our
clearinghouse holds material amounts of clearing member cash
deposits which are held or invested primarily to provide security
of capital while minimizing credit, market and liquidity risks.
While we seek to achieve a reasonable rate of return, we are
primarily concerned with preservation of capital and managing the
risks associated with these deposits. As the clearinghouse may
pass on interest revenues (minus costs) to the members, this could
include negative or reduced yield due to market conditions. The
following is a summary of the risks associated with these deposits
and how these risks are mitigated.

• Credit Risk. When the clearinghouse has the ability to hold

cash collateral at a central bank, the clearinghouse utilizes its
access to the central bank system to minimize credit risk
exposures. When funds are not held at a central bank, we seek
to substantially mitigate credit risk by ensuring that
investments are primarily placed in highly rated government
and supranational debt instruments.

•

Liquidity Risk. Liquidity risk is the risk a clearinghouse may
not be able to meet its payment obligations in the right
currency, in the right place and the right time. To mitigate this
risk, the clearinghouse monitors liquidity requirements
closely and maintains funds and assets in a manner which
minimizes the risk of loss or delay in the access by the
clearinghouse to such funds and assets. For example,

•

holding funds with a central bank where possible or investing
in highly liquid government or supranational debt instruments
serves to reduce liquidity risks.

Interest Rate Risk. Interest rate risk is the risk that interest
rates rise causing the value of purchased securities to decline.
If we were required to sell securities prior to maturity, and
interest rates had risen, the sale of the securities might be
made at a loss relative to the latest market price. Our
clearinghouse seeks to manage this risk by making short term
investments of members' cash deposits. In addition, the
clearinghouse investment guidelines allow for direct
purchases or repurchase agreements of high quality sovereign
debt (for example, European government and U.S. Treasury
securities), central bank certificates and supranational debt
instruments with short dated maturities.

Security Issuer Risk. Security issuer risk is the risk that an
issuer of a security defaults on its payment when the security
matures. This risk is mitigated by limiting allowable
investments and collateral under reverse repurchase
agreements to high quality sovereign, government agency or
supranational debt instruments.

Critical Accounting Policies and Estimates

financial

the consolidated

The preparation of financial statements and related disclosures in
conformity with U.S. GAAP requires management to make
judgments, assumptions, and estimates that affect the amounts
reported
statements and
accompanying notes. Note 2, “Summary of Significant
Accounting Policies,” to the consolidated financial statements
describes the significant accounting policies and methods used in
the preparation of the consolidated financial statements. The
accounting policies described below are significantly affected by
critical accounting estimates. Such accounting policies require
significant judgments, assumptions, and estimates used in the
preparation of the consolidated financial statements, and actual
results could differ materially from the amounts reported based on
these policies.

Revenue Recognition

Corporate Services Revenues

Listing Services Revenues

Listing services revenues primarily include annual renewal fees
and initial listing fees. Annual renewal fees do not require any
judgments or assumptions by management as these amounts are
recognized ratably over the following 12-month period. However,
the initial listing fee is allocated to multiple performance
obligations including initial and subsequent listing services and
corporate solutions services (when a company qualifies to receive
these services under the applicable Nasdaq rule), as well as a
customer's material right to renew the option to list on our
exchanges.

In performing this allocation, the standalone selling price of the
performance obligations is based on the initial and annual listing
fees and the standalone selling price of the corporate solutions
services is based on its market value. All listing fees are billed

upfront and the identified performance obligations are satisfied
over time since the customer receives and consumes the benefit as
Nasdaq provides the listing service. The amount of revenue
related to the corporate solutions services performance obligation
is recognized ratably over a two-year period, which is based on
contract terms, with the remaining revenue recognized ratably
over six years which is based on our historical listing experience
and projected future listing duration.

Market Technology Revenues

We enter into long-term contracts with customers to develop
customized technology solutions, license the right to use software
and provide support and other services to our customers which
results in these contracts containing multiple performance
obligations. We allocate the contract transaction price to each
performance obligation using our best estimate of the standalone
selling price of each distinct good or service in the contract. In
instances where standalone selling price is not directly observable,
such as when we do not sell the product or service separately, we
determine the standalone selling price predominately through an
expected cost plus a margin approach.

We generally recognize revenue over time as our customers
simultaneously receive and consume the benefits provided by our
performance because our customer controls the asset for which we
are creating, our performance does not create an asset with
alternative use, and we have a right to payment for performance
completed to date. For these services, we recognize revenue over
time using costs incurred to date relative to total estimated costs at
completion
satisfying our
performance obligation. Incurred costs represent work performed,
which corresponds with, and thereby depicts, the transfer of
control to the customer.

to measure progress

toward

Accounting for our long-term contracts requires judgment relative
to assessing risks and their impact on the estimate of revenues and
costs. Our estimates are impacted by factors such as the potential
for schedule and technical issues, productivity, and the complexity
of work performed. When adjustments in estimated total contract
costs are required, any changes in the estimated revenues from
prior estimates are recognized in the current period for the effect
of such change. If estimates of total costs to be incurred on a
contract exceed estimates of total revenues, a provision for the
entire estimated loss on the contract is recorded in the period in
which the loss is determined.

For further discussion related to recognition of these fees, see
“Revenue From Contracts with Customers - Listing Services,”
and “Revenue From Contracts with Customers - Market
Technology,” of Note 2, “Summary of Significant Accounting
Policies,” to the consolidated financial statements for further
discussion.

Goodwill and Related Impairment

Goodwill represents the excess of purchase price over the value
assigned to the net assets, including identifiable intangible assets,
of a business acquired. Goodwill is allocated to our reporting units
based on the assignment of the fair values of

each reporting unit of the acquired company. We test goodwill for
impairment at the reporting unit level annually, or in interim
periods if certain events occur indicating that the carrying amount
may be impaired, such as changes in the business climate, poor
indicators of operating performance or the sale or disposition of a
significant portion of a reporting unit. For purposes of performing
our goodwill impairment test, our five reporting units are the
Market Services segment, the two businesses comprising the
Corporate Services segment: Corporate Solutions and Listing
Services, the Information Services segment, and the Market
Technology segment. We test for impairment during the fourth
quarter of our fiscal year using an October 1 measurement date.
When testing goodwill for impairment, we have the option of first
performing a qualitative assessment to determine whether it is
more likely than not that the fair value of a reporting unit is less
than its carrying amount as the basis to determine if it is necessary
to perform a quantitative goodwill impairment test. In performing
a qualitative assessment, we consider the extent to which
unfavorable events or circumstances identified, such as changes in
economic conditions, industry and market conditions or company
specific events, could affect the comparison of the reporting unit’s
fair value with its carrying amount. If we choose not to complete a
qualitative assessment for a given reporting unit, or if the initial
assessment indicates that it is more likely than not that the
carrying amount of a reporting unit exceeds its estimated fair
value, a quantitative test is required.

When assessing goodwill for impairment, our decision to perform
a qualitative impairment assessment for a reporting unit in a given
year is influenced by a number of factors, including but not
limited to, the size of the reporting unit’s goodwill, the
significance of the excess of the reporting unit’s estimated fair
value over its carrying amount at the last quantitative assessment
date, and the amount of time in between quantitative fair value
assessments.

The quantitative goodwill impairment test consists of two steps
performed at the reporting unit level.

• The first step compares the estimated fair value of each

reporting unit to its corresponding carrying amount, including
goodwill. The fair value of each reporting unit is estimated
using a combination of discounted cash flow valuation, which
incorporates assumptions regarding future growth rates,
terminal values, and discount rates, as well as guideline
public company valuations, incorporating relevant trading
multiples of comparable companies and other factors. The
estimates and assumptions used consider historical
performance and are consistent with the assumptions used in
determining future profit plans for each reporting unit, which
are approved by our board of directors. If the reporting unit’s
estimated fair value exceeds its estimated carrying amount,
goodwill is not impaired.

•

If the first step results in the carrying amount exceeding the
fair value of the reporting unit, then a second step must be
completed in order to determine the amount of goodwill
impairment that should be recorded, if any. In the second

step, the implied fair value of the reporting unit’s goodwill is
determined by allocating the reporting unit’s fair value to all of its
assets and liabilities other than goodwill in a manner similar to a
purchase price allocation. The implied fair value of the goodwill
that results from the application of this second step is then
compared to the carrying amount of the goodwill and an
impairment charge is recorded for any difference.

The following table presents the balances of goodwill for our
reportable segments at the time of our 2018 annual impairment
test:

Market Services
Corporate Services
Information Services
Market Technology

October 1, 2018

(in millions)

3,435
503
2,283
148
6,369

In 2018, we performed a qualitative goodwill impairment test for
all reporting units, as the excesses of their fair values over their
respective carrying amounts at the time of the quantitative test in
2017 were significant. In conducting the qualitative assessment,
we evaluated the performance of each of these reporting units
since the last quantitative test, as well as future financial
projections to determine if there were any changes in the key
inputs used to determine the fair values of each reporting unit. We
also considered the qualitative factors in FASB ASC Topic 350,
“Intangibles–Goodwill and Other,” as well as other relevant
events and circumstances. Based on the results of the qualitative
assessment for each reporting unit, we concluded based on a
predominance of positive indicators and the weight of such
indicators that the fair values of our reporting units are more likely
than not greater than their respective carrying amounts and as a
result, quantitative analyses were not needed. No goodwill
impairment was recorded in 2018, 2017 and 2016.

inputs

Although we believe our estimates of fair value are reasonable, the
determination of certain valuation
to
management’s judgment. Changes in these inputs could materially
affect the results of our impairment review. If our forecasts of cash
flows or other key inputs are negatively revised in the future, the
estimated fair value of each reporting unit would be adversely
impacted, potentially leading to an impairment in the future that
could materially affect our operating results.

is subject

Subsequent to our annual impairment test, no indications of
impairment were identified.

Indefinite-Lived Intangible Assets and Related Impairment

Intangible assets deemed to have indefinite useful lives, primarily
exchange and clearing registrations, are not amortized but instead
are tested for impairment at least annually and more frequently
whenever events or changes in circumstances indicate that the fair
value of the asset may be less than its carrying amount. Similar to
goodwill impairment testing, we

test for impairment of indefinite-lived intangible assets during the
fourth quarter of our fiscal year using an October 1 measurement
date and may first perform a qualitative assessment, considering
similar factors as discussed above in the goodwill impairment
discussion, to determine if it is more likely than not that the fair
value of the indefinite-lived intangible asset is less than its
carrying amount. If we elect to perform or are required to perform
a quantitative assessment, the test consists of a comparison of the
fair value of the indefinite-lived intangible asset to its carrying
amount as of the impairment testing date. If the carrying amount
of the indefinite-lived intangible asset exceeds its fair value, an
impairment charge is recorded for the difference. The fair value of
indefinite-lived intangible assets is primarily determined on the
basis of estimated discounted value, using the Greenfield
Approach for exchange and clearing registrations and licenses and
the relief from royalty approach or excess earnings approach for
trade names, both of which incorporate assumptions regarding
future revenue projections and discount rates. During our annual
indefinite-lived intangible asset impairment test during the fourth
quarter of 2018, we performed a qualitative test as the excess fair
value of each individual indefinite-lived intangible asset over its
respective carrying amount at the time of the quantitative test in
2017 was significant. Based on the results of the qualitative
assessment, we concluded based on a predominance of positive
indicators and the weight of such indicators that the fair values of
our indefinite-lived intangible assets are more likely than not
greater than their respective carrying amounts and as a result,
quantitative analyses were not needed. There were no
indefinite-lived intangible asset impairment charges in 2018 and
2017. Subsequent to our annual indefinite-lived impairment test,
no indications of impairment were identified.

In 2016, we recorded a pre-tax, non-cash indefinite-lived
intangible asset impairment charge of $578 million to write off the
full value of a trade name from an acquired business due to a
continued decline in the operating performance of the business
during 2016 and a rebranding of our fixed income business under
a single brand called Nasdaq Fixed Income. This charge is
recorded in asset impairment charge in the Consolidated
Statements of Income for 2016. There were no other impairments
of indefinite-lived intangible assets for the year ended December
31, 2016.

Other Long-Lived Assets and Related Impairment

We review our other long-lived assets, such as finite-lived
intangible assets, equity method investments and equity securities,
as well as property and equipment for potential impairment when
there is evidence that events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The
carrying amount of an asset is not recoverable if it exceeds the
sum of the undiscounted cash flows expected to result from the
use and eventual disposition of the asset. Fair value of finite-lived
intangible assets and property and equipment is based on various
valuation techniques. We evaluate our equity method investments
and equity securities for other-than-temporary declines in value by
considering a variety of factors such as the earnings capacity of
the investment

and the fair value of the investment compared to its carrying
amount. In addition, for investments where the market value is
readily determinable, we consider the underlying stock price as an
additional factor. Any required impairment loss is measured as the
amount by which the carrying amount of the asset exceeds its fair
value and is recorded as a reduction in the carrying amount of the
related asset and a charge to operating results.

In 2016, we recorded a pre-tax, non-cash impairment charge of $7
million to write off the full value of an equity method investment
since the fair value of the investment was less than the carrying
value and management considered the decline in value to be
other-than-temporary. This charge is partially offset by a gain
resulting from the sale of a percentage of a separate equity method
investment and is recorded in net income from unconsolidated
investees in the Consolidated Statements of Income for 2016. No
other impairments of equity method investments or equity
securities were recorded in 2018, 2017 or 2016.

We recorded pre-tax, non-cash property and equipment asset
impairment charges of $9 million in 2017 and $8 million in 2016.
The impairment charge in 2017 primarily related to the write-off
of capitalized software and hardware equipment associated with
our 2017 and 2016 acquisitions and is included in merger and
strategic initiatives expense in the Consolidated Statements of
Income for 2017. The asset impairment charge in 2016 primarily
related to fixed assets and capitalized software that were retired
and is included in restructuring charges in the Consolidated
Statements of Income for 2016. There were no other impairments
of property and equipment recorded in 2018, 2017 or 2016.

Income Taxes

Estimates and judgments are required in the calculation of certain
tax liabilities and in the determination of the recoverability of
certain deferred tax assets, which arise from net operating loss
carryforwards, tax credit carryforwards and temporary differences
between the tax and financial statement recognition of revenue
and expense. Our deferred tax assets are reduced by a valuation
allowance if it is more likely than not that some portion or all of
the recorded deferred tax assets will not be realized in future
periods. Management is required to determine whether a tax
position is more likely than not to be sustained upon examination,
including resolution of any related appeals or litigation processes,
based on the technical merits of the position. Once it is determined
that a position meets the recognition thresholds, the position is
measured to determine the amount of benefit to be recognized in
the consolidated financial statements.

In assessing the need for a valuation allowance, we consider all
available evidence including past operating results, the existence
of cumulative losses in the most recent fiscal years, estimates of
future taxable income and the feasibility of tax planning strategies.
In the event that we change our determination as to the amount of
deferred tax assets that can be realized, we will adjust our
valuation allowance with a corresponding impact to the provision
for income taxes in the period in which such determination is
made.

In addition, the calculation of our tax liabilities involves
uncertainties in the application of tax regulations in the U.S. and
other tax jurisdictions. We recognize potential liabilities for
anticipated tax audit issues in such jurisdictions based on our
estimate of whether, and the extent to which, additional taxes and
interest may be due. While we believe that our tax liabilities
reflect the probable outcome of identified tax uncertainties, it is
reasonably possible that the ultimate resolution of any tax matter
may be greater or less than the amount accrued. If events occur
and the payment of these amounts ultimately proves unnecessary,
the reversal of the liabilities would result in tax benefits being
recognized in the period when we determine the liabilities are no
longer necessary. If our estimate of tax liabilities proves to be less
than the ultimate assessment, a further charge to expense would
result.

The Tax Cuts and Jobs Act was enacted on December 22, 2017.
This act contained several key provisions, including a reduction of
the U.S. corporate income tax rate from 35% to 21%. It also
imposed a transition tax on unremitted aggregate accumulated
earnings of non-U.S. subsidiaries, which did not impact us and the
act also created a new requirement to provide U.S. tax on foreign
earnings, global intangible low-taxed income, or GILTI, which
was immaterial for 2018. In December 2017, the SEC staff issued
Staff Accounting Bulletin No. 118, “Income Tax Accounting
Implications of the Tax Cuts and Jobs Act,” or SAB 118, which
allowed us to record provisional amounts during a measurement
period not to extend beyond one year of the enactment date.
During the fourth quarter of 2018, we finalized the effects of the
new legislation. For further discussion of the impact of the Tax
Cuts and Jobs Act on our financial statements, see “Tax Cuts and

Jobs Act,” of Note 17, “Income Taxes,” to the consolidated
financial statements.

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements,” of Note 2, “Summary
of Significant Accounting Policies,” to the consolidated financial
statements for further discussion of recently adopted and recently
issued accounting pronouncements that are applicable to Nasdaq.

Item 7A. Quantitative and Qualitative Disclosures About
Market Risk

Information about quantitative and qualitative disclosures about
market risk is incorporated herein by reference from “Item 7.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Quantitative and Qualitative
Disclosures About Market Risk.”

Item 8. Financial Statements and Supplementary Data.

statements,

consolidated

Nasdaq’s
including
financial
Consolidated Balance Sheets as of December 31, 2018 and 2017,
Consolidated Statements of Income for
the years ended
December 31, 2018, 2017 and 2016, Consolidated Statements of
Comprehensive Income (Loss) for the years ended December 31,
2018, 2017 and 2016, Consolidated Statements of Changes in
Equity for the years ended December 31, 2018, 2017 and 2016,
Consolidated Statements of Cash Flows for the years ended
December 31, 2018, 2017 and 2016 and notes to our consolidated
financial statements, together with a report thereon of Ernst &
Young LLP, dated February 22, 2019, are attached hereto as pages
F-1 through F-51 and incorporated by reference herein.

Summarized Quarterly Financial Data (Unaudited)

1st Qtr

2018

2nd Qtr

3rd Qtr

2018

4th Qtr

2018

Total revenues
Transaction-based expenses

Revenues less transaction-based expenses
Total operating expenses

Operating income

Net income (loss) attributable to Nasdaq

Basic earnings (loss) per share
Diluted earnings (loss) per share
Cash dividends declared per common share

Total revenues
Transaction-based expenses

Revenues less transaction-based expenses
Total operating expenses

Operating income

Net income attributable to Nasdaq

Basic earnings per share
Diluted earnings per share
Cash dividends declared per common share

$
$
$

(in millions, except per share amounts)
$
$

1,151
(485 )

1,027
(412 )

964
(364 )

666
393

273

615
346

269

600
354

246

177

162

163

1.06
1.05
0.82

$
$
$

0.98
0.97
—

$
$
$

0.99
0.97
0.44

$
$
$

1,136
(491 )

645
404

241

(44 )

(0.27 )
(0.27 )
0.44

1st Qtr

2017

2nd Qtr

3rd Qtr

2017

4th Qtr

2017

(in millions, except per share amounts)
$
$

994
(398 )

965
(362 )

969
(388 )

581
335

246

596
354

242

603
341

262

168

146

170

1.01
0.99
0.32

$
$
$

0.88
0.87
0.38

$
$
$

1.02
1.00
0.38

$
$
$

1,019
(389 )

630
390

240

246

1.47
1.45
0.38

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a) Disclosure controls and procedures. Nasdaq’s management, with the participation of Nasdaq’s President and Chief Executive
Officer, and Executive Vice President, Accounting and Corporate Strategy and Chief Financial Officer, has evaluated the effectiveness
of Nasdaq’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end
of the period covered by this report. Based upon that evaluation, Nasdaq’s President and Chief Executive Officer and Executive Vice
President, Accounting and Corporate Strategy and Chief Financial Officer, have concluded that, as of the end of such period, Nasdaq’s
disclosure controls and procedures are effective.

(b) Internal control over financial reporting. There have been no changes in Nasdaq’s internal control over financial reporting (as
defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2018 that
have materially affected, or are reasonably likely to materially affect, Nasdaq’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for the preparation and integrity of the consolidated financial statements appearing in the reports that we file
with the SEC. The consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles
and include amounts based on management’s estimates and judgments.

Management is also responsible for establishing and maintaining adequate internal control over Nasdaq’s financial reporting. Although
there are inherent limitations in the effectiveness of any system of internal control over financial reporting, we maintain a system of
internal control that is designed to provide reasonable assurance as to the fair and reliable preparation and presentation of the
consolidated financial statements, as well as to safeguard assets from unauthorized use or disposition that could have a material effect on
the financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018, based on criteria
established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) (2013 framework). This evaluation included review of the documentation of controls, evaluation of the design
effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on its assessment,
our management believes that, as of December 31, 2018, our internal control over financial reporting is effective.

Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on Nasdaq’s internal control over
financial reporting, which is included herein.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Nasdaq, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Nasdaq, Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) (the COSO criteria). In our opinion, Nasdaq, Inc. (the Company) maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated balance sheets of the Company as of December 31, 2018 and 2017, and the related consolidated statements of income,
comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2018, and
the related notes and our report dated February 22, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control
Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

New York, New York

February 22, 2019

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information about Nasdaq’s directors, as required by Item 401 of Regulation S-K, is incorporated by reference from the discussion under
the caption “Board of Directors-Proposal I: Election of Directors” in Nasdaq’s Proxy Statement. Information about Nasdaq’s executive
officers, as required by Item 401 of Regulation S-K, is incorporated by reference from the discussion under the caption “Other
Items-Executive Officers” in the Proxy Statement. Information about Section 16 reports, as required by Item 405 of Regulation S-K, is
incorporated by reference from the discussion under the caption “Other Items-Section 16(a) Beneficial Ownership Reporting
Compliance” in the Proxy Statement. Information about Nasdaq’s code of ethics, as required by Item 406 of Regulation S-K, is
incorporated by reference from the discussion under the caption “Corporate Governance” in the Proxy Statement. Information about
Nasdaq’s nomination procedures, audit committee and audit committee financial experts, as required by Items 407(c)(3), 407(d)(4) and
407(d)(5) of Regulation S-K, is incorporated by reference from the discussions under the headings “Board of Directors-Proposal I:
Election of Directors” and “Board of Directors-Board Committees” in the Proxy Statement.

Item 11. Executive Compensation

Information about Nasdaq’s director and executive compensation, as required by Items 402, 407(e)(4) and 407(e)(5) of Regulation S-K,
is incorporated by reference from the discussions under the headings “Board of Directors-Director Compensation” and “Named
Executive Officer Compensation” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information about security ownership of certain beneficial owners and management, as required by Item 403 of Regulation S-K, is
incorporated by reference from the discussion under the heading “Other Items-Security Ownership of Certain Beneficial Owners and
Management” in the Proxy Statement.

Equity Compensation Plan Information

Nasdaq’s Equity Plan provides for the issuance of our equity securities to our officers and other employees, directors and consultants. In
addition, most employees of Nasdaq and its subsidiaries are eligible to participate in the ESPP, at 85.0% of the fair market value of our
common stock on the price calculation date. The Equity Plan and the ESPP have been approved previously by our stockholders. The
following table sets forth information regarding outstanding options and shares reserved for future issuance under all of Nasdaq’s
compensation plans as of December 31, 2018.

Plan Category

Equity compensation plans approved by

stockholders

Equity compensation plans not approved by

stockholders

Total

Number of shares
to be issued upon exercise of
outstanding options,
warrants and rights(a)(1)

Weighted-average

exercise price of
outstanding options,
warrants and rights(b)

Number of shares
remaining available
for future issuance under
equity compensation plans
(excluding shares
reflected in column(a))(c)

447,716

—

447,716

49.19

—

49.19

12,870,957

(2)

—

12,870,957

(2)

(1) The amounts in this column include only the number of shares to be issued upon exercise of outstanding options, warrants and

rights. As of December 31, 2018, we also had 2,735,356 shares to be issued upon vesting of outstanding restricted stock and PSUs.

(2) This amount includes 10,986,965 shares of common stock that may be awarded pursuant to the Equity Plan and 1,883,992 shares of

common stock that may be issued pursuant to the ESPP.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information about certain relationships and related transactions, as required by Item 404 of Regulation S-K, is incorporated herein by
reference from the discussion under the heading “Other Items-Certain Relationships and Related Transactions” in the Proxy Statement.
Information about director independence, as required by Item 407(a) of Regulation S-K, is incorporated herein by reference from the
discussion under the heading “Board of Directors-Proposal I: Election of Directors” in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

Information about principal accountant fees and services, as required by Item 9(e) of Schedule 14A, is incorporated herein by reference
from the discussion under the heading “Audit Committee Matters-Annual Evaluation and 2019 Selection of Independent Auditors” in
the Proxy Statement.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)(1) Financial Statements

See “Index to Consolidated Financial Statements.”

(a)(2) Financial Statement Schedules

All schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements
or notes.

(a)(3) Exhibits

Exhibit Number

Exhibit Index

Purchase Agreement, dated as of April 1, 2013, among Nasdaq, Inc. (f/k/a The NASDAQ OMX Group, Inc.), BGC
Partners, Inc., BGC Holdings, L.P., BGC Partners, L.P., and, solely for purposes of certain sections thereof, Cantor
Fitzgerald, L.P. (incorporated herein by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2013 filed on August 8, 2013).

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).†

Amended and Restated Certificate of Incorporation of Nasdaq (incorporated herein by reference to Exhibit 3.1 to the
Current Report on Form 8-K filed on January 28, 2014).

Certificate of Elimination of Nasdaq’s Series A Convertible Preferred Stock (incorporated herein by reference to
Exhibit 3.1.1 to the Current Report on Form 8-K filed on January 28, 2014).

Certificate of Amendment of Nasdaq’s Amended and Restated Certificate of Incorporation (incorporated herein by
reference to Exhibit 3.1 to the Current Report on Form 8-K filed on November 19, 2014).

Nasdaq’s By-Laws (incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on
November 21, 2016).

Form of Common Stock certificate (incorporated herein by reference to Exhibit 4.1 to the Quarterly Report on Form
10-Q for the quarter ended September 30, 2015 filed on November 4, 2015).

Stockholders’ Agreement, dated as of February 27, 2008, between Nasdaq, Inc. (f/k/a The NASDAQ OMX Group,
Inc.) and Borse Dubai Limited (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K
filed on March 3, 2008).

First Amendment to Stockholders’ Agreement, dated as of February 19, 2009, between Nasdaq, Inc. (f/k/a The
NASDAQ OMX Group, Inc.) and Borse Dubai Limited (incorporated herein by reference to Exhibit 4.10.1 to the
Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009).

Registration Rights Agreement, dated as of February 27, 2008, among Nasdaq, Inc. (f/k/a The NASDAQ OMX Group,
Inc.), Borse Dubai Limited and Borse Dubai Nasdaq Share Trust (incorporated herein by reference to Exhibit 10.3 to
the Current Report on Form 8-K filed on March 3, 2008).

First Amendment to Registration Rights Agreement, dated as of February 19, 2009, among Nasdaq, Inc. (f/k/a The
NASDAQ OMX Group, Inc.), Borse Dubai Limited and Borse Dubai Nasdaq Share Trust (incorporated herein by
reference to Exhibit 4.11.1 to the Annual Report on Form 10-K for the year ended December 31, 2008 filed on
February 27, 2009).

Indenture, dated as of January 15, 2010, between Nasdaq (f/k/a The NASDAQ OMX Group, 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 January 19, 2010).

2.1

2.2

3.1

3.1.1

3.1.2

3.1.3

3.2

4.1

4.2

4.2.1

4.3

4.3.1

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

First Supplemental Indenture, dated as of January 15, 2010, among Nasdaq (f/k/a The NASDAQ OMX Group, Inc.)
and Wells Fargo Bank, National Association, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Current
Report on Form 8-K filed on January 19, 2010).

Second Supplemental Indenture, dated as of December 21, 2010, among Nasdaq (f/k/a The NASDAQ OMX Group,
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 December 21, 2010).

Stockholders’ Agreement, dated as of December 16, 2010, between Nasdaq, Inc. (f/k/a The NASDAQ OMX Group,
Inc.) and Investor AB (incorporated herein by reference to Exhibit 4.12 to the Annual Report on Form 10-K for the year
ended December 31, 2010 filed on February 24, 2011).

Indenture, dated as of June 7, 2013, between Nasdaq, Inc. (f/k/a The NASDAQ OMX Group, 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 June 10, 2013).

First Supplemental Indenture, dated as of June 7, 2013, among Nasdaq, Inc. (f/k/a The NASDAQ OMX Group, Inc.),
Wells Fargo Bank, National Association, as Trustee, Deutsche Bank AG, London Branch, as paying agent, and
Deutsche Bank Luxembourg S.A., as registrar and transfer agent (incorporated herein by reference to Exhibit 4.2 to the
Current Report on Form 8-K filed on June 10, 2013).

Second Supplemental Indenture, dated as of May 29, 2014, among Nasdaq, Inc. (f/k/a The NASDAQ OMX Group,
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 May 30, 2014).

Third Supplemental Indenture, dated as of May 20, 2016, among Nasdaq, Inc., Wells Fargo Bank, National
Association, as Trustee, and HSBC Bank USA, National Association, as paying agent and as registrar and transfer
agent (incorporated herein by reference to the Current Report on Form 8-K filed on May 23, 2016).

Fourth Supplemental Indenture, dated as of June 7, 2016, among Nasdaq, Inc. and Wells Fargo Bank, National
Association, as Trustee (incorporated herein by reference to the Current Report on Form 8-K filed on June 7, 2016).

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).

Registration Rights Agreement, dated as of June 28, 2013, by and among Nasdaq, Inc. (f/k/a The NASDAQ OMX
Group, Inc.), BGC Partners, Inc., BGC Holdings, L.P. and BGC Partners, L.P. (incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed on July 1, 2013).

Amended and Restated Board Compensation Policy, effective on April 24, 2018 (incorporated herein by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 1, 2018).*

Nasdaq Executive Corporate Incentive Plan, effective as of January 1, 2015 (incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed on May 11, 2015).*

Form of Nasdaq Non-Qualified Stock Option Award Certificate (incorporated herein by reference to Exhibit 10.3 to the
Annual Report on Form 10-K for the year ended December 31, 2010 filed on February 24, 2011).*

Form of Nasdaq Restricted Stock Unit Award Certificate (employees) (incorporated herein by reference to Exhibit 10.2
to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 1, 2018).*

Form of Nasdaq Restricted Stock Unit Award Certificate (directors) (incorporated herein by reference to Exhibit 10.3
to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 1, 2018).*

Form of Nasdaq One-Year Performance Share Unit Agreement (incorporated herein by reference to Exhibit 10.4 to the
Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 1, 2018).*

Form of Nasdaq Three-Year Performance Share Unit Agreement (incorporated herein by reference to Exhibit 10.5 to
the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 1, 2018).*

Form of Nasdaq Continuing Obligations Agreement (incorporated herein by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2017 filed on May 10, 2017).*

Amended and Restated Supplemental Executive Retirement Plan, dated as of December 17, 2008 (incorporated herein
by reference to Exhibit 10.6 to the Annual Report on Form 10-K for the year ended December 31, 2008 filed on
February 27, 2009).*

Amendment No. 1 to Amended and Restated Supplemental Executive Retirement Plan, effective as of December 31,
2008 (incorporated herein by reference to Exhibit 10.6.1 to the Annual Report on Form 10-K for the year ended
December 31, 2008 filed on February 27, 2009).*

10.9.1

Nasdaq Supplemental Employer Retirement Contribution Plan, dated as of December 17, 2008 (incorporated herein by
reference to Exhibit 10.7 to the Annual Report on Form 10-K for the year ended December 31, 2008 filed on February
27, 2009).*

Employment Agreement between Nasdaq and Adena Friedman, made and entered into on November 14, 2016 and
effective as of January 1, 2017 (incorporated herein by reference to Exhibit 10.10 to the Annual Report on Form 10-K
for the year ended December 31, 2016 filed on March 1, 2017).*

Nonqualified Stock Option Award Certificate to Adena T. Friedman from Nasdaq, Inc. in connection with grant made
on January 3, 2017 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 2017 filed on November 7, 2017).*

Employment Offer Letter, dated as of May 10, 2016, between Nasdaq, Inc. and Michael Ptasznik (incorporated herein
by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 filed on May
10, 2017).*

Employment Agreement between Nasdaq and Edward Knight, effective as of July 29, 2018 (incorporated herein by
reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 filed on
November 6, 2018).*

Employment Agreement between Nasdaq and Bradley J. Peterson, dated August 1, 2016 (incorporated herein by
reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed on
November 8, 2016).*

Nasdaq Change in Control Severance Plan for Executive Vice Presidents and Senior Vice Presidents, effective
November 26, 2013 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on
November 29, 2013).*

Credit Agreement, dated as of April 25, 2017, among Nasdaq, Inc., the various lenders from time to time party thereto,
Bank of America, N.A., as administrative agent and an issuing bank, and the other financial institutions party thereto
(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 26, 2017).

Credit Agreement, dated March 17, 2016, among Nasdaq, Inc., the various lenders party thereto and Bank of America,
N.A., as Administrative Agent (incorporated herein by reference to the Current Report on Form 8-K filed on March 22,
2016).

Amendment No. 1 to Credit Agreement, dated as of April 25, 2017, among Nasdaq, Inc., the lenders party thereto and
Bank of America, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.2 to the Current Report
on Form 8-K filed on April 26, 2017).

Form of Commercial Paper Dealer Agreement between Nasdaq, Inc., as Issuer, and the Dealer party thereto
(incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on April 26, 2017).

Statement regarding computation of per share earnings (incorporated herein by reference from Note 13 to the
consolidated financial statements under Part II, Item 8 of this Form 10-K).

List of all subsidiaries.

Consent of Ernst & Young LLP.

Powers of Attorney.

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, Accounting and 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.

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.18.1

10.19

21.1

23.1

24.1

31.1

31.2

32.1

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. Annual Report on Form 10-K for the year ended December 31, 2018, formatted in
XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2018 and December 31,
2017; (ii) Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016; (iii) Consolidated Statements
of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017 and 2016; (iv) Consolidated Statements of Changes
in Equity for the years ended December 31, 2018, 2017 and 2016; (v) Consolidated Statements of Cash Flows for the years
December 31, 2018, 2017 and 2016; and (vi) notes to 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.

(b) Exhibits:

See Item 15(a)(3) above.

All schedules are omitted because they are not applicable or the required information is included in the consolidated financial
statements or notes.

Item 16. Form 10-K Summary

None.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on February 22, 2019.

SIGNATURES

Nasdaq, Inc.
(Registrant)

By:
Name:
Title:

/s/ Adena T. Friedman
Adena T. Friedman
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated as of February 22, 2019.

Name

Title

/s/ Adena T. Friedman
Adena T. Friedman

President and Chief Executive Officer and Director
(Principal Executive Officer)

/s/ Michael Ptasznik
Michael Ptasznik

Executive Vice President, Accounting and Corporate Strategy and Chief Financial Officer
(Principal Financial Officer)

/s/ Ann M. Dennison
Ann M. Dennison

Senior Vice President and Controller
(Principal Accounting Officer)

*
Michael R. Splinter

*
Melissa M. Arnoldi

*
Charlene T. Begley

*
Steven D. Black

*
Essa Kazim

*
Thomas A. Kloet

*
John D. Rainey

*
Lars R. Wedenborn

Chairman of the Board

Director

* Pursuant to Power of Attorney

By:

/s/ Edward S. Knight
Edward S. Knight
Attorney-in-Fact

[THIS PAGE INTENTIONALLY LEFT BLANK]

Nasdaq, Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

The following consolidated financial statements of Nasdaq, Inc. and its subsidiaries are presented herein on the page indicated:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

F- 2
F- 3
F- 4
F- 5
F- 6
F- 7
F- 8

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Nasdaq, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nasdaq, Inc. (the Company) as of December 31, 2018 and 2017, the
related consolidated statements of income, comprehensive income (loss), changes in equity and cash flows for each of the three years in
the period ended December 31, 2018 and the related notes (collectively referred to as the “consolidated financial statements”). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December
31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,
in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),
and our report dated February 22, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1986.

New York, New York

February 22, 2019

F-2

Nasdaq, Inc.

Consolidated Balance Sheets

(in millions, except share and par value amounts)

Assets
Current assets:

Cash and cash equivalents
Restricted cash
Financial investments, at fair value
Receivables, net
Default funds and margin deposits
Other current assets

Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Other non-current assets
Total assets
Liabilities
Current liabilities:

Accounts payable and accrued expenses
Section 31 fees payable to SEC
Accrued personnel costs
Deferred revenue
Other current liabilities
Default funds and margin deposits
Short-term debt

Total current liabilities
Long-term debt
Deferred tax liabilities, net
Non-current deferred revenue
Other non-current liabilities
Total liabilities
Commitments and contingencies
Equity
Nasdaq stockholders’ equity:
Common stock, $0.01 par value, 300,000,000 shares authorized, shares issued: 170,709,425 at
December 31, 2018 and 172,373,432 at December 31, 2017; shares outstanding: 165,165,104 at
December 31, 2018 and 167,441,030 at December 31, 2017

Additional paid-in capital

Common stock in treasury, at cost: 5,544,321 shares at December 31, 2018 and 4,932,402 shares at
December 31, 2017

Accumulated other comprehensive loss
Retained earnings

Total Nasdaq stockholders’ equity
Total liabilities and equity

December 31, 2018

December 31, 2017

545
41
268
384
4,742
390
6,370
376
6,363
2,300
291
15,700

198
109
199
194
253
4,742
875
6,570
2,956
501
87
137
10,251

377
22
235
356
3,988
532
5,510
400
6,586
2,468
390
15,354

177
128
170
161
130
3,988
480
5,234
3,727
225
126
162
9,474

2
2,716

(297 )
(1,530 )
4,558
5,449
15,700

2
3,024

(247 )
(862 )
3,963
5,880
15,354

See accompanying notes to consolidated financial statements.

F-3

Nasdaq, Inc.

Consolidated Statements of Income

(in millions, except per share amounts)

Revenues:
Market Services
Corporate Services
Information Services
Market Technology
Other revenues

Total revenues

Transaction-based expenses:
Transaction rebates
Brokerage, clearance and exchange fees
Revenues less transaction-based expenses
Operating expenses:
Compensation and benefits
Professional and contract services
Computer operations and data communications
Occupancy
General, administrative and other
Marketing and advertising
Depreciation and amortization
Regulatory
Merger and strategic initiatives
Restructuring charges

Total operating expenses

Operating income
Interest income
Interest expense
Gain on sale of investment security
Net gain on divestiture of businesses
Asset impairment charge
Other investment income
Net income from unconsolidated investees
Income before income taxes
Income tax provision

Net income attributable to Nasdaq

Per share information:
Basic earnings per share

Diluted earnings per share

Cash dividends declared per common share

Years Ended December 31,

2018

2017

2016

2,709
528
714
270
56
4,277

2,418
501
588
247
194
3,948

2,255
477
540
241
191
3,704

(1,344 )
(407 )
2,526

(1,158 )
(379 )
2,411

(1,092 )
(336 )
2,276

712
144
127
95
120
37
210
32
21
—
1,498
1,028
10
(150 )
118
33
—
7
18
1,064
606

670
153
125
94
82
31
188
33
44
—
1,420
991
7
(143 )
—
—
—
2
15
872
143

458

729

2.77

2.73

1.70

4.38

4.30

1.46

665
153
111
86
73
30
170
35
76
41
1,440
836
5
(135 )
—

(578 )
3
2
133
27

106

0.64

0.63

1.21

See accompanying notes to consolidated financial statements.

F-4

Nasdaq, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in millions)

Net income
Other comprehensive income (loss):
Foreign currency translation gains (losses)
Income tax benefit (expense)

Foreign currency translation, net

Employee benefit plan adjustment gains (losses)
Employee benefit plan income tax (benefit) expense

Employee benefit plan, net

Years Ended December 31,

2018

2017

2016

458

729

106

(240 )
(11 )
(251 )

9
(9 )
—

214
(96 )
118

(2 )
1
(1 )

(183 )
68
(115 )

—
—
—

(115 )

(9 )

Total other comprehensive income (loss), net of tax(1)

(251 )

117

Comprehensive income (loss) attributable to Nasdaq

207

846

(1) Excludes a reclassification impact of Tax Reform of $417 million. See “Tax Cuts and Jobs Act,” of Note 17, “Income Taxes,” for

further discussion.

See accompanying notes to consolidated financial statements.

F-5

Nasdaq, Inc.

Consolidated Statements of Changes in Equity

(in millions, except share amounts)

Number of
Common
Shares
Outstanding

Common Stock
at Par Value

Additional
Paid-in
Capital

Common Stock In
Treasury, at Cost

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Balance at December 31, 2015

164,324,270

3,011

(111 )

(864 )

3,571

Total
Equity
$ 5,609

Net income

Other comprehensive loss

Cash dividends declared per common share

Share repurchase program

Share-based compensation

Stock option exercises, net

Other issuances of common stock, net

Issuance of Nasdaq common stock related

—

(1,547,778 )

2,361,699

1,219,820
(770,790 )

to a prior acquisition

992,247

—

—
(100 )

—

(65 )

—

(115 )

—

106

(115 )

(200 )

(100 )

106

—
(200 )

—

—
$ 5,428

Balance at December 31, 2016

166,579,468

3,104

(176 )

(979 )

3,477

Net income

Other comprehensive income

Cash dividends declared per common share

Share repurchase program

Share-based compensation

Stock option exercises, net

Other issuances of common stock, net

Issuance of Nasdaq common stock related

—

(2,843,519 )

2,384,821

1,102,830
(774,817 )

to a prior acquisition

992,247

—

—
(203 )

—

(71 )

—

117

—

729

—
(243 )

—

729

117

(243 )

(203 )

(42 )

—

Balance at December 31, 2017

167,441,030

3,024

(247 )

(862 )

3,963

$ 5,880

Net income

Other comprehensive loss, excluding

reclassification impact of Tax Reform (1)

Reclassification impact of Tax Reform (1)

Cash dividends declared per common
share

Share repurchase program

Share-based compensation

Stock option exercises, net

Other issuances of common stock, net

Issuance of Nasdaq common stock related

—

(4,508,426 )

1,528,293

118,094
(406,134 )

to a prior acquisition

992,247

—

—
(394 )

—

(50 )

—

(251 )

(417 )

—

458

—

417

(280 )

—

458

(251 )

—

(280 )

(394 )

(36 )

—

Balance at December 31, 2018

165,165,104

2,716

(297 )

(1,530 )

4,558

$ 5,449

(1) See “Tax Cuts and Jobs Act,” of Note 17, “Income Taxes,” for further discussion.

See accompanying notes to consolidated financial statements.

F-6

Nasdaq, Inc.

Consolidated Statements of Cash Flows

(in millions)

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:

Year Ended December 31,

2018

2017

2016

458

729

106

Depreciation and amortization
Share-based compensation
Deferred income taxes
Reversal of certain Swedish tax benefits
Net gain on divestiture of businesses
Gain on sale of investment security
Asset impairment charge
Net income from unconsolidated investees
Other reconciling items included in net income

Net change in operating assets and liabilities, net of effects of divestiture and acquisitions:

Receivables, net
Other assets
Accounts payable and accrued expenses
Section 31 fees payable to SEC
Accrued personnel costs
Deferred revenue
Other liabilities

Net cash provided by operating activities
Cash flows from investing activities:
Purchases of securities
Proceeds from sales and redemptions of securities
Proceeds from divestiture of businesses, net
Proceeds from sale of investment security
Acquisition of businesses, net of cash and cash equivalents acquired and other investment activities
Purchases of property and equipment
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from (repayments of) commercial paper, net
Repayments of long-term debt
Payment of debt extinguishment cost
Proceeds from long-term debt issuances, net of debt issuance costs
Repurchases of common stock
Dividends paid
Proceeds received from employee stock activity
Payments related to employee shares withheld for taxes
Proceeds of customer funds
Other financing activities
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents and restricted cash
Net increase (decrease) in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at end of period

210
69
301
41
(33 )
(118 )
—
(18 )
15

(35 )
(40 )
33
(19 )
37
7
120
1,028

(421 )
374
286
169
(101 )
(111 )
196

(205 )
(115 )
—
—
(394 )
(280 )
17
(50 )
—
—
(1,027 )
(10 )
187
399
586

188
70
7
—
—
—
—
(15 )
25

11
(30 )
(12 )
20
(41 )
(29 )
(14 )
909

(392 )
424
—
—
(778 )
(144 )
(890 )

480
(708 )
(9 )

648
(203 )
(243 )
53
(71 )
—
—
(53 )
15
(19 )
418
399

170
86
(137 )
—
—
—
578
(2 )
17

73
(52 )
5
5
27
(75 )
(25 )
776

(468 )
411
—
—
(1,466 )
(134 )
(1,657 )

—
(1,156 )
—
2,456
(100 )
(200 )
54
(65 )
(38 )
(3 )
948
(6 )
61
357
418

Supplemental Disclosure Cash Flow Information
Cash paid for:

Interest
Income taxes, net of refund

$
$

148
221

$
$

129
154

$
$

119
191

See accompanying notes to consolidated financial statements.

F-7

Nasdaq, Inc.

Notes to Consolidated Financial Statements

1. Organization and Nature of Operations

is a

leading provider of

Nasdaq, Inc.
trading, clearing,
marketplace technology, regulatory, securities listing, information
and public and private company services. Our global offerings are
diverse and include trading and clearing across multiple asset
classes, trade management services, market data products,
financial indexes, investment data and analytics, capital formation
solutions, corporate solutions, and market technology products
and services. Our technology powers markets across the globe,
supporting equity derivative trading, clearing and settlement, cash
equity trading, fixed income trading, trading surveillance and
many other functions.

We manage, operate and provide our products and services in four
business segments: Market Services, Corporate Services,
Information Services and Market Technology.

Market Services

Our Market Services segment includes our Equity Derivative
Trading and Clearing, Cash Equity Trading, FICC and Trade
Management Services businesses. We operate multiple exchanges
and other marketplace facilities across several asset classes,
including derivatives, commodities, cash equity, debt, structured
products and ETPs. In addition, in some countries where we
operate exchanges, we also provide broker services, clearing,
settlement and central depository services. Our transaction-based
platforms provide market participants with the ability to access,
process, display and integrate orders and quotes. The platforms
allow the routing and execution of buy and sell orders as well as
the reporting of transactions, providing fee-based revenues.

In the U.S., we operate six electronic options exchanges and three
cash equity exchanges. The Nasdaq Stock Market, the largest of
our cash equities exchanges, is the largest single venue of liquidity
for trading U.S.-listed cash equities. We also operate an electronic
platform for trading of U.S. Treasuries and NFX, a U.S. based
designated contract market which lists cash-settled energy
derivatives based on key energy benchmarks including oil, natural
gas and U.S. power. In addition, we also operate a Canadian
exchange for the trading of Canadian-listed securities.

In Europe, we operate exchanges in Stockholm (Sweden),
Copenhagen (Denmark), Helsinki (Finland), and Reykjavik
(Iceland), as well as the clearing operations of Nasdaq Clearing, as
Nasdaq Nordic. We also operate exchanges in Tallinn (Estonia),
Riga (Latvia) and Vilnius (Lithuania) as Nasdaq Baltic.
Collectively, Nasdaq Nordic and Nasdaq Baltic offer trading in
cash equities, depository receipts, warrants, convertibles, rights,
fund units and ETFs, as well as trading and clearing of derivatives
and clearing of resale and repurchase agreements.

Nasdaq Commodities is the brand name for Nasdaq’s European
commodity-related products and services. Nasdaq Commodities’
offerings include derivatives in oil, power, natural gas and carbon

emission markets, seafood, electricity certificates and clearing
services. These products are listed on two of Nasdaq’s derivatives
exchanges, Nasdaq Oslo ASA and NFX.

Through our Trade Management Services business, we provide
market participants with a wide variety of alternatives for
connecting to and accessing our markets via a number of different
protocols used for quoting, order entry, trade reporting, and
connectivity to various data feeds. We also provide data center
services, including co-location to market participants, whereby we
offer firms cabinet space and power to house their own servers and
other equipment within our data centers. Our broker services
securities
operations offer
administration solutions to financial participants in the Nordic
market.

customized

technology

and

Corporate Services

Our Corporate Services segment includes our Corporate Solutions
and Listing Services businesses.

Our Corporate Solutions business serves corporate clients,
including companies listed on our exchanges and private
companies. We help organizations enhance their ability to
understand and expand their global shareholder base, and improve
corporate governance through our suite of advanced technology,
analytics, and consultative services. In April 2018, we sold our
Public Relations Solutions and Digital Media Services businesses.
See “2018 Divestiture,” of Note 3, “Acquisitions and Divestiture,”
for further discussion. As of December 31, 2018, our Corporate
Solutions business included our investor relations intelligence,
board & leadership and our governance, risk & compliance
products and services.

For segment reporting purposes, we have included the revenues
and expenses of the Public Relations Solutions and Digital Media
Services businesses in corporate items, which were part of the
Corporate Solutions business, within our Corporate Services
segment, prior to the date of sale. See Note 20, “Business
Segments,” for further discussion.

In early 2018, we realigned our businesses to better serve the
needs of our corporate clients. As a result, beginning in the second
quarter of 2018, our BWise internal audit, regulatory compliance
management, and operational risk management software solutions
are now offered as part of governance, risk & compliance products
and services within our Corporate Solutions business. BWise was
previously part of our Market Technology segment.

As of December 31, 2018, BWise has been classified as held for
sale. See Note 5, “Assets and Liabilities Held for Sale,” for further
discussion. In February 2019, we entered into an agreement to sell
BWise. See “Agreement to Sell BWise,” of Note 21, “Subsequent
Events,” for further discussion.

Our Listing Services business includes our U.S. and European
Listing Services businesses. We operate a variety of listing
platforms around the world to provide multiple global capital
raising solutions for private and public companies. Our main

F-8

listing markets are The Nasdaq Stock Market and the Nasdaq
Nordic and Nasdaq Baltic exchanges. Through Nasdaq First
North, our Nordic and Baltic operations also offer alternative
marketplaces for smaller companies and growth companies. Our
Listing Services business also includes NPM, which provides
liquidity solutions for private companies and private funds.

As of December 31, 2018, there were 3,058 total listings on The
Nasdaq Stock Market, including 392 ETPs. The combined market
capitalization was approximately $11.1 trillion. In Europe, the
Nasdaq Nordic and Nasdaq Baltic exchanges, together with
Nasdaq First North, were home to 1,019 listed companies with a
combined market capitalization of approximately $1.3 trillion.

Information Services

Beginning in the second quarter of 2018, our Information Services
segment was recategorized into the following businesses:

• Market Data;

•

Index; and

Investment Data & Analytics.

Prior to the second quarter, our Information Services segment was
comprised of our Data Products and our Index Licensing and
Services businesses.

Market Technology

Our Market Technology segment is a leading global technology
solutions provider and partner
to exchanges, clearing
organizations, central securities depositories, regulators, banks,
brokers, buy-side firms and corporate businesses. Our Market
Technology business is the sales channel for our complete global
offering to other marketplaces.

Market Technology provides technology solutions for trading,
clearing, settlement, surveillance and information dissemination
to markets with wide-ranging requirements, from the leading
markets in the U.S., Europe and Asia to emerging markets in the
Middle East, Latin America, and Africa. Our marketplace
solutions can handle a wide array of assets, including cash
equities, equity derivatives, currencies, various interest-bearing
securities, commodities and energy products, and are currently
powering more than 100 marketplaces in 50 countries. Market
Technology also provides market surveillance services
to
broker-dealer firms worldwide, as well as risk management
solutions.

As discussed above under “Corporate Services,” as of the second
quarter of 2018, our BWise business, which was previously part of
our Market Technology segment, is now offered as part of our
Corporate Solutions business.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements are prepared in accordance
with U.S. GAAP and include the accounts of Nasdaq, its
wholly-owned subsidiaries and other entities in which Nasdaq has
a controlling financial interest. When we do not have a controlling
interest in an entity but exercise significant influence over the
entity’s operating and financial policies, such investment is
accounted for under the equity method of accounting. We
recognize our share of earnings or losses of an equity method
investee based on our ownership percentage. See “Equity Method
Investments,” of Note 6, “Investments,” for further discussion of
our equity method investments.

The accompanying consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary
for a fair statement of the results. These adjustments are of a
normal recurring nature. All significant intercompany accounts
and transactions have been eliminated in consolidation.

Our Investment Data & Analytics business is a leading content
and analytics cloud-based solutions provider used by asset
managers, investment consultants and asset owners to help
facilitate better investment decisions. Additionally, the Nasdaq
Fund Network gathers and distributes daily net asset values from
over 35,000 funds and other investment vehicles across North
America.

Certain prior year amounts have been reclassified to conform to
the current year presentation. On January 1, 2018, we adopted
Topic 606 using the full retrospective method which required
restatement of 2017 and 2016 financial statements.

Use of Estimates

in
The preparation of consolidated
conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts and
the disclosure of contingent amounts in the consolidated

financial statements

F-9

financial statements and accompanying notes. Actual results could
differ from those estimates.

Foreign Currency

Foreign denominated assets and liabilities are remeasured into the
functional currency at exchange rates in effect at the balance sheet
date and recorded through the income statement. Gains or losses
resulting from foreign currency transactions are remeasured using
the rates on the dates on which those elements are recognized
during the period, and are included in general, administrative and
other expense in the Consolidated Statements of Income.

translating our
Translation gains or losses resulting from
subsidiaries’ financial statements from the local functional
currency to the reporting currency, net of tax, are included in
accumulated other comprehensive loss within stockholders’
equity in the Consolidated Balance Sheets. Assets and liabilities
are translated at the balance sheet date while revenues and
expenses are translated at the date the transaction occurs or at an
applicable average rate.

Cash and Cash Equivalents

Cash and cash equivalents include all non-restricted cash in banks
and highly liquid investments with original maturities of 90 days
or less at the time of purchase. Such equivalent investments
included in cash and cash equivalents in the Consolidated Balance
Sheets were $198 million as of December 31, 2018 and $183
million as of December 31, 2017. Cash equivalents are carried at
cost plus accrued interest, which approximates fair value due to
the short maturities of these investments.

Restricted Cash

Current restricted cash, which was $41 million as of December 31,
2018 and $22 million as of December 31, 2017, is restricted from
withdrawal due to a contractual or regulatory requirement or not
available for general use and is classified as restricted cash in the
Consolidated Balance Sheets. As of December 31, 2018 and 2017,
current restricted cash primarily includes restricted cash held for
our trading and clearing businesses.

Receivables, net

Our receivables are concentrated with our member firms, market
data distributors, listed companies, corporate solutions and market
technology customers. Receivables are shown net of a reserve for
uncollectible accounts. The reserve for bad debts is maintained at
a level that management believes to be sufficient to absorb
estimated losses in the accounts receivable portfolio. The reserve
is increased by the provision for bad debts which is charged
against operating results and decreased by the amount of
charge-offs, net of recoveries. The provision for bad debts is
included in general, administrative and other expense in the
Consolidated Statements of Income. The amount charged against
operating results is based on several factors including, but not
limited to, the length of time a receivable is past due and our
historical experience with
In
circumstances where a specific customer’s inability to meet its
financial obligations is known (i.e., bankruptcy filings), we record
a specific provision for bad debts against amounts due to reduce

the particular customer.

the receivable to the amount we reasonably believe will be
collected. Accounts receivable are written-off against the reserve
for bad debts when collection efforts cease. Due to changing
economic, business and market conditions, we review the reserve
for bad debts monthly and make changes to the reserve through
the provision for bad debts as appropriate. If circumstances
change (i.e., higher than expected defaults or an unexpected
material adverse change in a major customer’s ability to pay), our
estimates of recoverability could be reduced by a material amount.
The total reserve netted against receivables in the Consolidated
Balance Sheets was $13 million as of December 31, 2018, $9
million as of December 31, 2017 and $13 million as of
December 31, 2016. The changes in the balance between periods
was immaterial.

Investments

Purchases and sales of investment securities are recognized on
settlement date.

Financial investments, at fair value

Financial investments, at fair value are primarily comprised of
highly rated European government debt securities bought
principally to meet regulatory capital requirements mainly for our
clearing operations at Nasdaq Clearing. These investments are
classified as trading securities as they are generally sold in the
near term. Changes in fair value of trading securities are included
in other investment income. Debt securities that are classified as
available-for-sale investment securities are primarily comprised
of commercial paper and are carried at fair value with unrealized
gains and losses, net of tax, reported in accumulated other
comprehensive
the
Consolidated Balance Sheets. Realized gains and losses on these
securities are included in earnings upon disposition of the
securities using the specific identification method. In addition,
realized losses are recognized when management determines that
a decline in value is other than temporary, which requires
judgment regarding the amount and timing of recovery. For
financial investments that are classified as available-for-sale
securities, we also consider the extent to which cost exceeds fair
value, the duration of that difference, management’s judgment
about the issuer’s current and prospective financial condition, as
well as our intent and ability to hold the security until recovery of
the unrealized losses.

stockholders’ equity

loss within

Fair value of both trading and available-for-sale investment
securities is generally obtained from third party pricing sources.
When available, quoted market prices are used to determine fair
value. If quoted market prices are not available, fair values are
estimated using pricing models with observable market inputs.
The inputs to the valuation models vary by the type of security
being priced but are typically benchmark yields, reported trades,
broker-dealer quotes, and prices of similar assets. Pricing models
the
generally do not entail material subjectivity because
methodologies employed use inputs observed from active
markets. See “Fair Value Measurements,” below for further
discussion of fair value measures.

F-10

Equity Securities

Our investments in equity securities are included in other
non-current assets in the Consolidated Balance Sheets, as we
intend to hold these investments for more than one year. On
January 1, 2018, we adopted ASU 2016-01 which requires that
investments in equity securities (excluding equity method
investments) be measured at fair value with changes in fair value
recognized in net income. Equity securities are no longer
classified as trading or available-for-sale.

We elected the measurement alternative for equity securities
which were historically accounted for under the cost method of
accounting. Since these equity securities do not have readily
determinable fair values, they are measured at cost, less any
impairment, plus or minus changes resulting from observable
price changes in orderly transactions for the identical or a similar
investment of the same issuer. We assess relevant transactions that
occur on or before the balance sheet date to identify observable
price changes, and we regularly monitor these investments to
evaluate whether there is an indication that the investment is
impaired, based on the implied value of recent company
financings, public market prices of comparable companies, and
general market conditions. If a qualitative assessment indicates
that the security is impaired, Nasdaq will estimate the fair value of
the security, and if the fair value is less than the carrying amount
of the security, recognize an impairment loss in net income equal
to the difference between the carrying amount and fair value.
There was no impact on our consolidated financial statements as a
result of this change. For the years ended December 31, 2018,
2017 and 2016, no impairment charges were recorded on our
equity securities and there were no upward or downward
adjustments recorded.

resulting from the sale of a percentage of a separate equity method
investment and is recorded in net income from unconsolidated
investees in the Consolidated Statements of Income for 2016. No
other impairments of equity method investments were recorded in
2018, 2017 or 2016.

Default Funds and Margin Deposits

Nasdaq Clearing members’ cash contributions are included in
default funds and margin deposits in the Consolidated Balance
Sheets as both a current asset and a current liability. These
balances may fluctuate over time due to changes in the amount of
deposits required and whether members choose to provide cash or
non-cash contributions. Non-cash contributions include highly
rated government debt securities that must meet specific criteria
approved by Nasdaq Clearing. Non-cash contributions are
pledged assets that are not recorded in the Consolidated Balance
Sheets as Nasdaq Clearing does not take legal ownership of these
assets and the risks and rewards remain with the clearing
members.

Derivative Financial Instruments and Hedging Activities

Non-Designated Derivatives

We use foreign exchange forward contracts to manage foreign
currency exposure of intercompany loans, accounts receivable,
accounts payable and other balance sheet items. These contracts
are not designated as hedges for financial reporting purposes. The
change in fair value of these contracts is recognized in general,
administrative and other expense in the Consolidated Statements
of Income and offsets the foreign currency exposure.

As of December 31, 2018 and 2017, the fair value amounts of our
derivative instruments were immaterial.

Equity Method Investments

Net Investment Hedges

In general, the equity method of accounting is used when we own
20% to 50% of the outstanding voting stock of a company or when
we are able to exercise significant influence over the operating and
financial policies of a company. We have certain investments in
which we have determined that we have significant influence and
as such account for the investments under the equity method of
accounting. We record our pro-rata share of earnings or losses
each period and record any dividends as a reduction in the
investment balance. We evaluate our equity method investments
for other-than-temporary declines in value by considering a
variety of factors such as the earnings capacity of the investment
and the fair value of the investment compared to its carrying
amount. In addition, for investments where the market value is
readily determinable, we consider the underlying stock price. If
the estimated fair value of the investment is less than the carrying
amount and management considers the decline in value to be other
than temporary, the excess of the carrying amount over the
estimated fair value is recognized in the financial statements as an
impairment. In 2016, we recorded a pre-tax, non-cash impairment
charge of $7 million to write off the full value of an equity method
investment since the fair value of the investment was less than the
carrying value and management considered the decline in value to
be other-than-temporary. This charge is partially offset by a gain

Net assets of our foreign subsidiaries are exposed to volatility in
foreign currency exchange rates. We may utilize net investment
hedges
translation adjustment arising from
re-measuring our investment in foreign subsidiaries.

to offset

the

Our 2021 and 2023 Notes have been designated as a hedge of our
net investment in certain foreign subsidiaries to mitigate the
foreign exchange risk associated with certain investments in these
subsidiaries. Any
the
increase or decrease
remeasurement of the 2021 and 2023 Notes into U.S. dollars is
recorded in accumulated other comprehensive loss within
stockholders’ equity in the Consolidated Balance Sheets. See
“3.875% Senior Unsecured Notes,” and “1.75% Senior Unsecured
Notes,” of Note 9, “Debt Obligations,” for further discussion.

Property and Equipment, net

Property and equipment, including leasehold improvements, are
carried at cost less accumulated depreciation and amortization.
Depreciation and amortization are
the
straight-line method over the estimated useful lives of the related
assets, which range from 10 to 40 years for buildings and
improvements, 2 to 5 years for data processing equipment, and 5
to 10 years for furniture and equipment.

recognized using

F-11

We develop systems solutions for both internal and external use.
Certain costs incurred in connection with developing or obtaining
internal use software are capitalized. In addition, certain costs of
computer software to be sold, leased, or otherwise marketed as a
separate product or as part of a product or process are capitalized
beginning when a product’s technological feasibility has been
established and ending when a product is available for general
release. Technological feasibility is established upon completion
of a detailed program design or, in its absence, completion. Prior
to reaching technological feasibility, all costs are charged to
expense. Unamortized capitalized costs are included in data
processing equipment and software, within property and
equipment, net in the Consolidated Balance Sheets. Capitalized
software costs are amortized on a straight-line basis over the
estimated useful lives of the software, generally 3 to 5 years.
Amortization of these costs is included in depreciation and
amortization expense in the Consolidated Statements of Income.

Leasehold improvements are amortized using the straight-line
method over the shorter of their estimated useful lives or the
remaining term of the related lease.

See Note 7, “Property and Equipment, net,” for further discussion.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of purchase price over the value
assigned to the net assets, including identifiable intangible assets,
of a business acquired. Goodwill is assessed for impairment
annually in the fourth quarter of our fiscal year using an October 1
measurement date, or more frequently if conditions exist that
indicate that the asset may be impaired, such as changes in the
business climate, poor indicators of operating performance or the
sale or disposition of a significant portion of a reporting unit.
When testing goodwill for impairment, we have the option of first
performing a qualitative assessment to determine whether it is
more likely than not that the fair value of a reporting unit is less
than its carrying amount as the basis to determine if it is necessary
to perform a quantitative goodwill impairment test. In performing
a qualitative assessment, we consider the extent to which
unfavorable events or circumstances identified, such as changes in
economic conditions, industry and market conditions or company
specific events, could affect the comparison of the reporting unit’s
fair value with its carrying amount. If we choose not to complete a
qualitative assessment for a given reporting unit, or if the initial
assessment indicates that it is more likely than not that the
carrying amount of a reporting unit exceeds its estimated fair
value, a quantitative test is required.

goodwill, the significance of the excess of the reporting unit’s
estimated fair value over its carrying amount at the last
quantitative assessment date, and the amount of time in between
quantitative fair value assessments.

The quantitative goodwill test consists of two steps:

• The first step compares the fair value of each reporting unit

with its carrying amount, including goodwill. If the reporting
unit’s fair value exceeds its carrying amount, goodwill is not
impaired.

•

If the fair value of a reporting unit is less than its carrying
amount, the second step of the goodwill test is performed to
measure the amount of impairment, if any. An impairment is
equal to the excess of the carrying amount of goodwill over its
fair value.

We also evaluate indefinite-lived intangible assets for impairment
annually in the fourth quarter of our fiscal year using an October 1
measurement date, or more frequently whenever events or
changes in circumstances indicate that the fair value of the asset
may be less than its carrying amount. Such evaluation includes
determining the fair value of the asset and comparing the fair
value of the asset with its carrying amount. If the fair value of the
indefinite-lived intangible asset is less than its carrying amount, an
impairment charge is recognized in an amount equal to the
difference.

For indefinite-lived intangible assets impairment testing, we also
have the option to first perform a qualitative assessment to
determine whether it is more likely than not that the fair value of
an indefinite-lived intangible asset is less than the carrying
amount. If, after assessing the totality of events or circumstances,
we determine that it is more likely than not that the fair value of an
indefinite-lived intangible asset is less than its carrying amount,
then we must perform additional testing of the asset. Otherwise,
we conclude that no impairment is indicated and further testing is
not performed.

There was no impairment of goodwill for the years ended
December 31, 2018, 2017 and 2016 and
there were no
indefinite-lived intangible asset impairment charges in 2018 and
2017. In 2016, we recorded a pre-tax, non-cash indefinite-lived
intangible asset impairment charge of $578 million to write off the
full value of a trade name from an acquired business due to a
continued decline in the operating performance of the business
during 2016 and a rebranding of our fixed income business under
a single brand called Nasdaq Fixed Income. This charge is
recorded in asset impairment charge in the Consolidated
Statements of Income for 2016. There were no other impairments
of
the year ended
December 31, 2016. Disruptions to our business and events, such
as economic weakness or unexpected significant declines in the
operating results of any of our reporting units or businesses, may
result in goodwill or indefinite-lived intangible asset impairment
charges in the future.

intangible assets

indefinite-lived

for

Valuation of Other Long-Lived Assets

We review our other long-lived assets, such as finite-lived
intangible assets and property and equipment, for potential
impairment when there is evidence that events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. The carrying amount of an asset is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the

F-12

asset. Fair value of finite-lived intangible assets and property and
equipment is based on various valuation techniques. Any required
impairment loss is measured as the amount by which the carrying
amount of the asset exceeds its fair value and is recorded as a
reduction in the carrying amount of the related asset and a charge
to operating results. We recorded pre-tax, non-cash property and
equipment asset impairment charges of $9 million in 2017 and $8
million in 2016. The impairment charge in 2017 primarily related
to the write-off of capitalized software and hardware equipment
associated with our 2017 and 2016 acquisitions and is included in
merger and strategic initiatives expense in the Consolidated
Statements of Income for 2017. The asset impairment charge in
2016 primarily related to fixed assets and capitalized software that
were retired and is included in restructuring charges in the
Consolidated Statements of Income for 2016. There were no other
impairments of property and equipment recorded in 2018, 2017 or
2016.

Revenue Recognition and Transaction-Based Expenses

Revenue From Contracts With Customers

On January 1, 2018, we adopted Topic 606 using the full
retrospective method. The adoption of Topic 606 impacted the
revenue and expense recognition for our Market Technology
business and revenue recognition for our Listing Services
business. However, the adoption of Topic 606 did not have a
material impact on our consolidated financial statements at the
time of adoption or in any prior reporting periods. There was no
impact to revenue and expense recognition for our other
businesses.

As of January 1, 2016, as a result of the adoption of Topic 606, the
impact to retained earnings was immaterial. The following tables
present the adjustments to reflect the adoption of Topic 606 on our
Consolidated Statements of Income for the years ended December
31, 2017 and 2016 and our Consolidated Balance Sheets as of
December 31, 2017 and 2016:

Adjustments to Reflect Adoption of Topic 606

Revenues less transaction-based expenses:
$

Market Services
Corporate Services
Information Services
Market Technology

Total revenues less transaction-based

expenses

Total operating expenses (1)

Income before income taxes
Income tax provision
Net income attributable to Nasdaq

Diluted earnings per share

Year Ended December 31,

2017

2016

(in millions)

—
(3 )
—
(14 )

—
(3 )
—
2

(17 ) $

(1 )

(9 ) $

(8 ) $
(3 )
(5 ) $

(3 )
(1 )
(2 )

(0.03 ) $

(0.01 )

(1) Adjustment to reflect the adoption of Topic 606 for the year
ended December 31, 2017 and 2016 primarily pertain to our
Market Technology business.

Adjustments to Reflect Adoption of Topic 606

December 31,
2017

December 31,
2016

(in millions)

Assets:
Other current assets
Other non-current assets
Deferred tax assets
Total assets

Liabilities:
Deferred revenue
Non-current deferred revenue
Total liabilities

Nasdaq stockholders' equity:
Retained earnings
Total Nasdaq stockholders' equity

(19 ) $
(38 )
2
(55 ) $

(28 ) $
(20 )
(48 )

(15 )
(46 )
(1 )
(62 )

(24 )
(36 )
(60 )

(7 ) $
(7 )

(2 )
(2 )

Total liabilities and equity

(55 ) $

(62 )

Additional disclosures required by Topic 606 are provided below.

F-13

Contract Balances

Substantially all of our revenues are considered to be revenues
from contracts with customers. The related accounts receivable
balances are recorded in our Consolidated Balance Sheets as
receivables which is net of allowance for doubtful accounts of $13
million as of December 31, 2018 and $9 million as of
December 31, 2017. The changes in the balance between periods
were immaterial. We do not have obligations for warranties,
returns or refunds to customers.

For the majority of our contracts with customers, except for our
market
services contracts, our
listings
performance obligations are short-term in nature and there is no
significant variable consideration.

technology and

We do not have revenues recognized from performance
obligations that were satisfied in prior periods. We have elected
not to provide disclosures about transaction price allocated to
unsatisfied performance obligations if contract durations are less
than one year. For contract durations that are one-year or greater,
we do not have a material portion of transaction price allocated to
unsatisfied performance obligations that are not included in
deferred revenue other than for our market technology contracts
which are discussed below under “Market Technology.” Deferred
revenue primarily represents our contract liabilities related to our
fees for annual and initial listings, market technology, corporate
solutions and information services contracts. Deferred revenue is
the only significant contract asset or liability impacted by our
adoption of Topic 606. See Note 8, “Deferred Revenue,” for our
discussion on deferred revenue balances, activity, and expected
timing of recognition. See “Revenue Recognition” below for
further descriptions of our revenue contracts.

Sales commissions earned by our sales force are considered
incremental and recoverable costs of obtaining a contract with a
customer. These costs are deferred and amortized on a
straight-line basis over the period of benefit that we have
determined to be the contract term or estimated service periods.
Sales commissions for renewal contracts are deferred and
amortized on a straight-line basis over the related contractual
is
renewal period. Amortization
in
included
compensation and benefits expense
the Consolidated
Statements of Income. The balance of deferred costs and related
amortization expense are not material to our consolidated
financial statements. We elected the practical expedient of
recognizing sales commissions as an expense when incurred if
contract durations are one year or less. We also have elected the
practical expedient of excluding sales taxes from transaction
prices.

expense
in

Certain judgments and estimates were used in the identification
and timing of satisfaction of performance obligations and the
related allocation of transaction price and are discussed below. We
believe that these represent a faithful depiction of the transfer of
services to our customers.

Revenue Recognition

Our primary revenue contract classifications are described below.
Though we discuss additional
in our
revenue details
“Management's Discussion and Analysis of Financial

Condition and Results of Operations,” the categories below best
represent those that depict similar economic characteristics of the
nature, amount, timing and uncertainty of our revenues and cash
flows.

Market Services

Transaction-Based Trading and Clearing

Transaction-based trading and clearing includes equity derivative
trading and clearing, cash equity trading and FICC revenues.
Nasdaq charges transaction fees for trades executed on our
exchanges, as well as on orders that are routed to and executed on
other market venues. Nasdaq charges clearing fees for contracts
cleared with Nasdaq Clearing.

In the U.S., transaction fees are based on trading volumes for
trades executed on our U.S. exchanges and in Europe, transaction
fees are based on the volume and value of traded and cleared
contracts. In Canada, transaction fees are based on trading
volumes for trades executed on our Canadian exchange.

Nasdaq satisfies its performance obligation for trading services
upon the execution of a customer trade and clearing services when
a contract is cleared, as trading and clearing transactions are
substantially complete when they are executed and we have no
further obligation to the customer at that time. Transaction-based
trading and clearing fees can be variable and are based on trade
volume tiered discounts. Transaction revenues, as well as any
tiered volume discounts, are calculated and billed monthly in
accordance with our published fee schedules. In the U.S., we also
pay liquidity payments to customers based on our published fee
schedules. We use these payments to improve the liquidity on our
markets and therefore recognize those payments as a cost of
revenue.

The majority of our FICC trading and clearing customers are
charged transaction fees, as discussed above, which are based on
the volume and value of traded and cleared contracts. We also
enter into annual fixed contracts with customers trading U.S.
Treasury securities. The customers are charged an annual fixed fee
which is billed per the agreement, on a monthly or quarterly
basis. Revenues earned on fixed contracts are recognized over
time on a ratable basis over the contract period beginning on the
date that our service is made available to the customer since the
customer receives and consumes the benefit as Nasdaq provides
the service.

For U.S. equity derivative trading, we credit a portion of the per
share execution charge to the market participant that provides the
liquidity. For U.S. cash equity trading, for Nasdaq and Nasdaq
PSX, we credit a portion of the per share execution charge to the
market participant that provides the liquidity and for Nasdaq BX,
we credit a portion of the per share execution charge to the market
participant that takes the liquidity. We record these credits as
transaction rebates that are included in transaction-based expense
in the Consolidated Statements of Income. These transaction
rebates are paid on a monthly basis and the amounts due are
included in accounts payable and accrued expenses in the
Consolidated Balance Sheets.

F-14

In the U.S., we pay Section 31 fees to the SEC for supervision and
regulation of securities markets. We pass these costs along to our
customers through our equity derivative trading and clearing fees
and our cash equity trading fees. We collect the fees as a
pass-through charge from organizations executing eligible trades
on our options exchanges and our cash equity platforms and we
recognize these amounts in transaction-based expenses when
incurred. Section 31 fees received are included in cash and cash
equivalents in the Consolidated Balance Sheets at the time of
receipt and, as required by law, the amount due to the SEC is
remitted semiannually and recorded as Section 31 fees payable to
the SEC in the Consolidated Balance Sheets until paid. Since the
amount recorded as revenues is equal to the amount recorded as
transaction-based expenses, there is no impact on our revenues
less transaction-based expenses. As we hold the cash received
until payment to the SEC, we earn interest income on the related
cash balances.

Under our Limitation of Liability Rule and procedures, we may,
subject to certain caps, provide compensation for losses directly
resulting from the systems’ actual failure to correctly process an
order, quote, message or other data into our platform. We do not
record a liability for any potential claims that may be submitted
under the Limitation of Liability Rule unless they meet the
provisions required in accordance with U.S. GAAP. As such,
losses arising as a result of the rule are accrued and charged to
expense only if the loss is probable and estimable.

Trade Management Services

We provide market participants with a wide variety of alternatives
for connecting to and accessing our markets for a fee. We also
offer market participants co-location services, whereby we charge
firms for cabinet space and power to house their own equipment
and servers within our data centers. These participants are charged
monthly fees for cabinet space, connectivity and support in
accordance with our published fee schedules. These fees are
recognized on a monthly basis when the performance obligation is
met. We also earn revenues from annual and monthly exchange
membership and registration fees. Revenues for providing access
to our markets, co-location services and monthly exchange
membership and registration fees are recognized on a monthly
basis as the service is provided. Revenues from annual fees for
exchange membership and registration fees are recognized ratably
over the following 12-month period since the customer receives
and consumes the benefit as Nasdaq provides the service. We also
offer broker services to financial participants in the Nordic market
primarily providing flexible back-office systems, which allow
customers to entirely or partly outsource their company’s
back-office functions. Revenues from broker services are based
on a fixed basic fee for administration or licensing, maintenance
and operations, and an incremental fee depending on the number
of transactions completed. Broker services revenues are generally
billed and recognized monthly.

Corporate Services

Corporate Solutions

As of December 31, 2018, corporate solutions revenues

primarily include subscription and transaction-based income from
our investor relations intelligence, board & leadership and
governance, risk & compliance products and services. In April
2018, we completed the sale of our Public Relations Solutions and
Digital Media Services businesses. See “2018 Divestiture,” of
Note 3, “Acquisitions and Divestiture,” for further discussion.
Subscription-based revenues earned are recognized over time on a
ratable basis over the contract period beginning on the date that
our service is made available to the customer since the customer
receives and consumes the benefit as Nasdaq provides the service.
Generally, fees are billed quarterly in advance and the contract
provides for automatic renewal. As part of the subscription
agreements, customers can also be charged usage fees based upon
actual usage of the services provided. Revenues from usage fees
are recognized at a point in time upon completion of the service.

Listing Services

Listing services revenues primarily include initial listing fees and
annual renewal fees. Under Topic 606, the initial listing fee is
allocated to multiple performance obligations including initial and
subsequent listing services and corporate solutions services (when
a company qualifies to receive these services under the applicable
Nasdaq rule), as well as a customer's material right to renew the
option to list on our exchanges. In performing this allocation, the
standalone selling price of the performance obligations is based on
the initial and annual listing fees and the standalone selling price
of the corporate solutions services is based on its market value. All
listing fees are billed upfront and the identified performance
obligations are satisfied over time since the customer receives and
consumes the benefit as Nasdaq provides the listing service. Upon
adoption of Topic 606, the amount of revenue related to the
corporate solutions services performance obligation is recognized
ratably over a two-year period, which is based on contract terms,
with the remaining revenue recognized ratably over six years
which is based on our historical listing experience and projected
future listing duration.

In the U.S., annual renewal fees are charged based on the number
of outstanding shares of companies listed in the U.S. at the end of
the prior year and are recognized ratably over the following
12-month period since the customer receives and consumes the
benefit as Nasdaq provides the service. European annual renewal
fees, which are received from companies listed on our Nasdaq
Nordic and Nasdaq Baltic exchanges and Nasdaq First North, are
directly related to the listed companies’ market capitalization on a
trailing 12-month basis and are recognized ratably over the
following 12-month period since the customer receives and
consumes the benefit as Nasdaq provides the service.

Information Services

Market Data Products

Market data products revenues are earned from U.S. and European
proprietary market data products. In the U.S., we also earn
revenues from U.S. shared tape plans.

F-15

We earn revenues primarily based on the number of data
subscribers and distributors of our data. Market data products
revenues are subscription-based and are recognized on a monthly
basis net of amounts due under revenue sharing arrangements with
market participants.

agreement, on a monthly or quarterly basis. These revenues are
recognized over the term of the license agreement since the
customer receives and consumes the benefit as Nasdaq provides
the service. Revenue from index data subscriptions are recognized
on a monthly basis.

For U.S. tape plans, revenues are collected monthly based on
published fee schedules and distributed quarterly to the U.S.
exchanges based on a formula required by Regulation NMS that
takes into account both trading and quoting activity. Revenues are
presented on a net basis as we are acting as an agent in this
arrangement.

Market Data Products Revenue Sharing

The most significant component of market data products revenues
recorded on a net basis is the UTP Plan revenue sharing in the U.S.
All indicators of principal versus agent reporting under U.S.
GAAP have been considered in analyzing the appropriate
presentation of the revenue sharing. However, the following are
the primary indicators of net reporting:

• We are the administrator for the plan, in addition to being a

participant in the plan. In our unique role as administrator, we
facilitate the collection and dissemination of revenues on
behalf of the plan participants. As a participant, we share in
the net distribution of revenues according to the plan on the
same terms as all other plan participants.

• The operating committee of the plan, which is comprised of

representatives from each of the participants, including us
solely in our capacity as a plan participant, is responsible for
setting the level of fees to be paid by distributors and
subscribers and taking action in accordance with the
provisions of the plan, subject to SEC approval.

• Risk of loss on the revenue is shared equally among plan

participants according to the plan.

The exchanges that comprise Nasdaq Nordic and Nasdaq Baltic
do not have any market data products revenue sharing agreements.

Index

We develop and license Nasdaq branded indexes, associated
derivatives and financial products as part of our Global Index
Family. We also provide index data products and custom
calculation services for third-party clients. Revenues primarily
include license fees from these branded indexes, associated
derivatives and financial products in the U.S. and abroad. We
primarily have two types of license agreements: transaction-based
licenses and asset-based licenses. Transaction-based licenses are
generally renewable agreements. Customers are charged based on
transaction volume or a minimum contract amount, or both. If a
customer is charged based on transaction volume, we recognize
revenue when the transaction occurs. If a customer is charged
based on a minimum contract amount, we recognize revenue on a
pro-rata basis over the licensing term since the customer receives
and
the
service. Asset-based
licenses are also generally renewable
agreements. Customers are charged based on a percentage of
the
assets under management for

licensed products, per

as Nasdaq provides

the benefit

consumes

Investment Data & Analytics

Investment data & analytics revenues are earned from investment
content and analytics products. We earn revenues primarily based
on the number of content and analytics subscribers and
distributors.

Subscription agreements are generally annual in term, payable in
advance, and provide for automatic renewal. Subscription-based
revenues are recognized over time on a ratable basis over the
contract period beginning on the date that our service is made
available to the customer since the customer receives and
consumes the benefit as Nasdaq provides the service.

Market Technology

Market Technology provides technology solutions for trading,
clearing, settlement, surveillance and information dissemination,
as well as risk management solutions. Revenues primarily consist
of software, license and support revenues, change request and
advisory revenues, and software as a service revenues.

In our Market Technology business, we enter into long-term
contracts with customers to develop customized technology
solutions, license the right to use software, and provide support
and other services to our customers. We also enter into agreements
to modify the system solutions sold by Nasdaq after delivery has
occurred. In addition, we enter into subscription agreements
which allow customers to connect to our servers to access our
software.

Our long-term contracts with customers to develop customized
technology solutions, license the right to use software and provide
support and other services to our customers have multiple
performance obligations. The performance obligations are
generally: 1) software license and installation service and 2)
software support. We have determined that the software license
and installation service are not distinct as the license and the
customized installation service are inputs to produce the combined
output, a functional and integrated software system.

For contracts with multiple performance obligations, we allocate
the contract transaction price to each performance obligation
using our best estimate of the standalone selling price of each
distinct good or service in the contract. In instances where
standalone selling price is not directly observable, such as when
we do not sell the product or service separately, we determine the
standalone selling price predominately through an expected cost
plus a margin approach.

Contract modifications are routine in the performance of our
contracts. Contracts are often modified to account for changes in
contract specifications or requirements. In most instances,
contract modifications are for goods and services that are not

F-16

distinct, and, therefore, are accounted for as part of the existing
contract.

For our long-term contracts, payments are generally made
throughout the contract life and can be dependent on either
reaching certain milestones or paid upfront in advance of the
service period depending on the stage of the contract. For
subscription agreements, contract payment terms can be quarterly,
annually or monthly, in advance. For all other contracts, payment
terms vary.

to measure progress

toward

ratably over the service period beginning on the date our service is
made available to the customer since the customer receives and
consumes the benefit consistently over the period as Nasdaq
provides the services.

Other Revenues

Other revenues include the revenues from the Public Relations
Solutions and Digital Media Services businesses which were sold
in April 2018. Prior to the sale date, these revenues were included
in our Corporate Solutions business and were primarily
transaction-based revenues.

As stated above, for contract durations that are one-year or greater, we do not have a material portion of transaction price allocated to
unsatisfied performance obligations that are not included in deferred revenue other than for our market technology contracts. For our
market technology contracts, the following table summarizes the amount of the transaction price allocated to performance obligations
that are unsatisfied as of December 31, 2018:

* * * * * *

2019
2020
2021
2022
2023
2024 and thereafter
Total

(in millions)

255
183
94
58
30
75
695

Market technology deferred revenue, as discussed in Note 8, “Deferred Revenue,” to the consolidated financial statements, represents
consideration received that is yet to be recognized as revenue for unsatisfied performance obligations.

F-17

The following tables summarize the disaggregation of revenue by major product and service and by segment for the years ended
December 31, 2018, 2017 and 2016:

Market Services

Corporate
Services

Information
Services

Market
Technology

Other
Revenues

Consolidated

Year Ended December 31, 2018

Transaction-based trading and clearing, net
Trade management services
Corporate solutions
Listing services
Market data products
Index
Investment data & analytics
Market technology
Other revenues

666
292
—
—
—
—
—
—
—

—
—
238
290
—
—
—
—
—

Revenues less transaction-based expenses $

958

528

(in millions)
$
—
—
—
—
390
206
118
—
—

714

—
—
—
—
—
—
—
270
—

$ —
—
—
—
—
—
—
—
56

666
292
238
290
390
206
118
270
56

270

2,526

Market Services

Corporate
Services

Information
Services

Market
Technology

Other
Revenues

Consolidated

Year Ended December 31, 2017

Transaction-based trading and clearing, net
Trade management services
Corporate solutions
Listing services
Market data products
Index
Investment data & analytics
Market technology
Other revenues

590
291
—
—
—
—
—
—
—

—
—
234
267
—
—
—
—
—

(in millions)
—
—
—
—
369
171
48
—
—

—
—
—
—
—
—
—
247
—

—
—
—
—
—
—
—
—
194

590
291
234
267
369
171
48
247
194

Revenues less transaction-based expenses $

881

501

588

247

194

2,411

Market Services

Corporate
Services

Information
Services

Market
Technology

Other
Revenues

Consolidated

Year Ended December 31, 2016

Transaction-based trading and clearing, net
Trade management services
Corporate solutions
Listing services
Market data products
Index
Investment data & analytics
Market technology
Other revenues

561
266
—
—
—
—
—
—
—

—
—
208
269
—
—
—
—
—

(in millions)
—
—
—
—
354
149
37
—
—

—
—
—
—
—
—
—
241
—

—
—
—
—
—
—
—
—
191

561
266
208
269
354
149
37
241
191

Revenues less transaction-based expenses $

827

477

540

241

191

2,276

F-18

For the year ended December 31, 2018, approximately 63.6% of Market Services revenues were recognized at a point in time and 36.4%
were recognized over time. For the year ended December 31, 2017, approximately 62.7% of Market Services revenues were recognized
at a point in time and 37.3% were recognized over time. For the year ended December 31, 2016, approximately 63.4% of Market
Services revenues were recognized at a point in time and 36.6% were recognized over time. Substantially all revenues from the
Corporate Services, Information Services and Market Technology segments were recognized over time for the years ended
December 31, 2018, 2017 and 2016.

* * * * * *

Earnings Per Share

to Nasdaq by

income attributable

We present both basic and diluted earnings per share. Basic
earnings per share is computed by dividing net income attributable
to Nasdaq by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share is computed
by dividing net
the
weighted-average number of common shares and common share
equivalents outstanding during the period and reflects the assumed
conversion of all dilutive securities, which primarily consist of
employee stock options, restricted stock, and PSUs. Common
share equivalents are excluded from the computation in periods
for which they have an anti-dilutive effect. Stock options for
which the exercise price exceeds the average market price over the
period are anti-dilutive and, accordingly, are excluded from the
calculation. PSUs, which are considered contingently issuable, are
included in the computation of dilutive earnings per share on a
weighted average basis when management determines the related
performance criteria are met. See Note 13, “Earnings Per Share,”
for further discussion.

Pension and Post-Retirement Benefits

Pension and other post-retirement benefit plan information for
financial reporting purposes
is developed using actuarial
valuations. We assess our pension and other post-retirement
benefit plan assumptions on a regular basis. In evaluating these
assumptions, we consider many factors, including evaluation of
the discount rate, expected rate of return on plan assets, mortality
rate, healthcare cost trend rate, retirement age assumption, our
historical assumptions compared with actual results and analysis
of current market conditions and asset allocations. See Note 10,
“Retirement Plans,” for further discussion.

Discount rates used for pension and other post-retirement benefit
plan calculations are evaluated annually and modified to reflect
the prevailing market rates at the measurement date of a
high-quality fixed-income debt instrument portfolio that would
provide the future cash flows needed to pay the benefits included
in the benefit obligations as they come due. Actuarial assumptions
are based upon management’s best estimates and judgment.

The expected rate of return on plan assets for our U.S. pension
plans represents our long-term assessment of return expectations
which may change based on significant shifts in economic and
financial market conditions. The long-term rate of return on plan
assets is derived from return assumptions based on targeted
allocations for various asset classes. While we consider the
pension plans’ recent performance and other economic growth
and inflation factors, which are supported by long-term historical
data, the return expectations for the targeted asset categories
represent a long-term prospective return.

Share-Based Compensation

Nasdaq uses the fair value method of accounting for share-based
awards. Share-based awards, or equity awards, include stock
options, restricted stock, and PSUs. The fair value of stock options
are estimated using the Black-Scholes option-pricing model. The
fair value of restricted stock awards and PSUs, other than PSUs
granted with market conditions, is determined based on the grant
date closing stock price less the present value of future cash
dividends. We estimate the fair value of PSUs granted with market
conditions using a Monte Carlo simulation model at the date of
grant.

We generally recognize compensation expense for equity awards
on a straight-line basis over the requisite service period of the
award, taking into account an estimated forfeiture rate. Granted
but unvested shares are generally forfeited upon termination of
employment.

Excess tax benefits or expense related to employee share-based
payments, if any, are recognized as income tax benefit or expense
in the Consolidated Statements of Income when the awards vest or
are settled.

Nasdaq also has an ESPP that allows eligible employees to
purchase a limited number of shares of our common stock at
six-month intervals, called offering periods, at 85.0% of the lower
of the fair market value on the first or the last day of each offering
period. The 15.0% discount given to our employees is included in
compensation and benefits expense
the Consolidated
Statements of Income.

See Note 11, “Share-Based Compensation,” for further discussion
of our share-based compensation plans.

Merger and Strategic Initiatives

We incur incremental direct merger and strategic initiative costs
relating to various completed and potential acquisitions and other
strategic opportunities. These costs include outside advisor fees,
deal-related bonuses to certain employees, and other external
costs directly related to proposed or closed transactions. We also
incur integration costs primarily related to employee termination
costs, deal-related bonuses and professional services costs
incurred relating to the integrations. As of December 31, 2018, all
planned integrations for our 2017 and 2016 acquisitions have been
completed. For
the years ended December 30, 2018 and
December 31, 2017, we also incurred costs related to the
divestiture of our Public Relations Solutions and Digital Media
Services businesses which primarily included outside advisor fees
as well as certain employee termination and lease reserves.

F-19

Leases

We expense rent from non-cancellable operating leases, net of
sublease income, on a straight line basis, based on future
minimum lease payments. The net costs are included in occupancy
expense in the Consolidated Statements of Income. See Note 16,
“Leases,” for further discussion.

In February 2016, the FASB issued ASU 2016-02, “Leases.” We
adopted this new guidance on January 1, 2019. See “Leases,” of
“Recent Accounting Pronouncements,” below
further
discussion.

for

Fair Value Measurements

the

transaction between market participants at

Fair value is defined as the price that would be received from
selling an asset or paid to transfer a liability, or the exit price, in an
the
orderly
fair value
measurement date. When determining
measurements for assets and liabilities required or permitted to be
either recorded or disclosed at fair value, we consider the principal
or most advantageous market in which we would transact, and we
also consider assumptions that market participants would use
when pricing the asset or liability. Fair value measurement
establishes a hierarchy of valuation techniques based on whether
the inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained
from independent sources, while unobservable inputs reflect
Nasdaq’s market assumptions. These two types of inputs create
the following fair value hierarchy:

• Level 1-Quoted prices for identical instruments in active

markets.

• Level 2-Quoted prices for similar instruments in active

markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations
whose inputs are observable or whose significant value
drivers are observable.

• Level 3-Instruments whose significant value drivers are

unobservable.

This hierarchy requires the use of observable market data when
available.

See Note 14, “Fair Value of Financial Instruments,” for further
discussion.

Tax Matters

We use the asset and liability method to determine income taxes
on all transactions recorded in the consolidated financial
statements. Deferred tax assets (net of valuation allowances) and
deferred tax liabilities are presented net by jurisdiction as either a
non-current asset or liability in our Consolidated Balance Sheets,
as appropriate. Deferred tax assets and liabilities are determined
based on differences between the financial statement carrying

amounts and the tax basis of existing assets and liabilities (i.e.,
temporary differences) and are measured at the enacted rates that
will be in effect when these differences are realized. If necessary,
a valuation allowance is established to reduce deferred tax assets
to the amount that is more likely than not to be realized.

In order to recognize and measure our unrecognized tax benefits,
management determines whether a tax position is more likely than
not to be sustained upon examination, including resolution of any
related appeals or litigation processes, based on the technical
merits of the position. Once it is determined that a position meets
the recognition thresholds, the position is measured to determine
the amount of benefit to be recognized in the consolidated
financial statements. Interest and/or penalties related to income
tax matters are recognized in income tax expense.

During the fourth quarter of 2018, we finalized the accounting
associated with the December 22, 2017 enactment of The Tax
Cuts and Jobs Act. For further discussion of the impacts of the tax
act and other tax matters, see Note 17, “Income Taxes,” to the
consolidated financial statements.

Assets Held for Sale

We classify assets or disposal groups as held for sale in the period
in which all of the following criteria are met:

• management commits to a plan to sell;

•

the asset or disposal group is available for immediate sale in
its present condition subject only to terms that are usual and
customary for sales of such assets or disposal groups;

an active program to locate a buyer and other actions required
to complete the plan to sell have been initiated;

the sale is probable within one year;

the asset or disposal group is being actively marketed for sale
at a price that is reasonable in relation to its current fair value;
and

it is unlikely that significant changes to the plan will be made
or that the plan will be withdrawn.

Assets and disposal groups classified as held for sale are measured
at the lower of their carrying amount or fair value less costs to sell.
Any loss resulting from this measurement is recognized in the
period in which the held for sale criteria are met. Conversely,
gains are not recognized until the date of sale. The fair value of an
asset less any costs to sell is assessed each reporting period it
remains classified as held for sale, and any change in fair value is
reported as an adjustment to the carrying value of the asset, except
that increases in fair value are limited to prior decreases recorded.
Assets are not depreciated or amortized while they are classified
as held for sale. See Note 4, “Assets and Liabilities Held For
Sale,” for further discussion of our assets held for sale.

F-20

Recent Accounting Pronouncements

Accounting Standard

Description

Effective Date

Effect on the Financial Statements or Other Significant Matters

Intangibles - Goodwill
and Other -
Internal-Use Software

In August 2018, the
FASB issued ASU
2018-15, “Customer’s
Accounting for
Implementation Costs
Incurred in a Cloud
Computing
Arrangement That Is a
Service Contract.”

Fair Value
Measurements

In August 2018, the
issued ASU
FASB
2018-13
“Disclosure
Framework—Changes
to the Disclosure
Requirements for Fair
Value Measurement.”

Income Statement -
Reporting
Comprehensive
Income
In February 2018, the
FASB issued ASU
2018-02,
“Reclassification of
Certain Tax Effects
from Accumulated
Other Comprehensive
Income (Topic 220).”

for

Payments

This ASU clarifies the accounting for
implementation costs of a hosting
arrangement and aligns the requirements
for capitalizing
implementation costs
incurred in a hosting arrangement that is a
service contract with the requirements for
capitalizing implementation costs incurred
to develop or obtain internal-use software
(and hosting arrangements that include an
internal-use software license). Capitalized
implementation costs should be expensed
over the term of the hosting arrangement
and recognized in the same line item in the
statement of income as the hosted service
costs.
capitalized
implementation costs should be classified
in the statement of cash flows in the same
manner as payments made for fees
associated with
the hosting element.
Capitalized implementation costs should
be presented in the balance sheet in the
same line item as a prepayment for the
fees
hosting
arrangement.
This ASU modifies
the disclosure
requirements on fair value measurements
by
disclosure
requirements related to the fair value
hierarchy, modifying existing disclosure
requirements related
to measurement
uncertainty, and adding new requirements,
mainly
value
measurements.

for Level

associated

removing

certain

fair

the

This ASU was issued to address the
income tax accounting treatment of the
effects within other
stranded
tax
the
income due
comprehensive
prohibition of backward tracing due to an
income tax rate change that was initially
recorded in other comprehensive income.
This issue came about from the enactment
of the Tax Cuts and Jobs Act that changed
our income tax rate from 35% to 21%. The
ASU changed current accounting whereby
an entity may elect to reclassify the
stranded tax effect from accumulated
other comprehensive income to retained
earnings.

January 1,
2020, with
early adoption
permitted. We
early adopted
this standard as
of July 1, 2018.

There was no impact to the financial statements as a
result of the adoption of this standard, as we are
currently accounting for costs incurred in a cloud
computing arrangement in accordance with the
standard.

There was no impact to the financial statements or
our disclosures as a result of the adoption of this
standard.

As a result of the adoption of this standard, we
recorded a reclassification of $417 million related to
the Tax Cuts and Jobs Act from accumulated other
comprehensive loss to retained earnings within
stockholders’ equity in the Consolidated Balance
Sheets. See “Tax Cuts and Jobs Act,” of Note 17,
“Income Taxes,” for further discussion.

January
1,
with
2020,
early adoption
permitted. We
early adopted
this standard as
of July 1, 2018
on
a
prospective
basis.

January 1,
2019, with
early adoption
permitted. We
early adopted
this standard as
of January 1,
2018.

F-21

Effect on the Financial Statements or Other Significant Matters
We do not anticipate a material impact on our
consolidated financial statements at the time of
adoption of this new standard as the carrying amounts
of our reporting units have been less than their
corresponding fair values in recent years. However,
changes in future projections, market conditions and
other factors may cause a change in the excess of fair
value of our reporting units over their corresponding
carrying amounts. We do not anticipate early adoption
of this standard.

We will adopt this standard on January 1, 2020. We
are currently assessing the impact that this standard
will have on our consolidated financial statements.

Effective Date
January 1,
2020, with
early adoption
permitted for
interim or
annual
goodwill
impairment
tests performed
on testing dates
after January 1,
2017.

January 1,
2020, with
early adoption
permitted as of
January 1,
2019.

January 1,
2019.

See discussion below.

Accounting Standard

Goodwill
In January 2017, the
FASB issued ASU
2017-04, “Simplifying
the Test for Goodwill
Impairment.”

Financial Instruments
- Credit Losses
In June 2016, the
FASB issued ASU
2016-13,
“Measurement of
Credit Losses on
Financial Instruments.”

Leases
In February 2016, the
FASB issued ASU
2016-02, “Leases.”

securities,

Description
This ASU simplifies how an entity is
required to test goodwill for impairment
and removes the second step of the
goodwill impairment test, which required a
hypothetical purchase price allocation if
the fair value of a reporting unit is less than
its carrying amount. Goodwill impairment
will now be measured using the difference
between the carrying amount and the fair
value of the reporting unit and the loss
recognized should not exceed the total
amount of goodwill allocated to that
reporting unit. The amendments in this
ASU should be applied on a prospective
basis.
This ASU changes the impairment model
for certain financial instruments. The new
model is a forward looking expected loss
model and will apply to financial assets
subject to credit losses and measured at
amortized cost and certain off-balance
sheet credit exposures. This includes loans,
held-to-maturity debt
loan
commitments, financial guarantees and net
investments in leases, as well as trade
receivables. For available-for-sale debt
securities with unrealized losses, credit
losses will be measured in a manner similar
to today, except that the losses will be
than
recognized as allowances rather
reductions in the amortized cost of the
securities.
Under this ASU, at the commencement
date, lessees will be required to recognize a
lessee’s
lease
obligation to make lease payments arising
from a lease, measured on a discounted
basis; and a right-of-use asset, which is an
asset that represents the lessee’s right to
use, or control the use of, a specified asset
for the lease term. This guidance is not
applicable for leases with a term of 12
months or less. Recognition, measurement
and presentation of expenses will depend
on classification as a finance or operating
lease. The guidance also requires certain
quantitative and qualitative disclosures
about
arrangements. Lessor
In
accounting
transition, lessees and lessors are required
to recognize and measure leases at the
beginning of the earliest period presented
using a modified retrospective approach.

largely unchanged.

liability, which

leasing
is

is a

Leases

We adopted ASU 2016-02 on January 1, 2019. Adoption of the new
standard resulted in the recording of a right-of-use asset of $442
million, a lease liability of $483 million, as well as the elimination
of deferred rent and sublease reserves of $41 million as of January

1, 2019. The standard did not impact our statements of income and
had no impact on our cash flows. Our implementation of this
guidance is subject to the same internal controls over financial
reporting that we apply to our consolidated financial statements.

* * * * * *

F-22

Practical Expedients and Accounting Policy Elections

2018, 2017 and 2016 Acquisitions and 2018 Divestiture

We elected the package of practical expedients permitted under
the transition guidance within the standard to not reassess
contracts to determine if they contain leases, lease classification
and initial direct costs. We also elected the optional transition

method to initially apply the standard at the January 1, 2019
adoption date. As a result, we applied the new lease standard
prospectively to leases existing or commencing on or after
January 1, 2019. Comparative periods presented will not be
restated upon adoption. Similarly, new disclosures under the
standard will be made for periods beginning January 1, 2019, and
not for prior comparative periods. Prior periods will continue to be
reported under guidance in effect prior to January 1, 2019. We
made an accounting policy election to treat the lease and non-lease
components in a contract as a single performance obligation to the
extent that the timing and pattern of transfer are similar for the
lease and non-lease components and the lease component qualifies
as an operating lease. We also made an accounting policy election
not to recognize lease liabilities and right-of-use assets for leases
with a term of 12 months or less. We will recognize these lease
payments on a straight-line basis over the lease term. We did not
elect the practical expedient related to using hindsight to
reevaluate the lease term. Additionally, since our leases do not
provide an implicit rate, we used our incremental borrowing rate
based on information available at the transition date utilizing the
remaining lease term to determine the present value of future
payments.

3. Acquisitions and Divestiture

2019 Acquisition

Acquisition of Cinnober

technology provider

In 2018, we made an all cash recommended public offer to the
shareholders and warrant holders of Cinnober, a major Swedish
financial
to brokers, exchanges and
clearinghouses worldwide. In December 2018, we increased our
offer to SEK 87 per share and SEK 121 per warrant, or
approximately $220 million. In January 2019, Nasdaq completed
the offer and as of February 2019 controls approximately 99.6%
of the total number of shares in Cinnober. Through compulsory
acquisition procedures, Nasdaq intends to acquire 100% of the
Cinnober shares outstanding. It is not currently known when the
proceedings will be completed and when Nasdaq will be able to
acquire the Cinnober shares that are the subject of the
proceedings. Cinnober is part of our Market Technology segment.

Nasdaq used cash on hand to fund this acquisition.

We completed a divestiture in April 2018 and several acquisitions
during the years ended December 31, 2018, 2017 and 2016 and
included the financial results of such acquisitions in our
consolidated financial statements from the respective acquisition
dates.

2018 Acquisitions

Acquisition of Quandl

In November 2018, we acquired Quandl, Inc., a leading provider
of alternative and core financial data. Quandl is part of our
Information Services segment.

Nasdaq used issuances of commercial paper to fund this
acquisition.

Acquisition of RedQuarry

In October 2018, we acquired the assets of RedQuarry.
RedQuarry is part of our Information Services segment.

2018 Divestiture

In April 2018, we sold our Public Relations Solutions and Digital
Media Services businesses which were part of our Corporate
Solutions business to West Corporation and recognized a pre-tax
net gain on the sale of $33 million, net of disposal costs ($14
million after tax), which includes a post-closing working capital
adjustment of $8 million ($5 million after tax) recorded in
September 2018. The total net pre-tax gain is included in net gain
on divestiture of businesses in the Consolidated Statements of
Income for 2018.

As of December 31, 2017, the assets and liabilities of the above
businesses were held for sale. See Note 4, “Assets and Liabilities
Held For Sale,” for further discussion.

Through a multi-year partnership with West, Nasdaq will continue
to provide eligible Nasdaq-listed clients with access to public
relations, webcasting and webhosting products and services as
part of the terms of the transaction.

As part of the terms of the transaction, we are providing transition
services to West, such as technology, finance and facilities related
services until mid-2019, and the compensation received for such
transition services is being reflected as a reduction to the
underlying expenses incurred by Nasdaq to provide such
transition services.

2017 Acquisitions

* * * * * *

Purchase
Consideration

Total Net Liabilities
Acquired

Total Net Deferred Tax
Liability

Acquired
Intangible Assets

Goodwill

(in millions)

eVestment

744

(10 ) $

(96 ) $

405

445

F-23

The amounts in the table above represent the final allocation of
purchase price. The allocation of the purchase price was subject to
revision during the measurement period, a period not to exceed 12
months from the acquisition date. Adjustments to the provisional
values, which may include tax and other estimates, during the
measurement period are recorded in the reporting period in which
the adjustment amounts are determined. In October 2018, we
recorded a measurement period adjustment related to our
acquisition of eVestment which is discussed below under
“Acquisition of eVestment.” The allocation of the purchase price
for eVestment was finalized in October 2018.

See “Intangible Assets” below for further discussion of intangible
assets acquired in the eVestment acquisition.

Acquisition of eVestment

In October 2017, we acquired eVestment for $705 million. The
aggregate cash consideration of $744 million, which is net of cash
acquired of $22 million, included $39 million of estimated tax
benefits associated with the transaction. We acquired net

liabilities, at fair value, totaling $10 million and we recorded a net
deferred tax liability of $104 million, which is net of the $39
million in estimated tax benefits associated with the transaction.
The deferred tax liability recorded of $143 million relates to
differences in the U.S. GAAP and tax basis of our investment in
eVestment. In October 2018, we recorded a measurement period
adjustment of $8 million to the estimated fair value of deferred tax
assets to reflect a revised assessment following the receipt of new
information. The adjustment resulted in an increase to deferred tax
assets recorded and a decrease to goodwill. The adjustment did not
result in an impact to our Consolidated Statements of Income.
eVestment is part of our Information Services segment.

Nasdaq used cash on hand and issuances of commercial paper to
fund this acquisition.

Acquisition of Sybenetix

In September 2017, we acquired Sybenetix which is part of our
Market Technology segment.

* * * * * *

2016 Acquisitions

ISE
Boardvantage
Marketwired
Nasdaq Canada

Purchase
Consideration

Total Net Assets
(Liabilities)
Acquired

Total Net
Deferred Tax
Liability

Acquired
Intangible Assets

Goodwill

1,070
242
111
116

(in millions)

83
28
(1 )
6

(185 ) $
(38 )
(5 )
(20 )

623
111
31
76

549
141
86
54

The amounts in the table above represent the final allocation of
purchase price for each acquisition. The allocations of the
purchase price were subject to revision during the measurement
period, a period not to exceed 12 months from the acquisition date.
Adjustments to the provisional values, which may include tax and
other estimates, during the measurement period are recorded in the
reporting period in which the adjustment amounts are determined.
We finalized the allocation of the purchase price for Marketwired
and Nasdaq Canada in February 2017. In the second quarter of
2017, we finalized the allocation of the purchase price for
Boardvantage and ISE. There were no adjustments to the
provisional values during the 12-month measurement period for
Nasdaq Canada and ISE. In the second quarter of 2016, we
recorded a measurement period adjustment of $5 million related to
our acquisition of Marketwired which is discussed below under
“Acquisition of Marketwired.” In the second quarter of 2017, we
recorded a measurement period adjustment of $7 million related to
our acquisition of Boardvantage which is discussed below under
“Acquisition of Boardvantage.”

See “Intangible Assets” below for further discussion of intangible
assets acquired through our 2016 acquisitions.

Acquisition of ISE
In June 2016, we acquired ISE for $1,070 million. We acquired
net assets, at fair value, totaling $83 million and recorded a net
deferred tax liability of $185 million, comprised of a deferred tax
liability of $266 million and a deferred tax asset of $81 million,
related to differences in the U.S. GAAP and tax basis of our
investment in ISE. ISE is part of our Market Services, Information
Services and Market Technology segments.

In May 2016, we issued the 2023 Notes and in June 2016, we
issued the 2026 Notes to fund this acquisition. See “1.75% Senior
Unsecured Notes,” and “3.85% Senior Unsecured Notes,” of Note
9, “Debt Obligations,” for further discussion.

Acquisition of Boardvantage

In May 2016, we acquired Boardvantage for $242 million ($197
million in cash paid plus $45 million in working capital
adjustments, which primarily includes cash acquired). We
acquired net assets, at fair value, totaling $28 million and recorded
a net deferred tax liability of $45 million, comprised of a deferred
tax liability of $46 million and a deferred tax asset of $1 million,
related to differences in the U.S. GAAP and tax basis of our
investment in Boardvantage. In the second quarter

F-24

of 2017, we recorded a measurement period adjustment of $7
million to the estimated fair value of deferred tax assets to reflect a
revised assessment following the receipt of new information. The
adjustment resulted in an increase to deferred tax assets recorded
and a decrease to goodwill. The adjustment did not result in an
impact to our Consolidated Statements of Income. Boardvantage
is part of our Corporate Solutions business within our Corporate
Services segment.

Nasdaq borrowed $197 million under the revolving credit
commitment of a previous credit facility to fund this acquisition.

Acquisition of Marketwired

In February 2016, we acquired Marketwired for $111 million
($109 million in cash paid plus $2 million in working capital
adjustments). We acquired net liabilities, at fair value, totaling $1
million and recorded a deferred tax liability of $10 million related
to differences in the U.S. GAAP and tax basis of our investment in
Marketwired. In the second quarter of 2016, we recorded a
measurement period adjustment of $5 million to the estimated fair
value of deferred tax liabilities to reflect a revised assessment
following the receipt of new information. The adjustment resulted

in a decrease to both deferred tax liabilities recorded and goodwill.
The adjustment did not result in an impact to our Consolidated
Statements of Income. Marketwired was part of our Corporate
Solutions business within our Corporate Services segment.

Nasdaq borrowed $109 million under the revolving credit
commitment of a previous credit facility to fund this acquisition.

Acquisition of Nasdaq Canada

In February 2016, we acquired Nasdaq Canada for $116 million

($115 million in cash paid plus $1 million in working capital
adjustments). We acquired net assets, at fair value, totaling $6
million and recorded a deferred tax liability of $20 million related
to differences in the U.S. GAAP and tax basis of our investment in
Nasdaq Canada. Nasdaq Canada is part of our Market Services
segment and our Data Products business within our Information
Services segment.

Nasdaq used cash on hand and borrowed $55 million under the
revolving credit commitment of a previous credit facility to fund
this acquisition.

Intangible Assets

* * * * * *

The following table presents the details of significant acquired intangible assets at the date of each acquisition. All acquired intangible
assets with finite lives are amortized using the straight-line method.

2017

2016

eVestment

ISE

Boardvantage

Marketwired Nasdaq Canada

($ in millions)

Exchange registrations

Discount rate used
Estimated average useful life

Customer relationships

Discount rate used
Estimated average useful life

Trade name

Discount rate used
Estimated average useful life

Technology

Discount rate used
Estimated average useful life

Total intangible assets

Exchange Registrations

As part of our acquisition of ISE we acquired exchange
registrations. The exchange registrations represent licenses that
provide ISE with the ability to operate its options exchanges.

Nasdaq views these intangible assets as a perpetual license to
operate the exchanges so long as ISE meets its regulatory
requirements. Nasdaq selected a variation of the income approach
called
the exchange
registrations. The Greenfield Approach refers to a discounted cash

the Greenfield Approach

to value

F-25

$ —
—
—
378
9.3 %

467
8.6 %

Indefinite
148
9.1 %

—
—
—
103
15.5 %

—
—
—
29
16.4 %

14 years
13
$
9.2 %

13 years
8
8.6 %

14 years
2
15.0 %

6 years
2
15.8 %

8 years
14
9.2 %

8 years

Indefinite
—
—
—

1 year
6
15.5 %

5 years

2 years
—
—
—

—
—
—
76
10.3 %

17 years
—
—
—
—
—
—

405

623

111

flow analysis that assumes the buyer is building the exchange
from a start-up business to a normalized level of operations as of
the acquisition date. This discounted cash flow model considers
the required resources and eventual returns from the build-out of
operational exchanges and the acquisition of customers, once the
exchange registrations are obtained. The advantage of this
approach is that it reflects the actual expectations that will arise
from an investment in the

it directly values

registrations and
the registrations. The
Greenfield Approach relies on assumptions regarding projected
revenues, margins, capital expenditures, depreciation, and
working capital during the 2 year pre-trade phase, the 10 year
ramp-up period, as well as the terminal period.

asset. The royalty rate is applied to the projected revenue over the
expected remaining life of the intangible asset to estimate royalty
savings. The net after-tax royalty savings are calculated for each
year in the remaining economic life of the trade name and
discounted to present value.

In developing a discount rate for the exchange registrations, we
estimated a weighted-average cost of capital for the overall
business and we employed this rate when discounting the cash
flows. The resulting discounted cash flows were then tax-effected
at the applicable statutory rate.

Customer Relationships

As part of all of our 2017 and 2016 acquisitions, we acquired
customer relationships. Customer relationships represent the
non-contractual and contractual relationships with customers.

Methodology

For our 2017 and 2016 acquisitions, customer relationships were
valued using the income approach, specifically an excess earnings
method. The excess earnings method examines the economic
returns contributed by the identified tangible and intangible assets
of a company, and then isolates the excess return that is
attributable to the intangible asset being valued.

Discount Rate

The discount rates used reflect the amount of risk associated with
the hypothetical cash flows for the customer relationships relative
to the overall business. In developing a discount rate for the
customer relationships, we estimated a weighted-average cost of
capital for the overall business and we employed this rate when
discounting the cash flows. The resulting discounted cash flows
were then tax-effected at the applicable statutory rate.

For our acquisitions of eVestment, Marketwired and Nasdaq
Canada, a discounted tax amortization benefit was added to the
fair value of the assets under the assumption that the customer
relationships would be amortized for tax purposes over a period of
15 years.

Estimated Useful Life

We estimate the useful life based on the historical behavior of the
customers and a parallel analysis of the customers using the excess
earnings method.

Trade Names

As part of our acquisitions of eVestment and ISE, we acquired
trade names. These trade names are recognized in the industry and
carry a reputation for quality. As such, the reputation and positive
recognition embodied in these trade names are a valuable asset to
Nasdaq.

Discount Rate

The discount rates used reflect the amount of risk associated with
the hypothetical cash flows for each trade name relative to the
overall business as discussed above in “Customer Relationships.”

Estimated Useful Life

We have estimated the useful life of the eVestment trade name to
be 8 years and the estimated useful life of the ISE trade name to be
indefinite based on the number of years the name has been in
service, its popularity within the industry, and our intention

to continue to use it in the branding of products.

Technology

As part of our acquisitions of eVestment and Boardvantage, we
acquired developed technology.

Methodology

The developed technologies were valued using the income
approach, specifically the RFRM as discussed above in “Trade
Names.”

Discount Rate

The discount rates used reflect the amount of risk associated with
the hypothetical cash flows for the developed technology relative
to the overall business as discussed above in “Customer
Relationships.”

Estimated Useful Life

We have estimated the useful life of the eVestment technology to
be 8 years and the estimated useful life of the Boardvantage
technology to be 5 years.

Pro Forma Results and Acquisition-related Costs

The consolidated financial statements for the years ended
December 31, 2018, 2017 and 2016 include the financial results of
the above 2018, 2017 and 2016 acquisitions from the date of each
acquisition. Pro forma financial results have not been presented
since these acquisitions both individually and in the aggregate
were not material to our financial results.

Acquisition-related costs for the transactions described above
were expensed as incurred and are included in merger and
strategic initiatives expense in the Consolidated Statements of
Income.

Methodology

4. Assets and Liabilities Held For Sale

The eVestment and ISE trade names were valued using the income
approach, specifically the relief-from-royalty method, or RFRM.
The RFRM is used to estimate the cost savings that accrue to the
owner of an intangible asset who would otherwise have to pay
royalties or license fees on revenues earned through the use of the

As of December 31, 2018, our BWise business was recorded as
held for sale and as of December 31, 2017, our Public Relations
Solutions and Digital Media Services businesses were recorded as
held for sale.

F-26

2018 Assets and Liabilities Held For Sale

As part of Nasdaq's renewed corporate strategy to embrace our
leading technology, information analytics and market strengths, in
December 2018, we decided to sell BWise, our internal audit,
regulatory compliance management, and operational
risk
management software that comprises our governance, risk and
compliance product offering. BWise is part of our Corporate
Solutions business within our Corporate Services segment.

We determined that we met all of the criteria to classify the assets
and liabilities of BWise as held for sale as of December 31, 2018.
The disposal of BWise did not represent a strategic shift that
would have a major effect on our operations and financial results
and is, therefore, not classified as discontinued operations. No
impairment charge was recorded for the year ended December 31,
2018 as the carrying amount of the net assets was less than the fair
value less costs to sell. Fair value was determined based upon the
anticipated sales price of these products and services based on
current market conditions and assumptions made by management,
which may differ from actual results and may result in an
impairment if market conditions deteriorate.

In February 2019, we entered into an agreement to sell BWise.
Based on the sales price in the agreement, no impairment charge
was recorded. See “Agreement to Sell BWise,” of Note 21,
“Subsequent Events,” for further discussion.

2017 Assets and Liabilities Held For Sale

As of December 31, 2017, the Public Relations Solutions and
Digital Media Services businesses were classified as held for sale.
The disposal of these businesses did not represent a strategic shift
that would have had a major effect on our operations and financial
results and were, therefore, not classified as discontinued
operations.

In April 2018, we sold these businesses. See “2018 Divestiture,”
of Note 3, “Acquisitions and Divestiture,” for further discussion.
Based on the sales price in the agreement, no impairment charge

was recorded at the time of the sale as the carrying amount of the
net assets was less than the sales price in the agreement less costs
to sell.

Major Classes of Assets and Liabilities Held For Sale

The carrying amounts of the major classes of assets and liabilities
that were classified as held for sale at December 31, 2018 and
2017 were as follows:

December 31,
2018

December 31,
2017

Receivables, net
Property and equipment, net
Goodwill (1)
Intangible assets, net(2)
Other assets

Total assets held for sale(3)

Deferred tax liabilities
Deferred revenue
Other current liabilities

Total liabilities held for sale(4)

(in millions)
13
$
10
47
16
3
89

4
12
4
20

27
21
202
38
9
297

16
2
27
45

(1) The assignment of goodwill was based on the relative fair

value of the disposal group and the portion of the remaining
reporting unit.

(2) Primarily represents customer relationships.

(3)

(4)

Included in other current assets in the Consolidated Balance
Sheets as of December 31, 2018 and 2017.
Included in other current liabilities in the Consolidated
Balance Sheets as of December 31, 2018 and 2017.

5. Goodwill and Acquired Intangible Assets

Goodwill

* * * * * *

The following table presents the changes in goodwill by business segment during the year ended December 31, 2018:

Market
Services

Corporate
Services

Information
Services

(in millions)

Market
Technology

Total

Balance at December 31, 2017
Goodwill acquired
Measurement period adjustment
Reclassification of goodwill(1)
Goodwill reclassified to held for sale(2)
Foreign currency translation adjustment
Balance at December 31, 2018

3,546
—
—
—
—
(116 )
3,430

490
—
—
29
(47 )
(17 )
455

2,362
56
(8 )
—
—
(77 )

2,333

188
—
—
(29 )
—
(14 )
145

6,586
56
(8 )
—
(47 )
(224 )
6,363

F-27

(1) Concurrent with the realignment of our BWise internal audit, regulatory compliance management, and operational risk management
software solutions from our Market Technology segment to our Corporate Services segment, goodwill was reassigned to the
Corporate Services segment using a relative fair value approach.

(2) See Note 5, “Assets and Liabilities Held for Sale,” for further discussion.

The goodwill acquired for Information Services shown above
relates to our acquisitions of Quandl and RedQuarry. See “2018
Acquisitions,” of Note 3, “Acquisitions and Divestiture,” for
further discussion.
In October 2018, we recorded a measurement period adjustment
of $8 million to the estimated fair value of deferred tax assets
related to our acquisition of eVestment. See “Acquisition of
eVestment,” of Note 3, “Acquisitions and Divestiture,” for further
discussion of the adjustment.
As of December 31, 2018, the amount of goodwill that is expected
to be deductible for tax purposes in future periods is $807 million.
Goodwill represents the excess of purchase price over the value
assigned to the net assets, including identifiable intangible assets,

of a business acquired. Goodwill is allocated to our reporting units
based on the assignment of the fair values of each reporting unit of
the acquired company. We test goodwill for impairment at the
reporting unit level annually, or in interim periods if certain events
occur indicating that the carrying amount may be impaired, such
as changes in the business climate, poor indicators of operating
performance or the sale or disposition of a significant portion of a
reporting unit. There was no impairment of goodwill for the years
ended
December 31, 2018, 2017 and 2016; however, events such as
extended economic weakness or unexpected significant declines
in operating results of a reporting unit may result in goodwill
impairment charges in the future.

Acquired Intangible Assets
The following table presents details of our total acquired intangible assets, both finite- and indefinite-lived:

* * * * * *

December 31, 2018

December 31, 2017

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)

Finite-Lived Intangible

Assets
Technology
Customer relationships(1)
Other
Foreign currency

54
1,532
17

(15 ) $

(456 )
(2 )

39
1,076
15

9 $
18
8

65
1,708
17

(22 ) $

(526 )
(4 )

43
1,182
13

8
18
8

translation adjustment

(149 )

(85 )

(111 )

(65 )

Total finite-lived

intangible assets

Indefinite-Lived

1,454

(409 ) $ 1,045

$ 1,679

(506 ) $ 1,173

Intangible Assets
Exchange and clearing

registrations

Trade names
Licenses
Foreign currency

1,257
122
52

—
—
—

$ 1,257
122
52

$ 1,257
129
52

—
—
—

$ 1,257
129
52

translation adjustment

(176 )

—

(176 )

(143 )

—

(143 )

Total indefinite-lived
intangible assets
Total intangible assets

$
$

1,255
2,709

$
$

—

$ 1,255
(409 ) $ 2,300

$ 1,295
$ 2,974

$
$

—

$ 1,295
(506 ) $ 2,468

(1) The decrease in the gross amount and accumulated amortization for customer relationships as of December 31, 2018 compared with

2017 is primarily due to certain intangible assets that became fully amortized in fourth quarter of 2018.

As a result of our decision to sell BWise, we reclassified certain
intangibles assets to held for sale. The following table presents the

gross amount, accumulated amortization and net amount of
finite-lived and indefinite-lived intangible assets that have been

F-28

reclassified as assets held for sale as of December 31, 2018. See
Note 5, “Assets and Liabilities Held for Sale,” for further
discussion.

Gross
Amount

Accumulated
Amortization

Net
Amount

(in millions)

(10 ) $

Finite-lived intangible assets

reclassified as held for sale -
customer relationships
Indefinite-lived intangible

assets reclassified as held for
sale - trade name

Total intangible assets held for

sale

Trading securities
Available-for-sale investment
securities

Financial investments, at fair
value

Equity method investments
Equity securities

December 31,
2018

December 31,
2017

(in millions)
$
259

221

268

235

135
44

$
$

131
152

$
$

—

(10 ) $

Trading Securities

Financial Investments, at Fair Value

In February 2019, we entered into an agreement to sell BWise. See
“Agreement to Sell BWise,” of Note 21, “Subsequent Events,” for
further discussion.

In addition, in April 2018, in connection with the sale of the Public
Relations Solutions and Digital Media Services businesses, we
recorded a $2 million pre-tax, non-cash write-off related to an
indefinite-lived intangible asset trade name.

Amortization expense for acquired finite-lived intangible assets
was $109 million for the year ended December 31, 2018, $92
million for the year ended December 31, 2017, and $82 million for
the year ended December 31, 2016. Amortization expense
increased in 2018 and 2017 primarily due to additional
amortization expense associated with acquired intangible assets in
2017. These amounts are
in depreciation and
amortization expense in the Consolidated Statements of Income.

included

The estimated future amortization expense (excluding the impact
of foreign currency translation adjustments of $85 million as of
December 31, 2018) of acquired finite-lived intangible assets as of
December 31, 2018 is as follows:

2019
2020
2021
2022
2023
2024 and thereafter
Total

6. Investments

(in millions)

100
98
97
94
92
649
1,130

The following table presents the details of our investments:

Trading securities, which are included in financial investments, at
fair value in the Consolidated Balance Sheets, are primarily
comprised of highly rated European government debt securities,
of which $166 million as of December 31, 2018 and $160 million
as of December 31, 2017, are assets primarily utilized to meet
for our clearing
requirements, mainly
regulatory capital
operations at Nasdaq Clearing.

Available-for-Sale Investment Securities

As of December 31, 2018 and 2017, available-for-sale investment
securities, which are included in financial investments, at fair
value in the Consolidated Balance Sheets, were primarily
comprised of commercial paper. As of December 31, 2018 and
2017, the cumulative unrealized gains and losses on these
securities were immaterial.

Equity Method Investments

As of December 31, 2018 and December 31, 2017, our equity
method investments primarily included equity interests in OCC
and EuroCCP N.V.

The carrying amounts of our equity method investments are
included in other non-current assets in the Consolidated Balance
Sheets.

Net income recognized from our equity interest in the earnings
and losses of these equity method investments was $18 million for
the year ended December 31, 2018, $15 million for the year ended
December 31, 2017, and $2 million for
the year ended
December 31, 2016. The change in the year ended December 31,
2018 compared with the same period in 2017 is primarily due to
an increase in income recognized from our investments in OCC
and EuroCCP N.V. The change in the year ended December 31,
2017 compared with the same period in 2016 relates to our
additional 20.0% ownership interest in OCC, which we acquired
in connection with our acquisition of ISE in June 2016, bringing
our total ownership interest in OCC to 40.0%, partially offset by
the write-off of an equity method investment which was offset by
a gain resulting from the sale of a percentage of a separate equity
method investment.

Capital Contribution to OCC

In March 2015, OCC implemented a capital plan under which the
options exchanges that are OCC’s stockholders contributed

F-29

and

related matters. See

$150 million of new equity capital to OCC, committed to make
future
replenishment capital contributions under certain
circumstances, and received commitments regarding future
“Other
dividend payments
Commitments,” of Note 19, “Commitments, Contingencies and
Guarantees,” for further discussion of our commitment to make
future replenishment capital contributions. Nasdaq PHLX and ISE
each contributed $30 million of new equity capital under the OCC
capital plan. OCC adopted specific policies with respect to fees,
customer refunds and stockholder dividends, which envision an
annual dividend equal to the portion of OCC’s after-tax income
that exceeds OCC’s capital requirements after payment of refunds
to OCC’s clearing members (such refunds are generally 50% of
the portion of OCC’s pre-tax income that exceeds OCC’s capital
requirements). In 2018, 2017 and 2016, OCC disbursed annual
dividends under the capital plan and Nasdaq, via its ownership
interests, as the owner of two shares, received $13 million in 2018,
$10 million in 2017 and $4 million in 2016.

In February 2016, after the SEC approved the rule change
establishing the OCC capital plan, certain industry participants
appealed that approval in the U.S. Court of Appeals. In August
2017, the Court of Appeals remanded the case to the SEC. In
February 2019, on remand from the Court of Appeals, the SEC
disapproved the OCC rule change that established the capital plan.
In its decision, the SEC noted that it will consider any requests for
exemptive or other relief that OCC might seek while OCC
considers its alternatives to ensure compliance with relevant
regulations. OCC has not publicly announced its plans in light of
the order. As a result of the SEC decision, OCC may return capital
to us or adopt new policies, which may impact us. We are unable
to predict the outcome or exact timing of resolution of this matter.

Equity Securities

The carrying amounts of our equity securities are included in other
non-current assets in the Consolidated Balance Sheets. As of
December 31, 2018, our equity securities primarily represent
various strategic investments made through our corporate venture
program. As of December 31, 2017, our equity securities
primarily represented our 5.0% ownership in Borsa Istanbul and
our 5.0% ownership interest in LCH.

In December 2018, we sold our 5.0% ownership interest in LCH
for $169 million in cash. As a result of the sale, we recognized a
pre-tax gain of $118 million ($93 million after tax). The gain is
included in gain on sale of investment security in the Consolidated
Statements of Income for the year ended December 31, 2018.

The Borsa Istanbul shares, which were issued to us in the first
quarter of 2014, were part of the consideration received under a
market technology agreement. This investment had a carrying
amount of $75 million which was guaranteed to us via a put option
negotiated as part of the market technology agreement. During the
second quarter of 2018, we exercised the put option and we expect
to receive cash consideration in installments through 2022. In
2018, we received $45 million in cash. The remaining receivable
is recorded in other current assets and other non-current assets in
the Consolidated Balance Sheets.

7. Property and Equipment, net

The following table presents our major categories of property and
equipment, net:

Data processing equipment and

software

Furniture, equipment and leasehold

improvements

Total property and equipment
Less: accumulated depreciation and

amortization

Total property and equipment, net

Year Ended December 31,

2018

2017

(in millions)

526

626

274
800

279
905

(424 )
376

(505 )
400

Depreciation and amortization expense for property and
equipment was $101 million for the year ended December 31,
2018, $96 million for the year ended December 31, 2017 and $88
million for the year ended December 31, 2016. The increase in
depreciation and amortization expense in 2018 and 2017 was
primarily due to additional expense associated with assets and
software placed in service. These amounts are included in
depreciation and amortization expense in the Consolidated
Statements of Income.

There were no impairments of property and equipment recorded in
2018. In 2017, we recorded a pre-tax, non-cash property and
equipment asset impairment charge of $9 million primarily related
to the write-off of capitalized software and hardware equipment
associated with our 2017 and 2016 acquisitions. This charge is
included in merger and strategic initiatives expense in the
Consolidated Statements of Income for 2017.

As of December 31, 2018 and 2017, we did not own any real
estate properties.

F-30

8. Deferred Revenue

Deferred revenue represents consideration received that is yet to be recognized as revenue. The changes in our deferred revenue during
the year ended December 31, 2018 are reflected in the following table:

Initial Listing
Revenues

Annual
Listings
Revenues

Market
Technology
Revenues

Corporate
Solutions and
Other
Revenues(3)

(in millions)

Information
Services
Revenues

Other(4)

Total

Balance at December 31, 2017
Additions
Revenue recognized
Reclassification of deferred revenue(1)
Deferred revenue reclassified to held for

sale(2)

Translation adjustment
Balance at December 31, 2018

64
29
(25 )
—

3
236
(234 )
—

—
(2 )
66

—
(1 )
4

109
168
(183 )
(11 )

—
(8 )
75

37
242
(242 )
11

(12 )
—
36

40
169
(130 )
—

34
23
(36 )
—

—
1
80

—
(1 )
20

287
867
(850 )
—

(12 )
(11 )
281

(1) Concurrent with the realignment of our BWise internal audit, regulatory compliance management, and operational risk management
software solutions from our Market Technology segment to our Corporate Services segment, deferred revenue was reassigned to the
Corporate Services segment.
See Note 5, “Assets and Liabilities Held for Sale,” for further discussion.

(2)

(3) Other revenues include the revenues from the Public Relations Solutions and Digital Media Services businesses through the date of
sale (April 2018). See “2018 Divestiture,” of Note 3, “Acquisitions and Divestiture,” to the consolidated financial statements for
further discussion.

(4) The balance as of December 31, 2018 and 2017 primarily includes deferred revenue from listing of additional shares fees which are
included in our Listing Services segment. The activity during the period primarily pertains to our Trade Management Services and
FICC businesses, which are included in our Market Services segment, for contracts paid monthly or quarterly in advance of the
service.

On January 1, 2018, we adopted Topic 606. As a result, a portion of revenues that were previously deferred were recognized either in
prior period revenues, through restatement, or as an adjustment to retained earnings upon adoption of the new standard. See “Revenue
From Contracts With Customers,” of Note 2, “Summary of Significant Accounting Policies,” for a description of our initial listing,
annual listing, market technology, corporate solutions, and information services revenues and the revenue recognition policy for each of
these revenue streams.

As of December 31, 2018, we estimate that our deferred revenue will be recognized in the following years:

Fiscal year ended:
2019
2020
2021
2022
2023
2024 and thereafter

Total

Initial Listing
Revenues

Annual
Listings
Revenues

Market
Technology
Revenues

Corporate
Solutions
Revenues

(in millions)

Information
Services
Revenues

Other(1)

Total

23
20
10
7
5
1

4
—
—
—
—
—

47
21
7
—
—
—

33
3
—
—
—
—

77
3
—
—
—
—

10
7
2
1
—
—

194
54
19
8
5
1

281

(1) Other primarily includes revenues from listing of additional shares fees which are included in our Listing Services business.

The timing of recognition of our deferred market technology revenues is primarily dependent upon the completion of customization and
any significant modifications made pursuant to existing market technology contracts. As such, as it relates to market technology
revenues, the timing represents our best estimate.

F-31

9. Debt Obligations

The following table presents the changes in the carrying amount of our debt obligations during the year ended December 31, 2018:

December 31,
2017

Additions

Payments,
Accretion
and Other

December 31,
2018

Short-term debt:

Commercial paper
Senior unsecured floating rate notes due March 22, 2019(1)

480
498

$400 million senior unsecured term loan facility due November 25,

2019 (average interest rate of 3.48% for the period January 1, 2018
through December 31, 2018)(2)

Total short-term debt
Long-term debt:

5.55% senior unsecured notes due January 15, 2020
3.875% senior unsecured notes due June 7, 2021
4.25% senior unsecured notes due June 1, 2024
1.75% senior unsecured notes due May 19, 2023
3.85% senior unsecured notes due June 30, 2026

$1 billion revolving credit commitment due April 25, 2022 (average

interest rate of 2.74% for the period January 1, 2018 through
December 31, 2018)

Total long-term debt

Total debt obligations

100

1,078

599
716
496
712
496

110

3,129

(in millions)
$

4,096
—

(4,301 ) $
2

—

4,096

—

(4,299 )

—
—
—
—
—

—

—
(30 )
1
(30 )
—

(114 )

(173 )

275
500

100

875

599
686
497
682
496

(4 )

2,956

3,831

4,207

4,096

(4,472 ) $

(1) Balance was reclassified to short-term debt as of March 31, 2018.
(2) Balance was reclassified to short-term debt as of December 31, 2018.

Commercial Paper Program

Our U.S. dollar commercial paper program is supported by our
2017 Credit Facility which provides liquidity support for the
repayment of commercial paper issued through the commercial
paper program. See “2017 Credit Facility” below for further
discussion of our 2017 Credit Facility. The effective interest rate
of commercial paper issuances fluctuate as short term interest
rates and demand fluctuate. The fluctuation of these rates due to
market conditions may impact our interest expense.

As of December 31, 2018, commercial paper notes in the table
above reflect the aggregate principal amount, less the unamortized
discount which is being accreted through interest expense over the
life of the applicable notes. The original maturities of these notes
range from 24 days to 67 days and the weighted-average maturity
is 33 days. The weighted-average effective interest rate is 3.03%
per annum.

Senior Unsecured Notes

less

Our senior unsecured notes were all issued at a discount. As a
result of the discount, the proceeds received from each issuance
were
the aggregate principal amount. As of
December 31, 2018, the amounts in the table above reflect the
aggregate principal amount, less the unamortized debt discount
and the unamortized debt issuance costs which are being accreted

than

through interest expense over the life of the applicable notes. Our
senior unsecured notes are general unsecured obligations of ours
and rank equally with all of our existing and future unsubordinated
obligations and they are not guaranteed by any of our subsidiaries.
The senior unsecured notes were issued under indentures that,
among other things, limit our ability to consolidate, merge or sell
all or substantially all of our assets, create liens, and enter into sale
and leaseback transactions.

With the exception of the 2020 Notes, upon a change of control
triggering event (as defined in the various note indentures), the
terms require us to repurchase all or part of each holder’s notes for
cash equal to 101% of the aggregate principal amount purchased
plus accrued and unpaid interest, if any.

Senior Unsecured Floating Rate Notes

In September 2017, Nasdaq issued the 2019 Notes. The 2019
Notes pay interest quarterly in arrears at a rate equal to the
three-month U.S. dollar LIBOR as determined at the beginning of
each quarterly period plus 0.39% per annum until March 22, 2019.

As of December 31, 2018, the amount outstanding of $500 million
is due upon maturity at March 22, 2019, which we expect to repay
with cash on hand and proceeds from issuances of commercial
paper or borrowings from our revolving credit commitment under
our 2017 Credit Facility.

F-32

5.55% Senior Unsecured Notes

In January 2010, Nasdaq issued the 2020 Notes. The 2020 Notes
pay interest semiannually at a rate of 5.55% per annum until
January 15, 2020.

3.875% Senior Unsecured Notes

In June 2013, Nasdaq issued the 2021 Notes. The 2021 Notes pay
interest annually at a rate of 3.875% per annum until June 7, 2021
and such rate may vary with Nasdaq’s debt rating up to a rate not
to exceed 5.875%.

The 2021 Notes have been designated as a hedge of our net
investment in certain foreign subsidiaries to mitigate the foreign
exchange risk associated with certain investments in these
subsidiaries. The decrease in the carrying amount of $30 million
noted in the “Payments, Accretion and Other” column in the table
above primarily reflects the translation of the 2021 Notes into U.S.
dollars and is recorded in accumulated other comprehensive loss
within stockholders’ equity in the Consolidated Balance Sheets as
of December 31, 2018.

4.25% Senior Unsecured Notes

In May 2014, Nasdaq issued the 2024 Notes. The 2024 Notes pay
interest semiannually at a rate of 4.25% per annum until June 1,
2024 and such rate may vary with Nasdaq’s debt rating up to a rate
not to exceed 6.25%.

1.75% Senior Unsecured Notes

In May 2016, Nasdaq issued the 2023 Notes. The 2023 Notes pay
interest annually at a rate of 1.75% per annum until May 19, 2023
and such rate may vary with Nasdaq’s debt rating up to a rate not
to exceed 3.75%.

The 2023 Notes have been designated as a hedge of our net
investment in certain foreign subsidiaries to mitigate the foreign
exchange rate risk associated with certain investments in these
subsidiaries. The decrease in the carrying amount of $30 million
noted in the “Payments, Accretion and Other” column in the table
above reflects the translation of the 2023 Notes into U.S. dollars
and is recorded in accumulated other comprehensive loss within
stockholders’ equity in the Consolidated Balance Sheets as of
December 31, 2018.

3.85% Senior Unsecured Notes

In June 2016, Nasdaq issued the 2026 Notes. The 2026 Notes pay
interest semiannually at a rate of 3.85% per annum until June 30,
2026 and such rate may vary with Nasdaq’s debt rating up to a rate
not to exceed 5.85%.

Credit Facilities

As of December 31, 2018, the amounts in the table above reflect
the aggregate principal amount, less the unamortized debt
issuance costs which are being accreted through interest expense
over the life of the applicable credit facility. Nasdaq is permitted
to repay borrowings under our credit facilities at any time in whole
or in part, without penalty.

Our credit facilities contain financial and operating covenants.
Financial covenants include a minimum interest expense coverage

ratio and a maximum leverage ratio. Operating covenants include,
among other things, limitations on Nasdaq’s ability to incur
additional indebtedness, grant liens on assets, dispose of assets
and pay dividends. Our credit facilities allow us to pay cash
dividends on our common stock. The facilities also contain
customary affirmative covenants, including access to financial
statements, notice of defaults and certain other material events,
maintenance of properties and insurance, and events of default,
including cross-defaults to our material indebtedness.

2017 Credit Facility

In April 2017, Nasdaq entered into the 2017 Credit Facility. The
2017 Credit Facility consists of a $1 billion five-year revolving
credit facility (with sublimits for non-dollar borrowings,
swingline borrowings and letters of credit), which replaced a
former credit facility. Nasdaq intends to use funds available under
the 2017 Credit Facility for general corporate purposes and to
provide liquidity support for the repayment of commercial paper
issued through the commercial paper program.

As of December 31, 2018, no amounts were outstanding on the
2017 Credit Facility. The $4 million balance represents
unamortized debt issuance costs. Of the $1 billion that is available
for borrowing, $277 million provides liquidity support for the
commercial paper program and for a letter of credit. As such, as of
December 31, 2018, the total remaining amount available under
the 2017 Credit Facility was $723 million. See “Commercial
Paper Program” above for further discussion of our commercial
paper program.

Under our 2017 Credit Facility, borrowings under the revolving
credit facility and swingline borrowings bear interest on the
principal amount outstanding at a variable interest rate based on
either the LIBOR or the base rate (as defined in the credit
agreement) (or other applicable rate with respect to non-dollar
borrowings), plus an applicable margin that varies with Nasdaq’s
debt rating. We are charged commitment fees of 0.125% to 0.4%,
depending on our credit rating, whether or not amounts have been
borrowed. These commitment fees are included in interest
expense and were not material for the years ended December 31,
2018, 2017 and 2016.

The 2017 Credit Facility includes an option for Nasdaq to increase
the available aggregate amount by up to $500 million, subject to
the consent of the lenders funding the increase and certain other
conditions.

2016 Credit Facility

In March 2016, Nasdaq entered into the 2016 Credit Facility.
Under our 2016 Credit Facility, borrowings bear interest on the
principal amount outstanding at a variable interest rate based on
either the LIBOR or the base rate (or other applicable rate with
respect to non-dollar borrowings), plus an applicable margin that
varies with Nasdaq’s debt rating.

As of December 31, 2018, the amount outstanding of $100 million
is due upon maturity at November 25, 2019, which we expect to
repay with cash on hand and proceeds from issuances

F-33

of commercial paper or borrowings from our revolving credit
commitment under our 2017 Credit Facility.

Other Credit Facilities

We also have credit facilities related to our Nasdaq Clearing
operations in order to provide further liquidity. Credit facilities,
which are available in multiple currencies, totaled $220 million as
of December 31, 2018 and $187 million as of December 31, 2017
in available liquidity, none of which was utilized.

Debt Covenants

allocations adopted by Nasdaq’s Pension and 401(k) Committee
and are primarily invested in collective fund investments that have
underlying investments in fixed income securities. The collective
fund investments are valued at net asset value which is a practical
expedient to estimate fair value.

Accumulated Other Comprehensive Loss

As of December 31, 2018, accumulated other comprehensive loss
for the Nasdaq Benefit Plans was $22 million reflecting an
unrecognized net loss of $28 million, partially offset by an income
tax benefit of $6 million, primarily due to our pension plans.

As of December 31, 2018, we were in compliance with the
covenants of all of our debt obligations.

Estimated Future Benefit Payments

10. Retirement Plans

Defined Contribution Savings Plan

We sponsor a 401(k) Plan for U.S. employees. Employees are
immediately eligible to make contributions to the plan and are also
eligible for an employer contribution match at an amount equal to
100.0% of the first 6.0% of eligible employee contributions.
Savings plan expense included in compensation and benefits
expense in the Consolidated Statements of Income was $14
million for the year ended December 31, 2018, $13 million for
2017 and $11 million for 2016.

Pension and Supplemental Executive Retirement Plans

We maintain non-contributory, defined-benefit pension plans,
non-qualified SERPs for certain senior executives and other
post-retirement benefit plans for eligible employees in the U.S.,
collectively referred to as the Nasdaq Benefit Plans. Our pension
plans and SERPs are frozen. Future service and salary for all
participants do not count toward an accrual of benefits under the
pension plans and SERPs. Most employees outside the U.S. are
covered by local retirement plans or by applicable social laws.
Benefits under social laws are generally expensed in the periods in
which the costs are incurred. The total expense for these plans is
included
the
in compensation and benefits expense
Consolidated Statements of Income and was $22 million in 2018,
$21 million in 2017 and $23 million in 2016.

Nasdaq recognizes the funded status of the Nasdaq Benefit Plans,
measured as the difference between the fair value of the plan
assets and the benefit obligation, in the Consolidated Balance
Sheets. During the third quarter of 2018, we contributed $22
million
to our U.S. defined-benefit pension plans. This
contribution increased the funded status of these plans to
approximately 100.0%. The funded status related to the SERP was
underfunded by $28 million as of December 31, 2018. As of
December 31, 2017, the funded status related to the Nasdaq
Benefit Plans was underfunded by $60 million and was
underfunded by $59 million as of December 31, 2016. The
underfunded liability for the above plans is included in accrued
personnel costs and other non-current
the
Consolidated Balance Sheets. The fair value of the plans' assets
was $94 million as of December 31, 2018 and $79 million as of
December 31, 2017 and the benefit obligation was $122 million as
of December 31, 2018 and $139 million as of December 31, 2017.
The plan assets of the Nasdaq Benefit Plans are invested per target

liabilities

We expect to make the following benefit payments to participants
in the next ten fiscal years under the Nasdaq Benefit Plans:

Pension SERP

Post-
retirement

Total

Fiscal Year Ended:
2019
2020
2021
2022
2023
2024 through 2028

4
5
4
5
5
29
$ 52

(in millions)
2
$
7
2
2
2
10
$ 25

—
—
—
—
—
1
1

6
12
6
7
7
40
$ 78

11. Share-Based Compensation

We have a share-based compensation program for employees and
non-employee directors. Share-based awards granted under this
program include stock options, restricted stock (consisting of
restricted stock units), and PSUs. For accounting purposes, we
consider PSUs to be a form of restricted stock.

Summary of Share-Based Compensation Expense

The following table shows the total share-based compensation
expense resulting from equity awards and the 15.0% discount for
the ESPP for the years ended December 31, 2018, 2017 and 2016
in the Consolidated Statements of Income:

Year Ended December 31,

2018

2017

2016

(in millions)

Share-based compensation expense

before income taxes

Income tax benefit
Share-based compensation expense

69
(19 )

$ 70

(29 )

86
(35 )

after income taxes

$ 41

Common Shares Available Under Our Equity Plan

As of December 31, 2018, we had approximately 11.0 million
shares of common stock authorized for future issuance under our
Equity Plan.

F-34

Restricted Stock

We grant restricted stock to most active employees. The grant date
fair value of restricted stock awards is based on the closing stock
price at the date of grant less the present value of future cash
dividends. Restricted stock awards granted generally vest 25.0%
on the second anniversary of the grant date, 25.0% on the third
anniversary of the grant date, and 50.0% on the fourth anniversary
of the grant date.

performance period. Compensation cost is recognized over the
performance period and the three-year vesting period based on the
probability that such performance measures will be achieved,
taking into account an estimated forfeiture rate.

During 2018, certain grants of PSUs with a one-year performance
period exceeded the applicable performance parameters. As a
result, an additional 51,914 units above target were considered
granted in the first quarter of 2019.

Summary of Restricted Stock Activity

Three-Year PSU Program

The following table summarizes our restricted stock activity for
the years ended December 31, 2018, 2017 and 2016:

Restricted Stock

Number of Awards

Weighted-Average
Grant Date Fair
Value

3,343,738
$
$
724,200
(1,238,980 ) $
(268,380 ) $

$
2,560,578
737,864
$
(1,102,823 ) $
(207,119 ) $

$
1,988,500
550,544
$
(702,832 ) $
(252,837 ) $

35.36
62.91
27.91
43.29

45.92
67.48
38.56
52.29

57.34
81.66
48.64
63.86

1,583,375

68.62

Unvested balances at
December 31, 2015

Granted
Vested
Forfeited
Unvested balances at
December 31, 2016

Granted
Vested
Forfeited
Unvested balances at
December 31, 2017

Granted
Vested
Forfeited
Unvested balances at
December 31, 2018

As of December 31, 2018, $55 million of total unrecognized
compensation cost related to restricted stock is expected to be
recognized over a weighted-average period of 1.8 years.

PSUs

PSUs are based on performance measures that impact the amount
of shares that each recipient will receive upon vesting. We have
two performance-based long-term PSU programs for certain
officers, a one-year performance-based program and a three-year
cumulative performance-based program that focuses on TSR.

One-Year PSU Program

the one-year
The grant date fair value of PSUs under
performance-based program is based on the closing stock price at
the date of grant less the present value of future cash dividends.
Under this program, an eligible employee receives a target grant
of PSUs, but may receive from 0.0% to 150.0% of the target
amount granted, depending on the achievement of performance
measures. These awards vest ratably on an annual basis over a
three-year period commencing with the end of the one-year

Under the three-year performance-based program, each eligible
individual receives PSUs, subject to market conditions, with a
three-year cumulative performance period that vest at the end of
the performance period. Compensation cost is recognized over the
three-year vesting period, taking into account an estimated
forfeiture rate, regardless of whether the market condition is
satisfied, provided that the requisite service period has been
completed. Performance will be determined by comparing
Nasdaq’s TSR to two peer groups, each weighted 50.0%. The first
peer group consists of exchange companies, and the second peer
group consists of all companies in the S&P 500. Nasdaq’s relative
performance ranking against each of these groups will determine
the final number of shares delivered to each individual under the
program. The payout under this program will be between 0.0%
and 200.0% of the number of PSUs granted and will be
determined by Nasdaq’s overall performance against both peer
groups. However, if Nasdaq’s TSR is negative for the three-year
performance period, regardless of TSR ranking, the payout will
not exceed 100.0% of the number of PSUs granted. We estimate
the fair value of PSUs granted under the three-year PSU program
using the Monte Carlo simulation model, as these awards contain
a market condition.

Certain grants of PSUs that were issued in 2016 with a three-year
the applicable performance
performance period exceeded
parameters. As a result, an additional 99,622 units above target
were considered granted in the first quarter of 2019.

The following weighted-average assumptions were used to
determine the weighted-average fair values of the PSU awards
granted under the three-year PSU program:

Weighted-average risk free interest

rate(1)

Expected volatility(2)
Weighted-average grant date share

price

Weighted-average fair value at grant

date

Year Ended December 31,

2018

2017

2.36 %
18.7 %

1.44 %
19.2 %

$86.24

$69.45

$116.86

$81.57

(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

F-35

not be obtained for all the companies in the peer groups used
for relative performance measurement within the program.

In addition, the annual dividend assumption utilized in the Monte
Carlo simulation model is based on Nasdaq’s dividend yield at the
date of grant.

Summary of PSU Activity

The following table summarizes our PSU activity for the years
ended December 31, 2018, 2017 and 2016:

PSUs

One-Year Program

Three-Year Program

Weighted-
Average
Grant
Date Fair
Value

Number of
Awards

Weighted-
Average
Grant Date
Fair Value

Unvested

balances at
December
31, 2015

Granted(1)
Vested
Forfeited
Unvested

balances at
December
31, 2016

Granted(1)
Vested
Forfeited
Unvested

balances at
December
31, 2017

Granted(1)
Vested
Forfeited
Unvested

balances at
December
31, 2018

$
423,967
242,642
$
(242,793 ) $
(45,050 ) $

41.34
58.33
39.63
47.72

$
1,439,718
761,501
$
(879,926 ) $
(6,625 ) $

$
378,766
197,075
$
(202,073 ) $
(40,764 ) $

52.55
65.51
49.93
55.92

$
1,314,668
803,712
$
(1,079,925 ) $
(28,497 ) $

$
333,004
177,831
$
(170,257 ) $
(26,347 ) $

61.39
80.97
58.49
61.83

$
1,009,958
484,075
$
(655,204 ) $
(1,079 ) $

49.41
66.89
43.81
69.11

63.18
55.57
42.83
87.86

78.18
90.92
64.08
81.57

314,231

74.01

837,750

96.57

(1)

Includes target awards granted and certain additional awards
granted based on overachievement of performance
parameters.

As of December 31, 2018, $14 million of total unrecognized
compensation cost related to the one-year PSU program is
expected to be recognized over a weighted-average period of 1.6
years. For the three-year PSU program, $28 million of total
unrecognized compensation cost is expected to be recognized over
a weighted-average period of 1.4 years.

Stock Options

In January 2017, our CEO received 268,817 performance-based
non-qualified stock options which will vest annually over a
three-year period, with each vesting contingent upon the
achievement of annual performance parameters. On January 29,

2019, Nasdaq's management compensation committee and board
of directors determined that the performance goal for 2018 was
met, resulting in the settlement of the second one-third of the
grant. There were no stock option awards granted during the years
ended December 31, 2018 and 2016.

The weighted-average grant date fair value was $66.68. We
estimated the fair value of this stock option award using the
Black-Scholes valuation model using the following assumptions:

Expected life (in years)
Weighted-average risk free interest rate
Expected volatility
Dividend yield

6
2.1 %
25.6 %
1.92 %

Our computation of expected life was based on an estimate of the
average length of time between option grant and exercise. The
interest rate for periods within the expected life of the award was
based on the U.S. Treasury yield curve in effect at the time of
grant. Our computation of expected volatility was an estimate of
the future upward/downward fluctuations in the underlying share
price. We used Nasdaq's historical volatility for the trailing 6-year
period as of the grant date. Our computation of dividend yield was
based on annualized dividends expressed as a percentage of share
price.

Summary of Stock Option Activity

A summary of stock option activity for the years ended
December 31, 2018, 2017 and 2016 is as follows:

Number of
Stock Options

Weighted-Average
Exercise Price

(1,219,820 )
(296 )

Outstanding at December 31, 2015 2,626,487
Exercised
Forfeited
Outstanding at December 31, 2016 1,406,371
268,817
Granted
(1,102,830 )
Exercised
(978 )
Forfeited
Outstanding at December 31, 2017
Exercised
Forfeited
Outstanding at December 31, 2018

571,380
(118,094 )
(5,570 )

447,716

Exercisable at December 31, 2018

268,504

27.74
34.00
23.31
22.32
66.68
21.98
21.33
43.84
24.44
25.29
49.19

37.51

We received net cash proceeds of $3 million from the exercise of
118,094 stock options for the year ended December 31, 2018,
received net cash proceeds of $24 million from the exercise of
1,102,830 stock options for the year ended December 31, 2017,
and received net cash proceeds of $41 million from the exercise of
1,219,820 stock options for the year ended December 31, 2016.

F-36

The following table summarizes significant ranges of outstanding and exercisable stock options as of December 31, 2018:

Range of Exercise
Prices

- $ 20.10
- $ 66.68

$ 18.67
$ 25.28
Total

Number of
Stock Options
76,844
370,872
447,716

Outstanding

Exercisable

Weighted-
Average
Remaining
Contractual
Term (in
years)
1.17
6.42
5.52

Weighted-
Average
Exercise
Price
$ 19.74
55.29
$ 49.19

Aggregate
Intrinsic
Value (in
millions)

5
10
15

Number
Exercisable
76,844
191,660
268,504

Weighted-
Average
Remaining
Contractual
Term (in
years)
1.17
4.94
3.86

Weighted-
Average
Exercise
Price
$ 19.74
44.64
$ 37.51

Aggregate
Intrinsic
Value (in
millions)

5
7
12

The aggregate intrinsic value in the above table represents the total
pre-tax intrinsic value (i.e., the difference between our closing
stock price on December 31, 2018 of $81.57 and the exercise
price, times the number of shares) based on stock options with an
exercise price less than Nasdaq’s closing price of $81.57 as of
December 31, 2018, which would have been received by the
option holders had the option holders exercised their stock options
on that date. This amount can change based on the fair market
value of our common stock. The total number of in-the-money
stock options exercisable as of December 31, 2018 was 0.3
million and the weighted-average exercise price was $37.51. As of
December 31, 2017, 0.3 million outstanding stock options were
exercisable and the weighted-average exercise price was $23.55.

The total pre-tax intrinsic value of stock options exercised was $7
million during 2018, $54 million during 2017 and $40 million
during 2016.

ESPP

We have an ESPP under which approximately 1.9 million shares
of our common stock have been reserved for future issuance as of
December 31, 2018. Under our ESPP, employees may purchase
shares having a value not exceeding 10.0% of their annual
compensation, subject to applicable annual Internal Revenue
Service limitations. We record compensation expense related to
the 15.0% discount that is given to our employees. The following
table summarizes employee activity and expenses associated with
the ESPP for the years ended December 31, 2018, 2017 and 2016.

Year Ended December 31,

2018

2017

2016

Number of shares purchased by

employees

205,785

235,859

233,464

Weighted-average price of

shares purchased
Compensation expenses

$ 66.79
3
$

$ 58.26
3
$

$ 50.39
4
$

12. Nasdaq Stockholders’ Equity

Common Stock

As of December 31, 2018, 300,000,000 shares of our common
stock were authorized, 170,709,425 shares were issued and
165,165,104 shares were outstanding. The holders of common
stock are entitled to one vote per share, except that our certificate
of incorporation limits the ability of any person to vote in excess
of 5.0% of the then-outstanding shares of Nasdaq common stock.

Common Stock in Treasury, at Cost

We account for the purchase of treasury stock under the cost
method with the shares of stock repurchased reflected as a
reduction to Nasdaq stockholders’ equity and included in common
stock in treasury, at cost in the Consolidated Balance Sheets.
Shares repurchased under our share repurchase program are
currently retired and canceled. When treasury shares are reissued,
they are recorded at the average cost of the treasury shares
acquired. We held 5,544,321 shares of common stock in treasury
as of December 31, 2018 and 4,932,402 shares as of December 31,
2017, most of which are related to shares of our common stock
repurchased for the settlement of employee tax withholding
obligations arising from the vesting of restricted stock and PSUs.

Share Repurchase Program

In January 2018, our board of directors authorized an additional
$500 million for the share repurchase program bringing the total
capacity to $726 million.

These purchases may be made from time to time at prevailing
market prices in open market purchases, privately-negotiated
transactions, block purchase
techniques or otherwise, as
determined by our management. The purchases are primarily
funded from existing cash balances. The share repurchase
program may be suspended, modified or discontinued at any time.
The share repurchase program has no defined expiration date.

F-37

A summary of our share repurchase activity, reported based on
settlement date is as follows:

remaining amount authorized for share repurchases under the
program was $332 million.

Year Ended December 31,

2018

2017

Number of shares of common

stock repurchased

Average price paid per share
$
Total purchase price (in millions) $

4,508,426
87.43
394

$
$

2,843,519
71.56
203

As discussed above in “Common Stock in Treasury, at Cost,”
shares repurchased under our share repurchase program are
currently retired and cancelled. As of December 31, 2018, the

Other Repurchases of Common Stock

For the year ended December 31, 2018, we repurchased 611,919
shares of our common stock in settlement of employee tax
withholding obligations arising from the vesting of restricted
stock.

Preferred Stock

Our certificate of incorporation authorizes the issuance of
30,000,000 shares of preferred stock, par value $0.01 per share,
issuable from time to time in one or more series. As of
December 31, 2018 and December 31, 2017, no shares of
preferred stock were issued or outstanding.

Cash Dividends on Common Stock

During 2018, our board of directors declared the following cash dividends:

* * * * * *

Declaration Date

Dividend Per
Common Share

Record Date

January 30, 2018
March 26, 2018
July 24, 2018
October 24, 2018

0.38
0.44
0.44
0.44

March 16, 2018
June 15, 2018
September 14, 2018
December 14, 2018

Total Amount
Paid

(in millions)
63
73
72
72
280

Payment Date

March 30, 2018
June 29, 2018
September 28, 2018
December 28, 2018

The total amount paid of $280 million was recorded in retained earnings in the Consolidated Balance Sheets at December 31, 2018.

In March 2018, the board of directors approved a regular quarterly cash dividend of $0.44 per share on our outstanding common stock
which reflects a 16.0% increase from our prior quarterly cash dividend of $0.38.

In January 2019, the board of directors declared a regular quarterly cash dividend of $0.44 per share on our outstanding common stock.
The dividend is payable on March 29, 2019 to shareholders of record at the close of business on March 15, 2019. The estimated amount
of this dividend is $73 million. Future declarations of quarterly dividends and the establishment of future record and payment dates are
subject to approval by the board of directors.

Our board of directors maintains a dividend policy with the intention to provide stockholders with regular and growing dividends over
the long term as earnings and cash flow grow.

F-38

13. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

Numerator:
Net income attributable to common shareholders
Denominator:
Weighted-average common shares outstanding for basic earnings per share
Weighted-average effect of dilutive securities:

Employee equity awards(1)
Contingent issuance of common stock

Weighted-average common shares outstanding for diluted earnings per share
Basic and diluted earnings per share:
Basic earnings per share

Diluted earnings per share

Year Ended December 31,

2018

2017

2016

(in millions, except share and per share amounts)

458

729

106

165,349,471

166,364,299

165,182,290

1,988,610
353,218

2,861,892
358,840

3,258,136
360,571

167,691,299

169,585,031

168,800,997

2.77

2.73

4.38

4.30

0.64

0.63

(1) PSUs, which are considered contingently issuable, are included in the computation of dilutive earnings per share on a weighted

average basis when management determines the related performance criteria are met.

There were no securities that were antidilutive for the year ended
December 31, 2018. Securities that were not included in the
computation of diluted earnings per share because their effect was
antidilutive totaled 267,465 for the year ended December 31, 2017
and 264,134 for the year ended December 31, 2016.

14. Fair Value of Financial Instruments

The following tables present our financial assets and financial
liabilities that are measured at fair value on a recurring basis as of
December 31, 2018 and December 31, 2017. We did not have any
financial liabilities measured at fair value on a recurring basis as
of December 31, 2017.

December 31, 2018

Total

Level 1

Level 2

Level 3

(in millions)

Assets at Fair Value
Financial investments,

268

133

135

—

at fair value
Default fund and
margin deposit
investments

Total Assets at Fair

1,649

327

1,322

Value

$ 1,917

460

$ 1,457

Liabilities at Fair Value
Other financial
instruments

Total Liabilities at

Fair Value

112

$ —

112

$ —

112

—

December 31, 2017
Level 2

Level 1

Total

Level 3

(in millions)

Assets at Fair Value
Financial

investments, at fair
value

235

135

100

—

Default fund and
margin deposit
investments

Total Assets at
Fair Value

2,129

371

1,758

2,364

506

1,858

—

As of December 31, 2018 and December 31, 2017, Level 1
financial investments, at fair value were primarily comprised of
trading securities, mainly highly rated European government

F-39

debt securities. As of December 31, 2018 and December 31, 2017,
Level 2 financial investments, at fair value were primarily
comprised of trading securities, mainly corporate bonds and
European mortgage bonds. Of the Level 1 and Level 2 financial
investments, at fair value, $166 million as of December 31, 2018
and $160 million as of December 31, 2017 are assets primarily
utilized to meet regulatory capital requirements, mainly for our
clearing operations at Nasdaq Clearing.

Our Level 1 default fund and margin deposit investments were
primarily comprised of highly rated European and U.S.
government debt securities. Level 2 default fund and margin
deposit investments were primarily comprised of central bank
repurchase agreements, as of
certificates and
December 31, 2018 and December 31, 2017.

reverse

Our Level 2 other financial instruments include a liability
associated with Nasdaq Clearing's requirement to fulfill the
settlement of certain contracts of a defaulted member. As of
December 31, 2018, the fair value of this guarantee was $112
million and is included in other current liabilities in the
Consolidated Balance Sheets. Collateral of $112 million was
recorded in other current assets which offsets this liability. See
Note 15, “Clearing Operations,” for further discussion of default
fund contributions and margin deposits.

Financial Instruments Not Measured at Fair Value on a
Recurring Basis

Some of our financial instruments are not measured at fair value
on a recurring basis but are recorded at amounts that approximate
fair value due to their liquid or short-term nature. Such financial
assets and financial liabilities include: cash and cash equivalents,
restricted cash, receivables, net, certain other current assets,
accounts payable and accrued expenses, Section 31 fees payable
to SEC, accrued personnel costs, commercial paper and certain
other current liabilities.

Our investments in OCC and EuroCCP N.V. are accounted for
under the equity method of accounting. See “Equity Method
Investments,” of Note 2, “Summary of Significant Accounting
Policies,” and “Equity Method Investments,” of Note 6,
“Investments,” for further discussion.

We also consider our debt obligations to be financial instruments.
The fair value of our debt obligations, utilizing discounted cash
flow analyses for our floating rate debt and prevailing market rates
for our fixed rate debt, was $3.9 billion as of December 31, 2018
and $4.4 billion as of December 31, 2017. The discounted cash
flow analyses are based on borrowing rates currently available to
us for debt with similar terms and maturities. The fair value of our
commercial paper approximates the carrying value since the rates
of interest on this short-term debt approximate market rates as of
December 31, 2018. Our commercial paper and our fixed rate and
floating rate debt are categorized as Level 2 in the fair value
hierarchy.

For further discussion of our debt obligations, see Note 9, “Debt
Obligations.”

Non-Financial Assets Measured at Fair Value on a
Non-Recurring Basis

Our non-financial assets, which include goodwill, intangible
assets, and other long-lived assets, are not required to be carried at
fair value on a recurring basis. Fair value measures of
non-financial assets are primarily used in the impairment analysis
of these assets. Any resulting asset impairment would require that
the non-financial asset be recorded at its fair value. Nasdaq uses
Level 3 inputs to measure the fair value of the above assets on a
non-recurring basis. As of December 31, 2018 and December 31,
2017, there were no non-financial assets measured at fair value on
a non-recurring basis.

15. Clearing Operations

Nasdaq Clearing

Nasdaq Clearing is authorized and supervised under EMIR as a
multi-asset clearinghouse by the SFSA. Such authorization is
effective for all member states of the European Union and certain
other non-member states that are part of the European Economic
Area, including Norway. The clearinghouse acts as the CCP for
exchange and OTC trades in equity derivatives, fixed income
derivatives, resale and repurchase contracts, power derivatives,
emission allowance derivatives, fuel oil derivatives, and seafood
derivatives.

Through our clearing operations in the financial markets, which
include the resale and repurchase market, the commodities
markets, and the seafood market, Nasdaq Clearing is the legal
counterparty for, and guarantees the fulfillment of, each contract
cleared. These contracts are not used by Nasdaq Clearing for the
purpose of trading on its own behalf. As the legal counterparty of
each transaction, Nasdaq Clearing bears the counterparty risk
between the purchaser and seller in the contract. In its guarantor
role, Nasdaq Clearing has precisely equal and offsetting claims to
and from clearing members on opposite sides of each contract,
standing as the CCP on every contract cleared. In accordance with
the rules and regulations of Nasdaq Clearing, default fund and
margin collateral requirements are calculated for each clearing
member’s positions in accounts with the CCP. See “Default Fund
Contributions and Margin Deposits” below for further discussion
of Nasdaq Clearing’s default fund and margin requirements.

Nasdaq Clearing maintains four member sponsored default funds:
one related to financial markets, one related to commodities
markets, one related to the seafood market, and a mutualized fund.
Under this structure, Nasdaq Clearing and its clearing members
must contribute to the total regulatory capital related to the
clearing operations of Nasdaq Clearing. This structure applies an
initial separation of default fund contributions for the financial,
commodities and seafood markets in order to create a buffer for
each market’s counterparty risks. Simultaneously, a mutualized
default fund provides capital efficiencies to Nasdaq Clearing’s
members with regard to total regulatory capital required. See
“Default Fund Contributions” below for further discussion of
Nasdaq Clearing’s default fund. Power of assessment and a
liability

F-40

waterfall also have been
implemented. See “Power of
Assessment” and “Liability Waterfall” below for further
discussion. These requirements ensure the alignment of risk
between Nasdaq Clearing and its clearing members.

Nasdaq Commodities Clearing Default

In September 2018, a member of
the Nasdaq Clearing
commodities market defaulted due to inability to post sufficient
collateral to cover increased margin requirements for the positions
of the relevant member, which had experienced losses due to
sharp adverse movements in the Nordic - German power market
spread. Nasdaq Clearing followed default procedures and offset
the future market risk on the defaulting member’s positions. The
default resulted in a loss of $133 million which was allocated to
Nasdaq Clearing and the members of the commodities default
fund in accordance with the liability waterfall as follows:

•

the first $8 million of the loss was allocated to Nasdaq
Clearing’s junior capital; and

the remainder was allocated on a pro-rata basis to the
commodities clearing members’ default funds.

During September 2018, Nasdaq Clearing replenished the utilized
junior capital of $8 million for the commodities market and the
commodities clearing members replenished their pro rata portions
of the default fund. Nasdaq Clearing has also increased its junior
capital by $14 million for the commodity market.

In November 2018, the defaulting member entered into an
agreement for a consensual arrangement with creditors, including
Nasdaq Clearing, for the recovery of the members’ default fund
the
losses. Any funds recovered will be apportioned
commodities default fund participants first and thereafter to
Nasdaq Clearing in accordance with the default fund rules.

In order to reduce the risk profile of commodities clearing
operations, Nasdaq Clearing has increased margin levels by
increasing the confidence level on commodity products and
thereby shifted the risk from waterfall resources more to each
portfolio holder's collateral. In addition, Nasdaq Clearing has
launched a risk management enhancement program entailing a
range of risk mitigating actions, which commenced in the fourth
quarter of 2018 and will continue during 2019.

In December 2018, we recorded a $23 million charge associated
with the clearing default as a result of our initiating a capital relief
program. The capital relief program is a voluntary program open
to each commodities default fund participant; each such
participant who agrees to the capital relief program will receive a
proportion of the funds made available under the capital relief
program as reflects their proportionate share of the aggregate of
the clearing members' default fund replenishments. The capital
relief program is in addition to any funds to be recovered from the
defaulting member. This charge
in general,
administrative and other expense in the Consolidated Statements
of Income for 2018.

is recorded

Sheets as of December 31, 2018 in order to allow Nasdaq Clearing
to fulfill the settlement of certain contracts of the defaulted
member arising from the default management process. We have
established mitigating positions. The collateral and liability were
previously included in Default Funds and Margin Deposits.

Default Fund Contributions and Margin Deposits

As of December 31, 2018, clearing member default fund
contributions and margin deposits were as follows:

December 31, 2018

Cash
Contributions

Non-Cash
Contributions

Total
Contributions

(in millions)

Default fund

contributions
Margin deposits
Total

370
4,372
4,742

129
3,073
3,202

499
7,445
7,944

In accordance with its investment policy, of the total cash
contributions of $4,742 million, Nasdaq Clearing has invested
$1,483 million in highly rated European and U.S. government
debt securities or central bank certificates with maturity dates
primarily 90 days or less and $166 million in reverse repurchase
agreements secured with highly rated government securities with
maturity dates that range from 4 days to 17 days. The carrying
value of these securities approximates their fair value due to the
short-term nature of the instruments and reverse repurchase
agreements. The remainder of this balance was held in cash in
demand deposit accounts at central banks and large, highly rated
financial institutions. Of the total default fund contributions of
$499 million, Nasdaq Clearing can utilize $436 million as capital
resources in the event of a counterparty default. The remaining
balance of $63 million pertains to member posted surplus
balances.

In the investment activity related to default fund and margin
contributions, we are exposed to counterparty risk related to
reverse repurchase agreement transactions, which reflect the risk
that the counterparty might become insolvent and, thus, fail to
meet its obligations to Nasdaq Clearing. We mitigate this risk by
only engaging in transactions with high credit quality reverse
repurchase agreement counterparties and by
the
acceptable collateral under the reverse repurchase agreement to
high quality issuers, primarily government securities and other
securities explicitly guaranteed by a government. The value of the
underlying security is monitored during the lifetime of the
contract and in the event the market value of the underlying
security falls below
the reverse repurchase amount our
clearinghouse may require additional collateral or a reset of the
contract.

limiting

Default Fund Contributions

As a result of the default, a $112 million liability was recorded in
other current liabilities and $112 million of collateral was
recorded in other current assets in the Consolidated Balance

Required contributions to the default funds are proportional to the
exposures of each clearing member. When a clearing member is
active in more than one market, contributions must

F-41

be made to all markets’ default funds in which the member is
active. Clearing members’ eligible contributions may include cash
and non-cash contributions. Cash contributions received are held
in cash or invested by Nasdaq Clearing, in accordance with its
investment policy, either in highly rated government debt
securities, time deposits, central bank certificates or reverse
repurchase agreements with highly rated government debt
securities as collateral. Nasdaq Clearing maintains and manages
all cash deposits related to margin collateral. All risks and rewards
of collateral ownership, including interest, belong to Nasdaq
Clearing. Clearing members’ cash contributions are included in
default funds and margin deposits in the Consolidated Balance
Sheets as both a current asset and a current liability. Non-cash
contributions include highly rated government debt securities that
must meet specific criteria approved by Nasdaq Clearing.
Non-cash contributions are pledged assets that are not recorded in
the Consolidated Balance Sheets as Nasdaq Clearing does not take
legal ownership of these assets and the risks and rewards remain
with the clearing members. These balances may fluctuate over
time due to changes in the amount of deposits required and
whether members choose
to provide cash or non-cash
contributions. Assets pledged are held at a nominee account in
Nasdaq Clearing’s name for the benefit of the clearing members
and are immediately accessible by Nasdaq Clearing in the event of
a default. In addition to clearing members’ required contributions
to the liability waterfall, Nasdaq Clearing is also required to
contribute capital to the liability waterfall and overall regulatory
capital as specified under its clearinghouse rules. As of
December 31, 2018, Nasdaq Clearing committed capital totaling
$121 million to the liability waterfall and overall regulatory
capital, in the form of government debt securities, which are
recorded as financial investments, at fair value in the Consolidated
Balance Sheets. The combined regulatory capital of the clearing
members and Nasdaq Clearing will serve to secure the obligations
of a clearing member exceeding such member’s own margin and
default fund deposits and may be used to cover losses sustained by
a clearing member in the event of a default.

Margin Deposits

Nasdaq Clearing requires all clearing members to provide
collateral, which may consist of cash and non-cash contributions,
to guarantee performance on the clearing members’ open
positions, or initial margin. In addition, clearing members must
also provide collateral to cover the daily margin call if needed. See
“Default Fund Contributions” above for further discussion of cash
and non-cash contributions.

Similar to default fund contributions, Nasdaq Clearing maintains
and manages all cash deposits related to margin collateral. All
risks and rewards of collateral ownership, including interest,
belong to Nasdaq Clearing and are recorded in revenues. These
cash deposits are recorded in default funds and margin deposits in
the Consolidated Balance Sheets as both a current asset and a
current liability. Pledged margin collateral is not recorded in our
Consolidated Balance Sheets as all risks and rewards of collateral
ownership, including interest, belong to the counterparty. Assets
pledged are held at a nominee account in Nasdaq Clearing’s name

for the benefit of the clearing members and are immediately
accessible by Nasdaq Clearing in the event of a default.

Nasdaq Clearing marks to market all outstanding contracts and
requires payment from clearing members whose positions have
lost value. The mark-to-market process helps identify any clearing
members that may not be able to satisfy their financial obligations
in a timely manner allowing Nasdaq Clearing the ability to
mitigate the risk of a clearing member defaulting due to
exceptionally large losses. In the event of a default, Nasdaq
Clearing can access the defaulting member’s margin and default
fund deposits to cover the defaulting member’s losses.

Regulatory Capital and Risk Management Calculations

Nasdaq Clearing manages risk
through a comprehensive
counterparty risk management framework, which is comprised of
policies, procedures, standards and financial resources. The level
of regulatory capital is determined in accordance with Nasdaq
Clearing’s regulatory capital policy, as approved by the SFSA.
Regulatory capital calculations are continuously updated through
a proprietary capital-at-risk calculation model that establishes the
appropriate level of capital.

As mentioned above, Nasdaq Clearing is the legal counterparty for
each contract cleared and thereby guarantees the fulfillment of
each contract. Nasdaq Clearing accounts for this guarantee as a
performance guarantee. We determine the fair value of the
performance guarantee by considering daily settlement of
contracts and other margining and default fund requirements, the
risk management program, historical evidence of default
payments, and the estimated probability of potential default
payouts. The calculation is determined using proprietary risk
management software that simulates gains and losses based on
historical market prices, extreme but plausible market scenarios,
volatility and other factors present at that point in time for those
particular unsettled contracts. Based on this analysis, excluding
any liability related to the Nasdaq commodities clearing default
(see discussion above), the estimated liability was nominal and no
liability was recorded as of December 31, 2018.

Power of Assessment

To further strengthen the contingent financial resources of the
clearinghouse, Nasdaq Clearing has power of assessment that
provides the ability to collect additional funds from its clearing
members to cover a defaulting member’s remaining obligations up
to the limits established under the terms of the clearinghouse rules.
The power of assessment corresponds to 100.0% of the clearing
member’s aggregate contribution to the financial, commodities
and seafood markets’ default funds.

Liability Waterfall

The liability waterfall is the priority order in which the capital
resources would be utilized in the event of a default where the
defaulting clearing member’s collateral would not be sufficient to
cover the cost to settle its portfolio. If a default occurs and the
defaulting clearing member’s collateral, including cash

F-42

deposits and pledged assets, is depleted, then capital is utilized in
the following amount and order:

•

junior capital contributed by Nasdaq Clearing, which totaled
$31 million as of December 31, 2018;

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 $23 million as of December 31, 2018; and

• mutualized default fund, which includes capital contributions

of the clearing members on a pro-rata basis.

If additional funds are needed after utilization of the liability
waterfall, then Nasdaq Clearing will utilize its power of
assessment and additional capital contributions will be required by
non-defaulting members up to the limits established under the
terms of the clearinghouse rules.

In addition to the capital held to withstand counterparty defaults
described above, Nasdaq Clearing also has committed capital of
$67 million to ensure that it can handle an orderly wind-down of
its operation, and that it is adequately protected against
investment, operational, legal, and business risks.

Market Value of Derivative Contracts Outstanding

The following table includes the market value of derivative
contracts outstanding prior to netting:

December 31, 2018

(in millions)

Commodity and seafood options, futures and

forwards(1)(2)(3)

Fixed-income options and futures(1)(2)
Stock options and futures(1)(2)
Index options and futures(1)(2)
Total

1,196
600
271
135
2,202

(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.

Derivative Contracts Cleared

The following table includes the total number of derivative
contracts cleared through Nasdaq Clearing for the years ended
December 31, 2018 and 2017:

Commodity and seafood
options, futures and
forwards(1)

Fixed-income options and

futures

Stock options and futures
Index options and futures
Total

December 31, 2018

December 31, 2017

1,649,912

2,824,188

22,839,794
24,978,684
49,038,297
98,506,687

20,376,383
26,023,816
44,928,284
94,152,671

(1) The total volume in cleared power related to commodity

contracts was 1,067 Terawatt hours (TWh) for the year ended
December 31, 2018 and 1,199 TWh for the year ended
December 31, 2017.

The outstanding contract value of resale and repurchase
agreements was $0.5 billion as of December 31, 2018 and $2.3
billion as of December 31, 2017. The total number of contracts
cleared was 9,223,246 for the year ended December 31, 2018 and
was 8,534,986 for the year ended December 31, 2017.

16. Leases

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 lease agreements contain renewal options and
escalation clauses based on increases in property taxes and
building operating costs.

As of December 31, 2018, future minimum lease payments under
non-cancelable operating leases (net of sublease income) are as
follows:

Gross Lease
Commitments

Sublease
Income

Net Lease
Commitments

(in millions)

Year ending December 31:

2019
2020
2021
2022
2023
Thereafter

Total future

minimum lease
payments

80
74
66
48
45
347

5
5
4
4
3
2

75
69
62
44
42
345

660

637

Rent expense for operating leases (net of sublease income of $5
million in 2018, $3 million in 2017, and $4 million in 2016) was
$82 million in 2018, $83 million in 2017, and $78 million in 2016.

F-43

In February 2016, the FASB issued ASU 2016-02, “Leases.” We
adopted this new guidance on January 1, 2019. See “Leases,” of
“Recent Accounting Pronouncements,” of Note 2, “Summary of
Significant Accounting Policies,” for further discussion.

17. Income Taxes

Income Before Income Tax Provision

The following table presents the domestic and foreign components
of income (loss) before income tax provision:

Year Ended December 31,

2018

2017

2016

Domestic
Foreign
Income before income tax

(in millions)
556
316

636
428

(153 )
286

provision

$ 1,064

872

133

Income Tax Provision

The income tax provision consists of the following amounts:

Year Ended December 31,

2018

2017

2016

Current income tax provision:
Federal
State
Foreign
Total current income tax

provision

Deferred income tax
provision (benefit):

Federal
State
Foreign
Total deferred income
provision (benefit)

(in millions)

103
56
146

51
17
68

305

136

(16 )
24
(1 )

185
116
—

301

(137 )

37
21
106

164

(98 )
(35 )
(4 )

Total income tax provision

606

143

We have determined that undistributed earnings of certain
non-U.S. subsidiaries will be reinvested for an indefinite period of
time. We have both the intent and ability to indefinitely reinvest
these earnings. As of December 31, 2018, the cumulative amount
of undistributed earnings in these subsidiaries is $387 million.
Given our intent to reinvest these earnings for an indefinite period
of time, we have not accrued a deferred tax liability on these
earnings. A determination of an unrecognized deferred tax
liability related to these earnings is not practicable.

A reconciliation of the income tax provision, based on the U.S.
federal statutory rate, to our actual income tax provision for the
years ended December 31, 2018, 2017 and 2016 is as follows:

Federal income tax

provision at the statutory
rate

State income tax provision,

net of federal effect
Change in deferred taxes
due to change in law
Excess tax benefits related
to employee share-based
compensation
Non-U.S. subsidiary

earnings

Tax credits and deductions
Change in unrecognized tax

benefits
Other, net
Actual income tax provision

Year Ended December 31,

2018

2017

2016

21.0 %

35.0 %

3.7 %

2.6 %

(6.7 )%

27.0 %

(9.9 )%

(1.2 )%

(0.7 )%

(4.0 )% — %

0.1 %
(0.2 )%

(6.0 )%
(1.0 )%

(7.3 )%
(5.1 )%

4.7 %
1.4 %
57.0 %

(0.8 )%
0.5 %
16.4 %

4.2 %
1.4 %
20.3 %

The majority of the increase in our effective tax rate in 2018
compared to 2017 and the decrease in our effective tax rate in
2017 compared to 2016 was the result of the final and provisional
impacts from The Tax Cuts and Jobs Act which was enacted on
December 22, 2017. See “Tax Cuts and Jobs Act” below for
further discussion of the impacts of this legislation on our
financial statements. Also impacting the increase in the effective
tax rate in 2018 compared to 2017 was the reversal of certain
Swedish tax benefits recorded in prior periods and the tax expense
associated with the sale of the Public Relations Solutions and
Digital Media Services businesses.

We recorded income tax benefits of $9 million in 2018, $40
million in 2017 and $41 million in 2016, primarily related to
share-based compensation. In 2018 and 2017, the benefit was
included in income tax expense and in 2016, the benefit was
recorded as additional paid-in-capital in the Consolidated Balance
Sheets due to the adoption of accounting guidance on January 1,
2017. This guidance requires all income tax effects of share-based
awards to be recognized as income tax expense or benefit in the
income statement when the awards vest or are settled on a
prospective basis, as opposed to stockholders’ equity.

We are subject to examination by federal, state and local, and
foreign tax authorities. We regularly assess the likelihood of
additional assessments by each jurisdiction and have established
tax reserves that we believe are adequate in relation to the
potential for additional assessments. We believe
the
resolution of tax matters will not have a material effect on our
financial condition but may be material to our operating results for
a particular period and the effective tax rate for that period.

that

The effective tax rate may vary from period to period depending
on, among other factors, the geographic and business mix of
earnings and losses. These same and other factors, including

F-44

the history of pre-tax earnings and losses, are taken into account in
assessing the ability to realize deferred tax assets.

Deferred Income Taxes

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:

The temporary differences, which give rise to our deferred tax
assets and (liabilities), consisted of the following:

Year Ended December 31,

2018

2017

2016

Deferred tax assets:
Deferred revenues
U.S. federal net operating loss
Foreign net operating loss
State net operating loss
Compensation and benefits
Foreign currency translation
Tax credits
Federal benefit of uncertain tax positions
Other
Gross deferred tax assets
Less: valuation allowance

Total deferred tax assets, net of valuation

allowance

Deferred tax liabilities:
Amortization of software development costs

and depreciation

Amortization of acquired intangible assets

Investments
Other
Gross deferred tax liabilities

Net deferred tax liabilities

Reported as:
Non-current deferred tax assets(1)
Deferred tax liabilities, net
Net deferred tax liabilities

December 31,

2018

2017

(in millions)

19
—
23
4
33
—
—
17
25
121
(23 )

25
1
30
4
42
292
7
—
20
421
(30 )

$ 391

(41 )

(47 )

(498 )
(34 )
(22 )
(595 )

(510 )
(26 )
(19 )
(602 )

$ (497 ) $ (211 )

4
(501 )

14
(225 )
$ (497 ) $ (211 )

(1) Included in other non-current assets in the Consolidated

Balance Sheets.

A valuation allowance has been established with regards to the tax
benefits associated with certain net operating losses, or NOLs, as
it is more likely than not that these benefits will not be realized in
the foreseeable future.

As of December 31, 2018, the expiration dates for the NOLs are as
follows:

Jurisdiction

Amount

Expiration Date

Foreign NOL
Foreign NOL
State NOL

(in millions)

3
20
4

2019-2025

No expiration date

2025-2036

Beginning balance
Additions as a result of tax

positions taken in prior periods

Additions as a result of tax

positions taken in the current
period

Reductions related to settlements

(in millions)
$

with taxing authorities

(23 ) —

(4 )

Reductions as a result of lapses of

the applicable statute of
limitations
Ending balance

(4 )
52

(10 ) —
48
$
45

As of December 31, 2018, we had $43 million of unrecognized tax
benefits, $45 million as of December 31, 2017 and $48 million as
of December 31, 2016 which, if recognized in the future, would
affect our effective tax rate. Nasdaq believes it is reasonably
possible that our unrecognized tax benefits could decrease within
the next 12 months by as much as $12 million, principally as a
result of potential resolutions or settlements of prior years’ tax
items.

We recognize interest and/or penalties related to income tax
matters in the provision for income taxes in our Consolidated
Statements of Income and were $2 million for the year ended
December 31, 2018, $1 million for 2017 and $2 million for 2016.
Accrued interest and penalties, net of tax effect were $10 million
as of December 31, 2018 and $9 million as of December 31, 2017.

Tax Audits

Nasdaq and its eligible subsidiaries file a consolidated U.S.
federal income tax return and applicable state and local income tax
returns and non-U.S. income tax returns. Federal income tax
returns for the years 2008 through 2014 are currently under
examination by the Internal Revenue Services and we are subject
to examination by the Internal Revenue Service for years 2015
through 2017. Several state tax returns are currently under
examination by the respective tax authorities for the years 2007
through 2016 and we are subject to examination for the year 2017.
Non-U.S. tax returns are subject to examination by the respective
tax authorities for the years 2009 through 2017. Although the
results of such examinations may have an impact on our
unrecognized tax benefits, we do not anticipate that such impact
will be material to our consolidated financial position or results of
operations. In addition, we do not anticipate that the amount of
unrecognized tax benefits as of December 31, 2018 will decrease
in the next twelve months as we do not expect to settle any
material tax audits.

The Swedish Tax Agency has disallowed certain interest expense
deductions for the years 2013 - 2016. We appealed to

F-45

the Lower Administrative Court for the years 2013 - 2015. In the
first quarter of 2018, the Lower Administrative Court denied our
appeal. We have appealed to the Administrative Court of Appeal.
Through March 31, 2018, we had recorded tax benefits of $56
million associated with this matter. We continue to pay all
assessments from the Swedish Tax Agency while this matter is
pending and have paid $40 million through December 31, 2018. In
the second quarter of 2018, the Administrative Court of Appeal
decided similar cases against other taxpayers. Although we
continue to assert the validity of these interest expense deductions,
the decisions of the court lead us to conclude that we can no longer
assert that we are more than likely to be successful in our appeal.
As such, in 2018, we recorded tax expense of $41 million, or
$0.24 per diluted share, which is net of any related U.S. tax
benefits and reflects the impact of foreign currency translation.
We expect to record future quarterly net tax expense of $1 million
related to this matter.

Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act contained several key provisions,
including a reduction of the U.S. corporate income tax rate from
35% to 21%. It also imposed a transition tax on unremitted
aggregate accumulated earnings of non-U.S. subsidiaries, which
did not impact us and the act also created a new requirement to
provide U.S. tax on foreign earnings, global intangible low-taxed
income, or GILTI, which was immaterial for 2018. To the extent
that we incur future expense under the GILTI provisions, we will
record the expense as a component of income tax expense as a
current-period expense when incurred. We were required to
remeasure all of our U.S. deferred tax assets and liabilities as of
December 22, 2017 and record the impact of such remeasurement
in our 2017 financial statements. The net effect of applying the
provisions of the act on our 2017 Consolidated Statement of
Income was a non-cash provisional tax benefit of $89 million,
substantially all of which reflects the estimated impact associated
with the remeasurement of our net U.S. deferred tax liability at the
lower U.S. federal corporate income tax rate.

SAB 118 provided guidance which allowed us to record
provisional amounts during a measurement period of up to one
year from the enactment date to finalize the recording of any
related tax impacts. During the fourth quarter of 2018, we
completed our accounting for the tax effects of the act, finalizing
our analysis of the act and subsequent guidance issued by the U.S.
Internal Revenue Service. As a result, we recorded a $290 million
non-cash tax charge, reducing deferred tax assets relating to
foreign currency translation.

Topic 220

On January 1, 2018, we adopted Topic 220. See “Income
Statement - Reporting Comprehensive Income,” of “Recent
Accounting Pronouncements,” of Note 2, “Summary of

Significant Accounting Policies,” for further discussion of this
standard. As a result of the adoption of this standard, we recorded
a reclassification of $417 million related to the Tax Cuts and Jobs
Act from accumulated other comprehensive loss to retained
earnings within stockholders’ equity in the Consolidated Balance
Sheets.

18. Restructuring Charges

2015 Restructuring Plan

During the first quarter of 2015, we performed a comprehensive
review of our processes, businesses and systems
in a
company-wide effort to improve performance, cut costs, and
reduce spending. This restructuring plan was completed in the
second quarter of 2016.

The following table presents a summary of restructuring plan
charges in the Consolidated Statements of Income:

Year Ended

December 31, 2016

(in millions)

Severance and other termination benefits
Facilities-related
Asset impairments
Other
Total restructuring charges

22
1
8
10
41

For
the year ended December 31, 2016, we recognized
restructuring charges totaling $41 million, including severance
costs of $22 million related to workforce reductions of 201
for asset
positions across our organization, $8 million
impairments, primarily related to fixed assets and capitalized
software that were retired and $10 million of other charges.

Restructuring Reserve

Severance

As of December 31, 2016, an accrued severance balance of $17
million was
the
liabilities
Consolidated Balance Sheets and was paid during 2017.

in other current

included

19. Commitments, Contingencies and Guarantees

Guarantees Issued and Credit Facilities Available

In addition to the default fund contributions and margin collateral
pledged by clearing members discussed in Note 15, “Clearing
Operations,” we have obtained financial guarantees and credit
facilities which are guaranteed by us through counter indemnities,
to provide further liquidity related to our clearing businesses.
Financial guarantees issued to us totaled $12 million as of
December 31, 2018 and $14 million as of December 31, 2017. As
discussed in “Other Credit Facilities,” of Note 9, “Debt
Obligations,” clearing-related credit facilities, which are available
in multiple currencies, totaled $220 million as of December 31,
2018 and $187 million as of December 31, 2017, in available
liquidity, none of which was utilized.

Execution Access is an introducing broker which operates the
trading platform for our Fixed Income business to trade in U.S.
Treasury securities. Execution Access has a clearing arrangement
with Industrial and Commercial Bank of China Financial Services
LLC, or ICBC. As of December 31, 2018, we have contributed
$15 million of clearing deposits to ICBC

F-46

in connection with this clearing arrangement. These deposits are
recorded in other current assets in our Consolidated Balance
Sheets. Some of the trading activity in Execution Access is cleared
by ICBC through the Fixed Income Clearing Corporation, with
ICBC acting as agent. Execution Access assumes the counterparty
risk of clients that do not clear through the Fixed Income Clearing
Corporation. Counterparty risk of clients exists for Execution
Access between the trade date and the settlement date of the
individual transactions, which is at least one business day (or
more,
issuance
calendar). Counterparties that do not clear through the Fixed
Income Clearing Corporation are subject to a credit due diligence
process and may be required to post collateral, provide principal
letters, or provide other forms of credit enhancement to Execution
Access for the purpose of mitigating counterparty risk. Daily
position trading limits are also enforced for such counterparties.

the U.S. Treasury

specified

We believe that the potential for us to be required to make
payments under these arrangements is mitigated through the
risk management policies.
pledged collateral and our
Accordingly, no contingent
the
recorded
Consolidated Balance Sheets for these arrangements. However,
no guarantee can be provided that these arrangements will at all
times be sufficient.

liability

Lease Commitments

Other Guarantees

Through our clearing operations in the financial markets, Nasdaq
Clearing is the legal counterparty for, and guarantees the
performance of, its clearing members. See Note 15, “Clearing
Operations,”
further discussion of Nasdaq Clearing
performance guarantees.

for

We have provided a guarantee related to lease obligations for The
Nasdaq Entrepreneurial Center, Inc., which is a not-for-profit
organization designed to convene, connect and engage aspiring
and current entrepreneurs. This entity is not included in the
consolidated financial statements of Nasdaq.

We believe that the potential for us to be required to make
payments under these arrangements is unlikely. Accordingly, no
contingent liability is recorded in the Consolidated Balance Sheets
for the above guarantees.

Non-Cash Contingent Consideration

As part of the purchase price consideration of a prior acquisition,
we have agreed to future annual issuances of 992,247 shares of
Nasdaq common stock which approximated certain tax benefits
associated with the transaction. Such

contingent future issuances of Nasdaq common stock will be paid
ratably through 2027 if Nasdaq’s total gross revenues equal or
exceed $25 million in each such year. The contingent future

issuances of Nasdaq common stock are subject to anti-dilution
protections and acceleration upon certain events.

Escrow Agreements

In connection with prior acquisitions, we entered into escrow
agreements to secure the payment of post-closing adjustments and
to ensure other closing conditions. As of December 31, 2018,
these escrow agreements provide for future payment of $12
million which is included in other current liabilities in the
Consolidated Balance Sheets.

Routing Brokerage Activities

One of our broker-dealer subsidiaries, Nasdaq Execution
Services, provides a guarantee to securities clearinghouses and
exchanges under its standard membership agreements, which
require members to guarantee the performance of other members.
If a member becomes unable to satisfy its obligations to a
clearinghouse or exchange, other members would be required to
meet its shortfalls. To mitigate these performance risks, the
exchanges and clearinghouses often require members to post
collateral, as well as meet certain minimum financial standards.
Nasdaq Execution Services’ maximum potential liability under
these arrangements cannot be quantified. However, we believe
that the potential for Nasdaq Execution Services to be required to
is unlikely.
make payments under
the
in
Accordingly, no contingent
Consolidated Balance Sheets for these arrangements.

these arrangements

recorded

liability

Acquisition of Cinnober

For further discussion of our acquisition of Cinnober, see
“Acquisition of Cinnober,” of Note 3, “Acquisitions and
Divestiture,” to the consolidated financial statements.

Other Commitment

We have a 40.0% ownership in OCC. Under the OCC's capital
plan, the OCC shareholders have committed to contribute up to
$200 million in equity capital if certain capital thresholds are
breached, including up to $80 million to be contributed by
Nasdaq. See “Equity Method Investments,” of Note 6,
“Investments,” for further discussion of our equity method
investment in OCC.

Offer for Oslo Børs VPS

For further discussion of our offer for Oslo Børs VPS, see “Offer
for Oslo Børs VPS,” of Note 21, “Subsequent Events.”

Legal and Regulatory Matters

Litigation

As previously disclosed, we are named as one of many defendants
in City of Providence v. BATS Global Markets, Inc., et al., 14 Civ.
2811 (S.D.N.Y.), which was filed on April 18, 2014 in the United
States District Court for the Southern District of New York. The
district court appointed lead counsel, who filed an amended
complaint on September 2, 2014. The amended complaint names
as defendants seven national exchanges, as well as Barclays PLC,
which operated a private

F-47

alternative trading system. On behalf of a putative class of
securities traders, the plaintiffs allege that the defendants engaged
in a scheme to manipulate the markets through high-frequency
trading; the amended complaint asserts claims against us under
Section 10(b) of the Exchange Act and Rule 10b-5, as well as
under Section 6(b) of the Exchange Act. The plaintiffs seek
injunctive and monetary relief of an unspecified amount. We filed
a motion to dismiss the amended complaint on November 3, 2014.
In response, the plaintiffs filed a second amended complaint on
November 24, 2014, which names the same defendants and
alleges essentially the same violations. We then filed a motion to
dismiss the second amended complaint on January 23, 2015. On
August 26, 2015, the district court entered an order dismissing the
second amended complaint in its entirety with prejudice,
concluding that most of the plaintiffs’ theories were foreclosed by
absolute immunity and in any event that the plaintiffs failed to
state any claim. The plaintiffs appealed the judgment of dismissal
to the United States Court of Appeals for the Second Circuit. On
December 19, 2017, the Second Circuit issued an opinion vacating
the district court’s judgment of dismissal and remanding to the
district court for further proceedings. The exchanges filed a
petition before the Second Circuit seeking panel or en banc
rehearing on January 31, 2018, which the Second Circuit denied
on March 13, 2018. On May 18, 2018, the exchanges filed a
motion to dismiss the amended complaint, raising issues not
addressed in the proceedings to date. Given the preliminary nature
of the proceedings, we are unable to estimate what, if any, liability
may result from this litigation. However, we believe that the
claims are without merit and will continue to litigate vigorously.

Nasdaq Commodities Clearing Default

During September 2018, a clearing member of Nasdaq Clearing's
commodities market was declared in default. Consistent with our
regulatory obligations, we notified all relevant regulators and are
cooperating fully with information requests. We are engaging in
discussions with the other members regarding the default and
recovery process towards the defaulting member. We are unable
to predict the outcome or exact timing of this matter. See “Nasdaq
Commodities Clearing Default,” of Note 15, “Clearing
Operations,” for further information on this event.

SEC Decisions

In recent years, certain industry groups have challenged the level
of fees that U.S. exchanges charge for market data and

connectivity. We have defeated two challenges in federal appeals
court pertaining to market data and an additional challenge at the
administrative level within the SEC. However, in October 2018,
the SEC reversed that administrative decision and found that
Nasdaq had not met a burden of demonstrating that certain
challenged fees were fair and reasonable; we estimate that this
decision will reduce our revenues by approximately $1 million.
Nasdaq has appealed this decision to the U.S. Court of Appeals for
the District of Columbia Circuit. In addition, the SEC remanded a
series of additional challenges to market data and connectivity
fees back to Nasdaq for further consideration. Nasdaq has also
appealed this decision to the U.S. Court of Appeals for the District
of Columbia Circuit. We are unable to predict the outcome or the
timing of the ultimate resolution of these matters.

Other Matters

Except as disclosed above and in prior reports filed under the
Exchange Act, we are not currently a party to any litigation or
proceeding that we believe could have a material adverse effect on
our business, consolidated financial condition, or operating
results. However, from time to time, we have been threatened
with, or named as a defendant in, lawsuits or involved in
regulatory proceedings.

In the normal course of business, Nasdaq discusses matters with
its regulators raised during regulatory examinations or otherwise
subject to their inquiries. Management believes that censures,
fines, penalties or other sanctions that could result from any
ongoing examinations or inquiries will not have a material impact
on its consolidated financial position or results of operations.
However, we are unable to predict the outcome or the timing of
the ultimate resolution of these matters, or the potential fines,
penalties or injunctive or other equitable relief, if any, that may
result from these matters.

Tax Audits

We are engaged in ongoing discussions and audits with taxing
authorities on various tax matters, the resolutions of which are
uncertain. Currently,
to
there are matters
assessments, some of which may not be resolved for several
years. Based on currently available information, we believe we
have adequately provided for any assessments that could result
from those proceedings where it is more likely than not that we
will be assessed. We review our positions on these matters as they
progress. See “Tax Audits,” of Note 17, “Income Taxes,” for
further discussion.

that may

lead

20. Business Segments

* * * * * *

We manage, operate and provide our products and services in four business segments: Market Services, Corporate Services, Information
Services and Market Technology. See Note 1, “Organization and Nature of Operations,” for further discussion of our reportable
segments. In early 2018, we realigned our businesses to better serve the needs of our corporate clients. As a result, beginning in the
second quarter of 2018, our BWise internal audit, regulatory compliance management, and operational risk management software
solutions are now offered as part of governance, risk & compliance products and services within our Corporate Solutions business.
BWise was previously part of our Market Technology segment. We have restated prior periods to conform to the current year
presentation.

F-48

Our management allocates resources, assesses performance and manages these businesses as four separate segments. We evaluate the
performance of our segments based on several factors, of which the primary financial measure is operating income. Results of individual
businesses are presented based on our management accounting practices and structure.

The following table presents certain information regarding our operating segments for the years ended December 31, 2018, 2017 and
2016:

Market
Services

Corporate
Services

Information
Services

Market
Technology

Corporate Items Consolidated

Year Ended December 31, 2018

Total revenues
Transaction-based expenses
Revenues less transaction-based expenses

2,709
(1,751 )
958

528
—
528

41
163
734
29

501
—
501

44
158
865
41

(in millions)

714
—
714

51
460
3,352
17

588
—
588

26
418
3,420
10

540
—
540
18
383
2,439
8

270
—
270

21
34
467
37

247
—
247

14
57
572
34

241
—
241
13
73
497
27

56
—
56

2
(173 )
848
—

194
—
194

9
(123 )
1,026
—

191
—
191
10
(200 )
586
—

4,277
(1,751 )
2,526

210
1,028
15,700
111

3,948
(1,537 )
2,411

188
991
15,354
144

3,704
(1,428 )
2,276
170
836
13,411
134

95
544
10,299
28

2,418
(1,537 )
881

95
481
9,471
59

2,255
(1,428 )
827
87
450
8,626
62

477
—
477
42
130
1,263
37

Depreciation and amortization
Operating income (loss)
Total assets
Purchase of property and equipment

Year Ended December 31, 2017

Total revenues
Transaction-based expenses
Revenues less transaction-based expenses

Depreciation and amortization
Operating income (loss)
Total assets
Purchase of property and equipment
Year Ended December 31, 2016
Total revenues
Transaction-based expenses
Revenues less transaction-based expenses
Depreciation and amortization
Operating income (loss)
Total assets
Purchase of property and equipment

Certain amounts are allocated to corporate items in our
management reports as we believe they do not contribute to a
meaningful evaluation of a particular segment's ongoing operating
performance. These items include the following:

2018 Divestiture: We have included in corporate items the
revenues and expenses of the Public Relations Solutions and
Digital Media Services businesses which were part of the
Corporate Solutions business within our Corporate Services
segment as these businesses were sold in April 2018. See “2018
Divestiture,” of Note 3, “Acquisitions and Divestiture,” for further
discussion.

the purpose of evaluating

between periods. Management does not consider intangible asset
amortization expense for
the
performance of our segments or their managers or when making
decisions
resources. Therefore, we believe
performance measures excluding intangible asset amortization
expense provide management with a more useful representation of
our segments' ongoing activity in each period.

to allocate

Clearing Default: For the year ended December 31, 2018, we
recorded $31 million in expense related to the clearing default. In
September 2018, we recorded an $8 million loss relating to

F-49

this default. In December 2018, we recorded a $23 million charge
as a result of initiating a capital relief program. See “Nasdaq
Commodities Clearing Default,” of Note 15, “Clearing
Operations,” for further discussion of the default. We have
excluded these charges as we believe they are non-recurring, as
there has never been a loss due to member default in our
clearinghouse, and they should be excluded when evaluating the
ongoing operating performance of the Market Services segment.
Any expenses associated with the enhancement of processes and
procedures relating to our clearing business will be reflected
within the Market Services segment.

pertaining to sales and use tax and VAT and certain litigation
costs. For 2017, other significant items primarily included loss on
extinguishment of debt. For 2016, other significant items
primarily included restructuring charges of $41 million which
were associated with our 2015 restructuring plan, a regulatory fine
received by our Nordic exchanges and clearinghouse, accelerated
expense for equity awards previously granted due to the
retirement of the company’s former CEO, and the release of a
sublease loss reserve due to the early exit of a facility. We believe
the exclusion of such amounts allows management and investors
to better understand the ongoing financial results of each segment.

Other significant items: We have included certain other charges or
gains in corporate items, to the extent we believe they should be
excluded when evaluating the ongoing operating performance of
each individual segment. For 2018, other significant items
to uncertain positions
primarily

included charges related

Accordingly, we do not allocate these costs for purposes of
disclosing segment results because they do not contribute to a
meaningful evaluation of a particular segment’s ongoing
operating performance.

A summary of our corporate items is as follows:

* * * * * *

Revenues - divested businesses
Expenses:

Amortization expense of acquired intangible assets
Merger and strategic initiatives expense
Clearing default
Extinguishment of debt
Restructuring charges
Regulatory matter
Expenses - divested businesses
Executive compensation
Other

Total expenses

Operating loss

Total assets increased $346 million as of December 31, 2018
compared with December 31, 2017 primarily due to an increase in
default funds and margin deposits (with a corresponding increase
in current liabilities), due to higher cash default fund contributions
directly related to member exposure and an increase in margin
level requirements as a result of the Nasdaq Commodities clearing
default in September 2018. This increase was partially offset by a
decrease in goodwill and intangible assets, net reflecting the
impact of changes in foreign exchange rates and amortization of
intangible assets. Total assets increased $2.0 billion as of
December 31, 2017 compared with December 31, 2016 primarily
due to an increase in default funds and margin deposits (with a
corresponding increase in current

liabilities), reflecting an increase in cash margin deposits pledged
by members of our Nasdaq Clearing business due to an increase in
clearing volume. Also contributing to the increase was an increase

Year Ended December 31,

2018

2017

2016

(in millions)

194

191

109
21
31
—
—
—
51
—
17

229

92
44
—
10
—
—
167
—
4

317

82
76
—
—
41
6
168
12
6

391

(173 ) $

(123 ) $

(200 )

in goodwill and intangible assets associated with our 2017 and
2016 acquisitions.

For further discussion of our segments’ results, see “Item 7.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations-Segment Operating Results.”

Geographic Data

The following table presents total revenues and property and
equipment, net by geographic area for 2018, 2017 and 2016.
Revenues are classified based upon the location of the customer.
Property and equipment information is based on the physical
location of the assets. On January 1, 2018, we adopted Topic 606
using the full retrospective method which required restatement of
2017 and 2016 financial statements.

F-50

Total
Revenues

Property and
Equipment,
Net

(in millions)

3,379
898
4,277

3,081
867
3,948

2,679
1,025
3,704

224
152
376

247
153
400

244
118
362

2018:
United States
All other countries

Total

2017:
United States
All other countries

Total

2016:
United States
All other countries

Total

21. Subsequent Events

Acquisition of Cinnober

Our property and equipment, net for all other countries primarily
includes assets held in Sweden.

No single customer accounted for 10.0% or more of our revenues
in 2018, 2017 and 2016.

* * * * * *

For further discussion of our acquisition of Cinnober, see “Acquisition of Cinnober,” of Note 3, “Acquisitions and Divestiture,” to the
consolidated financial statements.

Offer for Oslo Børs VPS

In February 2019, we, through our indirect wholly-owned subsidiary Nasdaq AB, made a public offer, or the Offer, to acquire all of the
issued shares of Oslo Børs VPS Holding ASA, or Oslo Børs VPS, at NOK 152 per share plus interest payments at a rate of 6% per annum
on the Offer price, pro-rated per day from January 29, 2019 until the conditions to the Offer have been fulfilled or waived. The Offer
price values the entire issued share capital of Oslo Børs VPS at NOK 6,537 million, or approximately $770 million. Oslo Børs VPS’
board of directors has unanimously recommended that its shareholders accept the Offer. The acceptance period will be open from
February 4, 2019 to March 4, 2019 and is subject to extension or re-opening.

The Offer is subject to the fulfillment or waiver of certain customary conditions, including but not limited to acceptances from
shareholders holding 90% or more of the shares of Oslo Børs VPS, certain regulatory clearances, limited confirmatory due diligence and
completion of the Offer by December 31, 2019.

Agreement to Sell BWise

In February 2019, we entered into an agreement with SAI Global to sell BWise, our internal audit, regulatory compliance management,
and operational risk management software that comprises our governance, risk and compliance product offering. Subject to regulatory
approvals, works council and other representative body consultations and notifications in applicable jurisdictions, as well as other
customary closing conditions, the transaction is expected to close in the first half of 2019.

BWise is part of our Corporate Solutions business within our Corporate Services segment.

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